There is a proper structure for the process of Strategic Innovation. Within such scaffold, there is existence of seven various branches that would help in producing innovation which are generally growth-driven. This innovation takes into account the assistance made to companies in reaching their goals, helping in bringing of new ideas and products to an organization. The world is forever shifting, so it is upto the companies in ensuring that they are continuing their innovative adventure. This report would take into account the critical analysis of seven dimensions present in the strategic innovation framework and the way it would be applied to an oil and gas firm. As per Tidd and Bessant (2014), strategic innovation helps firms in bringing together their ingenious assets, abilities and required discipline for developing the portfolio of product and service and driving the organizational growth in the industry.
Managed Innovation Process:
The first measurement of strategic innovation is connected to the process of managing innovation that includes the progression of activities from the commencement of initiative through accomplishment. According to Szekely and Strebel (2013), the global upstream oil and gas diligence spend around $1.3 trillion in the year 2012 and is projected to exceed $1.9 trillion by 2018. Even in the market that is growing, organizations are facing ever-changing technical, environmental and protection related challenges having a key impact on their capability in finding and manufacturing oil competitively.
A significant part of the global upstream expend is in the improvement and commencement of new technologies. Innovation is not merely down to the conventional measures of the dollars being spent, but also the ways on how the investment is being administered. Shell’s advancement to the innovation obtains from the ways the process of innovation is being managed and implemented. The approach of management is an amalgamation of strong business procedures having clear objectives along with the points of decision and management style identifying the sensitive facets of innovation. Sustainable innovation integrates the society value as the third driver adding to the needs of the customer and options for technology. The oil and gas industry’s main focus has been on the capital-intensive, strategic innovation has been demanding an enormously rigorous advancement towards innovation. As per Garcia, Lessard and Singh (2014), a significant part of the investment needs to be made towards developing a game-changing technology, vital in ensuring that the probability of a new idea is matched by advancement during the progression development stage. The innovation process that is being managed assists the firms in developing the core of the strategic innovation. It provides direction to the firm in creating innovation of the products and attaining competitive intensification in the market.
In the framework of the strategic innovation, the strategic alignment measurement assists the firms in building support for the new ideas of innovation. According to Styles and Goddard (2014), it has been evaluated that the strategic configuration dimension enabling the oil and gas firm in engaging the senior management team, making a broader example of the organization and engaging the important stakeholders in the expansion of shared vision. Through this, the firm would be able to generate possession, obligation and taking decisions for investment in building a stronger foundation for the thriving execution of a newly generated innovation idea.
However, in distinction to this, it is evaluated that for this aspect, the firms within the oil and gas industry requires to opt for a cross-functional team of future leaders, visionary and stimulated individuals within the management team for successfully implementing the modified idea. At certain times, the oil and gas firm encounters certain issues in picking the right candidates for the team of leaders. In concern to Shell, for driving growth, the firm efficiently makes use of the strategic arrangement element through development of the allotment of resources and conveying of the roles and responsibilities in fresh ways for influencing various departments in working together on the idea of single innovation.
For building support for the fresh ideas of innovation, it is indispensable for the firm in engaging all the stakeholders in proper ways with appropriate regularity. In this, the session of brainstorming does not assist the firm in accessing the imagination of stakeholders towards the fresh idea of innovation.
The industry foresight aspect of the framework of strategic innovation mainly deals with the changes or alteration, improving the in-depth understanding to the people within the firm about the business trends that are new in the horizon. It has been found that through industry foresight, oil and gas firms have effectively evaluated the innovation grounds and the rate of success of market innovation. The element of industry foresight believes that several industries have various trends, drivers and dislocations, helping the firms in operating the business activities in significant manner. Shell has always endeavored in going beyond traditional technology, embracing the unconventional technology in boosting innovation in its operations, especially the exploration of deep water.
Shell has endured a principally tough few years having weaker demand and the lower prices. It has been difficult in making the strategic decisions and sketch for the future. However, with the increase in the demand and the reliance on these sources of energy, it is expected that this industry would be continuing to generate revenue in investing the new exploration technology and projects with the costs gradually stabilizing. Creation of the revenue is a significant driver influencing innovation in the oil and gas industry. The oil and gas industry too ahs its own restrictions and boundaries and their consideration of the limitations assist them in helping to initiate new technologies along with the potential opportunities of growth and innovative business models (Perrons 2014). Developments in technology are taking up pace making it difficult for leveraging conventional linear methods for forecasting. Shell has been one of the most complex users of the techniques that have been intended in exploring the possible alternating future scenarios. Shell has urbanized a program called the Technology Futures for looking at the areas outside of energy for the purpose of innovation offering new opportunities for their business. Linking of the foresight into the process of innovation for exploration of the opportunities is one of the efficient methods of improving new high margin provisions.
As per Yusuf et al. (2014), through the industry foresight, a firm within the oil and gas industry is being enabled to improve its proprietary outlook of the future that supports it in developing leadership and the visionary partaking within the market. In the present challenging and volatile environment of business, Shell requires leaders at every possible level if they are to thrive along with survival. The ability of seeing the things lying ahead and understanding the issues facing the company with the courage of initiating actions for facing the challenges is essential.
The consideration and implementation of the dimension of consumer insight offers detailed indulgent about the requirements of the customers within the oil and gas industry. It facilitates the firms in producing fresh and innovative products as per the requirements of the customers. It assists Shell in enhancing the reputation of the new pioneering services and products among the customers that importantly drives the market growth. Customer insight is one of the efficient measurements of the structure of strategic innovation as it offers the proper understanding about the attitude, perception and requirements of customers. For the procurement and the construction organization within the oil and gas industry serving the owner operators (OOs), experience of customers needs to be extended far beyond the customer support desk and contractual commitment. The mandate within the B2B states that the oil and gas firm becomes strategic partner, assisting the customer in executing their most significant value-maximizing proposal. According to Radnejad and Vredenburg (2015), only customization of the goods and services would not meet the customer needs, but taking it a step further and developing their relationship into a precious partnership where there is transport of knowledge with one another.
Poverty of time along with urbanization are some of the key trends, with the biggest expediency footprint of over 43000 locations, Shell being positioned in meeting the needs of the customers. Shell is continuously looking for new ways in making people excited at the Shell site. The ‘Shell experience’ endeavor in making the lives of the customers much easier. Shell Retail has been managing database of around 4 million transactions of customers, one of the most complete in the world, facilitating Shell in spotting trends and innovates to offer services what people achieve and when they accomplish it.
Certain customer satisfaction surveys have pointed out that the oilfield providers are decontamination of the techniques that are prompt becoming the standard of the oil recuperation. A composite and mutual procedure along with equipment suppliers shoves innovation as they have been staking claims in the open market. Top oil organizations have been managing the demanding relationships with the service providers as they handle natural resources. Operators generally look for effective measurements, the most consistent apparatus along with the best downhole data (Rees and Smith 2017). For the suppliers and the organizations that have been employing their service, the getting might get much better. Firms that have been establishing their brand stands to meet more prospect as the world unlocks itself to improved oil recovery.
The next measurement of strategic innovation structure is related to the interior technology and competencies that is being effectively used by the oil and gas industries for leveraging the assets. It is evaluated that the indulgence of the core technology and abilities assist the management team in evaluating the process of innovation in effective manner. It is because, through such process, the management team would be enabling the identification of competencies, abilities and the resources, supporting the leadership and management for effective implementation of the innovation process (Erickson and Rothberg 2014).
The modern advancement in technology makes the oil executive consider the digital technologies having the potential in transforming the operations and creating the extra profits from accessible aptitude. Research has been able to find that the efficient use of digital technologies in the sector of oil and gas, reducing the capital expenditures by atleast 20 per cent, having the ability to cut the costs of operations in the upstream by 4 to 5 per cent (Perrons 2014). These latest technological progressions could further lessen the costs, unleashing the unparallel productivity and boosting of the performance in significant manner. In the oil and gas industry, making proper use of the existing technology that can distribute serious results: upto $1 billion in savings of cost or increase in production.
Innovation and technology have been critical in the oil and gas industry. Many of the successful new technologies in Shell’s business work as they have been making exploration and production of the energy resources more reasonable. The immense exhibit of the technological know-how would be facilitating Shell in taping the gas fields that were previously been measured too far offshore to be economically urbanized in the conventional way. It would be eliminating the requirement in devoting land and pipelines to practice LNG onshore.
Incorporated oil and gas companies are good at certain things. The expense formation of Shell is such that the workforce costs are generally low fraction of overall outlays. So they have been affording to shell out for the talent. The core competencies for the oil and gas companies are the geographical modeling and financial risk management.
Anybody has the ability in drilling a well and pump oil out of the ground. The hardest part would be in deciding the place of drilling. Oil companies are geological companies. Performance of poor exploration would be guaranteeing a success rate of 0-2%, ‘ok’ performance would be getting a 10 per cent rate of success, but a company having a world-class operation might average around 50 per cent of the success rate (Gassmann and Schweitzer 2013).
Risk management is also significant where key cost estimates a probability allocation, and those distributions would be getting rolled up into the bigger picture outlay distributions. The oil and gas companies need to understand their cumulative risk experience for survival.
Within the oil and gas industry, organizational readiness is stated to be one of the dimensions driving the growth of firm in the market. It is found that the organizational readiness assists the firms in improving the firm’s ability for acting upon the applied innovative ideas along with strategies. Through the organizational readiness, Shell enables in enhancing the abilities in fulfilling the operational, cultural and financial demands during the process of strategic innovation.
Shell is mainly focusing on the revenue growth, though their strategies and prior differ at certain times. Some of the organizations attain growth through augmenting of the daily rates of production, from optimization of the existing assets or expanding of the exploration into new fields. Despite of the priority of the organization, the capability to expand is associated directly with the cash available and the confirmed operational presentation for delivering of the results.
As per Bocken, Rana and Short (2015), Shell’s exploration and production comprises inherit risk: smaller costs like the trips and slips and those having higher severity with higher impact, like the serious environmental occurrence. These sorts of risks have resulted in augmented demands and expectations from the external and internal stakeholders for safer and faster and environmentally sound production. The effective managing of assets and operations is supreme to sustaining of a social license to activate. The oil and gas firm efficiently manufactures the innovative products that satisfies the customers’ needs and wants in their regular life.
In the strategic innovation, implementation takes in the broader range of the activities supporting the organization in involving all the stakeholders in the process of innovation, technical development of products, designing and prototyping. In the strategic innovation scaffold, the disciplined implementation model has high-level constituent like the implementation skill set along with mindsets, a formal project management method and the proper understanding of the organizational precedence.
In concern to Shell, the improved capacity of the organization assists the management in effectively implementing the strategic innovation ideas offering the competitive advantage to firm. It enables Shell in ensuring growth in the competitive business surroundings. However, as per Rees and Smith (2017), at certain times, certain lack of effectual skills and knowledge among the employees working in the oil and gas industry along with the management team members would be creating issues in implementing the process of strategic innovation within the firm. The oil and gas firms need to be more strategic, implementing the ideas in producing innovative services and goods for customers.
Conclusion:
From the above stated discussion, it can be concluded that the seven measurements of the strategic innovation structure assisting the oil and gas firms for innovating of the new products and the services for attaining the competitive advantage. Various dimensions offer the guidance to the oil and gas firms from generating the ideas of innovation for implementing such ideas for achieving success. It can also be concluded that the acceptance of strategic innovation framework supporting the firm in involving the structured advancement to innovation that significantly that assists the firms in comprehending an efficient organizational platform.
Reference:
Bocken, N.M.P., Rana, P. and Short, S.W., 2015. Value mapping for sustainable business thinking. Journal of Industrial and Production Engineering, 32(1), pp.67-81.
Erickson, G.S. and Rothberg, H.N., 2014, January. Strategic Innovation and Sustainable Competitive Advantage: Understanding Knowledge Assets. In ISPIM Conference Proceedings (p. 1). The International Society for Professional Innovation Management (ISPIM).
Garcia, R., Lessard, D. and Singh, A., 2014. Strategic partnering in oil and gas: A capabilities perspective. Energy Strategy Reviews, 3, pp.21-29.
Gassmann, O. and Schweitzer, F. eds., 2013. Management of the fuzzy front end of innovation. Springer Science & Business Media.
Gruber, M., De Leon, N., George, G. and Thompson, P., 2015. Managing by design. Academy of Management Journal, 58(1), pp.1-7.
Hansen, G.H. and Steen, M., 2015. Offshore oil and gas firms’ involvement in offshore wind: Technological frames and undercurrents. Environmental Innovation and Societal Transitions, 17, pp.1-14.
Perrons, R.K., 2014. How innovation and R&D happen in the upstream oil & gas industry: Insights from a global survey. Journal of Petroleum Science and Engineering, 124, pp.301-312.
Radnejad, A.B. and Vredenburg, H., 2015. Collaborative competitors in a fast–changing technology environment: open innovation in environmental technology development in the oil and gas industry. International Journal of Entrepreneurship and Innovation Management, 19(1-2), pp.77-98.
Rees, G. and Smith, P. eds., 2017. Strategic human resource management: An international perspective. Sage.
Styles, C. and Goddard, J., 2014. Spinning the wheel of strategic innovation. Business Strategy Review, 25(4), pp.76-80.
Szekely, F. and Strebel, H., 2013. Incremental, radical and game-changing: strategic innovation for sustainability. Corporate Governance, 13(5), pp.467-481.
Tidd, J. and Bessant, J., 2014. Strategic innovation management. John Wiley & Sons.
Yusuf, Y.Y., Gunasekaran, A., Musa, A., Dauda, M., El-Berishy, N.M. and Cang, S., 2014. A relational study of supply chain agility, competitiveness and business performance in the oil and gas industry. International Journal of Production Economics, 147, pp.531-543.
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