The purpose of this report is to provide information about innovation strategy along with its alignment to the business functions. The report explains different innovation concepts and their relationship with each other. Further, it also evaluates the impact of innovation trends on the activities of the company and the response of the company on innovation as well. The company selected for the process of innovation is Lego Toy Manufacturing organization and the selected innovation trend is augmented reality. Lego is a line of plastic construction toys company that is headquartered in Denmark. The company was found in the year 1949 by Ole Kirk Christiansen. The company is a strong and well-known brand present in the market that replaced Ferrari in the year 2015 and became World’s Most Powerful brand in terms of Brand Finance (Lego, 2018). The company Lego is a family owned business present in the market that is a part of world’s leading manufacturers present in the play market. The vision of the company states that, ‘only the best is good enough’. Along with that, the company also aims for systematic creativity and innovation in their business and leave a positive impact on the people using their products.
Further, augmented reality refers to an innovation under which the user gets interactive experience of real world environment. Under this type of innovation, the products are computer generated, this innovation is somewhat like virtual reality but virtual reality completely replaces the user’s real world environment. This type of innovation makes the user believe that products that they are using are natural as a part of the environment. With the use of augmented reality innovation, the organization Lego can effectively target diversified prospective customers present in the market and increase the sales and customer satisfaction as well (Handley, 2018). Further, more details about the company, its innovation practices present in the market are discussed below:
Definitions of some of the concepts related to the case along with their relationship with each other are discussed below:
Organisational environment: It refers to the environment that comprises of various forces that have a direct impact on the activities of the company. If refers to that environment under which, the employees work and with the external forces affecting the scope of business (Qian, & Law, 2016).
Innovation trend: It refers to the current and prevailing trends present in the environment that are related to the aspect of innovation. Companies to succeed in the target market use various innovation trends.
Innovation strategy: it refers to the strategy initiated in the business to find the right type of innovation for the business and implement it in the management as well.
Innovation capabilities: It refers to the capability of the innovation to help the business succeed in the target market. This aspect can improve the capabilities of business in the field of operations, management, technology or product development etc. (Jin, & Ji, 2018).
Innovation value creation and capture: it refers to the process with which the innovation strategy implemented in the business either creates value for it or capture the value present in the environment.
All the concepts discussed above have relation each other as innovation trends are a part of the organizational environment. From these trends present in the environment, the company selects the best suitable innovation for the business for which the management implement innovation strategy. Further, the innovation strategy should match with the environment of the organization; it should also be capable of fulfilling the vision of the company and creating value as well. The innovation strategy should be capable of creating value for the company or capturing it from the organizational environment. So, in this way, all the concepts are linked to each other (Lin, Kong, Bai, & Kong, 2018).
Before understanding the alignment of innovation strategy with the vision of organization, it is important to analyse the Lego’s innovation strategy applied for the value creation of business. The innovation strategy used by the company is discussed below:
Search: Lego being present in the toy industry wanted to make use of innovation in such a way that assist the growth of the business and innovate the products as well. In response to which, the company found augmented reality as the best source of growth of the business (Gassmann, Schuhmacher, von Zedtwitz, & Reepmeyer, 2018).
Select: with the use of augmented reality innovation strategy, the company aimed to create new products of kids that can engage them into play and make them learn and study as well.
Implement: In order to make plan into actions, the organization aimed to target a particular segment of 7-13 age group kids who would like the graphics of augmented reality (Morabito, 2014).
Capture: Lego will get the benefits of this innovation by effectively targeting the right segment in the market. Further, good promotional and advertisement strategy will also help the company to capture value from the market.
Further, it should be noted that it is important to align the activities of innovation strategy with the organization’s strategic objective so as to earn valuable returns for the company. The above mentioned innovation strategy for the company Lego also strategically aligns to activities of the company in such a way that outcome of both the activities is same (Antikainen, & Valkokari, 2016). Just like the business strategy of the company, the innovation strategy also thrives to achieve the best and positively results for the company. The augmented reality would be designed in the construction products in such a way that the kids learn while playing and it does not harm to their eyes as well. Further, it is important for the company to align the innovation strategy with organization because clashes in two strategies will disturb the working of the company. The ultimate goal of the organization is to earn profit by satisfying the customers that can be done when the innovation strategy aligns will the business model strategy to achieve the vision of the business. Creation of innovation strategy also ensures strategy alignment within the organization because this strategy successfully makes use of all the available resources in a way to achieve the desired outcome for the company (Burmeister, Lüttgens, & Piller, 2016).
Innovation is something that can act good as well as bad for the business process, if not used properly. However, the use of augmented reality innovation will help the company to grow in an effective manner. Furthermore, the impact of innovation strategy on the position of the company Lego is explained using the SWOT analysis strategic tool (Inigo, Albareda, & Ritala, 2017).
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Strength |
Weakness |
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· Toy with a difference: The company Lego produces set of bricks that can become a set of various permutation and combination. The products sold by the company are already innovative and different and augmented reality will help the company to originate new product line that will attract more customers present in the target market (França, Broman, Robèrt, Basile, & Trygg, 2017). · Form of creative expression: The products of the company Lego are treated as an expression of creativity. So, in order to live upto that expectation of customers, this type of innovation will support the company in the best way. |
· Expensive: The products of the company Lego are expensive enough that the customers think twice before buying such products for use. The reason of such expensive rate is that the company wants to target the premium-skimmed customers in the market who value their products. Further, high value demands high cost as well. · Taste of customers: Though the products served by the company Lego are for the kids of all age groups, however, only few ids get to understand the use of these products. And introduction of augmented reality will somehow increase the complexities of the product (Perry, Rahim, & Davis, 2018). |
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Opportunities |
Threat |
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· More parental focus on creative toys: families have started getting nuclear due to which parents have started focusing more on the skills enlargement of their children. Resulting in which, this type of innovation will help the company to attract the customers so that their can buy such products for the brain development and motor skill efficiency. · Activity driven learning: schools nowadays focus more on activity driven learning, so the augmented reality will help the company to target schools and attain more success in the target market (Jørgensen, & Pedersen, 2018). |
· Competition: as discussed above that the company Lego manufactures products that are very expensive for the customers. So, there is a threat for the company to get replaced by other competitor organization present in the market. · Counterfeits: There is presence of different types of cheaper plastics in the market. Since there is no major risk in the usage of counterfeits, they may be preferred instead of the original that affects the sale of Lego. |
Further, as discussed above, that the innovation strategy used by the company affects the business in a positive way. So, the recommendations for the respond of company towards innovation trends are discussed below:
The organization should organize its innovation is such a way that it adequately attracts the target customers in the market. As the products manufactured by the company Lego have meaning within it, so the products manufactured using augmented reality should drive the innovation in such a way that it increases the level satisfaction of parents and make kids learn things as well. So, in this way organization should organize the innovation activities that it drive the best results to the customers present in the market (Avenyo, Chien, Hollanders, Marins, Schaaper, & Verspagen, 2015).
An additional innovation capability that the company can drive in their business is the use of virtual reality feature in the business. As discussed above, augmented reality and virtual reality has a very thin line difference, so the company should make use of virtual reality feature to help the customer gain better satisfaction in the market. However, the introduction of virtual reality innovation depends only on the sale of company done with the use of augmented reality innovation in the business (Xi, Kraus, Filser, & Kellermanns, 2015).
The organization Lego should set various standards and KPIs (Key Performance Indicators) on the basis of which they should judge the growth of company through innovation. These KPIs will help the company to measure its performance (Jørgensen, & Pedersen, 2018).
The organization Lego Toys is a well renowned organization present in the toy manufacturing industry. In response to which, it is important for the organization to make use of innovation in such a way that vision is achieved. The objective of the company Lego is to produce products that help the company earn profits and at the same time help the kids to learn as well. The toys produced are not used just for fun but they are used for learning as well. So, the innovation trend of augmented reality should be used in the company in such a way that the learnings of kids is increased with the use of such toys. These products should provide real world experience to the kids that should attract their interest and teach them various things as well. In this way, Lego toys company should ensure the strategic alignment of business process with the innovation trends.
Conclusion
Thus, in the limelight of above mentioned events, the fact should be noted that the company Lego Toys is a toy manufacturing organization that wants to innovate their business in order to attain a dignified sustainable position in the target market. Augmented reality innovation trend has been used in the business to help the customers’ increase their satisfaction and help the organization grow as well. The report comprises of innovation trend strategies used by the company along with its alignment with the business objectives.
References
Antikainen, M., & Valkokari, K. (2016). A framework for sustainable circular business model innovation. Technology Innovation Management Review, 6(7).
Avenyo, E. K., Chien, C. L., Hollanders, H., Marins, L., Schaaper, M., & Verspagen, B. (2015). Tracking trends in innovation and mobility. United Nations Educational, Scientific and Cultural Organization-UNESCO (Ed.), UNESCO Science report: Towards, 2030, 57-83.
Burmeister, C., Lüttgens, D., & Piller, F. T. (2016). Business Model Innovation for Industrie 4.0: Why the Industrial Internet Mandates a New Perspective on Innovation. Die Unternehmung, 70(2), 124-152.
França, C. L., Broman, G., Robèrt, K. H., Basile, G., & Trygg, L. (2017). An approach to business model innovation and design for strategic sustainable development. Journal of Cleaner Production, 140, 155-166.
Gassmann, O., Schuhmacher, A., von Zedtwitz, M., & Reepmeyer, G. (2018). Future Directions and Trends. In Leading Pharmaceutical Innovation (pp. 155-163). Springer, Cham.
Handley, L. (2018). How marketing built Lego into the world’s favorite toy brand. Retrieved from https://www.cnbc.com/2018/04/27/lego-marketing-strategy-made-it-world-favorite-toy-brand.html
Inigo, E. A., Albareda, L., & Ritala, P. (2017). Business model innovation for sustainability: exploring evolutionary and radical approaches through dynamic capabilities. Industry and Innovation, 24(5), 515-542.
Jin, Y., & Ji, S. (2018). Mapping hotspots and emerging trends of business model innovation under networking in Internet of Things. EURASIP Journal on Wireless Communications and Networking, 2018(1), 96.
Jørgensen, S., & Pedersen, L. J. T. (2018). A Process Model for Sustainable Business Model Innovation. In RESTART Sustainable Business Model Innovation (pp. 183-192). Palgrave Macmillan, Cham.
Jørgensen, S., & Pedersen, L. J. T. (2018). Why Sustainable Business Model Innovation?. In RESTART Sustainable Business Model Innovation (pp. 3-11). Palgrave Macmillan, Cham.
Lego. (2018). The Lego Group. Retrieved from < https://www.lego.com/en-us/aboutus/lego-group>
Lin, G., Kong, Z., Bai, K., & Kong, L. (2018). The Emergence of Innovation Education: Trends and Challenges. Advances in Educational Technology and Psychology, 2(1), 102-105.
Morabito, V. (2014). Trends and challenges in digital business innovation. New York: Springer International Publishing.
Perry, A. S., Rahim, E., & Davis, B. (2018, March). Startup Success Trends in Small Business beyond Five-Years: A Qualitative Research Study. In 6th International Conference on Innovation and Entrepreneurship: ICIE 2018 (p. 341). Academic Conferences and publishing limited.
Qian, J., & Law, R. (2016). Vincenzo Morabito: The future of digital business innovation: trends and practices.
Xi, J. M., Kraus, S., Filser, M., & Kellermanns, F. W. (2015). Mapping the field of family business research: past trends and future directions. International Entrepreneurship and Management Journal, 11(1), 113-132.
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