Innovation Strategy and the Corporation
How does innovation contribute to competitive advantage?
Competitive advantage distinguishes an organization from its top rivals. Today, both manufacturing and service companies depend on innovation and strategy to acquire a competitive advantage against their competitors. Typically, competitive advantage involves the attraction of more customers, investors, and brand loyalty from the market. Firms in the same industry produce almost similar products and services; this makes it difficult for the target market to realize the difference. According to (Distanont & Khongmalai, 2018), innovation capability is the core productivity that creates a competitive edge by discovering or perceiving the better or new way to compete with industry rivals. One of the business’ successes factors is its innovation’s relative advantage. In the contemporary business world, innovation has become the most significant asset that most companies rely on to acquire a competitive advantage, especially when penetrating new markets (Myllyla, 2020). Maintaining product innovation is thus the surest strategy for a company to sustain its competitive edge and steer productivity growth for further competitiveness. In the context of innovation and strategy, this essay will illustrate how innovation contributes to competitive advantage using real-world examples of manufacturing and service companies.
The innovation of new ideas helps a company to improve its manufacturing processes, bring unique products, and improve services on the target market. Also, the exploration of new ways of doing things boosts companies in their focus to increase production efficiency and service delivery reliability and convenience (Weerawardena, 2014). For example, Apple Inc. is among the most innovative company whose products are distinguishable, unique and differ from its competitors in the market (Lopez, Forbes). As a manufacturer, Apple products are designed and manufactured with a unique and fashionable style which make its brand image gain popularity and stick to consumers’ mind. Apple’s R&D team develops its products by integrating internal tech capacity and the target market needs. However, not all products of Apple are manufactured through invention; most of them are redesigned by combining innovative technology, for example, music players and mobile phones. Since its first product launch, Apple has been learning through failure. Failure has always made Apple innovate better products, and this new product innovation has contributed to Apple’s success and strong competitive advantage over top rivals such as Samsung, Microsoft, and Sony. Some of Apple’s leading brands include iPhone, iPad, iPhone3GS, Apple TV, Apple Watch, Mac, iCloud, and Apple Pay, among many other unique products and services (Pratap, 2020). Upon the launch of these products, Apple’s customers are excited about the R&D and innovation being steered by the company, and hence stick their loyalty to Apple (Pratap, 2020). Market sustenance continues to make Apple a highly competitive firm in the computer hardware and artificial intelligence industry where it operates. Besides, the attraction of new customers and the maintenance of customer loyalty has been realized.
Also, innovation enables companies to present new or improved products and services to the market before their competitors do so (Distanont & Khongmalai, 2018). As a result, innovation is the surest pipeline for helping a company increase its market share in the industry. Several services and manufacturing companies have been able to succeed and thrive in the industry because of innovation, which creates a competitive edge for them. A good example is IBM. As a leading innovative conglomerate, IBM operates in the hardware and software techs industry, which is overly competitive, and receives stiff competition from Xerox, Accenture, Oracle, and others. According to (Weerawardena & Mavondo, 2011), innovative firms invest heavily in internal research to develop advanced techs and assure quality performance for customers as well as price improvement. IBM works on the slogan that “customers come first,” and this is the primary driver for the company to improve service attributes, quality, and delivery. As a service-based firm, IBM seeks to ensure market sustainability and become the market leader in the industry where it operates (IBM Cloud Team, 2020). Recently, the company rolled out the business intelligence segment in the IT market as a market expansion strategy, and this gave the company a competitive power against its competitors both in the U.S. and globally. During browser war, for instance, IBM invested heavily in innovating internet-based services as the competitors found it difficult to cope with this issue. Also, IBM has invested high to innovate virtual computers which helps clients share resources and data, helping them save cost and time. Through this innovative strategy, IBM has become a leading tech firm by increasing its market share year after year (Timothy, 2020).
Innovation assists companies offer value to customers, improve processes, reduce costs, add features, and hence raise consumer satisfaction (Herrera, 2015). Today, every industry is being driven by innovation. Any company that ignores the value of innovation finds it challenging to find a place in this competitive market environment. According to (Dustin, et al., 2014), a strategy lacking the element of innovation is “dead on arrival.” Consumer satisfaction goes hand in hand with product and services value, affordability, durability, and quality. Innovative companies like Walmart, endeavor to offer products at the convenience of the consumer. One of Walmart’s innovative strategy is a click-and-collect service. In this innovative strategy, consumers can place their orders online and pick their orders in Walmart’s groceries in person at their convenience. Other innovative efforts by Walmart are in its diversification of product categories, for example, voice shopping and e-commerce, in which consumers easily make their orders at cost-friendly prices. According to (Laura, 2018), innovative strategies by companies help transform consumer experience while shopping from their stores. However, innovation requires that a company spare no expense when it comes to modernizing. In Walmart, for example, stores have significant upgrades. Also, the company is creating environmental enhancements to respond to consumer needs in a digitally-driven lifestyle and approach. Besides, Walmart’s innovation strategy has helped the company increase efficiency, whose impact is felt through consumer satisfaction. High sales mean high profitability, and high profitability means high rank in terms of revenue. Competitors of Walmart, for example, Target, Best Pay, Home Depot, and Lowe’s, are finding it difficult to position themselves firmly in the U.S. retail market. Globally, competitors like Alibaba, Woolworths, and Carrefour continue to trail back as Walmart leads in the world market.
In exploring how innovation drives competitive advantage for a company, it is essential to understand the critical drives for innovation for manufacturing and service companies. First, innovation strategy is driven by consumer needs (Herrera, 2015). In Apple, for example, its crucial innovation driver is to meet the wants, needs, demands, and preferences of the target market. In the manufacture of its products, Apple not only includes new technology into its products but also ensures that the new design innovated to meet the users’ needs. This implies that, for a company to acquire a competitive advantage, its innovative strategy must focus on the user needs. Apple has successfully introduced high tech in the design and manufacture of its products. For example, Apple’s iPod presents itself as a music player helping a user to organize and transfer music from one file to another in the simplest way possible. Second, innovation strategy is driven by the competitive force or pressure in the business environment and industry (Marshaley, 2012). This is what continues to make Apple’s iPhone more attractive to users than the products offered to them by its competitors. As it operates in a stiff competitive business environment, this drives Apple to develop unique and better outcomes continuously. Besides, there are high consumer expectations in the market; and this motivates Apple to create or come up with the next big thing to maintain consumer loyalty while attracting more customers all over the world. Thus, relying on the drivers for innovation is another pipeline for acquiring a competitive advantage over the other market rivals (Anwar, 2018). Always, companies want to increase their market share, and thus consumer needs must be met first to achieve this strategic goal.
In an innovation strategy, the economic power of a company determines the success or failure of its competitive approaches and strategies. According to (Bibhav, 2011), the factor economy pressures businesses to invest more in innovation. The performance of people in any innovative firm depends on the availability of other resources, especially capital. Without capital, a company can’t invest in modern technology. For example, the fastest growing manufacturing and services company, IBM, relies heavily on its economic power to innovate and create new services as needed by the market. Other top-ranked innovative and competitive companies by Forbes, especially in Singapore, thrive due to their strong financial power and muscles. To achieve the competitive advantage of their rivals as desired, these service-based and manufacturing companies rely on the consumers’ capabilities to purchase or order their products and services as projected in their business plan (Goksoy, et al., 2013). Whenever a company has the financial ability to fund innovative strategies, and the same company enjoys a commendable and reliable market base in the industry, this helps attract a competitive advantage over their other rivals. In the case of IBM, for example, the company already has a diverse and reliable market for its artificial intelligence products and services.
Similarly, Apple has a ready market to purchase its expensive innovative products, making other competitors whose products are cheaper, like Huawei, Techno, and Nokia continue trailing it in the market. Thus, a robust economic power enables a company to produce, manufacture, and offer high quality, innovative, and expensive products and services that are readily acceptable to the target market (Gurlek & Tuna, 2018). More sales improve a company’s power to innovate, and hence obtaining a competitive control over new entrants and other competitors.
Besides, innovation is considered the surest approach for ensuring product improvement and differentiation, which is a core driver for competitive advantage (Weerawardena, 2014). In innovative companies, the innovative strategy is boosted by the company’s leader, organization culture, the structure of the organization, and the model of the innovation process. In Apple, for example, Steve Jobs is the first to enable its innovative ability and competitive success in the market. According to (Aziz, 2016), innovation differentiates between a leader and a follower. In this perspective, the fundamental drivers to acquiring a competitive advantage is always innovation. The culture of competitive organizations is unique and thrives through creativity. Creativity is the mother of innovation, and thus employees of an organization have to be exposed to a culture of creativity and innovation. Any innovative input capturing the diversity of ideas from different and passionate employees results in a competitive advantage to the company. Apple’s competitiveness and success, for example, depends on the company’s culture that sets an incubator for teamwork to bring ideas together, assemble them, and come up with new and improved products. Apple has spurred its employees to work in teams, and this continues to help the company innovate products that are different and unique from those manufactured and sold by other competitors (Bessant, 2017). Apple thrives when it comes to enabling tangible and intangible resources to the products and services through the process of innovation to develop capability. Thus, this is the primary reason why Apple’s market share continues to increase while at the same time, attracting the most competent and knowledgeable IT experts from all over the world.
In today’s business environment, innovation remains to be the art of acquiring a competitive advantage for every company. However, designing a reliable, convenient, and competitive innovation strategy is always difficult for any company. The most successful and competitive companies across different industries have a history of failure, but their focus has always helped them to reach the point in which they are now today. Innovation enables a company to produce products that match customer needs, and this results in consumer satisfaction, which contributes to consumer loyalty and hence acquiring a competitive advantage. Also, innovation assists companies to improve their manufacturing efficiency, quality of products and services, and delivery convenience and reliability. In the business environment, consumers are ever ready and willing to buy and stick to a company whose safety, satisfaction, and prices are affordable. Producing products that match consumer needs in terms of quality, price, and durability helps companies obtain a competitive edge over rivals. However, this cannot be achieved without using a distinguishable and unique innovative strategy. Thus, innovation is the future of our companies, given the competitiveness of the business environment today. It is the high time that every company invests more in innovation, and this will help them achieve a competitive advantage and sustainable position in the market.
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