Challenges faced by Atlassian Corporation
This report is a continuation previous assignment where the different issues faced by Atlassian was identified while dealing with entrepreneurship and innovation. Atlassian, is one of the software companies in Australia and this will focus on the issues faced by the organization and develop relevant solutions by innovation and entrepreneurship models and theories. The report will also provide relevant recommendation based on the solutions and approaches to effective strategies. These strategies will facilitate the organization to develop sustainable competitive advantage in the market.
Atlassian corporation Plc deals with the development of enterprise software development. The company mainly caters to content managers, project managers and software developers. Jira is one of its well-known products which has been developed for issue tracking purposes (Atlassian 2019). Innovation is one of the most challenging aspect of any organization as with advancement of technology and modernization, there is rapid change in the needs and wants of the consumers. The companies have to continuously innovative to make sure that they are addressing the current trend in the market.
Atlassian has been facing challenges in corporate innovation as they have been growing and expanding their operational business. The company has been facing challenges managing its growth effectively. The recent growth of the organization has been very slow as it has been difficult to balance between the corporate strategy of the organization and adapting to the change in the external environment through innovation. The company has been making acquisitions which is another challenge as it is essential to develop a business strategy to align the acquired start-ups with the business strategy of Atlassian. Moreover, there is lack of clarity in the key performance indicators developed by the organization. The organization has been facing issues in managing their short-term performance after they had gone through with their initial public offering in the year of 2015. There has been immense pressure on the managers as the investors are more interested in quarterly reports. Moreover, the key performance indicators are only based on revenue and profit margin. This means that the stakeholders are only considering revenue and profit margin as the performance indicator which could cause problems for the organizations. The short-term orientation of the company would cause issues in long term growth of the organization. The other competitors in the market are focusing on making huge investments so that they can maintain their sustainability through long term innovation. This would definitely restrict the innovation capacity of the organization and there will be difficulty in making progress, in terms of technological innovations.
Approaches to promote long-term sustainability and innovation
Creativity and innovation are one of the major factors driving success of different organizations. The issues and challenges faced by the organization has already been discussed in the above point. This part of the report discusses about the approaches and solutions that the organization should implement to make the organization more oriented towards long-term sustainability and innovation.
The first point that needs to be considered is the culture of the organization. It is essential to develop an organizational culture that promotes innovation. The culture of any organization varies depending upon their values but it is critical to promote people and employees that are innovation enablers within the organization (Yeh and Walter 2017). There are different types of innovation, an organization can pursue and disruptive innovation is one of the most effective way of competing with industry giants. Disruptive innovative facilitates in developing new value network for the organization in an existing market. Disruptive innovation provides lower performance in terms of monetary value, profit and revenue generation. This facilitates in developing a blue ocean of organization using disruptive technology as they are the only one catering to the needs of the new sets of consumers.
This could be very easily understood through examples such as transistor radio which was initially used only by travellers. The product took time to grow as the quality of sound were not up to the mark when compared to the Analog radios. However, with improvement in the technology, it took over the market, making the analog radios obsolete. On the contrary, sustaining innovation is another option for the company where they need to continuously improve their existing products (Coccia 2018). However, in terms of software technology companies it is essential to use disruptive innovation as the technology is progressing at a rapid rate and majority of the companies are looking for new features and technologies that would help them gain competitive advantage in the market. Innovation can either be incremental and radical, and either of them can provide competitive advantage.
Radical innovations are those technological innovations that completely disrupts the market as they are completely new. It affects the overall business model of organizations and creates a new model (Coccia 2017). However, radical innovations are few in numbers and it is difficult to develop technology that is complete new and requires years of investment. Salesforce is one fine example of radical invention where they developed the cloud model for software delivery. This was the creation of Software as a service platform which has transformed the CRM technology. However, this consist of high risk as in majority of the occasions, companies fail to innovative based on the ideas (Sheng and Chien 2016). On the other incremental innovation, improves the technology gradually which can be considered as agile methodology where continuous improvements are being made. These types of innovations are cost effective and offers less amount of risk for the companies.
Innovation Strategies for Atlassian Corporation
In case of Atlassian, both these type of innovation strategies could be effective. However, the management of the board needs to convince the internal stakeholders such as the investors to judge on the long-term performance of the organization. Atlassian is a huge organization and they can afford to use both these types of innovation pattern to develop their software technologies (Forés and Camisón 2016). The diagram shows the different types of innovation matrix which can facilitate in understanding the technologies needed by the organizations to make improvement to innovation model with the organization. The stakeholders are concerned about the short-term growth, profitability and revenue generation. Therefore, radical sustaining is one of the suitable options that Atlassian can use to constantly improve on their existing products that would provide short term increase in sales and at the same time would facilitate in making the existing products disruptive with continuous improvements (Myllylä 2018).
Figure 1: Disruptive vs incremental
(Source: Myllylä 2018 )
Blue ocean strategy has been often linked with innovation and it deals with development of new market segment that is uncontested. However, unlike disruptive innovation, it does not need to displace the existing technologies. Blue ocean strategy does not require displacement as it focuses on creating their own market space (Dvorak and Razova 2018). Therefore, instead of looking for solutions that are cheaper and better than the existing software in the market, it is essential to redefine the problem which creates a market for new products by keeping the existing products. In case of Atlassian, it would be more beneficial to use the blue ocean strategy to develop their own market segment using their level of expertise in software development (Agnihotri 2016). This can be better illustrated through an example, Apple introduced iTunes that enabled the consumers to download music legally at reasonable prices. This helped them in providing a different solution to the already existing problem of accessing music at cheaper prices. Similarly, it can be used as a way of providing new solutions to existing problems in a different way which could develop an uncontested market and cause the market to disrupt.
The development of a new business model is one of the major issues of the business entity. Atlassian has been acquiring various scale organizations and it is essential to align those subsidiaries to that of the main organization. The business model canvas is one of the most effective ways of pivoting the existing business models and testing the new models. This also helps in identifying the potential gaps in the market and within the organization to develop a business solution (Christensen, Bartman and Van Bever 2016). Initially, the feasibility of the business model needs to be evaluated to check whether it is appropriate in achieving the effective solution or not. This will facilitate in developing new revenue streams by developing new ways of adding value to the products and the organization as a whole. Atlassian needs to evaluate its existing business model to identify the way value is created thorough existing product line and the target consumers (Foss and Saebi 2017). Then, the current model has to be challenged and assumptions have to be reconsidered to highlight a different dimension that has not been considered in the research. This will facilitate in developing a new business model which will add a different value to the products.
Blue Ocean Strategy
The above models, approaches and concepts have clearly depicted the way organizations can be made more innovative. The importance and relevance of innovation in modern has been understood in the modern organizations as all these theories are aiming to create new value for the organization through different methods. These methods are essential for modern business entities to develop sustainable competitive advantage.
The evaluation of the different model, approaches and concepts have highlighted diverse ways of solving the prevalent issues in Atlassian. The report has developed following recommendations to deal with the current issues within the company:
- Organization can use disruptive innovation to displace the existing products and software with something radical. Disruptive innovative will facilitate in developing a long-term orientation within the organization. The company should use incremental disruption where they can gain competitive advantage by gradually developing superior products.
- The current KPI of the organization is focused on short term orientation where only profit and revenue are being considered. However, innovation capability, progress and market orientation also need to be measured continuously to check the increase in efficiency of the overall business model.
- The organization should also focus on developing a new business model by using business model canvas. This will facilitate in developing an innovative model that would be significant with the current demand in the market. The company should use continuous integration of process innovation to make sure that there is increase in efficiency of the overall organization. This would increase the growth rate and market share of the organization and will significantly deal with the slow growth
- Developing a blue ocean is another strategy which would help in improving the growth of the organization. Blue ocean is not easy to develop but the organization needs to use their skilled workforce to address problems in different ways at diverse levels. Blue ocean will also reduce the competition in the market as new target segment will be developed. However, executing and developing Blue ocean and disruptive innovation is quite tough and time consuming.
- In order to convince the share holders about the capability of the organization, radical sustainability can be used where significant improvement in the existing products would move the organization towards innovation.
Conclusion
Thus, it can be concluded from the report that the organization has been facing issues with their growth and key performance indicators. In terms of innovation, the stakeholders have been focused on improving short term revenue and profit which causes issues for long term sustainability of the organization. The report had discussed the different approaches, concepts and models of innovation which can be used by the organization to improve the innovation in the business model. The evaluation of the different concepts shows that radical sustaining is one of the most suitable ways of improving the growth rate and developing sustainable competitive advantage for the organization. The report also recommended the use of business canvas model to develop innovative business model so that continuous improvement can be made. The organization should also need to develop other key performance indicators that would measure the innovative level of the organization, market orientation and gap identification.
References
Agnihotri, A., 2016. Extending boundaries of blue ocean strategy. Journal of Strategic Marketing, 24(6), pp.519-528.
Atlassian, 2019. Atlassian | Software Development And Collaboration Tools. [online] Atlassian. Available at: <https://www.atlassian.com> [Accessed 8 February 2019].
Christensen, C.M., Bartman, T. and Van Bever, D., 2016. The hard truth about business model innovation. MIT Sloan Management Review, 58(1), p.31.
Coccia, M., 2017. Sources of technological innovation: Radical and incremental innovation problem-driven to support competitive advantage of firms. Technology Analysis & Strategic Management, 29(9), pp.1048-1061.
Coccia, M., 2018. Disruptive firms and industrial change.
Dvorak, J. and Razova, I., 2018. Empirical Validation of Blue Ocean Strategy Sustainability in an International Environment. Foundations of Management, 10(1), pp.143-162.
Forés, B. and Camisón, C., 2016. Does incremental and radical innovation performance depend on different types of knowledge accumulation capabilities and organizational size?. Journal of Business Research, 69(2), pp.831-848.
Foss, N.J. and Saebi, T., 2017. Fifteen years of research on business model innovation: How far have we come, and where should we go?. Journal of Management, 43(1), pp.200-227.
Myllylä, J., 2018. Key Innovation Management Models And Theories. [online] Viima.com. Available at: <https://www.viima.com/blog/innovation-management-models> [Accessed 8 February 2019].
Sheng, M.L. and Chien, I., 2016. Rethinking organizational learning orientation on radical and incremental innovation in high-tech firms. Journal of Business Research, 69(6), pp.2302-2308.
Yeh, S.T. and Walter, Z., 2017. Determinants of service innovation in academic libraries through the lens of disruptive innovation. College & Research Libraries, 77(6).
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