Decision-Making Techniques
Strategic Innovation is basically a method of redesigning the strategy of business of any organization. This helps in the growth and reputation of the company (Zhang, Luo and Yang 2014). This also helps in creating a competitive environment for the organizations. This report is concerned with the companies Netflix and Tesla.
This report is concerned with the strategic Innovation in Netflix and Tesla. A brief introduction of both the companies have been provided in this report. The strategic innovation has also been provided in the report. The different type of strategic innovations and comparison about them is also provided in the report.
Before acquiring further knowledge about the strategic innovation in the organizations it is important to have some insights on both the company. Firstly, the Netflix Company is an entertainment company based in America. It was founded in the year 1997 by Reed Hastings and Marc Randolph. The company started with delivering streaming media and video on demand services and by the year 2013 the company started distributions and television productions.
Secondly, the Tesla Inc. is an electric automotive company that specializes in solar panels and storage manufacturing as well. It was founded in the year 2003 and was formerly known as the Tesla Motors. The company was named after the scientist Nikola Tesla. The main products of the company were electric cars, lithium-ion battery energy storage, and residential photovoltaic panels. Elon Musk was the CEO of the company and thrived for the strategic innovation within the company.
On the context of this discussion Netflix and Telsa have been considered however, the companies do not have much in common. On the context of Strategic Innovations it is to be said that both the companies make use of the same decision making techniques (Oshri, Kotalrsky and Gerbasyi 2015). Tesla CEO Elon Musk and Netflix CEO Reed Hastings have both used the first principle thinking. This was the term that is around 2000 years old and it is being said that Greek philosopher Aristotle has been noted quoting, “things better known and clearer to us”. This can be also called as Aristotle’s First Principles. According to the principle it has been thought of that starting from scratch in looking for the root of the problem can result in procurement of a better solution for the problem. This depends on reasoning of the analogy which means copying the performance of the other people and using variations for the solution (Macgrath 2015). In addition to this, when some type of innovation is required by the first principle application would provide an excellent ground. The Netflix Company has been one of the prime example as they have evolved themselves from a DVD-rental mailing service in the late 1990s into a popular streaming services which can be ranked among the best in the world.
Strategic Innovations
First Principle thinking is basically an idea that every process that is being done is ultimately unpinned by the beliefs of the foundation. It encourages the company to think about the innovations and the best possible outcomes for the company instead of using the age old methods of the company (Hammrfjord and Roxenhall 2017). The Netflix Company also faced difficulty due to the fact that the people at the higher end of the company were not ready to innovate and the fell back for the age old conventional methods adopted by the company at first. But as time went by the people within the company approached the things with a different view and this helped the company in the process of innovation to a great deal. The CEO of the company at that time approached things with a different perspective altogether (Muradli and Volkova 2015). The CEO had an idea that the introduction of the broadband network across the US would make quite a huge obstruction for the DVD rental business of the company and hence, he approached and hired some new members for the company that would help the company in encouraging critical-thinking style that would replace the ideas that lacked imagination (Sriboonlue, Usssahawantchakit and Raksong 2016). The process was started by asking the people to formulate new ideas without providing them with any actual guidelines. It was found inevitable that live streaming would absolutely destroy the DVD-lending business.
Furthermore the Tesla Inc. company also advanced similarly under their leader Elon Musk, the CEO of the company. Elon Musk has been quoted saying, “You can’t say: ‘Nobody wants a car because horses are great and we’re used to them. They can eat grass [and] there’s lots of grass all over the place and there’s no gasoline people can buy, so people are never going to get cars.’ People did say that, you know,” Like Hastings Musk too encouraged the thinking that involved First Thinking this lead to the innovation within the company (Lilly and Juma 2014). The CEO believed that the absolute truth about the current situation in the company would be obtained by following the principle. A mere example is Musk asked his employees not to think about ‘how to increase the efficiency of the $600 per kilowatt-hour battery and rather question the build of the battery and try to innovate them. The method of first thinking has actually revolutionized the industry (Loo 2015). The employees were encouraged to think of ways to improve the materials that were being used for the development of the batteries and also think of methods that can be implemented in the batteries and also the cost of the batteries were to be reduced. In addition to all this, musk also asked the employees and the staffs to think of the shapes of the batteries and provide insights about how to develop them (Iplik, Topsakal and Dogan, 2014). Hence, these are the two prime examples of companies following the first principle thinking in order to achieve strategic innovation.
Blue Ocean Strategy
There are various strategy that can be adopted for the strategic innovation fort the organization. Among them the Blue Ocean Strategy is one of the very important strategy (Markose 2016). It is basically a marketing theory that was published by INSEAD Blue Ocean Strategy Institute by W. Chan Kim and Renée Mauborgne. In addition to this, the book was published in the year 2005 and the strategy was formulated around the same time. The strategy is basically based on movies that were based on strategy formulation. The strategy is complied with the analytical frameworks and tools that help the ability of the organization create and capture systematically (Rathaermal 2015). The general concept for the strategy is that of creating a company that released into a free and uncontested market. This would help the company in a steady growth as the market is uncontested and company does not have worry about the possible competitors. Hence, the company is relieved from compromising with the cost of the selling the product. In addition to this, strategies provides a systematic approach for making the competition irrelevant and provides outlines for the principles for the company to achieve success. Most of the firms in today’s world compete for gaining the market share and as a result the product is sold at a lower prices and profit for the company under threat. Hence the development of this strategy came into limelight.
The Open Innovation Strategy is a strategy that provides idea and the options form outside the organization so that better innovation strategy can be produced (Ergunova et al. 2017). It is already assumed that the firm should be able exploit both the type of ideas for gaining advancement in the technologies, the technique also treats the projects as open systems and suggests that the organization should look for ways that would be providing direction for connecting to the core procedures of the company (De Masis, Di Minin and Frattini 2015). The general idea is collaborate with the people so that a new pool of ideas can be formed and also the business network can be expanded. It is also used for the promotion of newer ideas into the business systems. Hence, there is a notion to this strategy that the company who are ready to embrace any type of ideas from both the internal and the external sources should be looking to implement the open innovation strategy in their system (Frow et al. 2015).
Open Innovation Strategy
Both the Blue Ocean System and the Open Innovation system very different and the organization that are trying to embrace the strategy for the development of the system should have different type of approaches (Wali, Omar and Sadq 2016). The Netflix Company is looking to adopt a new business policy by shifting to the business form the DVD rental to providing streaming content for the customers (cui et al. 2015). They later on moved on to producing content. In this case the content provided to the customer was totally new and the business method was also new altogether and the hence, the company used the Open Innovation strategy as they gained knowledge that there were external developments in the country that would be affecting them and hence the external factors that affected the company was assessed from earlier and the company acted on it formulated newer policies so that it would enhance the productivity and the business of the company (Simsek et al. 2015). The main idea in open innovation is to collaborate and formulate new ideas. Hence the company took heed of the external factors and the formulated newer ideas from the internal sources. As a result this provides a great pool of ideas for the company and would help in the acceleration of the innovation procedure. The new combination of the knowledge and the newly formulated ideas are always expected by the company and this make the employees proactive to the idea as much as possible (Cortimiglia, Ghezzi and Frank 2016). Hence, the wider perspective of the innovation is obtained by the company.
However, there are challenges that are involved with the strategy obtained by the company. Hence, various other companies avoid the open innovation strategy as well. By opening up the organization might be subjected to external challenges (Grover 2016). And hence, the companies that are not fully suitable to these kind of challenges prefer the Blue Ocean System. The Telsa Company was involved in the development that had increased the effectiveness of the batteries provided by them and reduce the cost of the production of the batteries for the company and hence the selling rate to the customers were also reduced to great extent (Franca et al. 2017). This resulted in the growth of the business of the company to great extent. Hence the proper analysis of the procedures of the company were done and the end product was finalized by the Tesla Company.
Challenges of Open Innovation
Conclusion
For conclusion it can be said that the innovation strategy is very important concept in the field of business Innovation is very important for the growth of the company to achieve success in the field of their business. This why the companies needs to formulate strategies for the strategic innovation in the organization. This is a necessity in the businesses and there are various companies that have adopted the strategies of the development of the business of the companies. It is very important for the organization to adopt a strategy that supports their business and is formulated according to the need of the business. For the discussions the Tesla and the Netflix Company have been selected in this report. After the introduction of both the companies, the report has been used to provide the strategic innovation. The different type of strategic innovations and comparison about them is also mentioned in the report. The mentioned methods for the strategic innovations for the development of the companies are the Blue Ocean System and the Open Innovation system. In addition to this both the processes and advantages and disadvantages with respect to the companies have been provided in the report. It is being mentioned that Netflix Company made use of both the internal and the external sources and hence they required the open innovation strategy, whereas the Tesla Company had to analyze their system and form a new system and hence, the company used the Blue Ocean System. However, it should be said that the Tesla and the Netflix Company are two different type of companies entirely and hence, the methods used by them should never be compared. However the both the companies followed the first principle technique and both the companies gained immense success by following their respective method.
References
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