INNOVATION STRATEGY
Executive summary
Design thinking is an innovative trend that helps an organization to achieve a specific solution to a problem and to ensure business success. Customers’ needs and specific solutions are reflected in the business with the emergence of potential solutions that reflect a sense-making activity with deeper insights. Effective ways to address business exercise tends to reflect important data and discover solutions that have commitment and confidence in business success.
The report consists of the design thinking process to be implemented by IKEA furniture. IKEA is a furniture outlet that manufactures, designs and sells furniture worldwide. The major concept of design thinking approach reflects the innovation trend that the company should follow while achieving business outcomes. The report presents a deep analysis of the business model canvas and the nine concepts of BMC that impact the success of the business while implementing design thinking process.
Contents
Executive summary 2
Introduction 4
Organization 4
Organization and innovation trend 4
Concepts and relationships 5
Organizational environment 5
Innovation trend 5
Innovation strategy 5
Innovation capabilities 6
Innovation value creation and capture 6
Creation of innovation strategy ensures strategic alignment 6
Impact of innovation trend on the business (BMC) 7
IKEA Business model canvas 7
Key partners 7
Key activities 7
Key resources 7
Channels 7
Value proposition 7
Customer relationships 8
Customer segment 8
Cost structure 8
Revenue streams 8
Recommendations 8
Organize innovation activities 8
Innovation capabilities 8
Innovation initiatives 9
Value creation from innovation 9
Strategic alignment to address innovation trend 9
Conclusion 9
References 10
Appendix 11
Business model canvas IKEA 11
Introduction
To be successful, every organization plans for innovation strategy that works in an organization as it delivers lower risks, superior solutions and costs of change. The innovation strategy adopted by the business would impact a positive change in the business while considering useful tactics of the business and achieving the outcomes which lead to new trade-offs and obstacles at each time. The challenges of innovation have a frequent change in conventional ways in order to surprise business trends. The manufacturing firms tend to work on TQM Total Quality Management in terms of understanding business needs and customer needs. Design thinking is an innovative trend that is selected in IKEA. IKEA is a furniture outlet that tends to manufacture furniture as per new designs and trends.
The report consists of the selected innovation trend for an organization with several concepts that interlink with each other. IKEA is a furniture outlet, that uses design thinking approach for innovation strategy. Innovation trend, organization environment, organizational environment, and innovation capabilities are focused on the business. Design thinking is applied in IKEA with a sense of data that is organized and patterned in the business for innovation and design emergency.
Organization
IKEA is a multi-national group that designs furniture that is ready to assemble. The furniture includes home accessories and kitchen appliances. IKEA is the world’s largest furniture retailer that is listed in Forbes international. The company manufactures modernist designs and works with several types of appliances that are eco-friendly and are associated with simplicity. There are cost control measures taken by the business for continuous product development.
Organization and innovation trend
Design thinking is an innovation trend which is a strategic innovation technique to ensure business trend with creative concepts. the success rate and growth of the organization depend on the innovation trend that the organization uses in the business (Sprouts, 2017). Design-led companies ensure outperformed business growth and techniques (Battistella, Biotto & Alberto, 2012). IKEA’s design thinking works on five principles that follow form, sustainability, function, low price, and quality. This is the approach that is termed by IKEA with a democratic design system. The company pays keen interest in the innovation process that would ensure business growth.
Concepts and relationships
Organizational environment
The concept of organizational environment includes technological improvement and market needs. The change in the organizational environment is due to the innovation strategy that is used in the business which considers a value creation outcome. The change in the business model tends to focus on building a change in the environment (Liedtka & Ogilivie, 2011). The organizational environment works as a constant change which relatively ensures competencies and change in the organization’s environment. The innovation strategy tends to reflect several dynamic functionalities of the business with business models and theoretical scope. The organizational sphere is affected with change in innovation strategy. Thereby, the concept of organizational environment is linked with innovation strategy and trend.
Innovation trend
Innovation trend leads to market change and innovation management. The change in the innovation trend leads most of the companies to focus on an innovation strategy that needs to be applied in the business. In the case of IKEA, the innovation trend leads to an innovation strategy that is design thinking strategy which is applied in the organization. Thereby, there is a relationship between innovation trend and innovation strategy which ensures growth and development of the business (Brown & Wyatt, 2015). There are several important trends that ensure a diverse classification of important trends that an organization needs to focus while shaping innovation strategy in the business.
Innovation strategy
Clarifying the importance of innovation in the business, innovation is the key dimension for the strategic management of the firms (Dorst, 2011). There is long term growth while implementing an innovation strategy which is absolutely considered for business survival. There is a greater relevance for managers of IKEA to work on design thinking strategy that leads to business growth and helps in innovation value creation of the business. However, innovations strategy leads to the value creation of an organization. The business strategy applied ensures strategic practice to be implemented in the business with the firm’s design thinking approach.
Innovation capabilities
Product innovation leads to innovation performance which is the basic attention that an organization works on improving innovation capability. This is the most effective business factor that leads to innovation success and value creation of an organization. Increase in innovation capability leads to innovation success of the business which is a major step to improve the process, product, marketing or organizational success strategy (Carlgren, Ingo & Maria, 2016). A positive impact on financial performance is observed in the outcome when innovation capabilities are improved. IKEA improves product innovation and understands the need of customers while effectively improve innovation capabilities for value creation.
Innovation value creation and capture
Innovation strategy enhances innovation value creation. The business trends tend to enhance operational efficiency while improving value creation of the business (Eisenman, 2013). Growing attention for innovation strategy would help to differentiate the value of the products and services in the business. valuable ideas lead to valuable strategies, which directly leads to the value creation of the business. On the other hand, innovation capability leads to value creation that is valuable assets of the firm.
Creation of innovation strategy ensures strategic alignment
The innovation strategy that is selected by an organization leads to the strategic alignment of the business. The design thinking approach that is selected by IKEA leads to build strategic alignment in the business. Considering the importance of design thinking approach, the level of experience and innovation that is set in the business tends to reflect strategic alignment. Design thinking fits as an innovation strategy for IKEA as it is important to work on social technology and manage the trade-offs of the business while successfully considering business concepts with efficient measures taken by an organization. Design thinking implemented with linear and structured system leads to the strategic alignment of the business (McGrath, 2013). The process and innovation lead to business improvement that works with respective perspective of considering stakeholders importance, experiments, and design process for a product. IKEA has majorly contributed to design thinking while working on several themes and patterns in the business with pointing innovation. Thereby, design thinking builds alignment in the business with several criteria that are translated into business and moving innovation trends with team building approaches.
Impact of innovation trend on the business (BMC)
The impact of innovation trend tends such as design thinking approach leads to the success of the business. A proper analysis is conducted while applying Business Model Canvas a strategic tool to analyze the business outcomes in terms of opportunities, threat and weakness of the business (Osterwalder & Pigneur, 2010).
IKEA Business model canvas
Key partners
The key partners of IKEA are manufacturing firms, delivery companies, Wood makers and outfitting firms, The innovation trend analyzed impacts the business success of IKEA.
Key activities
The key activities of the business include designing the furniture, service, advertising and marketing and manufacturing of furniture. These are the key activities that ensure innovation in the design of the products that the company manufactures for the customers.
Key resources
For innovation trends, it is important that key resources are effectively used to ensure value creation in the business (Osterwalder & Pigneur, 2010). The key resources are infrastructure, furniture, and tools. Human resources have a sense of design and ideas that results in business success.
Channels
The channels of distribution of the products that the company manufactures include IKEA superstores, store websites, catalogues, and email subscriptions.
Value proposition
Affordable home furniture includes easy to assemble furniture and easy to transport. IKEA deals with dining options, childcare on site and family experience. With the help of design thinking approach, the company tends to work on effective products that satisfy a wide segment of customers.
Customer relationships
There are several special discounts, offers and low price coupons that build customer relationship. The new design thinking approach tends to reflect and assemble the products with special discounts.
Customer segment
There are several customer segments that include conscious customers, small businesses and college students.
Cost structure
The cost structure includes designing cost, technological cost, raw materials cost, advertising cost, transportation, etc.
Revenue streams
The income of the company is generally from furniture sales, service fees and accessories sales that include tools and equipment of the business.
Recommendations
Organize innovation activities
IKEA should organize the innovation activities while working on a design thinking approach with a step to step process. The five-step process should be applied that include emphasizing, define the problem, ideate, prototype, and test (Carsrud & Brännback, 2011). The innovation activities that IKEA should follow is to work on the step to step process while ensuring business results.
Innovation capabilities
Additional capabilities that an organization should develop include operational capability, management, and development capabilities that would ensure effective results of design thinking approach. Innovation capabilities are the means of success of the firm which ensures quick reactions to the business activities and success criteria. The product and process of the company tend to reflect business capabilities that ensure desirable technological upfront. There is a positive economic performance that ensures an extraordinary profit.
Innovation initiatives
The current innovation initiatives include the sustainability of the business while working on product differentiation. Further, applying the digital innovation and transformation as the major initiatives would work best with the design thinking approach (Karatas, 2014). Effective change in the environment and culture would enhance business growth while working on organization-wide innovation leads to a design sprint and business challenges with new tools and efforts.
Value creation from innovation
Implementing the design thinking approach would ensure value creation as the organization should effectively follow the steps of business activities that would ensure the strategic alignment of business (Colombo, Massimo & Grilli, 2010).
Strategic alignment to address innovation trend
Strategic alignment tends to work as building support for organization success. Strategic alignment ensures senior leadership team, organizational development and broad cross-section that should be implemented (Liedtka, 2018). Innovation process tends to build alignment which creates commitment and a strong foundation of the business. Internal and external alignment with co-creation process will focus on the channel of distribution of products for IKEA. Advertising would address as an innovation trend which works on the packaging and other representations.
Conclusion
The structure of design thinking is a major emphasize that works towards immersion and customer experience. The critical success of the design thinking process is examined in the report. IKEA implements the design thinking process and conducts a business model canvas to analyze the impact of design thinking on business performance and successful outcome. The design thinking process tends to reflect and address the challenges of the business with superior solutions and considering organizational growth with several business perspectives. There are varying perspectives that are provided in the report which include the learning aspects of problems and solutions for business growth. The major consideration is based on the emphasizes of design thinking and emotions of engagement. The five-step process of design thinking is implemented by IKEA for the success and growth of the company. The recommendation of innovation initiatives, innovation capabilities and activities of the business ensures the success of the business for future perspectives.
References
Battistella, C, Biotto, G & De T, Alberto F. (2012). From design-driven innovation to meaning strategy. Management Decision, 50 (4), 718-743.
Brown, T, and Wyatt, J., (2015). Design Thinking for social innovation. Annual Review of Policy Design 3 (1), 1-10.
Carlgren, L, Ingo R & Maria E., (2016) “Framing Design Thinking : The Concept in Idea and Enactment.” Creativity and Innovation Management 25(1), 38-57.
Carsrud, A., & Brännback, M. (2011). Entrepreneurial motivations: what do we still need to know?. Journal of Small Business Management, 49 (1), 9-26.
Colombo, Massimo G., and Grilli, Luca (2010). On growth drivers of high-tech start-ups: Exploring the role of founders’ human capital and venture capital. Journal of Business Venturing 25 (6), 610-626.
Dorst, K., (2011). The core of ‘Design Thinking ‘ and its application. Design studies 32 (6), 521-532.
Eisenman, M., (2013). Understanding aesthetic innovation in the context of technological evolution. Academy of Management Review 38 (3), 332-351.
Karatas O, M., (2014). Understanding entrepreneurship: Challenging dominant perspectives and theorizing entrepreneurship through new post positivist epistemologies. Journal of Small Business Management 52 (4), 589-593.
Liedtka, L., (2018). Why design thinking works: It addresses the biases and behaviors that hamper innovation. Harvard Business Review, 96(5), 72-79.
Liedtka, J., & Ogilivie T., (2011). Designing for growth: a design thinking toolkit for managers. New York: Colombia Business School Publishing.
McGrath, R G., (2013). The end of competitive advantage: How to keep your strategy moving as fast as your business. Harvard Business Review Press.
Osterwalder, A., & Pigneur, Y., (2010). Business Model generation, Hoboken, New Jersey: Wiley.
Osterwalder, Alexander and Pigneur, Yves. (2010). Business model generation: A handbook for visionaries, game changers, and challengers. Hoboken.
Sprouts, (2017). The Design Thinking Process. Retrieved from https://www.youtube.com/watch?v=_r0VX-aU_T8&feature=youtu.be
Appendix
Business model canvas IKEA