Question

Standing in the showroom of a local appliance store, you realise the problem almost immediately. Virtually all of the washers, dryers, refrigerators, freezers and dishwashers are white. It is tough to tell one company’s product from another, and the biggest signs in the place announce the low prices on this versus that model. This is the exact reason that Vortex’s senior management team developed the ‘brand-focused value creation’ strategy: to create innovative, branded solutions that consumers will find appealing, that will generate brand loyalty, and, most important, that will command a premium price. During its 65-year history, Vortex has become an expert in manufacturing excellence. Its machines are among the most reliable in the industry, and their products are in almost every household in Australia at one time or another. Periodically the products have been given a facelift or a small improvement in performance or function, but rarely did this constitute much more than an additional wash cycle.
How do you make a company like Vortex innovative? How would you measure success? How can you teach people to be creative, especially when your core capability is manufacturing so-called ‘white goods’? When the idea of innovation as a key to success was first suggested at the company it was met with considerable resistance. Corporate director Jean Simpson said, ‘Over the years people have used many nice adjectives to describe Vortex. But ‘innovative’ has rarely been among them’. Worse yet, Mark Dearson, your VP of group manufacturing, proclaimed, ‘its cost reduction that has made Vortex great’.
Nonetheless, you can see that without significant innovation, Vortex will be mired in a never-ending price-cutting battle. Generic-looking products are compared on price and your cost-cutting measures will only take the company so far. The first effort at innovation within the company produced some new product lines, but expenses far exceeded the positive results of those innovations. During that effort, the former CEO pushed all 23 000 employees to unleash their creativity for the future of the company. Most employees saw the effort as a waste of time and employee morale dipped severely, making the next effort all the more difficult for you.
There is no real financial crisis at Vortex. The company is performing well for now, but future success will be limited if it can’t differentiate its products from the pack. How can you develop a culture of innovation at Vortex? If the company produces a commodity item such as a standard, white clothes washer, how can that be changed so that it produces a premium-priced product? With manufacturing as Vortex’s core strength, how will you develop a customer focus?
As you stand in the appliance store, you realise that these questions need to be addressed and need to be addressed quickly. You can’t afford to have another failure in this effort at the company. Beyond managing for innovation, how might you implant innovation as a standard of your business? What role do the leaders of the organisation play in this effort? If you were in charge at Vortex, what would you do?

1. Identify and justify where Vortex’s current products sit on the “S-curve pattern of innovation”? Provide three distinct justifications for you answer.
[30-50 Words]

2. Explain why it is important that Vortex develop new organisational systems around innovation. Provide at least three reasons.
[150-200 Words]

3. Identify and rank three obstacles (from more important to less important) that Vortex faces in its push to innovate. Justify the order of each of your choices
[80-100 Words]

4   Explain and justify how you might overcome the obstacles you have identified in 3. Address each of the three obstacles distinctly.
[100-150 Words]

Answer 1

1) Vortex presently has the current products in the maturity stage sitting on the plateau stage set to enter into the decline stage unless Vortex adopts an innovative approach to stem the discontinuity by implementing design thinking with the introduction of new and improved product to enter into the next cycle of growth propelled by innovative technology creating improved and unique products.

The company was an innovator of the product and has obtained profitability from the product within all stages of the product life cycle from innovation to maturity. The company has reached the plateau for the product and requires to implements innovation and design thinking to enter into the next phase of growth. The company is attaining all its competitive advantage from cost leadership and not from product differentiation and innovation which should be the major strengths for any manufacturing company for retaining a sustainable competitive advantage. For a manufacturers cost leadership is not a very successful strategy for attaining competitive advantage as it requires expenses cost controls introduction which could impact quality and also requires every entity within the supply chain to operate with minimal profits resulting in restricting the growth and expansion of the company.

2)  Adoption of an innovation promoting business model which helps to achieve sustainable competitive advantage within the global environment. Need for integrating innovative and accurate design into the processes so as to create unique products perfectly suited to consumer requirements with adequate flexibility to implement a response to change in trends, consumer behavior, and needs. Design innovation is not only a differentiator which provides an extensive competitive advantage but greatly improves the viability of the process for the business and the feasibility for it being technologically successful. The utilization of innovative design is important for achieving the business goals of customer satisfaction and profitability along with maximizing product life. Importance of creating the perfect design has been realized by organizations as errors can be extremely expensive because of them being identified at highly advanced stages of development of the product resulting in extensive modifications in redesigning which is cost intensive.

3) Lack of innovation: Results in an inability to introduce an improvement within the product to effectively enter into the second growth phase needed to optimally exploit the innovation window to implement substantial improvement within the product to create differentiation from the earlier product. Innovation results in greater ability to compete, meet changing consumer needs, have greater perceived value and be designed to successfully address the need which is presently unfulfilled and exploit the gap identified.

Lack of creative culture: it is the environment within the organization namely the culture and structure which can promote or restrict creativity and innovation. A creative organization provides the required environment and support point reading individual to express the uniqueness and celebrate being different and thinking different rather than following a set of rows within an extremely disciplined environment. Growth and strength mindsets are encouraged for taking initiative and understanding that failures are important to learning and growth.

Lack of motivational leadership guiding the organization towards innovation with the ability to adopt change and make a successful transition to an innovative and creative company. there exist and doing and doing that within the company as it understands that it requires to enter into the next phase of growth by adopting innovation but is unable to take action required to implement the change and make the transformation.

4) The adoption of an innovation promoting business model which helps to achieve sustainable competitive advantage within the global environment requires optimization of processes by the adoption of unique high context creative culture centered around employees, customers, and product. the process of innovation needs to be an integral part of the organizational structure with clearly defined processes and procedures implementation efficient innovation within the business processes. Which require the clear establishment of performance benchmark with the organizational structure providing the required supposed to clear definition of responsibility and the goals to be achieved through the innovation process within the product over the short-term and as a continuous process of improvement over the long-term while maintaining alignment with the mission and vision of the organization.

A Creative culture requires a business model with minimization of disciplinary processes which have strict guidelines and deadlines as they are counterproductive to innovation. The rights of individuals need to be protected with adequate trust and loyalty existing to facilitate adequate delegation of authority with accountability with all employees understanding and appreciating the trust and authority by exhibiting adequate self-discipline with the responsibility to provide their best performance as they feel a part of the organization.

The leadership has an important role in formulating and effective strategy for fulfilling the needs of the human resource to drive and guide them towards innovation and creativity. Change needs to be implemented from the top down with the organization being led into change by a strong visionary leader through adequate guidance and addressing of employees fears through inclusion to overcome resistance.