Free BMW: Strategic Innovation Report Sample
1. Introduction... 3
2. Methodology ..... 5
3. Discussion...... 5
4. Findings......... 8
References ..... 13
Success in present, global market conditions require much more agility and responsiveness to client needs. As organizational structures of global companies respond more swiftly to market conditions and client needs, conventional management practices become not only irrelevant but also constitute serious challenges to any strategic advantage a company could attain in a highly competitive market (Baden-Fuller, 2005). Further, a significant feature in organizational structure is emerging in company management which has redefined how internal and external components in a company's business ecosystem are at interplay. By approaching companies as open systems, better insights are gained by linking internal, organizational components and external, market factors (Nadler & Tushman, 1997). To unlock new markets or reinvent new market segment in old markets, moreover, companies adopt strategic innovation as an effective management resource. That is, by tapping into organizational potentials and exploiting market opportunities companies optimize resource usage and management. According to a conception of resource management, strategic innovation can be referred to as "purposeful orchestration of organizational knowledge development and application" (Pitt & Clarke, 2010).
Strategic innovation for established players can be attained in underdeveloped markets by reinventing existing resources which can be attained, in turn, by product acceptability, affordability, availability and awareness (Anderson & Markides, 2007). Companies differentiate in capacity for product and/or service reinvention by ability to reinvent business models and creating new customer value (Berghman et al. 2013). Conversely, a company's capacity for learning enables her to enact strategic innovation successfully (Gebauer, Worch & Truffer 2012). Consequently, organizational expansions should also, for a strategic innovation oriented company, be considered for different DNA of new subsidiaries (Govindarajan & Trimble, 2005). That is, in developing new organizational structures for new subsidiaries of older parent companies, new offshoot companies should establish an entrepreneurial culture of learning and experimentation. For parent, established companies, hence, strategic innovation is an organizational question par excellence in which companies reconceptualize her whole business model (Markides, 1998). Obstacles, however, to strategic innovations include inertia of success, uncertainty about what to change into, uncertainty surrounding new strategic positions and challenges of implementation – all of which, when overcome, will lead to leaps in innovation and experimentation.
Probably, one notable component around which strategic innovation should be considered – as opposed to conventional focus on design features of strategic innovation – is people (Braganza & Ward, 2001). Instead of laying emphasis on design features of strategic innovation models, people – believed to be a major reason for implementation failures – should be considered for as central to strategic innovation.
The case for strategic innovation is, hence, central to current management practices for big established players as well as for smaller companies. For current purposes, accordingly, BMW strategic innovation is explored as an open organizational system for ability to reconceptualize business models and create new customer value, capacity for knowledge development and application orchestration in underdeveloped markets, entrepreneurial culture of learning and experimentation of affiliates as well as BMW staff.
A literature -based, broad literature survey is performed for BMW strategies across different geographical areas and business activities. BMW company and market performance data are obtained from BMW corporate group of portals as well as public, news sources. A framework of reference is adopted as an overarching concept for BMW's strategic initiatives.
BMW is a German holding company whose activities fall into automobiles, motorcycles and financial services areas (Financial Times, 2015). She owns BMW, MINI and Rolls-Royce brands each of which includes a number of models (BMW, n.d.a). Her networks of production, sales and services are spread in more than 150 countries (BMW, n.d.b). Given her pioneering role in automobile industry, geographical spread, sterling brand equity, BMW is an established, global company par excellence. As such, BMW established status is both an asset and a liability from s strategic innovation perspective. Given her conventional competitive advantages, BMW enjoys major assets compared to competitor automobile manufacturers including, but are not limited to, her know-how automobile part product design and development, brand value as well as extensive sales and services world networks. BMW has – like all established big players – a liability all four obstacles of strategic innovation: inertia of success, uncertainty about what to change into, uncertainty surrounding new strategic positions and challenges of implementation. Given BMW's current strategic statement – "Our activities will remain firmly focused on the premium segments of the international automobile markets. Our mission statement up to the year 2020 is clearly defined: the BMW Group is the world’s leading provider of premium products and premium services for individual mobility" (BMW, n.d.c) – BMW is poised to serve a specific segment of automobile consumers, fundamentally a premium segment. However, BMW has shown her dynamism and openness to external market conditions not by offering specifically new products but by adopting strategic moves which has helped her redefine her market positioning in a highly crowded automobile industry The following is a discussion of BMW's moves which she adopted as a strategic innovation pioneer.
BMW: Bypassing Obstacles To Strategic Innovation
Overcoming her inertia of success, BMW introduced her concept BMWi in 2013 (Confino, 2013). By introducing a product new to her line of world renowned brands, BMW manages to achieve, partly, strategic innovation and overcomes a conventional anxiety established companies experience when sailing in uncharted waters. This is, moreover, a move which reflects BMW's capacity for absorption and responsiveness to external market changes.
In responding to uncertainty about what to change into, BMW has devised a very innovative tactic by which is better able to reach out to new customers demanding specific products. Through her Individual Collection (BMW, n.d.d), BMW reinvents her customer segments and lures in new segments by personalizing driving experience. This is, again, a successful implementation of strategic innovation. For nothing in fact – in present market conditions – can be more effective than reaching out to customers directly. By adopting a co-creation, co-design approach, BMW is drawing her new market boundaries in unchartered waters. BMW refines her personalized approach strategy even further in specific markets. For BMW USA, for example, BMW enables her customers to create a personalized model under a "Build Your Own" section (BMW, n.d.e). Thus, BMW converts car consumption experience completely. Like online fitting functionalities of online clothing companies, BMW offers customers a unique experience of building personalized models.
Again, by introducing her BMWi, BMW is overcoming uncertainty surrounding her new strategic positions. Indeed, launching a new product is always a precarious enterprise. True, marketing
Figure 1 (EV Obsession, 2015)
research and necessary projections are made. However, no one company – however big or established – can predict a new product's full success pre-launch. Similarly, introducing BMWi is only a bet on a new market segment by introducing a new product. This comes, moreover, in line with a claim (Markides, 1998) of how capitalist system market entities are part of a natural selection process by which winners and losers emerge. BMWi3 managed, for example, to achieve good results in U.S. market, outside Germany and her product focus. The above chart shows most important players in U.S. electric car market.
Further, if, as noted, people are responsible for strategic innovation implementation success or failure, workers at BMW share a corporate culture and a set of values which, predictably, makes BMW a strategic innovator. By adopting diversity as a fundamental corporate value (BMW, n.d.f), BMW sources her workforce pool and expertise for very diverse groups which further enhances corporate dynamism and innovation as is shown by a growing body of research establishing connections between cultural diversity and work performance and productivity. As well, BMW's beliefs include: customer orientation, first-class performance, responsibility, effectiveness, adaptability, dissent, respect, trust, fairness, employees, acting as role model, sustainability, society and independence (BMW, n.d.g). Of particular interest are customer orientation, adaptability and independence. Through focusing on customer orientation, BMW reflects leading current management practices of creation and design by gearing her products towards customers as opposed to older practices of product design and development. Through adaptability, BMW is again expressing her strategic innovation caliber. By showing resilience against challenges, internal and external, BMW manifests her dynamism and agility. Through independence, values of entrepreneurial spirit are manifest and maintained by means of innovative initiatives and/or projects launched by BMW. Indeed, as noted, BMW's workforce remains an incomparable, valuable asset.
Overall, BMW manages to manifest fundamental features of strategic innovation. By overcoming all four obstacles to strategic innovation, BMW shows her capacity as an open system for organizational learning, reconceptualization of business models as well as creation of new customer value. Indeed, by exploiting her extensive organizational knowledge and application, BMW manages to orchestrate her repertoire in underdeveloped markets or rediscover new exiting market segment. As well, BMW image as a company of entrepreneurial culture and spirit is emphasized by a number of strategic market moves, not least her project i, aimed at sustainability and environmental-friendly projects. Further, BMW workforce embraces a corporate culture which promotes diversity, customer care, adaptability and independence. Given her long history, extensive global reach and superior technical as well as strategic capabilities, BMW is a leading multinational enterprise whose strategic moves do not only inform her future steps but also act as a roadmap for different automobile player. Indeed, BMW's competitive positioning is close to a cult for which loyal customers do not only form a unique club – even if not formally via BMW's Club – to defend what is most essential about BMW brand. In fact, very few brands, similar to BMW enjoy her global status over years. If anything, BMW strategic innovation is not particularly new to her, albeit in different cloaks of strategic interventions. Still, BMW is a company – out of very few ones – whose enduring legacies continue to inform present innovations.
Strategic innovation is a significant management concept which helps close gaps in organizational makeup dynamics. By laying emphasis on strategic options – as opposed to technological innovations and breakthroughs – companies can gain market access or expand on market share, not by competing using game rules but by changing rules. Indeed, notable examples of market breakthroughs are achieved by adopting innovative strategies responsive to external market forces. Moreover, company strategic innovation is achieved by mustering company's resources and knowledge repertoire. As companies, established or start-up, pursue strategic innovation, different sets of problems emerge. For start-ups, strategic innovation is, mainly, a question of innovative strategic options. For established companies, however, strategic innovation is an organizational question par excellence. That is, established companies face dilemmas of organizational conflict as well as effective sourcing of corporate knowledge repertoire. An established company of long history and global reputation, BMW manages to implement strategic innovation in her pursuit of organizational integration and learning as well as new market segmentation acquisition or rediscover of older segments. In her response to strategic innovation's four obstacles, BMW shows her ability to overcome success inertia by launching new electrical car model, BMWi. By seeking customers via co-create and co-design models of product development, BMW manages to define what she might change to, i.e. redefining herself based on customer needs. Admittedly, by launching a new BMWi, BMW cannot predict whether her new product will achieve market success or not but BMW ventures into unchartered waters in response to what might be similar to a natural selection process in which winners and losers emerge. In her corporate culture, BMW assumes a set of beliefs and values which manifest her capacity for successful strategic innovation implementation. If anything, BMW will remain still one global, market leader in automobile manufacturing. Still, BMW will lead automobile industry both in technical pioneering as well as in strategic innovation. Notably, BMW stakeholders are wise enough in re-investments in research and development as well as market expansion– a dedication which many family businesses dropped for more short-range profits.
BMW is a long-established market leader. The recent turnaround in business activities and strategic initiatives has helped BMW redefine her business model in order to cater for new emerging segment of customers and customer needs. Based on BMW's overall corporate strategy, BMW's focus on premium market should be modified in order to cater for a much broader market. That is, given recent global trends of catering for customers of less economic clout, BMW should adopt strategic innovation initiatives which lure broader segments of customers but also maintain her core customer base. True, BMW's introduction of BMWi has yet to prove sustainable. However, given BMW's long history of technical expertise and technological innovation – which after all address needs of a conventional base of existing and potential customers – product innovation might be a liability rather than an asset for a different segment of less economically capable customers who seek cost and value. Thus, in her furthering of her strategic innovation BMW could co-create, co-design a game changer model not by investing in research and development for a completely new model but by redefining her customer relations. The present "Build Your Own" is a viable start for more broader market opportunities and customer segments.
Anderson, J., & Markides, C. (2007). Strategic Innovation at the Base of the Pyramid. MIT Sloan Management Review [Online] Available from: http://sloanreview.mit.edu/article/strategic-innovation-at-the-base-of-the-pyramid/ [Accessed: 2nd April, 2015]
Baden-Fuller, C. (2005). Strategic Innovation, Corporate Entrepreneurship and Matching Outside-in to Inside-out Approaches to Strategy Research. British Journal of Management [Online] 6(s1), p. S3–S16. Wiley Online Library. doi: 10.1111/j.1467-8551.1995.tb00134.x [Accessed: 2nd April, 2015]
Berghman, L., Matthyssens, P., Streukens, S., & Vandenbempt, K. (2013). Deliberate Learning Mechanisms for Stimulating Strategic Innovation Capacity. Long Range Planning [Online] 46(1-2), p. 39–71. ScienceDirect. doi: 10.1016/j.lrp.2012.11.003 [Accessed: 2nd April, 2015]
BMW. (n.d.a) BMW [Online] Available from: http://www.bmw.com/com/en/index.html [Accessed: 2nd April, 2015]
BMW. (n.d.b) BMW [Online] Available from: http://www.bmwgroup.com/e/0_0_www_bmwgroup_com/unternehmen/unternehmensprofil/standorte/standorte/index.html [Accessed: 2nd April, 2015]
BMW. (n.d.c) BMW [Online] Available from: http://www.bmwgroup.com/e/0_0_www_bmwgroup_com/unternehmen/unternehmensprofil/strategie/strategie.html [Accessed: 2nd April, 2015]
BMW (n.d.d). BMW [Online] Available from: http://www.bmw.com/com/en/insights/explore/individual_2014/overview.html [Accessed: 2nd April, 2015]
BMW. (n.d.e) BMW [Online] Available from: http://www.bmwusa.com/standard/content/byo/default.aspx? [Accessed: 2nd April, 2015]
BMW. (n.d.f) BMW [Online] Available from: http://www.bmwgroup.com/com/en/responsibility/whats_next/diversity/index.html [Accessed: 2nd April, 2015]
BMW. (n.d.g) BMW [Online] Available from: http://www.bmwgroup.com/com/en/careers/working-in-the-bmw-group/corporate-culture/index.html [Accessed: 2nd April, 2015]
Braganza, A., & Ward, J. (2001). Implementing strategic innovation: supporting people over the design and implementation boundary. Strategic Change [Online] 10(2), p. 103–113. Wiley Online Library. doi: 10.1002/jsc.533 [Accessed: 2nd April, 2015]
Confino, J. (2013) Can the new BMW i help scale up the electric car market? The Guardian. [Online] 6th June. n. pag. Available from: http://www.theguardian.com/sustainable-business/blog/bmw-i-scale-up-electric-vehicle-market [Accessed: 2nd April, 2015]
EV Obsession. 2015. EV Obsession [Online]. Available from: http://evobsession.com/us-electric-car-sales-increase-just-9-january-2015/ [Accessed: 3rd April, 2015]
Financial Times. (2015). Financial Times [Online] Available from: http://markets.ft.com/research/Markets/Tearsheets/Business-profile?s=BMWX:GER [Accessed: 2nd April, 2015]
Gebauer, H., Worch, H., & Truffer, B. (2012). Absorptive capacity, learning processes and combinative capabilities as determinants of strategic innovation. European Management Journal [Online] 30(1), p. 57–73. ScienceDirect. doi: 10.1016/j.emj.2011.10.004 [Accessed: 2nd April, 2015]
Govindarajan, V., Trimble, C. (2005). Organizational Dna for Strategic Innovation. California Management Review [Online] 47(3), p. 47-76. Social Science Research Network. Available from: http://ssrn.com/abstract=1506780
Markides, C. (1998). Strategic Innovation in Established Companies. MIT Sloan Management Review [Online] Available from: http://sloanreview.mit.edu/article/strategic-innovation-in-established-companies/ [Accessed: 2nd April, 2015]
Pitt, M., & Clarke, K. (2010). Competing on Competence: A Knowledge Perspective on the Management of Strategic Innovation. Technology Analysis & Strategic Management [Online] 11(3), p. 301-316. Taylor & Francis Online. doi: 10.1080/095373299107375 [Accessed: 2nd April, 2015]
Velamuri, V. (2013). BMW's car-sharing innovation. Financial Times [Online] Available form: http://www.ft.com/intl/cms/s/0/c6fe4eae-4153-11e3-9073-00144feabdc0.html#axzz3W8Q7pC8G [Accessed: 2nd April, 2015]