Ten Different Types of Innovation (cont.) Some Examples

Types of Innovation/Company Ford*i Google*ii Microsoft*iii McDonald's*iv
Invention/intent a new industry a new marketing system integrated office tools a convenient food system
1. profit model develop a high quality, reliable, low-cost vehicle; demanded 50% payment upfront

 

 

started as simple text advertisements that users could buy via a bidding process; implemented 'pay per click' model;  advertising accounts for most of Google's revenue

 

 

bundling together popular applications at a cheaper price than buying them separately

 

 

franchisees pay monthly base rent and/or a percentage of monthly sales as rent

 

 

2. network

 

 

use vertical integration (control the entire supply chain like investing in rubber plantations, steel factories, etc)

 

 

    users global & local partnerships, eg Coca-Cola beverages that delivered daily

 

 

3. structure

 

 

paid twice the minimum wage; reduced working days from 9 to 8 hours

 

 

attracts & incentivises staff with activities like allowing 20% of their time to work on new concepts or projects

 

 

  in 1961, opened Hamburger University to teach restaurant operations procedures to different stakeholders like franchisees

 

 

4. process

 

 

introduced the moving assembly line, which reduced assembly time from around 12 hours to around 100 minutes; by 1923 2 m. cars manufactured annually

 

 

developed 'PageRank' linked analysis algorithm. It ranks webpages according to the number of links connecting them

 

 

collects customer data daily as a basis for improving software

 

 

franchisees are encouraged to develop and launch new product items like Egg McMuffin in 1971

 

 

5. product performance

 

 

readily available, easy & cheap repairs and maintenance simplified the ads by restricting the number of characters as a headline and/or description

 

 

   
6. product system

 

 

modification kits available to convert vehicles into tractors, snowploughs, sawmills, pressing cider, etc

 

 

launched 'AdSense' as another form of advertising by targeting Google ads displayed on their customers' websites

 

 

introduced a group of desktop applications for both Windows & Macintosh operating systems

 

 

 
7. service

 

 

  provide integrated advertising services to help major customers communicate effectively with their target audiences

 

 

   
8. channel

 

 

local, independent dealerships in nearly every city; helped with publicity and created local motor clubs, etc shifted to include location-specific information & mobile devices in its search results to make smarter searches and better devices

 

 

with the rise of the Internet (1990s), Microsoft Office became compatible and able be incorporated automatically with upgrades from third-party add-ins

 

 

 
9. brand

 

 

founded a motion picture department (1914) used to promote the company's own vehicles uses 'Google Doodles' program to play with its logo

 

 

  using distinctive designs of the building themselves, to the Golden Arches, two characters such as Ron McDonald and Hamburglar, etc to focus on family-friendly attributes
10. customer engagement

 

 

  (source: Larry Keeley et al, 2013)

 

 

to market test new products, Microsoft used preferred customers to test their products before selling to the general marketplace

 

 

franchisees develop new products

 

 

Notes

i) There is too much commentary focus on the simplicity of the Ford's car design and the moving assembly line and not enough on Ford's use of multiple types of innovation, like selling cars to dealers rather than directly to the consumers. This created a new business framework and a better pattern of cash flow

"...Dealers help spur demand and engage at a local level - and they used their credit and cash to buy the cars wholesale, lowering Ford's capital requirements and risks..."

Larry Keeley et al, 2013

NB There were around a 100 other car companies that were potential competitors to Ford.

ii) Google was initially another search engine in a crowded market. It established its dominance owing to the accuracy of results over its immense index of webpages. It is essentially a self-sustaining business. Even though it started in 1998, it was not till 2000 when it introduced its integral advertising program for creating online campaigns connected to search terms, ie AdWords,  that its revenue exploded.

iii) Microsoft's  basis for success was charging for the licences for software solutions, and bundling its popular applications of Word, Excel and PowerPoint under MS office.

iv) McDonald's uses a system where franchisees and suppliers are partners; they buy and build all properties and lease facilities to individuals as franchisees

 

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