P3. 4 P's of Innovation and explaining use of Innovation Funnel for IKEA
For any organization, it is very important to do innovation in their products and products in order to increase growth and productivity in the market. Innovation process is a method which is used to implement new ideas in the existing services. Innovative ideas come from several sources which include unreasonable demands or goals from their customers and time pressures from competitors. The innovation mix or 4 P's is a model that was developed by John Bessant and Joe Tidd. This procedure will help IKEA to improve their services and bring new changes in their business. Company uses this innovation mix to attract more customers towards them and making them to buy their services (Amabile and Pratt, 2016). This model or 4 P's of innovation consists of four different factors present in it such as Paradigm, Product, Process and Position respectively which are explained as below:
Product: In this method, it helps to create new or improved products in market which can be beneficial for organization. This innovation or change can be done in their product's own functionality or it can take the form of new technology which is currently trending in industry. This innovation is based on their customer's feedback for products and services which IKEA improves and produce better product. It can bedone in two ways i.e. new products and improved products.
Process: Process innovation is a new or significantly improved way of doing things in a business which can help to increase the production level for company and decrease costs. This method comes in the form of new processes or techniques or ideas, new equipment or software, etc (Berry, and Berry, 2018). Process innovation method can be done through various ways such as:
1.Production: This is where the organization introduces processes, equipment and technology to enhance their manufacturing or production process in company. This can include software development to increase their production design and development or it can be a new equipment which makes a process to run more efficiently and effectively.
2.Delivery: In this method, it involves factors like tools, techniques and software solutions which can help organization in their supply chain and delivery systems. Methods such as bar codes, tracking systems, etc. would be very useful innovation in this category.
3.Services:This method plays an important role for the organization. It includes areas like new product development, purchasing, maintenance and accounting for company. All the services which are provided to their customers should be proper and on time (Biemans, 2018).
Position: It is a type of psychological category. In this method, it involves re-positioning of an established product or process of the organization in a specific context. Position-based innovations refer to changes in terms of how their specific product or process is perceived and the way they are used by their customers. This innovation includes changes in their products. This may be related to the way in which they are marketed and packed their products for the potential consumers. This is done to target their customers to deliver products according to the needs and requirements. This also helps to communicate with customers to understand their references.
Paradigm: This is a type of specific innovation category. It is concerned with the change in their products and services in organization. In this innovation method, IKEA changes the whole product or process in system which according to them requires a change and introducing completely a new product in the target market. It will help them to increase their popularity among their customers and can earn a good revenue from this method (Drucker, 2014).
Innovation Funnel Method: Innovation Funnel helps to enable the ideas to be evaluated for viability through a process of filters, gates and rules. Each stage of idea process is either passes through the filters and gates or they fail to meet the criteria to advance. Ideas may become archived (e.g., if it is not justified at the time) or may continue to pass through to additional or next stages. For IKEA, it is very important to apply innovation funnel method in their production system as it will help them to generate great ideas which can be implemented to produce new and unique products for their customers. It will also help them to build their brand reputation in market. Introducing new and improved products for the clients will ensure to increase their productivity and profitability rate (Gavira and et.al., 2016).
The key objective of this methodis to generate many ideas relevant to current business situation of IKEA and helps to enable new growth in market. This model also ensures to expand inbound idea flowinto the funnel related to the long-term business strategies of company.
Importance of Innovation Funnel for IKEA
The main aim of any product or process development project in IKEA is to take an idea from their employees and staff members in order to have more suggestions and converting it into a specific product which can meet market needs. The overall development method of IKEA starts with a huge range of inputs from different people and then gradually examine these ideas and selects the best idea from it which can be applied for the completion of the that product in organization. Managing the innovation funnel includes three different tasks or challenges which have to be fulfilled by IKEA i.e.
- The first is that organisation must expand its knowledge base and access to information in order to increase the number of new products and process ideas for their services.
- The second challenge for IKEA is that ideas generated should be screened and focused on the most attractive opportunities available in market.
- The third task is to ensure that selected projects fulfil all objectives which were approved for it.
The goal is not just to apply limited resources to their selected projects with an idea to get the highest expected pay-off, but it has to create a portfolio of projects that will help the business objectives of IKEA in improving their strategic ability to carry out their future projects in market (West, and Bogers, 2014).
Advantages of innovation process and innovation funnel for IKEA
There is a great importance and advantages of innovation process and funnel for the organization. For example:
- Improved productivity and reduced costs: It helps in reducing unit costs for the organization. It can be achieved by improving their production capacity or by implementing flexibility in their business, such as, to enable to exploit economies of scale.
- Provide better quality: It is the most important for IKEA to provide improved and better quality products to their customers. It is more likely to meet customer needs. This will help them in resulting higher sales and profits (Innovation management (4) - '4 P's of Innovation',2014).
- Building a product range: Innovation process can help IKEA to introduce a wide range of new products in their production system. A broader product range will provide an opportunity to enhance their sales and profits and can also reduce risk for shareholders.
- To handle legal and environmental issues: Innovation might enable the business to reduce its carbon emission, produce less waste or perhaps comply with changing product legislation. Changes in laws often force business to innovate when they might not otherwise do so (Zandoval Bonazzi and Ari Zilber, 2014).
- Uniqueness in products: An effective innovation method is a great way to develop a unique selling proposition (USP) for their products such as something according to their customer's needs and preferences which help their business to differentiate themselves from competitors in target market.
- Improved staff retention and motivation: Innovation processes help to motivate employees of company and encourage them to bring new and unique ideas. This will also help in building confidence level in them which can be beneficial for organization. Potential good quality recruits are often selected by IKEA for their business to maintain the reputation for innovation in market.
- Opportunity assessment:These methods also help in organizational analysis from various factors, such as, it can be done through market research, by customer knowledge or from other information sources, to understand different opportunity which are existing for a new product line (Innovation Funnel,2016).
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It can be concluded from the above report that innovation plays a very crucial role in the organization which helps to bring new and innovative products for the organization. It also discussed about the importance of innovation funnel which van be useful for the IKEA to bring changes in their product range according to their customers needs and preferences.
You May Also Read: Context of Innovation
- Amabile, T. M. and Pratt, M. G., 2016. The dynamic componential model of creativity and innovation in organizations: Making progress, making meaning. Research in Organizational Behavior.36. pp.157-183.
- Berry, F. S. and Berry, W. D., 2018. Innovation and Diusion Models in Policy Research. In Theories of the policy process. pp. 263-308. Routledge.
- Biemans, W., 2018. Managing innovation within networks. Routledge.
- Drucker, P., 2014. Innovation and entrepreneurship. Routledge.
- Gavira and et.al., 2016. Technological innovation management: Analyzing the application of the innovation funnel in a consumer goods organization.