Harnessing the Secret Structure of Innovation SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Harnessing the Secret Structure of Innovation
In an era of low growth, companies need innovation more than ever. They can draw on a large body of theory and precedent. In practice, though, the authors say that innovation is more of an art than a science. They argue that there is an opportunity to view innovation not as the product of luck or extraordinary vision but as the result of a deliberate search process that companies can harness to construct an advantaged innovation strategy.The authors analyzed the mathematics of innovation as a search process for viable product designs across a universe of components. They then tested their insights using historical data from four real environments and concluded that companies can have an advantaged innovation strategy by using information about the unfolding process of innovation. But there isn't one superior strategy. The optimal strategy, they found, is both time-dependent and space-dependent. Based on their findings, the authors developed a five-step process for constructing an information-advantaged innovation strategy. Step 1. Choose your space: Where to play? It's not enough to analyze markets or anticipate customers'needs, the authors say. To innovate successfully, you also need to understand the structure of your innovation space. Step 2. Select your strategy: How to play? Measure the evolution of complexity in the space by analyzing the distribution of product sizes in terms of the number of unique components in products. If complexity is low and stable, the authors say, it's an indication that the space is still in its infancy, which argues for an impatient strategy. If complexity is high, then the space is maturing and a patient strategy will be the best approach. Step 3. Apply your strategy: How to execute? If you follow an impatient innovation strategy, the objective is to adopt or develop components that enable the company to bring relatively simple products to market quickly. Managers should ask themselves how they can be first. However, if the characteristics of your chosen innovation space imply that a patient strategy is more appropriate, your objective should instead be to maximize future innovation options. Step 4. Sense shifts and adapt: How to extract a switch signal? You need to monitor the complexity of your innovation space and compete on access to information in order to detect valuable strategy-switching signals before competitors. In their research, the authors found that a flattening in the increase of product complexity is a signal that it is time to switch from an impatient innovation strategy to a patient one. Step 5. Brace for disruptions: How to reset the clock? The promise of an information-enabled innovation strategy extends to disruption. Disruption, the authors note, suddenly resets and simplifies an innovation space by lowering product complexity. Disruptions don't just happen -they are created by innovators at the edge of a space who build simpler products that leverage components from a different space.
Authors :: Martin Reeves, Thomas Fink, Ramiro Palma, Johann Harnoss
Swot Analysis of "Harnessing the Secret Structure of Innovation" written by Martin Reeves, Thomas Fink, Ramiro Palma, Johann Harnoss includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Innovation Space facing as an external strategic factors. Some of the topics covered in Harnessing the Secret Structure of Innovation case study are - Strategic Management Strategies, and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Harnessing the Secret Structure of Innovation casestudy better are - – cloud computing is disrupting traditional business models, there is increasing trade war between United States & China, wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%, technology disruption,
digital marketing is dominated by two big players Facebook and Google, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Harnessing the Secret Structure of Innovation
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Harnessing the Secret Structure of Innovation case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Innovation Space, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Innovation Space operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Harnessing the Secret Structure of Innovation can be done for the following purposes –
1. Strategic planning using facts provided in Harnessing the Secret Structure of Innovation case study
2. Improving business portfolio management of Innovation Space
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Innovation Space
Strengths Harnessing the Secret Structure of Innovation | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Innovation Space in Harnessing the Secret Structure of Innovation Harvard Business Review case study are -
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Innovation Space digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Innovation Space has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
High brand equity
– Innovation Space has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Innovation Space to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Innovation Space is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Innovation Space is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Harnessing the Secret Structure of Innovation Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Innovation Space has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Harnessing the Secret Structure of Innovation HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Organizational Resilience of Innovation Space
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Innovation Space does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to recruit top talent
– Innovation Space is one of the leading recruiters in the industry. Managers in the Harnessing the Secret Structure of Innovation are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy in the Harnessing the Secret Structure of Innovation Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Strong track record of project management
– Innovation Space is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Innovation Space is present in almost all the verticals within the industry. This has provided firm in Harnessing the Secret Structure of Innovation case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Analytics focus
– Innovation Space is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Martin Reeves, Thomas Fink, Ramiro Palma, Johann Harnoss can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Low bargaining power of suppliers
– Suppliers of Innovation Space in the sector have low bargaining power. Harnessing the Secret Structure of Innovation has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Innovation Space to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Innovation Space are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Weaknesses Harnessing the Secret Structure of Innovation | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Harnessing the Secret Structure of Innovation are -
Need for greater diversity
– Innovation Space has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High cash cycle compare to competitors
Innovation Space has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Harnessing the Secret Structure of Innovation, it seems that the employees of Innovation Space don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Interest costs
– Compare to the competition, Innovation Space has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Harnessing the Secret Structure of Innovation, is just above the industry average. Innovation Space needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Workers concerns about automation
– As automation is fast increasing in the segment, Innovation Space needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Lack of clear differentiation of Innovation Space products
– To increase the profitability and margins on the products, Innovation Space needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to strategic competitive environment developments
– As Harnessing the Secret Structure of Innovation HBR case study mentions - Innovation Space takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Slow decision making process
– As mentioned earlier in the report, Innovation Space has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Innovation Space even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Increasing silos among functional specialists
– The organizational structure of Innovation Space is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Innovation Space needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Innovation Space to focus more on services rather than just following the product oriented approach.
No frontier risks strategy
– After analyzing the HBR case study Harnessing the Secret Structure of Innovation, it seems that company is thinking about the frontier risks that can impact Innovation & Entrepreneurship strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Opportunities Harnessing the Secret Structure of Innovation | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Harnessing the Secret Structure of Innovation are -
Leveraging digital technologies
– Innovation Space can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Better consumer reach
– The expansion of the 5G network will help Innovation Space to increase its market reach. Innovation Space will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Low interest rates
– Even though inflation is raising its head in most developed economies, Innovation Space can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Creating value in data economy
– The success of analytics program of Innovation Space has opened avenues for new revenue streams for the organization in the industry. This can help Innovation Space to build a more holistic ecosystem as suggested in the Harnessing the Secret Structure of Innovation case study. Innovation Space can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Innovation Space has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Innovation Space to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Buying journey improvements
– Innovation Space can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Harnessing the Secret Structure of Innovation suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Innovation Space can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Harnessing the Secret Structure of Innovation, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Innovation Space can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Innovation & Entrepreneurship segment.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Innovation Space can use these opportunities to build new business models that can help the communities that Innovation Space operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Innovation Space can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Innovation Space can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Innovation & Entrepreneurship industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Innovation Space can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Innovation Space can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Threats Harnessing the Secret Structure of Innovation External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Harnessing the Secret Structure of Innovation are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Innovation Space can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Harnessing the Secret Structure of Innovation .
Shortening product life cycle
– it is one of the major threat that Innovation Space is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Innovation Space with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Innovation Space in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Stagnating economy with rate increase
– Innovation Space can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Consumer confidence and its impact on Innovation Space demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Regulatory challenges
– Innovation Space needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Innovation & Entrepreneurship industry regulations.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Innovation Space business can come under increasing regulations regarding data privacy, data security, etc.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Innovation Space.
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Innovation Space can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Innovation Space needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Harnessing the Secret Structure of Innovation Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Harnessing the Secret Structure of Innovation needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Harnessing the Secret Structure of Innovation is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Harnessing the Secret Structure of Innovation is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Harnessing the Secret Structure of Innovation is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Innovation Space needs to make to build a sustainable competitive advantage.
