Innovation Value Chain
- Apr 18, 2017
- 6 min read
The Innovation Value Chain is a framework that allows companies to evaluate their innovation performance. This method comprises of three main phases: Idea Generation, Idea Conversion and Idea Diffusion. By using an innovation value chain, managers can determine where their weakest links lie, and customise innovation practices to improve in those areas.
In the idea generation phase, the business takes initiative to act upon an opportunity, and come up with new ideas which they can discuss with other team members. They must then take those ideas and decide whether the idea is worth pursuing and collaborate across all units within the business. (http://www.organizing4innovation.com/innovation-value-chain-professional-service-organizations/).
The conversion phase consists of the funding and screening of the new idea and developing those ideas into viable services, products or businesses. The final phase is diffusion. In this phase, the developed ideas are spread within and across the organization, as well as outside the business.
The Pizza Hut uses an innovation value chain in their practices to evaluate their performance as a company. They do their research and find out what their consumers are craving. Trends within the current consumer market show them where change needs to be made. The Pizza Hut Head office members collaborate and come up with new, exciting, innovative Pizza combinations that will ensure increase in sales and create a buzz. These ideas will be implemented into each branch of the brand, and employees will be taught exactly how to make those new products. This is how they diffuse that product into the market. Depending on sales, they will be able to tell if their ideas were successful or not.
Blu Betty use an innovation value chain to ensure that they are keeping up with demands and evaluating their performance.
When it comes to the idea generation phase, Blu Betty ensure that they are creating their own unique designs and coming up with innovation ideas.
In-house, they have a design and pattern maker who is one of the last few shoe designers in the country. As a designer, his colleagues describe him as innovative, creative and technically very sound. Due to Blu Betty being made up of a small team of professionals, who have experience in their fields and good taste, the company are able to create ideas of their own. Blu Betty feel that the products that they put out there are meeting their target in terms of demand and keeping up with trends. For example, Blu Betty recently came up with the idea, internally, to do a photoshoot called ‘Celebrating African Classics’, where they collaborated externally with another brand.
The fact that the retail sector is shrinking while e-commerce grows, has resulted in Blu Betty’s demand outweighs their current capacity and supply. Although there are many performance indicators, Blu Betty put high value on their increasing number of followers on social media platforms such as Facebook and Instagram. Blu Betty have an organic reach of approximately thirty-eight thousand people per day on Facebook, and when posting, can reach upward of one hundred thousand individuals. Blu Betty want to reach as many people as possible and generate what they refer to as ‘hits’. The responses that they get via their social media and online ordering systems, are indicators to them that what they are currently doing is special, cutting-edge and giving people a reason to support their business and buy products. This is a clear indicator of success.
Blu Betty do cross-pollinate ideas across their company. Colleen, Blu Betty’s designer, Blu Betty’s photographer and Steph Touzel, do share their ideas and come up with innovative ways to grow their business. They work together to come up with innovation regarding the look and feel of the business, as well as giving creative input into shoe design. Mick and Colleen, as the main stakeholders, do consult and take input from other team members where ideas are received, and possible implemented.
When looking at external factors, or outbound logistics in the Idea Generation phase, Blu Betty are able to keep track of online trends and use those as ideas for their products. They ensure that they are creating products that their market are interested in. Charlene, Carmen and Stephan who do sales at markets for Blu Betty, outside of online sales, have indicated that a lot of people are, for example, looking at grey leather, which is currently an enormous trend. This resulted in the sale of their one grey leathered product going up, and as a result, in the design of new grey leather products for their brand. This is the type of information that they get across the country. This has allowed Blu Betty to increase their sales drastically.
Cross-pollination from outside Blu Betty is an area that Colleen believes they do very well in. The reason for this is that they collaborate with other small, local, proudly South African brands and try to incorporate those brands into their business, almost like amalgamating with those brands. Blu Betty get many great ideas from outside of their business. Brand Candy is a business who is helping Blu Betty build their brand. They make good suggestions and are helping Blu Betty become eco-friendlier and socially conscious. Blu Betty would like to start identifying themselves with a charity cause, and they are currently looking at various Rhino Charity Foundations. Brand Candy come up with great ideas that make business easier for Blu Betty, easier for customers and more efficient.
In the conversion phase, screening and funding become very important factors to consider. Colleen feels that she can very quickly determine whether something will work or not, based on the type of product or type of concept. This is because Blu Betty have very clear goals. When it comes to funding, Blu Betty do have capital funding for new ideas, and are fortunate that if they have a new product or new idea, they have an excellent cash flow business and can physically fund any new ideas that come their way. They are very careful when it comes to finances, however, they believe that new ideas can be beneficial. Approximately seventy percent of the ideas that they have screened and implemented have worked for their brand.
As far as taking these ideas and developing them into products, Blu Betty are very strong. Blu Betty are very good at taking great ideas, and then developing them and bringing them into the marketplace and selling it. They however do admit to being weaker when it comes to best practice. For example, when it comes to Blu Betty’s website, they have not prioritized this platform. For this reason, their website is still under construction, which in turn limits their online sales and any interest that may have been shown in this regard. The brand also admits that they need to get their corporate governance into order, and should also be looking towards a more reliable base from which they can sell their products, as selling only at markets and online is not reliable enough in their eyes. Colleen also states: “We could perhaps also improve client follow-ups and invoicing. There are certainly some systems which are lacking. When making the shoes, capacity is a bit of a problem, and we could be improving the communicate between the factory and Blu Betty could then be a lot better as a business.”
When it comes to diffusion of these ideas via marketing and sales, Blu Betty show great strength. In respect of products, new materials and new design combinations, Blu Betty is excellent. When it comes to input regarding styling, or combination of leather, utilising a certain bag with a certain shoe in social media, in a photoshoot or at a market, the diffusion of these ideas is great! Within Blu Betty and their factory, when it comes creatively to developing their products, the input of each team member results in successful diffusion of their products.
Blu Betty’s stakeholders are very involved in the businesses innovation practices. Due to Blu Betty being a small business, their list of Stakeholders isn’t very long. Blu Betty’s stakeholders are not only made up of the previously discussed individuals within the business, but also by consumers and anyone else who has an interest in the business. Stakeholders are defined as “A person, group or organisation that has interest or concern in an organisation”.
Every individual who is in contact with Blu Betty as a brand is considered a stakeholder. Examples of Blu Betty stakeholders would include team members, suppliers, factory staff, consumers and investors. Above, we have discussed how these stakeholders play a role in Blu Betty’s innovation value chain. Stakeholders determine the success or failure of a business, and this is why Blu Betty put so much emphasis on the importance of keeping their stakeholders happy.
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