Blue Ocean Strategy MANAGING INNOVATION ASSIGNMENT - Essay Prowess

Blue Ocean Strategy MANAGING INNOVATION ASSIGNMENT

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Blue Ocean Strategy MANAGING INNOVATION ASSIGNMENT

INTRODUCTION

Innovation is vital in any business as it plays a crucial role in growth. The exploitation of new ideas is essential to a company as it helps in improving the various processes undertaken and brings new and improved products and services to the market (Chatzoglou & Chatzoudes 2018, p.45). Innovation also increases the efficiency of products and services and hence improving its profitability. Competition is present in businesses; as a result, innovation has played an indispensable role in giving some companies a competitive edge over their rivals. With the advancement in technology, creativity has been enhanced and new products, services, and processes have been introduced.  Leaders in innovative companies ought to ensure there is effective communication, and the employees will be aware of the importance of innovation as a strategy (Chatzoglou & Chatzoudes 2018, p.48). Innovation tends to play a role in economic growth as it benefits the businesses as well as the consumers. Innovation has also enabled companies to solve existing problems. Innovation is a process; as a result, there is a need to combine the right skills, resources, capabilities, and knowledge. Furthermore, innovation helps in the creation of unique ways of meeting customer’s needs. Innovation requires a particular approach; this can be established through a clear understanding of the problems or requirements in the market. Most businesses spot opportunities and come up with a product or a service that meets customer’s demands. Innovation has been viewed as the application of better solutions that meet new requirements and market needs (Chatzoglou & Chatzoudes 2018, p.52).

 Through innovation, a business can increase productivity, reduce product costs, build the value of the brand, increase turnover and profitability as well as gaining a competitive advantage. Furthermore, innovation has also enabled companies to gain a significant market share. Change is inevitable; as a result, innovation plays an indispensable role in initiating change; for instance, the products, services, and products tend to change to meet customer needs and demands. Managing innovation involves the use of a set of tools that allows the managers and the employees to collaborate with a common understanding of the goals and processes. Through innovation management, a company can react to internal and external opportunities and utilize creativity to come up with new products, ideas, and processes (Chatzoglou & Chatzoudes 2018, p.63). Employees in a company tend to possess different capabilities; through this, some can develop ideas that benefit the entire company. There is a need for a company to grow; as a result, innovation can enable it to develop and become successful.

The paper will describe the Blue Ocean strategy and its principles. The paper will also apply the Blue Ocean strategy to explain the historical development and predict the future of Money Box.

THEORETICAL APPROACH: BLUE OCEAN STRATEGY

Blue Ocean Strategy can be described as a market for a product where there is no competition or less competition. The strategy tends to revolve around looking for a business whereby it is operated by a few companies, and there is no pressure incurred during pricing (Smith, n.d.). The strategy can be applied across businesses. Blue Ocean Strategy is not limited to one business; instead, it can be utilized in any business.  Most companies tend to operate in a business environment where there is severe competition, and every company tends to work to ensure that it gains a market share (Mi 2015, p.1). Furthermore, when a commodity tends to come under pressure from pricing, the company’s operations can be negatively affected; the saturated market where a business operates, and it is under threat, is referred to as “Red Ocean.”  When there is insufficient room for growth, companies tend to look for avenues that would enable them to find a new business whereby they can get a large market share and low competition; this can be termed as ‘Blue Ocean’ (Smith, n.d.). In business, a blue ocean tends to be sexist in a place where there is a potential for high profits and low competition. Blue Ocean Strategy tends to capture new demand and makes competition to be extraneous through the introduction of a new commodity that has superior aspects; this, in turn, enables the company to make a high profit since the product is priced slightly higher than the rest since the product has unique features in the market (Mi 2015, p.1). Many customers will be attracted to the new product, and in turn, they will be enthusiastic to pay more for the product; this, in turn, enables the company to grow (Smith, n.d.).

 In the Blue Ocean Strategy, there are no accepted boundaries or structures; however, the structure is created by the processes undertaken by the stakeholders in the market. Furthermore, the barriers encountered do not affect strategy and thinking; however, change tends to occur from the supply side, and it focuses on the demand side. Being an innovation theory, Blue Ocean Strategy tends to ignore the competition and the entrance into new markets. The strategy consists of six principles that are utilized to reduce the risks that might be experienced in the strategy. The principles are divided into two; formulation and execution principles, the principles include reaching beyond existing demand, restructuring market boundaries, concentrating on the big picture, getting the strategic sequence right, building execution into strategy and overcoming the critical organizational challenges. Blue Ocean Strategy tends to center on value innovation, and this is where a business gets out of the accessible market boundaries by creating a bound in value for buyers.

Application of Blue Ocean Strategy

Moneybox

Moneybox is an application that enables the users and to save and invest their spare digital change into stocks and shares. Moneybox has its headquarters in London, England, United Kingdom; besides, the organization has revenue of $1.1 million, and it has employed 39 individuals (Hodgson, 2017). The company receives funding from investors such as Samos Investments, Eight Roads, and Oxford Capital Partners. Despite its success, the company faces competition from CASH BOARD, Instant, and Money Dashboard.  Charlie Mortimer and Ben Stanway founded Moneybox in 2015, and it offers different financial services. Since the company targets millennials, the application enables the users to start investing from as low as £1 (Hodgson, 2017). Moneybox is utilizing about 51 technologies for its website; these include SPF, Meta, and iPhone. Being a mobile investment, Moneybox was designed to make saving money easier for youths and individuals who are unable to browse the stock market.

Historical development

Moneybox aims at making investment and savings easier for young individuals. The company tends to fight back against the traditional concepts, whereby most individuals began investing when they were almost retiring. Most individuals below thirty tend to avoid saving, as they believe that they lack spare cash that can be invested (Hodgson, 2017). Most youths perceive that the concept of stock and shares is complicated, and they tend to avoid it; furthermore, Moneybox spotted this as a gap in the market as it could venture and make high profits. Moneybox’s founder, Ben Stanway, made attempts to change the perception that the young had concerning investments. The founder aimed at educating young individuals on investments. Stanway further argued that an individual could invest any amount of money irrespective of the amount. Many young individuals believe that one should not invest with less money; as a result, there is a need to acquire a lot of cash. Moneybox came into life in 2016, and it was created after some funding. The app concentrates on reducing investments from high to low expenditure; besides, Moneybox focus on surprising individuals with the amount they can save a lot after investing a small amount of money (Lobo, 2016).  In the past, the company had not understood the audience.  The branding strategy used in Moneybox was established because most young people struggle to invest (Hodgson, 2017).

Youth need regular reminders on how and when to invest; as a result, Moneybox was introduced to aid the millennials in saving; besides, the individuals could use their smartphones to access the app, and this encouraged saving. Moneybox has made investment easy for young individuals.  Furthermore, the company’s brand concentrates on the young audience as it draws their attention (Lobo, 2016). Through innovation, Moneybox has become exceptional; this has, in turn, enabled the company to compete in the market.  Moneybox is the first in the United Kingdom market, and it works to ensure that it influences many people to develop a culture of saving. Through the Blue Ocean Strategy, an individual can acquire more knowledge about Moneybox.

Investment has been an everyday activity in most countries; however, it targets many adults who are working as it enables them to save for future use. Moneybox came up with a unique idea whereby it targeted the youth since most of them do not know investment. Most youths in the past believed that investing extra cash should only be done by the adults who are approaching retirement. By focusing on the youth, Moneybox created uncontested market space; this, in turn, enabled the company to gain a competitive edge over the rivals since youth form the largest population in most nations (Hodgson, 2017). When one convinces the youth, they are likely to make huge profits since the youth need to be educated on the importance of saving for the future.  Since the company focused on a small group in the population (teens), it considered competition to be irrelevant; this, in turn, enabled the company to grow. Saving and investment were new among the teens; this, in turn, enabled Moneybox to create and capture new demand (Lobo, 2016). Moneybox pushed its boundaries and offered consumers unique services that are highly valued. Saving and investment were not typical in the past; as a result, the company spotted an unknown market space that has unattained competition. The company also created unattained competition hence creating demand; this, in turn, has enabled the company to grow. Since Moneybox was launched in 2015, the company has gained more than 100,000 customers, and it has started making investments from the app (Hodgson, 2017). According to Moneybox, the average user invests £20 per week; this is done through weekly deposits, one-offs, and payday boosts (Owler, n.d.).

Moneybox-Four Action Framework

REDUCECREATE
  Platform fee of 0.45% for starters Time taken for one to acquire substantial returns      Easy and simple to use Compatible with different devices using iOS, Android and Amazon Fire OS.
RAISEELIMINATE
  New Technology Global expansion Customer support to guide the customers  High charges on small investments  Short-term investments

Most youths are new to savings and investment; as a result, there is a need to be enlightened as this would encourage them to invest. Furthermore, the starter’s investments are charged 0.45%; this is taken from the value of one’s investment annually. The fee accrues daily; however, it is charged monthly, whereby the most significant holding is sold. The app is user-friendly and easy to use; this, in turn, enables people to access the app and learn more about investment.  Moneybox has utilized technology and continuous innovation to outshine its competitors. Moneybox’s approach of targeting the youth has made it gain better chances of growing and reducing competition from its rivals. Focus on global expansion is vital in Moneybox as it enables it to widen its market share.  Savings and investments on Moneybox tend to benefit individuals who invest in the long term since short term investments can result in low output than the invested cash due to fluctuations.

Future development

Moneybox believes that any innovation that encourages people to adopt a saving behavior is welcomed by many. Furthermore, Moneybox plans to convince the parents to use the mobile app to invest on behalf of their children, more so those below 18; this would, in turn, encourage a saving culture, and the company grows.  Blue Ocean Strategy is not sustainable in the absence of constant innovation; this implies that Moneybox need to identify other opportunities in the society, for instance, ways of convincing youth to invest, as well as educating parents on the importance of investments; through this, most parents will invest for their children, and this ensures a better future. Moneybox has attracted funding from companies such as Alibaba, Made.com, and Treatwell; this, in turn, enables the company to identify new opportunities in the market. Due to constant innovation in Moneybox, Starling Bank has teamed up with Moneybox, and this has enabled the customers to access a collection of saving and investment tools; this, in turn, allows the company to attract many customers.

Since the company focuses on the youth, it should acquire more funds from the investors as this enables it to invest heavily. Most youths are unaware of investments; as a result, the company should venture into it and ensure that the high number of youth is persuaded to invest. Moneybox is already facing competition from Instant, Money Dashboard, and Cash Board as a result; the company ought to constantly concentrate on ways of differentiating itself if it aims at breaking away from the competition. Cutthroat competition tends to reduce profits since most competitors tend to offer similar products or services; as a result, constant innovation is vital in bringing about differentiation, and this gives the company a competitive edge over the competitors (Blue Ocean Strategy, 2015). The future of Moneybox is still bright since it is a young company started in 2015; as a result, the company can find ways of upholding differentiation to maximize profits.  Charges tend to be an issue in Moneybox since the individuals starting with small investments is charged highly; this, in turn, could be higher than the monthly profits. It can take more time for one to see any substantial returns on their savings; this, in turn, could discourage many young people from investing.

The company needs to educate the youth and individuals with no knowledge of investment; this, in turn, enables it to acquire many customers. When the company introduces customer services such as providing advice, it would have differentiated its product and services hence more customers (Carlyann, 2018). Furthermore, Moneybox faces promising opportunities, whereby it can target many young individuals. Moneybox tends to focus on one geographical location, London; there is a need for the company to widen its market share by expanding to global reach (Agnihotri 2016, p.520). Many youths across the world are unaware of saving and investments; as a result, Moneybox should use this as an opportunity to attract youth around the globe. When the company acquires a wide market share, competition from rivals reduces, and this enables the company to make high profits. Moneybox has a total funding of $23.3 million and revenue of $1.1 million; through constant innovation and the use of blue ocean strategy, the company is likely to increase the returns, and this enables it to grow (Owler, n.d.).

 Entering into the global market will boost the company’s revenues since the customer base will tend to widen, and low competition is experienced. Being a digital savings and investment app, Moneybox rounds up the spare change from transactions undertaken by the use of cards into shares and stocks.  When a company utilizes Blue Ocean Strategy, value innovation is created in the areas where the company’s actions tend to affect the cost structure and the value proportions to the buyers (Berg, 2011). In Blue Ocean Strategy, a company tends to create unchallenged market space, and this, in turn, makes competition irrelevant (Kim & Mauborgne, 2005).  Through the use of the strategy, Moneybox is likely to increase the returns, and the number of employees can be increased as it aims at entering the new markets.

Conclusion

Innovation is vital in a business as it enables a company to introduce new ideas that can help in improving the processes, products, and services. Change is inevitable in the world; as a result, businesses ought to embrace innovation as it enables it to meet customer’s needs. Furthermore, advancement in technology has promoted innovation since new ideas can be obtained, and this tends to change the processes undertaken in companies. Moneybox has brought about transformations in London and the United Kingdom as it focuses on helping millennials to save and invest. Moneybox spotted an opportunity since most youths do not know saving and investment; this, in turn, enables the company to acquire a substantial market share in the United Kingdom since there was low competition. Innovation has helped Moneybox to gain a competitive edge over its rivals such as Instant, Cash Board, and money Dashboard, among others. Moneybox has been designed to be user-friendly and straightforward; this, in turn, enables the millennials to save and invest. The company has also educated the parents on the importance of saving; through this, the parents have invested for their children, and this guarantees a better future. Through innovation, Moneybox has attracted more than 100,000 customers.

The company was started in 2015; this implies that it is still young, and it has the potential to expand beyond Europe. Moneybox created a great value and avoided competition by identifying existing gaps in the market.  Blue Ocean Strategy is vital in Moneybox as it focuses on investigating an unknown market space. Blue Ocean Strategy can be beyond the existing market, or it can concentrate on expanding from the existing business. Implementation of Blue Ocean Strategy does not guarantee sustainability in a company for the long-term; as a result, there is a need to maintain unvarying innovation as this enables the company to gain a competitive advantage over the rivals. Furthermore, four actions framework work in handy with the blue ocean strategy; however, it is composed of ‘eliminate, reduce, raise, and create.’ The framework enables the company to undertake differentiation, and this, in turn, gives the company a competitive edge. Through constant innovation, Moneybox ought to identify more gaps in the market, for instance, it should expand to the United States and other regions as this will enable it to acquire a wide market share and low competition. Blue Ocean Strategy has benefited Moneybox; however, there is a need for the company to identify other innovation approaches as this will make it more unique, and this creates hurdles to significant rivals such as Money Dashboard and Instant. Furthermore, the Blue Ocean Strategy has played an indispensable role in Moneybox in the past, present, and in predicting the future.

References

Agnihotri, A. (2016) ‘Extending boundaries of Blue Ocean Strategy’, Journal of Strategic Marketing, 24(6), pp. 519–528. doi: 10.1080/0965254X.2015.1069882.

Berg, R. (2011)What is Blue Ocean Strategy Part 2 – Value Innovation. Retrieved from Berg Consulting. Available at:http://bergconsulting.com.au/Berg_Consulting_Blog/what-is-blue-ocean-strategy-part-2-value-innovation (Accessed: 28/11/2019).

Blue Ocean Strategy (2015) 4 Actions Framework. Retrieved from Blue Ocean Strategy. Available at: http://www.blueoceanstrategy.com/tools/4-actions-framework/ (Accessed: 28/11/2019).

Chatzoglou, P. and Chatzoudes, D., 2018. The role of innovation in building competitive advantages: an empirical investigation. European Journal of Innovation Management, 21(1), pp.44-69.

Edwards, Carlyann. 2018. Blue Ocean Strategy: Creating Your Own Market. Available at: https://www.businessnewsdaily.com/5647-blue-ocean-strategy.html [Accessed 28 November 2019]

Hodgson, S. (2017, November 20). Breakthrough brands: Moneybox, a really smart investment in innovation. Retrieved November 28, 2019, from www.fabrikbrands.com: https://fabrikbrands.com/breakthrough-brands-moneybox/

Kim, W.C.& Mauborgne, R. (2005) Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant. United States of America: Harvard Business School Press.

Lobo, D. (2016, October 27). Anthony Bolton backs Moneybox app. Retrieved November 28, 2019, from citywire.co.uk: https://citywire.co.uk/funds-insider/news/anthony-bolton-backs-moneybox-app/a963151

Mi, J., 2015. Blue ocean strategy. Wiley Encyclopedia of Management, pp.1-1.

Owler. (n.d.). Moneybox’s Competitors, Revenue, Number of Employees, Funding and Acquisitions. Retrieved November 28, 2019, from www.owler.com: https://www.owler.com/company/moneyboxapp

Smith, R. (n.d.). The Blue Ocean Strategy Summary. Retrieved November 28, 2019, from www.clearpointstrategy.com: https://www.clearpointstrategy.com/blue-ocean-strategy/

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