Tech Pinoy Trend: July 2012

Introducing something new to the organization can be called innovation whether it is technological or non-technological where the end result should generally be for its advantage, that is, beneficial for the growth of the company. Yet, an organization should strive to lead the technological as well as non-technological innovation, to set the standard through continuous research and development, because once a dominant design or service is established in the market by another company, it will be too late for a company to set a different industry standard based on its own product or service. Any organization, once it loses its “innovative being”, may be reduced to a mere follower and may have a hard time regain its market leadership where it has previously been.

We have witnessed this in the Nokia mobile phone where it misses the opportunity to maintain its leadership in the market. Nokia merely developed incremental innovations on their devices, perhaps enjoying its market leadership, until the arrival of the Apple iOS that introduced a much radical design, has changed the mobile phone game ever since. Thus, to be able to survive the intense competition with Apple and other players like Samsung in the handset business, Nokia announced their alliance with Microsoft last February 2011, a business restructure innovation, in order to produce a line of smartphones called Lumia running the Windows operating system. Nokia have to use this strategy to regain its leading position in the marketplace. Yet, the market pull for the Window-based handset is dismal and made a negative effect on the organization. Recently, Nokia has announced that they need to slash 10,000 jobs, or 19 percent of its workforce, and the shutdowns of research and development center in Ulm, Germany, and Burnaby, Canada, and a handset factory in Salo, Finland, in order to save at least €1.6 billion or Ph₱53 billion, by the end of 2013.

A change in the business process or management to reduce cost is an approach that could also be regarded as non-technological innovation as in the case of Nokia. Yet, management innovation does not only pertains to slashing of workforce and facilities or restructuring its business organizational process. It may also apply to new ways of managing people, creating incentives, measuring performance, creating positive cultures, hiring, and leadership. All of these are distinctly human, and less about technology. Companies are great not only because they are at the leading edge of technological innovation but also have the people skill, introducing non-technological innovation in the organization that would give importance in the workforce, making people happy.

Another innovation approach is to rely on complementary assets, such as name recognition, to increase market share. To mention some, “to Google” is almost synonymous with “to search something in the web”, Amazon on the other hand, for online retail, and Colgate for toothpaste. These companies thrived on their brand names in order to become leaders in their respective markets.

According to BrandZ Top 100 Most Valuable Global Brands in 2012, Google brand alone costs US$107,857 million, Amazon costs US$34,077 million, and Colgate costs US$14,948 million. The top 1 brand is Apple at US$182,951 million, followed by IBM at US$115,985 million and Google at third. These companies in the top 3 are all in the technology industry, yet McDonalds which is in the fast food business was able to make it at the top 4 at US$95,188 million.

For the past years, we have seen McDonalds introduced new ways in marketing such as updated regional slogans, as “I’m lovin‘ it” in the US while “Love ko ‘to” in the Philippines, and improved customer service not only in the expansion on their menu, which is a product development innovation, in response to changing consumer taste, but also the redesign of all its restaurants worldwide, another non-technological innovation approach, to carry the “Forever Young” brand. They reportedly invested US$1 billion to redesign nearly all of the 14,000 restaurants by 2015. McDonalds also has to rely on economies of scale, a distribution channel innovation, to reduce price which currently has 33,000+ locations worldwide.

These are some of the innovations that are non-technological, and as it seems, the benefits outweigh the negative result. Yet, some organizations may think otherwise as their application for non-technological innovations would vary depending on their company objectives.

References:

2 The New York Times Business Day Technology, “Nokia to Cut 10,000 Jobs and Close 3 Facilities” by Kevin O’Brien, June 14, 2012, http://www.nytimes.com/2012/06/15/technology/nokia-to-cut-10000-jobs-and-close-3-facilities.html?pagewanted=all

3 Non-technological Innovation by Jon Radoff’s Internet Wonderland, http://radoff.com/blog/2011/02/24/nontechnological-innovation/

4 BrandZ Top 100 Most Valuable Global Brands 2012, p. 34

5 McDonald’s, Wikipedia, http://en.wikipedia.org/wiki/McDonald's

One more thing...
Sometimes, a simple non-technological innovation may have bigger impact not only in the organization, but also in the environment. Take for example the color-coding of the garbage cans for trash segregations, simple yet has profound effect on the environment as well as disciplining ourselves. Yet, it would not end there, as I would personally want to lobby the Color-Coded Recycle Management System where the Recycle logo should be placed in all product labels or packaging in a color-coded format so that consumers would be able to easily identify on which color-coded garbage to dispose of their trash. The color-coded garbages would still have their usual labeled trash instructions for the sake of those who have color vision deficiency.