The complete process of translating an idea or invention into a good or service in order to create a value for which customers will pay is called as an innovation. As per (Chiaroni, Chiesa and Frattini, 2011), innovation management can be defined as proper management of the innovation process in terms of both products and the organizational innovation. It includes various set of tools that helps both managers and engineers to cooperate with a common understanding of the different processes and goals that have been identified.
World is becoming globalized day by day and because of that competition in the automobile sector has become very intense. All the organizations are working on same platform with same products and services and therefore, it has become difficult for them to capture the market share easily (Gassmann, Enkel and Chesbrough, 2010). In order to capture the market share and attract more and more customers, innovation and management has become key aspect among companies. According to Maital and Seshadri, (2012), automobile companies all around the world work in very similar with very little differences and if a company could find a way to innovate something then that company will surely will be able to attract more customers and will also gain competitive advantage in the most appropriate manner.
There are many automobile companies working in the world but two most popular companies in this sector are Toyota ad TATA. Toyota Motor Corporation is one of the most famous Japanese automobile manufacturer companies that has its headquarters in Aichi, Japan. It has more than 338, 875 employees worldwide and is called as the 12th largest company in the world in terms of revenues (Anon, 2015). It is also the largest automobile manufacturer in the world and recently, it produced its 200th million vehicle. It produces vehicles under 5 brands which includes Toyota brand, Hino, Lexus, Ranz ad Scion. Other than all these features, company is also world famous for adopting the latest technology in its vehicles which makes it very different from other competitors (Basulto, 2007).
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As per Silicon Valley Business Journal, (2015), calling Toyota an innovative company at first seems odd but the vehicles of company are more than just loved and are often attacked for being better at imitation then at invention. One of the core success of the company is its production system in which engineers came out with system to get as much as out of the every part, machine and worker. Company has also done innovation in terms of andon cord which can be pulled by any worker if there is problem in assembly line., Kanban card system that allows worker to signal when any new parts are needed. Company is also the biggest inventor of Hybrid vehicles and is known by some its cars called as Prius, Mirai, etc (Yahoo News, 2015).
Other than Toyota, TATA is also one of the best automobile companies in the world which is known for its innovative products. TATA Motors is an Indian multinational automobile manufacturing company which has its headquarters in Mumbai, Maharashtra. It produces different products such as passenger cars, trucks, vans, coaches, buses, construction equipment and military vehicles too (Tata.com, 2015). It is also called as the world's 17th largest motor vehicles manufacturing company which also includes subsidiaries called as Jaguar Land Rover and Tata Daewoo. As per (), innovation in Tata Motors is not a recent phenomenon but it is a great part of its ongoing legacy. Company has created several breakthroughs products in last 50 years and among them, some were 407 platforms which was the biggest selling LCV player, Tata Indica which was designed ion order to provide more value for money in terms of internal space, Tata Ace which offered innovative 2 cylinder engines, semi-monocoque body, etc (Tata.co.in, 2015). Company has also adopted several business processes like Tata Business excellence Model in order to achieve organizational achievements, IT systems like ARIBA, SRM, etc.
It can be said that both the companies are moving forward in order to create a benchmark in the field of innovation and are also getting successful. This report has been made in order to compare and contrast the innovation management that is used by both the organizations. Further, it will also analyses the processes that both the organizations can learn from each other and ways to improve the innovation management in each of the businesses.
Auto mobile industry is one of the most dynamic industries in the world. Industry started witnessing innovation since the invention of internal combustion by Nicolaus August Otto in 1876. Daimler, Henry Ford, Kiichiro Toyoda and Soichiro Honda, change the culture of industry by adopting innovation in the vehicle manufacturing. Innovation in industry can be seen in line with time (Surowiecki, 2015). Toyota has worked upon innovation from time to time. Company has seen huge amount of success in the past few years because of its high class quality products. Innovation management in Toyota can be described from three stage of product development (Ahmed and Shepherd, 2010). At the idea generation stage, the management gain insight about the customer needs and a high understanding of the potential relevancy of emerging technologies. At the product development stage, they make connection with the customers in order to prove the validity of concepts and to identify market capabilities & related risks. Further, it also identifies the ability to leverage existing product platforms into new products. At the commercialization stage, company closely work with experts to roll out products carefully but quickly (Igartua, Garrigós and Hervas-Oliver, 2010). Integration and coordination can be seen within the entire organization for an effective launch of product.
Toyota works on developing additional capabilities which are very particular to their selected innovation strategies. It is evident that Toyota is a technology driven firm and their strategy is to design leading edge vehicles for consumers. However, it is important that they have to be remain good at understanding emerging technologies and efficient in managing product life cycles (Basulto, 2007). These capabilities are less important for need seekers whose approach is to recognize the unidentified needs of customers and innovate to fill them. On the other hand, need seekers require world class consumer insight skills. Toyota focuses on a specific aligned set of common and distinct capabilities which facilitate them to better implement their selected strategies (Surowiecki, 2015).
Company performs innovation by focusing on process rather than on products that means they emphasis on factory floor rather than on showroom. From this, it is difficult to see any innovation but this has not made them any less powerful (Anon, 2015). Success of the organization is defined by its production system which has seen huge transformation after Second World War when Japan was into restructuring itself. At that time, it was difficult for them to arrange capital and equipment. But later on, the success knocked on their door. As compared to other auto mobile companies, what they have done is to turn their principle into practice (Igartua, Garrigós and Hervas-Oliver, 2010). Toyota's principle were simple which includes the art of ingenuity, the pursuit of perfection and the rhythm of fit. The principle of Ingenuity creates images of cleverness, initiative, resourcefulness, originality, creativity, inventiveness etc. It defines that company has to be artist as well as scientist. The key is to continuously ask the question that is there any better way. Camry, RAV4, 4-Runner, RX are some of ingenious vehicles who have gained huge attention in the auto-mobile market (Huizingh, 2011).
Second principle they follow is the pursuit of Perfection. Innovation occurs at Toyota through systematic movement of perfection at all the levels of business. Perfection brings excellence, precision, competitiveness in all departments (Schiederig, Tietze and Herstatt, 2012). For instance the Lexus brand of Toyota is a sign of perfection in form of design, performance, car, service and satisfaction. Third principle of Rhythm of fit states that Toyota works on shaping the innovation in order to adapt with the attitudes and behaviour of people. Company firmly understand the change that fits into current time and environment (Gawer, 2011). Hence it can be said that above three principles create both policy as well as framework at Toyota for driving innovation and developing fine solutions.
There are also some practices which company has adopted in relation to its core principles for purpose of innovation. Management understood the importance of learning and make out that learning and innovation can go hand in hand but learning is to be given priority. Education and learning can bring substantial innovation for the business (Basulto, 2007). Another thing to do is to constantly work on latent needs of the customers and comprehend the emerging needs. Company believe that elegant solutions often comes from the customers, so the idea is to get out and try to live in consumer's world. Further it laid emphasis on clear and existing needs of people. Innovation which has the potential to drive business is presumed to be funded and succeed. They also look for invention in pictures and visuals. They emphasize on need for visual imagery (Silicon Valley Business Journal, 2015). The most compelling solutions are of perceptual and emotional nature.
At this stage company needs intuition and the ability to read the minds of customers. Further a sound technical analysis is critical before innovation begins for the new product. Toyota take into account factors such as risks, probabilities of success and the lessons learned from the past mistakes (Surowiecki, 2015). Hence the bottom line is that Toyota has became the dominant care manufacturer because of innovation. The major key to success is creating elegant solutions on the basis of three guiding principles. Because of this company has become world's finest manufacturer and a truly a great innovator. Combination of production perfection and technical innovation work as unbeatable recipe of success for company. The most important thing to remember is that Toyota has a way of thinking (Yahoo News, 2015). It is not just a series of processes or incentives or targets rather it is a philosophy a way of looking at life. Hence it can be said that Toyota lives up with great innovation management. Company has seen so much success because they are well familiar with the needs and wants of the customers. They work greatly on encouraging innovation because they want their customers to be happy and satisfied.
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Tata Motors is the world famous automobile company that is basically known for its innovative products all around the world. Company has only one mission and that is to make the life of people simple by providing the best and most high quality products (Tata.co.in, 2015). Company also wants to create vehicles that can provide the high experience and total safety to people in all aspects. As asked by some managers at Tata Motors, it was found out that company has used different types of the innovation management process that has helped them to become one of the most innovative companies in the world.
One of the best strategies that company applied was the open innovation which means to combine all the internal and external ideas as well as the internal and external paths in order to develop the new technologies in the company (Tata.com, 2015). This model or process helped the company to develop new processes and products with a collective effort from all internal and external sources. Moreover, it also helped the company to share the knowledge among the workers which forced them to create some new bench marking technologies (Anon, 2015). By using this particular model, company invented the world's cheapest car known as Tata Nano.
This project was areal invention in all levels of engineering work like engine, body, parts, design and marketing. Company decided to bring the number of sources under a single umbrella in order to execute this particular project (Brentani and Reid, 2012). Company also believes in working with other firms so that it can learn new things and create better products in front of world. This is not the case in case of Toyota as the company like to develop its own products without knowledge sharing and due to that it was criticized for imitating the cars of other companies (Talke, Salomo and Kock, 2011). Research and development division of Tata works hand in hand with some German suppliers called as Bosch.
Local researchers and in order to bring cars ta can satisfy the needs and demands of the people all around the world. In order to make cheap cars, company decided to reduce the cost of its engine units which was successful. Other than that, company also used more of fibre and plastics instead of metal to further make some difference in terms of cost (Song, Kawakami and Stringfellow, 2010). Apart from the process and production, company also uses the help of third party to use its product marketing and reach. Company while using the open innovation increased the modularity among both its products and processes. Further, aggressive leveraging of third parties have also helped the companies to reach more customers in limited time (Van De Vrande, Vanhaverbek and Gassmann, 2010). Creative use of the innovation technology which was carefully integrated with social institutions helped company to deliver even greater values in all terms.
There are some other innovative technologies also that were used by the company for the mass market in the emerging economies. From the interview of some Tata motors managers, it was analyzed that, from the very beginning company has given great emphasis on disruptive technologies because it is simpler, cheaper and most important very user friendly (Chiaroni, Chiesa and Frattini, 2011). It starts with the low cost product in the low end or non-traditional market and then slowly moves towards the mainstream market. Company used this method and brought many innovations in its vehicles. Company also focused on the architectural innovations by keeping the core technology untouched with some components linked to it and then adding some new components into it. Tata used this particular method by linking the low cost innovations into a car concept (Gassmann, Enkel and Chesbrough, 2010). TataMotors also believes in using the modularity which involves a core product designed as a platform where the architecture, interface and the standards remains constant in order to accommodate the future generations of the products. All the cars of the company are launched with the space of some modification so that it can be added later on in order to fulfill extended needs and demands of people (Maital and Seshadri 2012). Other than all these techniques, company also focused on partnering with different companies so that innovation can be increased in very low cost. Tata has always been aggressive in collaborating with different international as well as local manufacturers and companies. More than 80% parts of the company are outsourced to different companies in India as well as out of India to the companies like Bosch (Ahmed and Shepherd, 2010). Tata also use labor intensive assemble method rather than the capital intensive production in order to reduce the further cost in production.
Company in order to bring the innovations have also followed the growth with acquisitions strategy. From the very beginning, Tata motors had the strategy to expand the innovations in terms of buying companies with lots of innovations (Igartua, Garrigós and Hervas-Oliver, 2010). Company purchased the Daewoo in 1998 which was the Korean company so that it can achieve the workforce in order to expand business into heavy vehicles' sector. Similarly, company also purchased the Jaguar Land Rover in order to enter into the luxury car market (Huizingh, 2011). It can be said that all these acquit ions helped company to present themselves as a company with great future and innovative methods to fulfill all needs and demands of people in most suitable manner.
In terms of connection, there are many technologies that were used by company like the Total Quality Management Services, Tata group Innovation forum, etc that allowed them to connect all the Tata Companies throughout the world by stimulating innovative thinking and fostering collaboration and research (Schiederig, Tietze and Herstatt, 2012). This forum allowed the company to organize many events and workshops that increased the interactions between Tata Managers, innovation experts and academicians. With the increasing demand of protecting the world from environment degradation Tata has also taken a step by installing a new treatment process which is completely based on the nanotechnology at its paint shop and is helping company to reap green benefits and cost savings (Brentani and Reid, 2012). This new process not only helped the company to cut down its energy use, water consumption but it also helped them to reduce the generation of highly toxic effluent sludge that has severe health hazards.
In terms of comparison, it can be said that Tata is still a very small company in front of Toyota because of its reach, capital, size and products. There are many things which can be compared like Tata has always believed in learning from people so it understands the needs and wants of target market then develop the products whereas Toyota has always believed in themselves and due to that company is developing the products on its own and still getting success (Silicon Valley Business Journal, 2015). Technology that is used in Toyota is very superior and the company generally makes high end and luxury cars but on the other hand Tata has very limited reach in high end market and is very much limited to small, compact and cheap cars. Tata is very behind in terms of adopting the green technology whereas Toyota is manufacturing green vehicles from many years (Basulto, 2007). Toyota is a company that is very active in implementing new technology like Kanban cards, andon cord, etc. but Tata does not invest in technology instantaneously because it waits and see the market trend. It can be said that Tata still needs a creative thinking like Toyota to capture the world market with its cars.
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Innovation management brings together collaboration and social software along with a clear focus on developing results and establishing a culture of knowledge sharing & innovation. The purpose of innovation management within a company is to develop a suitable environment so that innovation and creativity can be encouraged (Van De Vrande, Vanhaverbeke and Gassmann, 2010). Toyota and TATA motors can adopt different types of approaches in order to improve the innovation management within the business. These approaches are as follows:
Planning – The best way to manage innovation within the business is to prepare appropriate plans. Framing of plans provides solid base to all business activities. Planning has to be done at every aspect such as engineering, vehicle evaluation, prototype building, safety, crash worthiness etc (Igartua, Garrigós and Hervas-Oliver, 2010). It helps in identifying from where the innovation can arise inside the business. After framing plans strategies and approaches are decided which can be implemented. Here need and preferences of customers are given special attention and then products are designed accordingly. Planning also reduces any kind of uncertainties related to future and proper measures can be adopted at time (Van De Vrande, Vanhaverbeke and Gassmann, 2010).
Market scanning – In order to drive innovation it is also important to know what is happening and what is going to happen in the market. Companies have to be remain updated with latest trends and practices inside the automotive industry (Song, Kawakami and Stringfellow, 2010). Customers always expect adding of some extra features and characteristics in the vehicles that they drive. Firms have to work on these features which can provide comfort and luxury to consumers. Further producers have to identify the class of customers for which they are designing the vehicle (Talke, Salomo and Kock, 2011). Here the investigation is done about the purchasing power of people. Hence companies try to segment their market. For that purpose appropriate scanning of the surrounding market is important. In this way they can drive for innovation within business.
Identifying needs of customers – In order to survive the intense level of competition it is important to scan the customers that means identifying their needs, expectations and requirements (Brentani and Reid, 2012). This will help in improving the products for both companies. Needs and wants of people can be obtained through online surveys, field surveys, etc. Customers will have plenty of ideas for incremental innovations. They can suggest some features or things which can make product cheaper, faster and easier to use for them (Schiederig, Tietze and Herstatt 2012). Hence it is very important for both the companies to constantly work on innovation and creativeness.
Watch the competition – Automotive industry is flooded with high level of competition. All firms make hard efforts to live up to the expectations of customers. Toyota and Tata have to be remain alert with their competitors in an intelligent manner (Huizingh, 2011). It is important to analyse the position of other companies in order to make out where they are standing. They have to find out how their products are competitive and better than others. Firms can bring innovation by designing their product better and distinctive from others. For that purpose they have to keep in mind the position of the competitors. Innovative products can help in giving tough competition to other companies (Igartua, Garrigós and Hervas-Oliver, 2010). The focus is on improvements which can distinguish company from others and helps in consolidating its presence on the market.
Marketing of products – Marketing and promotion is inseparable element of business. In the absence of proper marketing, no product can survive in the market. Firms have to adopt unique ways of promoting their products so that more and more people can be attracted to buy them (Ahmed and Shepherd, 2010). Toyota and TATA can adopt social media marketing within their business which is a current sensation in market. Very high number of companies are relying on this tool of marketing and it is because high amount of awareness can be created among large number of customers (Maital and Seshadri, 2012). Hence selection of right marketing technique is also necessary for innovation.
Resources – Success of innovation depends on all the resources of company which includes human, technical, financial etc. Creativity can be seen if all these resources are utilized in optimum manner and to their best extent possible (Gassmann, Enkel and Chesbrough, 2010). Toyota and TATA motors have to employ highly skilled and efficient manpower which can produce most innovative design for their vehicles. Technical resources includes effective use of best equipment and tools for manufacturing of cars. Financial resources includes effective management all cash flows of business (Chiaroni, Chiesa and Frattini, 2011).
Research & development activities – Innovation is also achieved by constantly focusing on research and development activities. It is about finding ways of giving amazing and outstanding vehicle driving experience to the customers (Maital and Seshadri, 2012). Both the companies have their own research and development centres where regular research and development activities are undertaken. These centers are the driving force behind their all engineering activities. Members of team work on engineering design, prototype building, safety, crash worthiness, regulatory affairs, emissions, vehicle evaluation etc. So all this lead to bring innovation within the company(Igartua, Garrigós and Hervas-Oliver, 2010).
Vision & Mission – Companies can also practice innovation management by setting vision and mission related to innovation. Vision of TATA motors is deliver products which are most admired by their customers, employees, business partners and shareholders (Ahmed and Shepherd, 2010). They want to constantly work on the experience and value which their people enjoyed from being with them. Vision of Toyota is centred around its three working principles which are discussed above.
Above all it can be said that support of the senior management is also crucial to successful innovation. It is necessary to have a clear direction and support from upper management so that employees can feel highly motivated to achieve all business goals and objectives.
From the above study several aspects can be concluded. It can be said that Tata stand out small in front of Toyota in terms of innovation. In terms of technology Toyota is way superior as compared to Tata. Vision and mission of Toyota are highly concentrated around innovation and besides that their major principles which includes the art of ingenuity, the pursuit of perfection and the rhythm of fit, makes one of the highly competitive automotive organization in the market. Their success is based on innovation in their production system. Further they work very hard on needs and preferences of customers. On other other side Tata has developed its business on the basis of understanding of its people and target market. They also believe in working with other firms so that it can learn new things and create better products in front of world. They have also followed the strategy of acquisition for innovation. It can be said that both the organizations share different work cultures and dimensions. All they need to do is keep their research & development activities strong and active every time. This will help them to run on path of innovation every time.
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