Group Report

1. Topic: Explore Innovation • Sources of Innovation • Types and Patterns of Innovation • Standards Battles and Design Dominance • Timing of Entry

Group Members
 Rahman Mohamed M00459704  Janany Kumarasarma M00459341 (Group Leader)  Nayomi Ekanayake M00436434  Infaz Ismath M00459696

Group Project
MGT 3130

Acknowledgement
We would like to express our gratitude to Mr.I.G.Perera who gave us the possibility to complete this assignment and for the guidance and support he gave in preparation of this study. Especially, we would like to give our special thanks to our senior batch that enabled us to complete this work. However, it would not have been possible without the kind support and help from our friends. Last but not the least we would like to thank all our peers and staff at I.C.B.T and specially Mr.Shalika our coordinator who were ready to lend a hand in whatever way he could. We are making this project not only for marks but also to increase our knowledge. Thanks again to all who helped us.

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Table of Contents

1.Overview .......................................................................................................................... 3 1.1 Introduction ................................................................................................................. 3 1.2 Reasons for choosing topics........................................................................................ 4 2.Methodology .................................................................................................................... 5 3.Sources of Innovation ...................................................................................................... 6 3.1 Individual Creativity ................................................................................................. 6 3.2 Organizational Creativity ........................................................................................... 7 3.3 User Innovation .......................................................................................................... 7 3.4 Creativity to Innovation ............................................................................................. 8 3.5 Research and advancement ........................................................................................ 9 4. Types and Patterns of Innovation ............................................................................. 10 4.1 Product vs. Process Innovation ................................................................................. 10 4.2 Radical vs. Incremental innovation........................................................................... 10 4.3 Competence enhancing vs. Competence destroying Innovation .............................. 10 4.4 Architectural vs. component Innovation ................................................................... 10 4.5 Technology S-Curve ................................................................................................. 10 5. 6. Standards battles and Design Dominance ................................................................. 14 Timing of Entry......................................................................................................... 17

Reference .......................................................................................................................... 20

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1.Overview
1.1 Introduction
We will be choosing Sony as our firm for this topic. The essay will be all about the innovation of Sony. How they explore, execute and exploit innovation. Their methods and types of innovation, how they first came into the scene, their barriers and obstacles in doing so and the battles they‟ve had over the years with rivalry companies. Our aim is to finish this as successfully as we can by finding correct and accurate information. At the end of this essay we would have liked to have done a thorough and meaningful research of Sony. Find out how Sony over the years has been so successful, their tips and tricks and all their innovation process that‟s been going on throughout the years. Objectives would be to get whatever information we get through a solid and reliable source, such as the Sony website. Sony also has their own forums and FAQ sites where a lot of information is shared. We can also get information from other related websites such as news websites and other rivalry company websites, and also from Sony retail outlets where we could talk to them in person. And we hope to finish this essay with the best of our ability, through fair practice. The electronics side of Sony is known as “Sony group”, which is categorized into five segments. Electronic, games, entertainment, motion pictures as well music, financial services etc. We have carried out this research to do a detailed study of the industry dynamics of the innovation process of Sony. And during this essay we have evaluated the company‟s Sources of innovation, Types and patterns of innovation, Standards battles and design dominance and finally the Timing of entry.

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1.2 Reasons for choosing topics:

1st topic: Sources of innovation – The reason is to find out what is the source of Sony‟s success, the source from where all the brilliant innovation ideas come from, and what is behind all the success Sony has had throughout the years. 2nd Topic: Types and patterns of innovation – Sony is a unique company, only few companies have the success rate of Sony. So we are interested in finding out the unique types and patterns that Sony use in their innovation process. 3rd topic: Standards battles and design - Sony is not the only company out there, naturally there is competitors, and competitors mean battles for dominance. It could be for design or otherwise. And so we are curious as to know how Sony have overcome all these competitors to stay at the top of the tree. 4th topic: Timing of entry – Obviously Sony has made a very good entry into the market. Especially regarding their most productive goods, like the Play station series. And we‟ll be looking deeply into this to find out the reason. How the idea came about – Sony‟s products are something which we use in our day to day life. Our mobile phones, our gaming devices, our household items etc. So it‟s an interest of ours to find out in detail about Sony. How it started from scratch, and what it has done throughout the years to achieve such a rank in today‟s world.

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2.Methodology
This group report mainly focuses on “Exploring Innovations”. So as we had a choice to choose our company we chose “SONY” as they are the pioneers in technology and who originates with various kind of technology from time to time.

This study is based on secondary sources of information. The main sources of secondary information are the internet, journals and articles. Internet is a suitable option as most of the organization relies on providing their own website customized to serve the needs of its consumers. Technological companies also have its own website which will provide a great amount of information for the needs of this research. Beside these there are numerous amounts of authors that have published their own articles online to which others can refer and gather information from it. This can be a valuable source of secondary information for conducting this research. We as a group worked really hard to gather information and research on Sony organization although it is a well-recognized organization.

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3.Sources of Innovation

SONY perpetually targeted to supply new hardware product which is able to be applied into their computer code systems. For instance, in cameras, live station, blue ray disc and Sony used 3D live product. From this techniques SONY isn't solely focusing among their corporations and conjointly Considering out of the box for contemporary technologies. Through linking each of the internal concepts and with the assistance of external specialists they're aiming to step up their analysis competency and with efficiency to act in response quickly to changes of the client would like.

3.1 Individual Creativity
The SONY Play station was invented by the Sony engineer, Ken Kutaragi in 1994, who was researching from 1990 and did a smart move in 1994 and the play station console was the best-selling console at that time.

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3.2 Organizational Creativity
Sony has always been the pioneers of creativity when it comes to technology. Their motto is make .believe and it‟s described as shown. Sony as a company attempts to take the maximum use of their employees to bring out their creativity. This has been proven to us not only once but many times already. Sony happened to become one of the best companies after the war in japan. Sony Organization as a whole had a high amount of knowledge about technology and creativity aspect as well. They used to spend less on resources and labour and get more out of them and they were gaining privileges from specific Asian countries. Their creativity leads to their organizational success it is clear from TWOS analysis, PESTEL and so forth.

3.3 User Innovation
Many merchandise starts off with „innovations‟. All innovations return from serving to noncustomers fancy the merchandise. An innovation actually originates from external world the “industry” and comes from people who don't have any information in any respect concerning the “industry” or the merchandise. Sony on the other hand starts to acknowledge users as a supply of innovative concepts for tangible and intangible goods. Sony gathers user information from various ways to develop and gain an insight of what their next innovation should be by internet and other sources.

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3.4Converting creativity to innovation

Some of the main innovations                 1946 – Japans first tape recorder was built 1950 – Japans first commercially successful transistor radio was created. 1960 – The first fully transistorized television was released 1965 – The transistor radio was created “Sony boy” 1971 – The Colour video cassette player was built. 1975 – The Betar video tape recorder was created 1979 – Worlds first stereo cassette player was built. 1980 – Sony launches the beta cam 1982 – Worlds first cd player was introduced 1983 – Sony created the floppy disk 1989 – light weighted camcorder was introduced 1994 – Sony play station was released 1996 – Flat TV‟s were introduced 2003 – entertainment robot was created 2006 – Blue-ray disc were introduced 2009 – Sony vio netbooks were released

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3.5 Research and advancement
Sony continuingly got involved in technological innovation as to keep up the expansion of the entire cluster. Sony also does believe that the technology has created possibilities through our analysis and development is vital to product differentiation in existing businesses and therefore the supply important creation in fresh business. Sony pays a high amount of resources in order to research and keep up with the constantly changing technology, to increase the consumer demand more. In the year of 2007 Sony spent a large proportion from its overall income which is 7.1% on R&D. Sony has come up with an OLED which is efficient and thinner than LED thru R&D.

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4.Types and Patterns of Innovation
Innovations are a part in the output of the organization, it can be good or services. Innovations are always improved effectiveness and efficiency of the products. It plays a major role in organizations‟ turnover. Innovation leads to success, Innovation is bringing out something new to the market.

There are four innovation types can be listed as follows, 1. Product vs. Process Innovation 2. Radical vs. Incremental innovation 3. Competence enhancing vs. Competence destroying Innovation 4. Architectural vs. component Innovation

4.1Product vs. Process Innovation.
Process Innovation is a new way of marketing through delivering good or services to the market. Even though the product innovation is more important than process innovation, both are essential for an organization for its sustainability. For example Walk man was invented by Sony for the first time which was a portable music player, and from the day of beginning to up to now Sony has created so much of electrical products such as, In the Electronics and Mobile category; Sony is the market leader of the audio and video electronics in the United States.     Blu-ray Disc CD,DVD Super audio CD technologies Sony sells a wide range of consumer products. 10 | P a g e

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Consumer products as;  BRAVIA high definition television  Cyber shot digital cameras  Handy cam camcorders  VAIO personal computers  Walk man digital music player Under Sony Mobile Communications  Xperia smart phones  Sony entertainment network Sony Creative software  Sound Forge Pro  ACID Pro  Vegas Pro

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4.2 Radical vs. Incremental Innovation
Radical innovation is bringing out a completely new product type of production process; it can be a totally new product and some state of diversifications. But, most of the radical innovations would be very new to the market and specially differs from the existing product process. Based on Sony Corporation an introduction of the Sony play station was a radical innovation, it was far enough powerful to dominate the market for the video games. Sony was aware of technology changes to present powerful processors with developed graphics, it made Sony to become a market leader in the video games industry.

4.3 Competence enhancing vs. Competence destroying Innovation
Competence enhance and competence destroy are two different concepts in innovation of the industry. For Sony Corporation manufacturing each generation of Intel‟s microprocessors of 286, 386, 486, Pentium, Pentium 2, Pentium3 and Pentium 4 are implicit in its previous generation.

4.4 Architectural vs. Component Innovation
Architectural changes the connection which means transform the entire design of the system. According to Sony Corporation, Walkman is an example of architectural Innovation, which changed the shrinking of the radio technology, into portable music player. It changed the music industry forever.

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4.5 Technology ‘S’ curve

S- Curve illustrates introduction, growth and maturation of innovation. (Innovation Zen). S- Curve if very flexible and convenient to analyze the industry‟s overall performance such as, introduction, growth and maturation of innovations and it can easily understandable. At the beginning stage a specific amount of money was spent on research and development and it took long time for the production. Earlier stage of the curve is adoption period since it is a new product or technology to the market the adoption is little slow. Sony Corporation moves forward with „S-Curve‟, it introduces new technologies with cheaper prices, E.g. PS2. S-Curve is useful to understand the value of the enhancement as well as price restrictions. Usually Sony when it comes to the S-Curve when introducing a technology to the market they offer the product at a high price and of low volume for an example Blue- ray Disc. Also when theres a market for the existing product and the volume goes in large quantities, and Sony tend to pull the price down to increase reliability to the customers and to increase their client base, this is also one strategy of Sony.

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5.Standards battles and Design Dominance
Sony throughout the years had many battles with rivalry companies, and more often than not has come up on top. Usually their designs dominate other companies. Sony usually has that knack of coming out on top as they have so often done in the past. And as most know Sony has a very high standard set for itself in the modern world. They have achieved so many standards in terms of their designs, devices and features etc. But they also have achieved standards „out of the box‟, like Sony green partner standards which they established in 2001.

Design is a very important thing in today‟s world. Every company has to have its own unique design, and more importantly it has to have a much better design than its closest rival, because the first thing a customer notices in a product is its design. There could also be many problems with companies putting up their designs first in the market as other companies could copy it, but not putting it out there first could have them lagging behind in the market, and no company would want to have that, so there are quite a few issues when it comes to design dominance. Sony has had many battles over the years, battles with Sega, battles with Nintendo, and with Microsoft. To overcome all these firms and to be one of the leading organizations in the market had to have taken some serious thinking and some good skills as well. Timing is everything for Sony. Like with their play station series, they unveiled all three at almost the perfect time, whether it was in the seasonal time or waiting until Microsoft released its Xbox first.

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Absorptive capacity is a method which Sony has used very wisely. After the initial success with the play station 1, Sony then invested a lot of money in R&D and also into the production of the plays station 2, and fair to say it has played of handsomely. Sony also made the PS2 games backward compatible and vice versa, that also helped in attracting a lot of buyers. After releasing the PS1 Sony only made minor changes in the PlayStation 2, the functions were basically the same with a few changes, but with a different design. Sony also introduced a “slim” version of the play station 2, and as the name suggests it was obviously slimmer than the previous one, it also came with a vertical stand and had more memory space as well. This is a good example of increasing the revenue and increasing the product‟s profit, minor changes such as this could make a huge difference in the company‟s profits, the PlayStation 2 “slim” went on to be more popular than the original PlayStation 2 even though the price was slightly higher and the design and functions had hardly changed.

Sony had a memorable battle from 2003 to 2008 with Toshiba. The famous Blu-ray versus HD-DVD battle. Sony however had the backing of its brand name, and its own Sony pictures Entertainment to go with other studios to help them with the battle. While Toshiba had the Warner brothers and Universal pictures with many others. And Sony had one major advantage going their way. Sony‟s play station 3 used the Blu -ray technology, Sony‟s play stations have always been a huge success, and a large population used the play station 3, that there alone was a huge factor for Sony. And as time went on, Warner brothers defected to the Blu-ray standard leaving Toshiba very little chance. A little later after that Toshiba‟s CEO announced that Toshiba would accept defeat and no longer produce HD-dvd players.

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More than its Blu-ray technology Sony had a huge success with its play stations. And like with the Blu-ray Sony had a battle for its play stations as well. Sega, Nintendo were its initial contenders. And later on Xbox rose up to be its main concern. When Sony first put its play station 1 in the market in 1995, Sega were the market leaders. And to get the success that Sony did was a commendable effort; also at the time Sony did not have a brand image in the video game market although they had other an image in electronics and media. And with the help of some outsider like Bruce Stein (toy industry veteran) Sony manage to really burst into the market. They also managed to persuade game developers like Electronic Arts the largest game developer in the US at the time to produce play station titles. With the play station one being such a hit, the much awaited play station 2 was always going to be a real eye catcher. The play station 2 kicked Sega out of contention and rose to become on the best gaming device/console of all time, and sold like hot cakes at the time. With Sega out of the way came Microsoft‟s Xbox and Nintendo‟s Game cube. When the Xbox came into the market it‟s price was much less and also the technology was slightly more than the play station 2, but the play station 2 already had a significant lead in the market. And in the 2001 Christmas season the Xbox sold 1.5 million units and the Game cube 1.3. The play station on the other hand had sold 2 million units in the month of December alone. But in 2005 the Xbox 360 came out which happened to overtake Sony‟s play station 3 which Sony expected to sell more than it actually did. Not long after Nintendo came out with their Nintendo Wii, which overtook the play station 3 as well as the Xbox 360 by a big margin, thus forcing Microsoft and Sony to reduce their prices which resulted in a loss for each item sold.

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6.Timing of Entry

Timing is considered as one of the most significant step to be taken by any company when launching a new product to the market. Most of the successful business point of view is common towards the idea that for a success of a product it is very much important to be the first on the market to launch a product. Because it opens a great chance for the company or an enterprise to gain profit as mostly consumers gets attracted to new findings and new innovations which comes into the market. This is not only to gain profit but it has also other advantages such as obtaining plentiful competence and a better market plus there is more opportunity to get patent registration which will prevent a new competitor to the market. However it is true that this does not sound as easy as it says to obtain a consumer demand for a totally new product. It can only be done with advanced planning and research on the similar products in the market which would help the company to establish new techniques to bring it to an advanced level than those which are already in the market. Thus timing of entry has become a major task for the company when launching a new product. It does not depend on one or two features of the product but many features are attached in it. For instance it is very much important to find out the demand for that particular product. This can be known by comparing it with a similar product and research on that product in the market as to how consumers have accepted that particular product and how much demand is there in the market. This also involves technology and development of the product. It is important that the product has new technological innovations or advanced features which could create a demand in the market and also it should maintain certainty as it is a new product. The consumers have to be given the belief that it does not deceive them with any feature in that which they could be discouraged after use of the product.

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There are number of times where products come into the market at the same time which increases high competition. One of the much known product example is Coca-Cola and Pepsi Cola which usually introduce their innovations in to the market simultaneously after the competitors. This is referred as parallel entry which is to be given high attention since every project or venture comes with great planning and expectations as each of them will have strong innovations as there are leading enterprises in the market. Since a high competitive atmosphere is created when there is a parallel entry as every company will bring up their best innovation by a strong venture to establish a something new to the market and also to be first on the market. One of the well-known brands of products in the market comes from „Sony‟ which is known as for its high quality consumer electronics. For example products such as DVDs, laptops, televisions, personal digital assistants and with a high demand for its PlayStation Sony is known as one of the leading technologies for many years by winning different awards for its technological innovations. Once it was announced that Sony was awarded Consumer Electronics Brand of the Year by a survey carried among U.S consumers which resulted in achieving 35,000 customers in a year.

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One of the greater achievements for Sony was when it launched its PlayStation Portable (PSP). It was a great success which showed a huge demand among the consumers that there were shortages of the product in stores across the countries as it gained around 200,000 units after a month of its launch. As Sony got to know that they need to bring out more units to the store they decided on the time they would launch it which was closer to time of Christmas which was considered to be the point where their decision of time of entry seems to be an advantage for the product. Also they decided to launch their next version console the Xbox 360 before Christmas because at the same time Nintendo was launching the latest console Revolution box at the same time. This timing of entry was decided on competition of the market.

This pressure of competitiveness is one of the most important factors to be taken in to account when deciding the time of entry of a product as there are some many features attached with it.One is to keep up with the rivals where the company has to make sure that their competitive product does not go one step ahead. Another feature is the need of the consumers which is very important for the company to keep it up to date and also the aware of the technological changes. Thus it is very much important for the business to maintain consumer interest in its products and develop the product in order to satisfy the different needs of the consumers as there are so many competitors who launch their product at the same time. Thus it is important for the business to launch its product by new developments and strategic planning specifically when it is a new product. It could be aimed to increase sales on the new product and minimize on existing products in the market by focusing on the competitive products.

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Reference
 Schilling, M.A. (2010) Strategic Management of Technological Innovation (3rd Edition). McGraw-Hill, New York.

About.com, 2013 [History of Sony PlayStation /Who Made the First PlayStation] [ONLINE] Available at: http://inventors.about.com/library/inventors/bl_playstation.htm. [Accessed 10 July 2013]. Bized 2012 [Bized, Notes, 2012, Timing of market entry] [ONLINE] Available at: http://www.bized.co.uk/notes/2012/03/timing-market-entry. [Accessed 10 July 2013]. Bized 2013 [Bized, Strategic Planning, [ONLINE] Available at: http://www.bized.co.uk/dataserv/chron/news/2442.htm. [Accessed 15 July 2013]. Garylilien. 2013. [ONLINE] Available at: http://www.garylilien.info/publications/49%20%20Timing%20of%20competitive%20market....pdf. [Accessed 11 July 2013]. Seanmalstrom.wordpress 2009 [The Source of Innovation, Malstrom's Articles News] [ONLINE] Available at: http://seanmalstrom.wordpress.com/2009/07/30/the-source-of-innovation/. [Accessed 09 July 2013]. Sony Global - Technology. 2013. [ONLINE] Available at: http://www.sony.net/SonyInfo/technology/. [Accessed 11 July 2013]. Sony Store 2013 [Sony Careers, About Sony Electronics, History of Innovation] [ONLINE] Available at: http://discover.store.sony.com/sonyjobs/pages/about/innovation.html. [Accessed 10 July 2013]. Wiki Invest 2013 [RESEARCH AND DEVELOPMENT for Sony (SNE)] [ONLINE] Available at: http://www.wikinvest.com/stock/Sony_(SNE)/Research_Development. [Accessed 12 July 2013].

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