14 avril 2014

Des innovations pour le marketing

Le champs du management de l'innovation et ses pratiques ont fortement évolué au cours des dernières années. Trois d'entre elles-nous semblent particulièrement importantes

D'abord l'innovation s'est ouverte. Elle ne résulte plus seulement du dialogue des études de marché et de la R&D mais de la conversation élargie qui peut se nourrir de crowd-sourcing, de collaboration, d'open source, ce qu'un chesbrough promeut depuis le début des années 2000. Mieux, c'est le consommateur lui-même qui devient l'innovateur dont on reprend les idées et les prototypes.

Le changement ne porte pas seulement sur la production mais aussi sur sa propagation. A la fin des années 60, Bass a formulé l'équation fondamentale de la diffusion de l'adoption des produits nouveaux, qui reflète le jeu de la communication directe ( publicité) et des processus de bouche à oreille. Dans les années 2000 la notion d'externalité de réseau et de standard a ouvert sur une compréhension écologique de la propagation de l'innovation qui se traduit aujourd'hui au travers de l'intuition d'écosystème et plus profondement avec la notion de marchés à plusieurs versants. Parallèlement l'attention s'est déportée de la notion d'adoption qui a abouti au modèle TAM, à la question de l'appropriation car on s'est rendu compte que l'important était moins le fait d'acheter ou d'adopter une nouvelle technologie, plutôt que de la faire sienne et le l'insérer dans le réseau de nos habitudes, de nos biens, et de notre vie sociale.

Troisième changement sa nature. L'innovation c'est d'abord intéressé au produit, puis à l'organisation, aux services. Surtout les services désormais. Pour le marketing c'est l'idée développée par le Service Dominant Logic. La notion d'effet utile va audelà des attributs et des caractéristique des service, elle induit l'idée forte que c'est le client qui devient le producteur et incite à la participation.  Au delà la question du contenu (technique/service) de l'innovation se pose aussi la question du  degré de sophistication qui peut être élevé, nécessitant des capacités technologique importante (HiTech) tout autant que faible, frugale, pauvre et simple (Low tech). C'est ce que nous apprennent aujourd'hui les pays du sud avec des combinaison inédites. Il reste à dessiner dans cette perspective d'une innovation simple et sociale à s'interroger sur la capacité de l'innovation à transformer la société. Cette nécessité va au-dela des innovations architecturales et disruptives de Clarke et d'Abernathy.

Ce sont ces idées que nous avons approfondies avec les étudiants du MBA franco-indien lors d'un atelier à l'esc de pau tenu du 3 au 5 avril 2014 au travers de l'analyse de 6 cas :

13 avril 2014

SBI to allow mobile banking without bank account

sbi mobile bank
SBI to allow mobilebanking without bank account. SBI being one of the biggest public sector bank in India. SBI entered the market of mobile marketing as a financial service to its consumers with the help of WAP and SMS banking. SBI started a pilot project that would allow banking through mobile phones even if their customers don’t have a bank A/c. The scheme is called mobicash.The service is like a mobile prepaid card allow money to be loaded on customers mobile that he can then spend.

THE PURCHASE OF THE CARD:- The card can be purchased from specialised service providers by even those who don’t have a bank account. Customers need to pay rupees 60, a nonrefundable charge, to specialised service and load a minimum amount of Rs.200 the 1st time. The prepaid instrument launched in partnership with oxygen a service provider, offer facilities like money transfer, payment at merchant establishments and top ups for mobile prepaid cards. State bank of India estimated that currently cash and cheque payments dominate banking transactions with share of 49 % of these are expected to go down to 15% by 2020. Mobile banking constitutes just 0.1% of total
Volume et valeurs des transactions
banking transaction, would be 2
nd largest channel after ATMs. The report says and expects around 20%-30% of transaction happen via mobile phones by 2020. Public sector banks can be mobile banking a financial inclusion plot without setting up branches. SBI estimated that while a transaction at branch on an average cost Rs.45. a transaction through ATM costs Rs.20 and a transaction through mobile would cost just Re1.

MARKETING STRATEGY:-Participation in various consumer exhibition of meeting: - SBI meets an opportunity to educate people about its personal segments product and services. Tie-ups with oxygen sim card company and target all their customers. Advertising in TV and newspapers SBI has a campaign also to attempt to explain why it is better than other banks. SBI has launched an education initiative to educate its customers about mobile banking. Oral marketing by telling sim card providers to teach them about mobile banking and the ease of use. Banking over mobile from anywhere in India. Introduction of mobile banking follows the relatively successful introduction of internet banking in India. The mobile phone network is the most likely platform value added services such as online banking and mobile consumers. Several issues both technological and cultural mar the adoption of mobile banking. It has a fast growth in urban India. Banking over mobile from anywhere in India without physical premises there. Reduces delays in banking transactions and affordable time to employees for other banking services.
Number of internet users is small in comparison to mobile phone users in India. Security concern is the biggest barrier to adoption of mobile banking. There are more people using a mobile phone than a bank account in India. Setting up a bank branches is not only expensive but time consuming. Account to studies it could easily take more than two decades for bank branches to reach entire 1.2 billon people. Banks will be able to approve and give loans via mobile banking within next five years. This with further reduce the need to go to a branch. 
 First, the ability to save has improved for a majority of users through SBI mobile banking by comparison to earlier practices such as keeping cash on hand. These informal forms of savings often are susceptible to unnecessary and trivial expenditures or claimable by friends/relatives. 
Second, SBI mobile banking has become a very effective, safe, and trustworthy savings instrument for its users; importantly, dependence on risky informal methods has decreased for a large percentage of customers who were previously dependent on these practices for lack of affordable and safe savings options. 
Third, SBI mobile banking is perceived as a good substitute to both traditional banking and informal forms of savings; however, it has not dispelled the need for these existing savings mechanisms. SBI is used as one among many other savings mechanisms—including informal methods—by a sizeable percentage of customers. Fourth, SBI mobile banking is used in conjunction with or as complementary to an existing saving practice. Finally, as per the preference of SBI mobile banking over other forms of savings, users had diverging views. The majority of users consider SBI mobile money accounts as a preferred alternative for small savings. 
At the same time, in spite of an expressed preference for SBI mobile money, one-third of users became inactive following the introduction of transaction charges for deposits and withdrawals. In fact, a considerable minority of customers is concerned about the possible increase in the cost of SBI transactions. This would potentially make the service less attractive to those who are looking to save in small amounts.
SBI mobile banking has increased the capacity of low-income users to save. According to the study, 90 percent of users (N=144) state that their ability to save has increased with the mobile banking services of SBI. In response to a query about the extent of this improvement, 57 percent of users stated their ability to save had ‘definitely improved’ and 41% noted that it had become ‘somewhat better’ after opening an SBI account. Users gave three important reasons for this positive effect of SBI mobile accounts on their overall savings behaviour. First, keeping money in the SBI mobile accounts is much safer than keeping cash on hand (84 percent). Second, having a mobile account enables users to avoid wasteful expenses and to save rather than spend, thus inculcating better saving habits.SBI customers consider the services as safe and trustworthy because their savings are securely deposited with the State Bank of India, whose brand name as a leading public sector commercial bank in India lends credibility to the activities of its business correspondent, after becoming SBI mobile banking customers, dependence on risky and costly alternatives in informal savings practices (keeping cash at home, under the mattress, or on person) largely diminished because SBI mobile account became a safe saving option.11% of the respondents who had ‘no savings’ before SBI accounts were able to save after they opened their SBI accounts because it created an incentive to save. While all users in the study had stated that they found a new method of saving mechanism in the SBI accounts, more than 10 percent of the users with bank accounts found it a better alternative and shifted to saving in mobile money accounts.SBI mobile banking is a preferred alternative for small savers. Asked about their preference for saving in small lump sums of Rs. 1,000 to 2,000 ($20 to $40), 79 percent of users in the study preferred SBI mobile banking accounts as against 26 percent who preferred saving at bank.

CONCLUSION : Mobile banking and mobilepayments can help in creation of mobile based digital cash economy that is more efficient, transparent and inclusive. For this, the regulators as well as banking and telecom industry will need to make a coordinated attempt to delay effective services, educate potential customers and speed up adoption. Higher collaboration between banks ad telecoms will impact mobile adoption in India. Innovative solutions provide security speed convenience ease of use and interoperability should help players gain high acceptance. The study brings forth several insights regarding the effects of SBI mobile banking on the savings behaviour and practices of low income users in the metropolis of Delhi. A critical finding is that SBI mobile banking service is valued as a boon for small savers and users who depended on risky informal savings practices. In particular, a high percentage of users save in SBI mobile banking for emergencies.
More importantly, it is considered as a robust substitute to many informal savings mechanisms as well as a bank account. Yet, savings behaviour indicated that SBI mobile banking accounts have not dispelled the need for some of the savings mechanisms used earlier because different savings methods were perceived as having their own usefulness and purpose. Contrary to expectations, in addition to making payments and deposits easier and more accessible, SBI mobile money accounts also seem to improve efficiency and regularity of other savings mechanisms. Overall, the positive perceptions of mobile banking in the daily lives of SBI account holders are an encouraging sign of the potential of mobile money for expanding the financial inclusion of large numbers of low income households in India.
 The negative perceptions of non users with regard to their saving capacity speak on the one hand, to their irregular income and, on the other hand, to their lack of awareness of the potential of mobile banking for improving creative strategies for reaching out to the poor in India and elsewhere. This alone will ensure their financial inclusion home.

by akshay Kothari, anudeep dongre .s, chanda pokharna -   Esc Pau MBA franco-Indien - Avril 2014.

11 avril 2014

Tesla: a toy for the hipster? Maybe not for much longer.

Model S
Facing the decreasing supply of petroleum resources and the arising need for alternative solutions, the energy transition is currently a world-wide challenge, especially for car-makers. The car industry is slowly changing and more change is coming. We see four possible outcomes for car-makers in this transit: the end of car ownership and the apogee of car-sharing (such as Autolib’ with the Bolloré Bluecars), the hybrid car (using different sources of energy), the all-electric vehicles (EVs) that can be recharged at a paying station or at home or in some other places (parking, malls, food courts); and finally the model proposed by Tesla which is an all-electric vehicle plus the infrastructure throughout a region to recharge the car for free. Tesla is different from any other commercialized EV because the car comes with free energy in any Supercharger station.
 
Tesla is a US-based company primarily engaged in the designing, development, manufacturing and selling of electric vehicles and electric powertrain components. Tesla was founded in 2003 by a group of ambitious engineers in the Silicon Valley. The company recorded revenues of $2,1 billion in 2013, as compared to $413.2 million in 2012. Tesla operates in North America (75% of revenues), Europe (24%) and Asia (1%). The company revealed Roadster, a powerful electric vehicle in 2006. In May 2013, Tesla expanded its Supercharger network covering California and Nevada on the west coast and the Washington, DC to Boston region on the east coast. In January 2014, Tesla opened new Supercharger locations connecting the Netherlands, Germany, Switzerland, and Austria.

Tesla, the disruptive
Tesla engines bring the revolution in green tech businesses for those who are looking for an alternative to petrol cars. The then Vice chairman of General Motors stated in an interview "All the geniuses here at General Motors kept saying lithium-ion technology is 10 years away, and Toyota agreed with us, along comes Tesla. So I said, 'How come some tiny little California startup, run by guys who know nothing about the car business, can do this, and we can't?” Effectively Tesla forced the car industry to come up with similar technologies. However Tesla has succeeded in using battery-only systems. It also argues that this method of power is more efficient than petrol-powered vehicles. Tesla engines are about the size of a water-melon, with a lot more juice.
Indeed, Tesla produces a battery which is able to outperform traditional batteries in order to have vehicles entirely battery-powered with no emissions. They use their unique lithium-ion batteries to make the only EVs in the current market that combine long-distance driving. They propose unique EVs that combine high ranges, sportive performance, design, and a unique recharging infrastructure. Among the main commercialized EVs in the world, the Tesla Roadster has the highest autonomy for an all-electric (395 km), then the Tesla Model X comes second (260 km), then in third place is Tesla Model S matching Bolloré’s Bluecar (250 km), and finally the forth one is Renault’s Zoé (210 km) and all others EVs are under 200 km of autonomy.

The road might be bumpy

Although 25,000 world-wide customers were convinced by Tesla’s model S, some fear took over late last year, as three Tesla drivers saw their car turn into flames in the U.S and Mexico. This kind of incident got world-wide media attention as concerns were raised as to how qualitative Tesla’s batteries really are. Tesla’s CEO, Elon Musk, was fast to comment and reassure the public and investors stating that despite the incidents, Tesla cars were much safer than regular petrol cars. In February this year, Musk acknowledged that Tesla experienced “a significant drop in demand, and we are quite worried about it”.
Security issues are not the only concerns customers might have before buying a car from Tesla. A big question mark for European potential customers is the number of Superchargers, Tesla’s fast recharging stations which allow a driver the recharge up to 80% of the battery in 40 minutes and a full charge in 75 minutes. Although the U.S will be 80% covered by the end of 2014, there are currently only 14 stations in Europe, and most of them in Norway and Germany. We know it is Tesla’s intention to expand this network of Superchargers in Europe by the end of 2015 but for now only a handful of potential buyers live close enough to a station to make the use of a Tesla at least moderately convenient. For all the others, they can fully recharge in 12 hours using a regular plug at home… Not quite the dream yet!

How does Tesla’s strategy fit in the global picture?

The growing sales and infrastructure in the U.S will give Tesla the cash to scale up world-wide, and do the necessary work to do so. Currently, sales in the U.S finance the expansion in other countries. Compared to other luxury cars, Tesla sells the Model S to a much higher percentage of men (83,9%) and those buyers are, on average, 45-64 years old and wealthier than those purchasing competing models. The Model S is often compared to the General Motors' Chevy Volt and Nissan Leaf because they are the three best-selling all-electric, or extended-range electric cars. They all may be battery powered, but the type of buyer they attract is totally different.
In its expansion in Europe, Tesla will also be facing a marketing challenge: standardization or adaptation? Tesla will have to adapt to the demand for smaller cars that most Europeans drive. According to the European Commission, the main target for all-electrics is young female around 18-34 years old who live in metropolitan area, using a car everyday and are very familiar to electric cars. The technology will remain the same, only the body-work will have to be changed. In its effort to convince European buyers, Tesla will most likely come up with European versions of its fleet.
On another note, Tesla will most likely have a hard time competing with all the gas providers who are paying (or paid) for direct distribution on the highways, at least in France. Only through tough negotiations and ingenious competition Tesla will be able to develop its Supercharger network.
Finally, another important issue is the price of energy in Europe which is more expensive than in the U.S. Could they really offer, for free, electricity in Europe? Waiting for this to happen, most European car buyers will probably not connect the dots between the offer and the advantages. Old habits die hard.

On top of everything mentioned in this article, we have realized that electrical vehicles are not a new concept. Since the first petroleum shock in the 1970s, all car-makers have talked about transforming the existing petroleum model to a new one without really doing it. Tesla has done it with performance EVs using existing technology and more, implementing Android, creating Supercharger stations. Why do world-wide leading car-markers have difficulties matching Tesla’s performance? Tesla being a young company created in the Silicon Valley, they don’t have the lock in process to launch projects. An important fact is that Tesla’s CEO Elon Musk is an entrepreneur to the core who doesn’t hesitate to break barriers. 

By Anne-Claire Lanuzel, Marie-Sophie Pons, Juliette Soria, Kailash Kolla and Arnaud Juhel- - Esc Pau MBA franco-Indien - Avril 2014.


BAJAJ: Frugal for BOP

Hamara Bajaj!!
In recent years, the Indian two-wheeler industry has seen spectacular growth. India currently has the second fastest growing two-wheeler market after China, which experienced 42 per cent growth (2010, marketline), and followed by Germany in third with 23 per cent growth. The Indian motorcycles market is forecast to have a volume of 19,099.6 thousand units, an increase of 38.4% since 2013.
India has an emerging economy, which has allowed people access to better career prospects and a higher quality of life. These economic advances have given people the opportunity to purchase affordable transportation products, such as motorbikes. BAL was founded in 1945, it is India's largest, and the world's 4th largest two- and three-wheeler manufacturer. Based in Pune, Maharashtra, the company has factories in Akurdi and Chakan (near Pune), as well as, Waluj and Patnagar in Uttaranchal. Bajaj Auto makes and exports motor scooters, motorcycles and auto rickshaws (a two or three wheeler motorised passenger cart).

BAJAJ Auto issue:

Bajaj Auto continues to struggle in the Indian market by posting a 6% degrowth for the third consecutive month. However Bajaj has seen a 5% increase in exports this month with 1,42,009 units (against 1,35,149 units in 2013 (Marketline)

Solution:  Changing the distribution system to be able to provide motorbike to rural zone The company is going to set up separate sales channels for every segment of its business and consumers. Bajaj Auto's entire product portfolio, from the entry level to the premium, is being sold by the same dealers. The restructuring will involve separate dealer networks catering to the urban and rural markets as well as its three-wheeler and premium bikes segments. Plans are now being firmed up to rationalise its 500-strong dealership network, in some cases closing down un-viable city dealerships or asking them to move to the rural areas. The company has identified 20 cities from rural geographies, where rural dealerships will come up, including Chakan near Pune, Niphad near Nashik, and the outlying areas of Surat and Kanpur. According to M. Bajaj, "The needs of financing, selling, distribution and even after-sales service are completely different in the rural areas and do not make sense for city dealers to control this". "The city dealer is happy with the proposal since he can focus on selling motorcycles which is witnessing huge growth," Mr Bajaj said, adding that the number of city dealers will come down slightly. "But, then, they get better volumes since discounting disappears when competition is reduced."
By targeting rural areas, Bajaj Auto will need to adjust its prices for a lower income population. To take upon this challenge, BAL will need to find new,innovative ways to reduce its cost.

Frugal innovation: How does BAL do it? What does it mean?

To decrease cost of the production BAL is using standard raw materials, but in order to provide a quality products it adds the latest technological features to the bike. This can be seen as Frugal Innovation, because BAL is removing all non-essential features from a durable good. This low cost manufacturing allows the company to reduce its overall costs so they are able to sell a high quality product, at a low cost price. This approach is also seen in the second principle of Jugaad innovation book, where they promote the idea, “Do more with less”. BAL is connected to a large supplier network (200/350 suppliers) to get the cheapest standard material. They are able to use economies of scales and bargaining power thanks to their market share 17,9% (2013, Marketline)

What BAL has already done to help the BOP (charity Business, education, social, environment)

The core elements of CSR include ethical functioning, respect for all stakeholders, protection of human rights and care for the environment. The Jamnalal Bajaj Foundation has been developing these elements in selected rural areas. CSR values are followed in order to maintain the well being and needs of the local people. Special emphasis is given to health, family welfare, immunisation, supply of portable drinking water, sanitation and alternative source of renewable energy. The firm is involved in a lot of charitable activities, such as community awareness campaign and health camps, but also a large amount of employment generation programmes. The JBF is also involved in a hospital (Kamalnayan Baja Hospital) located in Aurangabad, providing specialist care, medical facilities which are not available in this region.

According to what we said previously, how BAL will be able to provide its motorbike to BOP?

By using the BOP approach, BAL is able to supply motorbikes to the majority of its target consumers in the rural zones of India. BAL is well known brand in the rural zone of India, and due to the low price of their products they can easily sell them. People can understand the company's motives and the benefits BAL can offer them.

Conclusion

After several years of competing against Honda’s Hero, BAL decided to reorganise its business structure, following the concept of frugal innovation, in order to address the rural Indian market. This approach can be considered as Frugal since it seems to follow the 6 rules mentioned in the book. Since BAL is targeting under privileged consumers the analysis of the company shows it can be considered as a BOP approach (this term might be use for MNC operating in developing economies).
Furthermore, the authors also define the western approach on innovation as “ industrialisation of the creative process led to a structured approach to innovation with the followings key characteristics: big budgets, standardized business process, and controlled access to knowledge.” This model of innovation management has 3 clear limitations: “Too expensive and resource consuming, it lacks flexibility, and it is elitist and insular” according to the authors. This differs to opinion of the market followed by BAL, which is more flexible, uses more efficient methods to address developing markets.
Enhanced by the success in India, BAL wants to export its model and implement its activities in emerging markets, such as Africa. Is their success only due to their strong national image after what they have done for the BOP in their own country? Will this strategy be as successful in other emerging countries without applying any tailored CSR approaches to their individual economies?

By  Quentin Girardeau, Thomas Hénault, Malik Simon, Vincent Pensa, Alix Lalire, Martin Leblond -
- Esc Pau MBA franco-Indien - Avril 2014.



How does Nike transform the sports practices?

Launched in 2012 the Nike+ FuelBand, Nike Corporation reached to take advantage of three main socio-cultural changes. Namely, the increasing of personal coaching businesses, the lack of time for people to practice a supervised sport and the increase of the individualism in developed countries. Indeed, this designed high-tech bracelet is conceived to follow your way of moving thanks to the unit Nikefuel, which is a universal way to measure your movements for any kinds of activities. 

The digital fitness device market is dominated by Fitbit with its “Flex” (67% of sales in 2013), followed by the Jawbone Ps (19% of sales) and by Nike (with 10% of sales in 2013). Nike Inc.'s equipment division saw an 18% rise in profits for the 2012 fiscal year after introduction of its flagship (against -1% in 2011).

Nike+ FuelBand: Not just a product, a real innovative concept

The Nike+ FuelBand allows also customers to stay connected through the Nike+ community. From now on the company offers not only a product but also offers a multitude of associated services, a universe and a lifestyle. Nike enable its customers to:
  • Follow their physical activities and compare it along the time.
  • Define their personal objectives day per day for each training session.
  • Train in a clever way by being advised by a famous international personal trainer who is going to care about each individual case, and provide an adapted solution according to the objective of each customer.
  • Improve their performance by analyzing them and giving a general trend.
  • Find a better circuit which will be adapted to the consumer need. By diversifying the circuit, Nike is also suggesting more or less difficult training.
  • Challenge your friends through games and virtual competitions.
  • Share your success.
What is the objective of Nike Brand?

Take advantage of “The Quantified Self” among other trends. So, QF is a movement to incorporate technology into data acquisition on aspects of a person's daily life in terms of inputs (e.g. food consumed, quality of surrounding air), states (e.g. mood, arousal, blood oxygen levels), and performance (mental and physical). Such as self-monitoring and self-sensing, which combines wearable sensors (EEG, ECG, video, etc.) and wearable computing, is also known as life logging. The product matches perfectly to needs of these specifics customers.

Firstly created for the runners, the FuelBand is aimed to touch the maximum of people. The most important thing is the ability of Nike to make consumers aware of their need of this product and to adopt daily it. Finally, Nike tries to create virality and extend the Nike+’ community (a real digital cloud) including all daily efforts not just sport, making customers more active “Life is a sport, make it count”. Obviously, this cloud creates dynamics, relationship with customers and a feeling of identity, membership in the brand. It’s also a system of motivation and socialization.

Who is targeted?

We can suggest a segmentation by sports practices frequency and also by benefits. That is why we tried to identify some caricature profiles.

People who are casually practicing sport

First, people who would be not aware of doing physical activities in their daily life. Here, Nike is challenging itself, to make more people practicing more sport activities. Nike encourages the physical efforts. The woman being 50 years old and doing her vegetables market is active! Then, people who taking care about their image and adopted the Nike style. This urban style is linked to a young dynamic trendy. They perceived the product as a fashionable accessory.

People who are regularly practicing sport

We can quote people who are looking for a physical wellness. For example women who are doing Zumba or Fitness in order to feel good in their body [15 to 45]. Or the young executive is looking for staying in a good shape [25 to.40]. Obviously, people who are looking for mental profits and satisfaction. For example, the young trader, who needs to decompress and to forget daily responsibilities, he will quickly adopt the product.

Sportive amateurs who are frequently practicing sport

One hand, we would have people who are practicing an individual sport and are looking for the individual performance and tend to come out of their limits. Cross country running illustrates these customers. In the other hand, we would find people who are practicing a team sport and are looking for the comparison of themselves with the others and supervised by a coach being careful for individual and collective performance.

Finally, this product needs some improvements (because some problems of Nikefuel accounting) before to be adapted for new use and in other areas. We can easily imagine medical applications to struggle for example against some diseases such as diabetes. Indeed, this kind of gadget could be a permanent blood tester and warn people who has a disease. Obviously, we can also imagine many perspectives for this product related to the Big Data trends.

By N. Godard, A. Natta, V. T., S. Datta and M. Quetant - Esc Pau MBA franco-Indien  -  Avril 2014.

“Products are yours” – The offering strategy of Auchan with Quirky


What is the common point between a perfect tea maker, stackable glass, and lights for keyboard? You don’t see it? 
Well they all came from the mind of a consumer like you and me. And they all came to reality and are sell through the social community Quirky. Conscious of the huge potential of this platform Auchan recently form a partnership with them. The firsts Quirky’s products should be in the shelves this spring. Focus on a promising innovation.




The importance of being innovative when you’re a retail chain.

Since the first store opened in Roubaix in 1961, Auchan has become one of the leading retailer worldwide. Present in 12 countries with over 170,000 employees, the Auchan group, led by the Mulliez family, generates a turnover of 41 billion €. Hypermarket sector represents 78% of the turnover of the group. Hypermarket was recognized as a temple of modern consumption. Nowadays hypermarket has lost its dynamism and some of his followers indeed turnover of Auchan France declined by 2.6% in 2013. Auchan opened in 2000, the “drive”. It has really took 10 years to take off. In parallel, the rise of local shops won 2 million customers in France (figure Kantar-IFLS).
Gigantism and distance have become the main weaknesses of the model. Some consumers feel they have better things to do than waste 2 hours in a department store too, and too far from their homes. That’s why Auchan has chosen to import Quirky products to offer its customers everyday products truly innovative and attractive. On this exclusive partnership, the creation is at the heart of the launch of Quirky Auchan. Quirky today provides over 300,000 individuals contributors and inventors to meet and create a product via an online social network. 

Innovation 2.0, by Quirky.

Quirky has an international online community of more than 10,000 members. Basically the customer will propose his ideas to the site. The other members will give their suggestions and enhancements to that idea in the site. Quirky is getting almost 3000 ideas per week, from that only 3 ideas are being selected for the evaluation purpose. There are two possibilities in the evaluation desk if it is get selected then Marketing research, design and naming of the product will be done, otherwise it will get rejected. Then to create the product, Engineering and concepts are being made. After that the study of market for the product is done. Now, according to the engineering and concepts the product will be made in the production unit. Then the product will be made visible in online stores and also some of the international super markets. Once the product is being sold, 10% - 30% of the benefits are given to the inventor of the idea as well as the members who are all contributed in this innovation. Last year Quirky paid $3.8 billion to its inventors and members who are all influenced it over online.
Product innovation means different things to different people.
Quirky bring infinity of new possibilities. And they let us dream nicely about our future with those. From simple items to complicated ones. Quirky makes products like electronics and power, health and fitness, kitchen. For e.g.: Six pivoting outlets accommodate plugs and chunky adapters of all shapes and sizes. Fill every outlet with any plug—all at once. Yet those are mainly incremental innovation, but maybe one day the community will be able to truly revolutionize the world. The creation process is brand new in the business, and need a lot of flexibility. This combination of facilities, skills and technologies that are used to produce products needs to be rethink for every projects. The strongest ideas are well researched, easy to understand, build them with modern technology. Each week, ideas are received. Before it does though, it has to go through a staff and community review process. Quirky probably won’t subsidize to a R&D department but for sure it can create products and bring ideas that a R&D department would never came up with.
Beyond those frontlines innovation, we must not forget the background innovation, which is the base of Quirky: Human resources. Working on so many different projects with the will of making dreams of people came true and adapt to all the news conditions is like creating a new company per products. (And there are 3 new products per week!) That’s really stressful and so Quirky introduced the voluntary company black-out. In average every 3 months, but actually whenever they feel their employees to much stress they completely shut down the company for a week and ask them to do anything but not working.

To manage 450000 inventors, really?

This black out is part of a solution of a deeper issue. How to manage that many inventors? Virtually the company is not only an hundred employees that they manage but several hundreds of thousands, and for a very few of concrete results. The French community is made of 450 000 people all seeking to be the next Quirky inventor, among them less than 400 have seen their idea became a real product, and only 4 products will be sell on the Auchan’s stores. Will the French people still trying over and over to create a new product when basically the chance to see it become real is 1/1 000 and the chance to see it on the shelves is only 1/100 000? We should not forget that taking a chance cost 7 euros each time. Maybe Auchan is currently just shyly trying a new concept and will increase the rates and will face this. Still there is a possibility of seeing the French community giving up Quirky. We must not forget that French people are less risk taker than American. There the chance of an idea become a real product is 1/250, but we don’t know how the rate of products that are actually push on the market.

A strategic communication asset more than an innovation bringer?

According to Kotler’s definition marketing is:” The science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit”. But here marketing changed is to create products according to customer’s imagination beyond any consideration for the needs. The relationship between the consumer and the company is no more only a buyer/seller relationship the customer become an entrepreneur and the customers will feel like that they are the part of company and will create an emotional bound to this one. When we see the shyness of Auchan to put new Quirky’s product in its shelves, we can assume that the bound with the consumer is probably the main asset that Auchan is seeking in that partnership with Quirky.
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Reda El Ouarzazi , Arthur Guéna, Abhishek Maddi, Canida Pinto , Kiran Shivanna et Dinesh Subramanian - Esc Pau MBA franco-Indien - Avril 2014.

Bricks to clicks : The LEGO experience

Over the last 20 years, the world of consumption has changed drastically. Indeed, we can now talk about dematerialization of the world, letting our tangible objects being replaced by digital and virtual ones. The challenge for LEGO has become to satisfy new generations of consumer (Y, Z  ), with the question of maintaining sales on their primary tangible product, construction toys. 
By the late 90s the company has known serious difficulties, facing this business issues. Indeed, with the generalization of video games, children expected more technological toys. Lego has tried to cope by diversifying indiscriminately (cinema, video games, amusement park, or clothing). However, the group has pushed the strategy too far, even sales increased, the benefit dropt down. In 1998 the group knew the first loss of its history. The group had to fire a lot of employees and the Brand image was really damaged.We have diversified ourselves too much and too quickly in businesses that we do not know” said Jorgen Vig, the new CEO of the brand.
This issues which dropt down the company allowed the stakeholders to think to a smarter strategy in order to fit closer to customer needs and to propose a better answer to its new business issues.

Renew the way they manage: open innovation

After 2003 when LEGO was close to bankruptcy, they had to re-think their innovation process in order to make the company stable and profitable. Legos’ CEO and its teams decided to take steps in the innovation of his core product which is the games for the kids. The big challenge for LEGO was to renew their innovation power. To fill success, they needed a collaborative method to enhance a process involving designers, markets analysts, researchers and users.The starting point was that at every meeting we talked about the need to be more innovative – but how?” says Torsten Bjørn, who was one of the key drivers of the project Design for Business (D4B).

Organizational architecture required to exploit today’s strategy is different with the architecture required to explore (Tushman and O’Reilly, 1997). That’s why LEGO’s ability is not only to execute their traditional plastic bricks but also to innovate into fundamentally different types of toys. LEGO were only able to break out of their stagnation after performance crises triggered external leadership succession. The re-inventions are initiated under crisis conditions, they are easier to motivate than strategic renewals. LEGO re-invention was made more risky because new leader Torsten Bjørn had to lead changes in firms ‘fundamental core values associated identities. 
The new structure would allow to LEGO to strategically coordinate innovation activities, led by a cross-functional team: the Executive Innovation Governance Group. LEGO shares responsibilities for innovation in all areas across 4 groups and expects different degree of innovativeness from each of them. 
The innovation process model they create, involve awareness and a shared understanding of innovation on the whole group. Through the four pillars of business, product, communication and process, the model illustrates three level of innovation: adjust, reconfigure and redefine. In every innovation project, the first step is to define the group’s business objectives and the project goals concerning end-user experience.

How to adapt to new customers experiences?

Lego was specialized in toy’s construction. They were seen as a gift by young children, but also like share moments between a son and his father within the family. Indeed, a decade ago, the customer experience was to share good moments in family, between brothers or parents for example. More, parents offered constructions toys to make their child creative, inventive and smart!
Today, a new way of use is born; nowadays majority of children became digital fans. Lego know that and has changed his offer. The aim is to follow this new way that’s why the company proposed many movies, applications, Video-Games…
Indeed, the new customer experience is to play in front of a screen (alone), smartphone, video games tablet or movies. Those digital supports are the new way to play and make children addict. Another approach to use it is Lego Digital Designer, the goal is to create your own project, and toys are almost dematerializing. Good point for this firm, they follow the digital wave.
Lego has focused on co-branding strategies with successful products, created around 34 video games and recently a movie, “The Lego movie”. It is really attractive to note that the main goal of this movie was to add an extra dimension to Lego’s brand, and it works pretty well as it earned more than $410 million in the Box office. They has also developed partnership with entertainment companies in order to capitalize on fandom to reinforce brand loyalty, as grown-up aficionados of products spend incredible sums to acquire out-of-print sets or painstakingly build stop-motion animations of scenes from their favourite TV shows or movies.

In a world of infinite change with the development of augmented reality and the launch of 3d printers, we can wonder what will be LEGO’s next innovation and what will be the future generations’ expectations…

Jules OLIVRY, Guillaume GREGOIRE, Pierre CUMANT, Sankhet SHARMA, Estelle HENRY, Antoine RICHARD - Esc Pau MBA franco-Indien - Avril 2014.