Managing Innovation for Substantial Competitive Edge

1. MANAGING INNOVATION FOR
SUBSTANTIAL COMPETITIVE EDGE
Complied by:
Mr. Santanu Kumar Das
General Manager, Sales and Marketing
Manipal Cure and Care, Bangalore
E-mail: dassantanu12@rediff.com
Mobile: +91 9972303422

2. Santanu Kumar Das
MANAGING INNOVATION FOR SUSTAINABLE COMPETITIVE EDGE
April, 2010
____________________________________________________________________________________________
Table of Content
Introduction ………………………………………………………………………… 3
Programme Goal …………………………………………………………………… 4
Outcome Objective ………………………………………………………………… 5
Contributing Factors ……………………………………………………………….. 6
Discussion ………………………………………………………………………….. 8
Conclusion …………………………………………………………………………. 17
Synopsis ……………………………………………………………………………. 19
References ………………………………………………………………………….. 20
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3. Santanu Kumar Das
MANAGING INNOVATION FOR SUSTAINABLE COMPETITIVE EDGE
April, 2010
____________________________________________________________________________________________
Introduction
Steve Jobs in an interview with CNET News at the Macworld Expo, 2002 said “Apple
and Dell are the only ones in this industry making money. They make it by being Wal-
Mart. We make it by innovation.”
If you analyse what Jobs said carefully, you shall see two distinct “Unique Selling
Propositions or Differentiators” in the same category. There is practically no
difference in their offering. Dell lures its customers by displaying an attractive pricing
and then adds on hidden costs once the customer walks-in. Apple does the same by
showing-off their cutting-edge design and upfront premium pricing.
A Unique Selling Proposition or a Differentiator is always necessary for any company
to keep on growing. Rather it is their only chance to remain at the top/buzzing of their
consumers mind.
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4. Santanu Kumar Das
MANAGING INNOVATION FOR SUSTAINABLE COMPETITIVE EDGE
April, 2010
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Programme Goal
In today’s close-knit and competitive markets it is very difficult to identify a
dependable service provider for an end consumer, especially in the category of
healthcare. On an average the patient-hospital bed ratio in India is 12 beds per 10,000
people. At any given point of time if 1% of our country’s population falls sick we do
not have enough beds to accommodate or doctors, paramedic professionals to attend.
Even in this scenario every hospital and medical facility is busy fighting the war of
the latest world-class technology they have implemented to see their balance sheets go
green. The question is; where are the beds? And where does the rest 99% population
go? Lifestyle diseases are racing ahead of infectious diseases.
Companies that embrace innovation today for sustainability will generate more long-
term shareholder value because they do not ignore future risks resulting from
technological developments, social inequalities, and growing environmental
problems. Today’s investor believes that sustainability is a method for enlightened
and disciplined management, and thus an essential factor in corporate success.
Good management can predict these changes in the awareness of the investors and the
developments in the market at an early stage and transform them into business
opportunities. This makes the company stand ahead of trends / the company’s
sustainability profile in the eyes of its investors, beneficiary customers and associate
business partners which give a competitive edge ahead of its competitors in the
industry or sector.
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5. Santanu Kumar Das
MANAGING INNOVATION FOR SUSTAINABLE COMPETITIVE EDGE
April, 2010
____________________________________________________________________________________________
Outcome Objective
What is the purpose of your business?
Business needs profits! But a profit is not the only reason why business is done. The
objective is to provide value to the customers, when this vision is lost then the sense
of purpose is lost, the feeling of belonging, the sight of the reason of work and reason
of business is lost.
Striking the right balance in the business will help you refine your goals.
Organizations prosper by achieving strategy through balancing the following aspects
of business.
• Customer First
• Employees
• Operations
• Advertising, Communication and most importantly
• Growth
When all these business aspects are brought in line, for the value addition of the
business, not only do they add value for the customer but provides immense profit to
the investors for its unique approach.
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6. Santanu Kumar Das
MANAGING INNOVATION FOR SUSTAINABLE COMPETITIVE EDGE
April, 2010
____________________________________________________________________________________________
Contributing Factors
Differentiator
In future we are going to deal with consumers who comprises of today’s youth, who
see, react and voice their opinions bluntly. So, we need to think today, to have a
product or service for tomorrow and most importantly with a “differentiator” that
future generation adores.
Sony was known to be a market leader in technologies like Audio Players, Walkmans,
Discmans, etc. for the mass market. Apple Inc. conventionally a computer
manufacturer introduced a brilliant product - iPod (What I call – An MP3 player with
graphical user interface) that took the market by storm. Today, even after 4 years of
its launch, the likes of Sony, Panasonic are still striving to regain their top position.
Differentiator gives a business the edge that keeps competitors at bay and reaps
extraordinary growth and profits. And today we hear every urban Indian talking about
Apple Inc., which was unheard of just half a decade back. Here’s where Apple
thought “future backwards” and this is how it comes into play, with the present state
of our country’s healthcare it is difficult to suffice the growing Lifestyle Diseases. So,
when everybody is screaming aloud of the technology, there’s a slot to be identified
that gives you the first mover’s advantage in the market and keeps your competition at
bay.
Focus on strengthening the innovation in your core capabilities like leadership,
teamwork, communication, information integration, processes and implied knowledge
which cannot be replicated easily by competitors.
It is important to create a good leadership and an effective team.
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7. Santanu Kumar Das
MANAGING INNOVATION FOR SUSTAINABLE COMPETITIVE EDGE
April, 2010
____________________________________________________________________________________________
Among the other core competencies, motivating leadership and team work plays most
important role for the faster success. “It is about thinking future backwards and not
the presents forward”. As a leader, you must focus your company’s resources on what
it does best and what creates competitive advantage. Some technical and business
competencies can be in short supply however. You can address these missing
competencies by using three approaches: internal development, acquisition of an
outside firm, and partnering.
Be innovative and intelligent at Human Resources strategy for a sustainable
competitive advantage. Every differentiator can be bought or replicated overnight, but
duplicating a well-trained, motivated, and committed workforce will need at least a
decade.
Manage innovation in the processes, Focus not on what your people do, but on how
they do it. Establish a synergetic and an end-to-end coordination of work activities
that create and deliver ultimate value to the customer.
No single aspect of a business model is sufficient to create a sustainable competitive
edge. It is the synergistic combination of all of these information services and
logistical processes that creates value for customers and comprises the competitive
advantage of this business model.
Timing
Timing is everything. You have to know not only how to make a move, but when to
make the move. Customer value derives from timely delivery. You have a brilliant
business idea but implemented at a time which the product is not useful, it has no
value addition. Skin moisturisers needed to be sold just before winter!
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8. Santanu Kumar Das
MANAGING INNOVATION FOR SUSTAINABLE COMPETITIVE EDGE
April, 2010
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Discussion
To illustrate what I mean by “innovation for a sustainable competitive edge” let’s take
an unique example of innovation being implemented in every area of business - The
United Parcel Service (UPS).
UPS’s system depends in part on a human resources management and highly efficient
technology. It is the world's largest package delivery company. Headquartered in
Sandy Springs, Georgia, United States, UPS delivers more than 15 million packages a
day to 6.1 million customers in more than 200 countries and territories around the
world. Since 2005, its operations include logistics and other transportation-related
areas. It was based in New York City from 1930 until 1975, Greenwich, Connecticut
from 1975 until 1991, and has been based in Sandy Springs since 1991.
UPS is well known for its brown trucks, internally known as package cars (hence the
company nickname "The Big Brown Machine"). UPS also operates its own airline
based in Louisville, Kentucky where its World port air hub is also located.
UPS's primary business is the time-definite delivery of packages and documents
worldwide. In recent years, UPS has extended their service portfolio to include less
than truckload transportation (primarily in the U.S.) and supply chain services. UPS
reports their operations in three segments: U.S. Domestic Package operations,
International Package operations, and Supply Chain & Freight operations.
Their major domestic competitors in United States include United States Postal
Service (USPS) and FedEx. In addition to these domestic carriers, UPS competes with
a variety of international operators, including Canada Post, TNT N.V., Deutsche Post
(owner of DHL), Royal Mail, Japan Post, India Post and many other regional carriers,
national postal services and air cargo handlers. However, their earliest competitor was
the Distributional Overnight Western National Service (DOWNS), a service with
roots in the pony express that has since disappeared.
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9. Santanu Kumar Das
MANAGING INNOVATION FOR SUSTAINABLE COMPETITIVE EDGE
April, 2010
____________________________________________________________________________________________
Historically, the bulk of UPS' competition came from inexpensive ground-based
delivery services, such as Parcel Post (USPS). But in 1998 FedEx expanded into the
ground parcel delivery market by acquiring RPS (originally Roadway Package
System) and re-branding it as FedEx Ground in 2000. In 2003 DHL expanded its US
operations by acquiring Airborne Express, significantly increasing its presence in the
United States, and adding more competition in the ground delivery market. In
response to this, UPS partnered with the US Postal Service to offer UPS Mail
Innovations, a program that allows UPS to pick up mail and transfer it to a USPS
center, or destination delivery unit (DDU), for final distribution. This process is also
known as zone skipping, long used by Parcel Consolidators.
More recently, the continued growth of online shopping, combined with increasing
awareness of the role transportation (including package delivery) has on the
environment, has contributed to the rise of emerging competition from niche carriers
or re-branded incumbents. For instance, the US Postal Service claims "greener
delivery" of parcels on the assumption that USPS letter carriers deliver to each US
address, six days a week anyway, and therefore offer the industry's lowest fuel
consumption per delivery. Other carriers, like ParcelPool.com, which specializes in
residential package delivery to APO-FPO addresses, Hawaii, Alaska, Puerto Rico and
other US Territories, arose in response to increased demand from catalog retailers and
online e-tailers for low-cost residential delivery services closely matching service
standards normally associated with more expensive expedited parcel delivery.
Brand Identity makes a huge difference
Colour
The brown color that UPS uses on its vehicles and uniforms is called Pullman Brown.
The color is also mentioned in their advertising slogan: "What can Brown do for
you?" Originally founder James E. Casey wanted the trucks to be yellow, but one of
his partners, Charlie Soderstrom stated they would be impossible to keep clean, and
that Pullman railroad cars were brown for just that reason.
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10. Santanu Kumar Das
MANAGING INNOVATION FOR SUSTAINABLE COMPETITIVE EDGE
April, 2010
____________________________________________________________________________________________
Font
UPS commissioned brand consultancy FutureBrand to develop their own font, UPS
Sans, for use in marketing and communication material. UPS Sans was created by
slightly altering certain parts of FSI FontShop International’s font FF Dax.
Uniforms
The UPS delivery driver uniform consists of a brown short-sleeve or long-sleeve
button-up shirt or blouse with a pointed collar, front left pocket, and the company
logo above the pocket. The shirt is worn with a pair of brown pants or shorts. When
pants are worn, the shirt tail is tucked in. All buttons, with the exception of the one on
the collar, are fastened. Both shirts can be worn with either the shorts or the pants.
Drivers for UPS Express Critical are not required to wear any uniforms and can
deliver in their own clothes.
Winter attire consists of a heavy brown jacket with the UPS logo on the left breast,
the trademark brown pants, and either a UPS baseball cap or a simple brown stocking
cap. UPS drivers must have a tucked-in brown or white undershirt underneath the
jacket.
A male UPS driver must be clean-shaven or have only a mustache that does not
extend below the corner of his lip. His sideburns may not extend past the ear and his
hair may not extend below the top of the collar.
During the initial expansion into what was then West Germany the Brown UPS
Uniform was replaced with a Green Uniform due to sensitivity over the "Brown
Shirts" worn by the Nazi SA during Hitler's rise to power.
Vehicles
Package cars
UPS package car from rear quarter. US variant, Corpus Christi, Texas, the UPS
package car (or van) is a major symbol of the U.S. business world, with its iconic
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11. Santanu Kumar Das
MANAGING INNOVATION FOR SUSTAINABLE COMPETITIVE EDGE
April, 2010
____________________________________________________________________________________________
status referenced in an early-2000s ad campaign following UPS' sponsorship of Dale
Jarrett in the NASCAR Sprint Cup Series: the ads were about how the company
would prefer to race the truck over a stock car despite the futility of doing so, as
"people love the truck".
The classic UPS package car is built on a General Motors or Ford chassis has a
manual transmission, manual steering, and no radio or air conditioning. The older
ones are easily recognizable due to their round headlights and turn signals set onto a
sculpted fiberglass hood. These are either Grumman Olson P-600 or P-800 step vans
(a recent redesign changed the look, replacing the round turn signals with ovoid LED
ones).
Newer package cars in North America have either a Freightliner Trucks or Navistar
International chassis; automatic transmissions and power steering are slowly
appearing in package cars. UPS also operates Dodge Sprinter box vans as well as
Dodge Grand Caravan minivans.
UPS has ordered Modec electric vans for its UK and German fleets. Energy costs play
a huge part in the potential profitability of package delivery companies like UPS,
DHL and FedEx.
When package cars reach the end of their useful service life (typically 20–25 years or
more), they are almost always dismantled for spare parts; the only exception being
when they are repainted white for internal use.
When using non-proprietary trucks, such as Ford E-Series vans, Dodge Caravans, or
Dodge Sprinters, UPS will often remove the vehicle badging as to not provide free
advertising to the manufacturer.
Other trucks
A UPS trailer parked in Durham, North Carolina UPS commonly refers to its tractor-
trailers as "feeders". The tractors are painted the same shade of brown as the package
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12. Santanu Kumar Das
MANAGING INNOVATION FOR SUSTAINABLE COMPETITIVE EDGE
April, 2010
____________________________________________________________________________________________
cars, while the company-owned trailers are painted grey. Most tractors usually tow
two 28-foot (8.5 m) trailers in tandem (also known as "pups"), or a single 45, 48 or
53-foot (16 m) trailer. They have three different types of feeders — Flatbed, Drop
Frame and Trailer on Flat Car (TOFC). The latter are put onto railroad cars. Tractors
are usually made by International or Mack, but a few Ford, Sterling, and Freightliner
tractors are in the fleet. Past makes in the fleet include Chevrolet, GMC, and Diamond
REO. In keeping with the "no free advertising" the same is done with the "feeder"
trucks. The make and model badges are removed from the vehicle.
UPS Airlines
From the launch of UPS Airlines in 1988 to today, UPS has had two color schemes
for its aircraft fleet. The first was introduced in 1988 and is still seen on some of their
aircraft today as the new design is phased in. It consisted of a mostly white fuselage.
A brown stripe was located on the window line (or where it would have been on its
Boeing 757 and 767 freighters). The words United Parcel Service was located above
the stripe on the front half of the fuselage. On the 747 aircraft, the United Parcel
Service letters were much larger and were located further back. A brown vertical
stabilizer featured the then-current UPS shield.
Today's colour scheme was introduced alongside the new brand-mark design in 2003.
The brown stripe was phased out to be replaced by an arching design over the wing
coming to a point on the top of the fuselage. This brown segment was trimmed by a
gold outline; this is the same color gold as on the new shield. Replacing the company
name on the fuselage is, in black: "Worldwide Services", with the words
"synchronizing the world of commerce" underneath. The redesigned logo is featured
on a brown vertical stabilizer.
Bicycles
In 2008, UPS started hiring bike delivery people in Vancouver, Washington; Portland,
Salem, Corvallis, Eugene, and Medford, Oregon.
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13. Santanu Kumar Das
MANAGING INNOVATION FOR SUSTAINABLE COMPETITIVE EDGE
April, 2010
____________________________________________________________________________________________
Trains
UPS contracts with several railroad companies in the United States to provide inter-
modal transport for their cargo.
Innovation in system design
UPS' Parcel Network is based on a hub and spoke model. UPS operates centers that
feed parcels to hubs where parcels are sorted and forwarded to their destinations.
Centers typically are the point of entry for parcels and send the parcels to one or more
hubs. A hub is a location where many centers send packages to be sorted and sent
back out to other centers or hubs. For example, a parcel being shipped from
Wilmington, North
Carolina to San Francisco, California is picked up by a driver and taken to the 23rd
Street center in Wilmington, where it is loaded on a trailer and driven to Raleigh,
North Carolina. At Raleigh, the package would join packages from all over North
Carolina and be forwarded to the Chicago Area Consolidated Hub in Hodgkin,
Illinois. After arriving there, it would be loaded onto a trailer and sent by rail (trailer
on flat car in most cases) to the North Bay, California hub in San Pablo, California,
where it would then be forwarded to the delivery center, loaded onto the delivery
vehicle, and transported to its final destination.
UPS' air network runs similarly to the ground network through a hub-and-spoke
system, though air hubs are typically located at airports so packages and planes can
quickly be unloaded, sorted, and loaded again. Centers feed packages to facilities at
airports (called gateways), which in turn send them to an air hub to be sorted and put
on another plane to a final destination gateway, and then from there to a center. For
instance, a package traveling from Seattle, Washington to Atlanta, Georgia, would be
loaded onto an air container at Boeing Field just south of Seattle and flown to the UPS
Air Hub at Chicago Rockford International Airport in Rockford, Illinois. From there it
would be sorted to a container heading to Atlanta to Hartsfield-Jackson International
Airport, and taken by truck from the airport to the delivery center.
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14. Santanu Kumar Das
MANAGING INNOVATION FOR SUSTAINABLE COMPETITIVE EDGE
April, 2010
____________________________________________________________________________________________
A good management not only addresses an environmental issue but integrates it
as a part of their process.
Fuel economy
In 2004 UPS announced that they would save fuel by minimizing left turns. Because
drivers are idle at intersections while waiting to make left turns, UPS developed
software that routes the day's packages with preference to right turns. Since UPS
operates a fleet of over 88,000 ground vehicles, the fuel savings are considerable. In
2005, UPS eliminated
464,000 miles (747,000 km) from its travel and saved 51,000 US gallons (190,000 l)
of fuel within Washington D.C. alone.
UPS is also utilizing hybrid electric vehicles (HEV) for local deliveries only. As of
May 22, 2007 the company has 50 deployed in Atlanta, Dallas, Houston, and Phoenix.
The 50 HEVs are expected to cut fuel consumption by 44,000 US gallons (170,000 l)
per year.
Environmental record
UPS has 94,500 vehicles in operation. In May 2008 UPS placed an order for 200
hybrid electric vehicles (adding to the 50 it has currently) and 300 compressed natural
gas (which are 20% more fuel efficient, and add to the 800 it already has) vehicles
with from Daimler Trucks North America.
UPS received a "starting" rating of 39 points out of 100 totals on the environmental
scorecard by the Climate Counts Group for their efforts to lessen the company's
impact on the environment. UPS has also been awarded the Clean Air Excellence
Award by the United States Environmental Protection Agency because of the
alternative fuel program they have developed.
In October, 2009, UPS became the first small package carrier to offer customers the
chance to buy carbon offsets to neutralize the greenhouse gas emissions generated by
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15. Santanu Kumar Das
MANAGING INNOVATION FOR SUSTAINABLE COMPETITIVE EDGE
April, 2010
____________________________________________________________________________________________
the transport of their packages. Although initially only available on UPS.com and to
high-volume shippers, UPS hopes to roll out UPS carbon neutral to more customer
groups in this year.
New age technologies are transforming business environment. The same is also
driving changes in the business information available to an end investor and
consumer. The key word for sustainability in today’s competitive business
atmosphere is: Differentiator. The challenge is to provide this “Differentiator” with
clarity, understanding and insight. Communication is an effective tool in marketing.
Adopt it whenever, wherever possible. It can actually get you closer to your consumer
and it’s a medium which can be personalised.
Sustainable Growth is the foundation for business to succeed, it requires you to be
always at the top and to do so, and you need to constantly throw challenges at your
competition, create hurdles that make a market less contestable. These are created to
block potential entrants from entering profitably and keeping the first movers
advantage. Be innovative in creating hurdles, do it by healthy and sustainable ways by
adding value to your products or by changing the perspective of your consumer and
way hey perceives your offering.
Build market leadership and develop consumer loyalty by establishing branded
products. It can make successful entry and sustainability in the market. Be innovative
in branding your product or services. Few great examples to share would be Absolut
Vodka – the shape of its bottle and the typography on it, the advertising message that
has not changed even a bit since its inception. Rather evolved with time. The
Economist – The bright patent red background with the same serif typeface and the
then the Volkswagen Beetle - A small car introduced when the roads were jammed
with Cadillac and Impalas of the world. Today Beetle has become a motoring icon
because of its distinct shape and clever advertising.
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16. Santanu Kumar Das
MANAGING INNOVATION FOR SUSTAINABLE COMPETITIVE EDGE
April, 2010
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Effective strategic alliances will save time and resources by allowing you and your
partners to focus on your core competencies and provide you with the competitive
advantage crucial to your company. The Nike + iPod Sports Kit.
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17. Santanu Kumar Das
MANAGING INNOVATION FOR SUSTAINABLE COMPETITIVE EDGE
April, 2010
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Conclusion
Through innovation we witnessed how Apple’s story of iPod, the effective workforce
& system flow at UPS logistics or Volkswagen Beetle; could achieve a sustainable
competitive edge in comparison to their counter parts.
The answer to serving the rest 99% population is - “Preventive Healthcare”. In simple
words, convert this problem in an opportunity. Our future consumer is young, well
informed and blunt; we need to create an offering that he adores.
Brand Image
Create a distinct differentiator by introducing a new age/way to deliver healthcare;
provide a non-sick or non-hospital environment. Have centres spread across the city
in strategic locations where your consumer visits frequently (high streets) and he
could relate to easily. Apart from services introduce ‘preventive care products’ at your
centres and place them in strategic locations to trigger impulse buying. Have the
communication messages, advertising and imagery which can evolve with time.
Front-end staff is usually ignored as a part of brand imagery, they needs to be more
presentable, they should speak your consumer’s language and understand his lifestyle
and work.
System Design
Combine your operational and technological capabilities. Map the behavioural or
consumption patterns of your customers and improvise the delivery pattern on regular
basis. Cut down the time your consumer spends in a conventional healthcare
environment. Surprise him with simplistic, clinical report delivery methods. Provide
him easy accessibility to his clinical reports from a remote location. Still people in our
country believe in taking a second o from a family doctor. This might add a layer of
security or privacy but would definitely add value and confidence in your delivery.
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18. Santanu Kumar Das
MANAGING INNOVATION FOR SUSTAINABLE COMPETITIVE EDGE
April, 2010
____________________________________________________________________________________________
In short, introduce a new business module in healthcare that would create a hurdle for
conventional competition, keeping them at bay and giving you the first movers’
advantage.
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19. Santanu Kumar Das
MANAGING INNOVATION FOR SUSTAINABLE COMPETITIVE EDGE
April, 2010
____________________________________________________________________________________________
Synopsis
Newer technologies are introduced every day leaving no slot for anyone to acquire or
ride on. One’s who embrace innovations in their business today, will generate more
long-term shareholder value as they do not ignore future risks resulting from
technological developments.
Likewise healthcare is one such industry in our country which has a huge scope. But
due to some obvious reasons it is still in a very poor state. As discussed, average
patient to hospital bed ratio in India is 12 beds per 10,000 people and at any given
point of time if 1% of our country’s population falls sick. We do not have enough
beds to accommodate or doctors, paramedic professionals to attend. Here’s where
innovating helps achieve a sustainable competitive age.
Change the way healthcare is delivered, if the market is flooded with players who
practise the curative way. Just change the perspective of looking at it, introduce a
precautionary delivery system - “Preventive Healthcare”.
Make your offering relatable to the young, future consumer, who’s well informed and
who could adore, accept your pre-empt thinking.
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20. Santanu Kumar Das
MANAGING INNOVATION FOR SUSTAINABLE COMPETITIVE EDGE
April, 2010
____________________________________________________________________________________________
References
1. www.news.cnet.com
2. www.en.wikipedia.org
3. www.ups.com
4. www.apple.com
5. www.volkswagen.com
6. www.pressroom.ups.com
7. www.money.cnn.com
8. www.typophile.com
9. www.nytimes.com
10. www.upi.com
11. www.poynerbaxter.com
12. www.cbp.gov
13. www.findarticles.com
14. www.carbonoffsetsdaily.com
15. www.docstoc.com
16. Times of India
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