One type of change to consider is disruptive change or innovation. Disruptive innovation is a relatively new term coined in 1995 by Bower and Christenson. In essence, this is any new or different approach to a product or services that radically changes the market. This kind of radical change is hard to predict from your competition, but just the type of internal innovation that change managers want to develop their competitive advantage in the market. Organizations that empower employees to create innovative, disruptive technologies, products, or services are the hallmark of pioneering industry leaders.
The companies who are the disruptive innovators are companies that compete in the market differently, serving an underserved or unserved customer base, and do so typically at a lower price. One example of this kind of disruptive innovation was the emergence of Amazon into the retail space. Amazon was one of the first companies to consider e-commerce as the primary method of product distribution. This disruptive approach to business has by its growth affected the retail so much that historical physical or brick and mortar companies are weakening or closing. Retailers that were once the largest retailer in U.S. cities no longer exist or are failing because of the disruptive innovation of companies like Amazon and its largest competitor, Walmart. The disruptive innovation and efficiencies of both of these companies have an impact not only on retail, but logistics, technology, and public buying trends.
For this assignment, you may choose to represent either Amazon or Walmart. If you selected Walmart as your company, you would assess Amazon’s practices. If you selected Amazon, you would assess the practices of Walmart. As the representative of your chosen company, you have been asked to identify the three most impactful, disruptive technologies that your competitor is using to secure market share. You will then address how that disruptive innovation should be treated in your selected company at each of the three identified change management tiers (i.e., enterprise, organizational, and individual). If you choose to include graphs or figures, they should be included in an appendix. Your audience for this paper is the executive leadership of your selected company. However, you are expected to write in an appropriate academic voice.
Length: Your assignment is to write a paper of 6 pages, not including a cover page, references, or appendices.
Please consider that those holding doctorates in business are often hired for their professional and academic expertise to offer solutions to businesses in need. This assignment is geared toward helping you discover how you might respond if asked to act in this role.
References:Include at least 4 references in your selected company.
Your paper should demonstrate thoughtful consideration of the ideas and concepts and provide new thoughts and insights relating directly to this topic. Your response should reflect scholarly writing and current APA standards.
Week 5 – Assignment: Explore The Role Of Disruptive Innovation In A Global Marketplace
Over the years, most firms have gained a competitive advantage in their respective industries through disruptive innovation. Amazon, an e-commerce retailer, ranks among such companies that thrive and compete against other large retailers such as Walmart through launching progressive, disruptive innovations. Like Amazon, Walmart should respond to these disruptive innovations to remain competitive in the sector; however, how the firm treats the disruptive innovations should vary from one management level to another depending on the functionality fit and the innovation’s impact on primary and secondary activities.
Impactful, Disruptive Technologies Used to Secure Market Share
Among the most significant disruptive technologies that Amazon uses at present times are automated warehouses. The company leverages robotics in its fulfilment centres to move goods from the shelves and package them in preparation for delivery. This technology enables Amazon to increase the number of order deliveries per day because the robots can move more efficiently across the warehouses and package more products than humans. For example, a New York Times report reveals that the robots raise the average picker’s productivity from 100 items per hour to approximately 300 or 400 hourly, depending on the nature of teams and facilities (Scheiber, 2019). This data implies that Amazon can dispatch about three times the number of orders it delivered before. Amazon’s warehouse automation is a disruptive technology because it introduces a different approach to handling products other than relying on human force to move and package the commodities. Amazon also capitalizes on this technology to secure a market share among consumers that seek convenience in product and service delivery.
Besides the automated warehouses, the no-cashier stores are also disruptive technologies that Amazon has been working on to improve its service delivery. The Amazon Go stores enable consumers to walk into the stores, pick the goods they need, and leave without transacting at the cash register (Koksal, 2020). The advanced technology adopted by Amazon relies on a complex system of cameras, software, and sensors that monitor customers’ activities and allow accurate charges on the picked items from the consumers’ credit cards (Koksal, 2020). Amazon’s Go store is a disruptive technology that challenges retailers that rely on cash registers to improve their service provision approach. Amazon also uses this technology to secure a significant market share among brick-and-mortar shoppers who value convenience. Arguably, the Amazon Go store appeals to consumers who lack the time or do not wish to queue in stores to purchase convenience items and groceries.
The other impactful and disruptive technology used and patented by Amazon to secure a market share in the retail industry is the automation of package delivery, particularly drones and different mobile warehouses. Reports reveal that Amazon has been patenting, developing, and testing drone delivery systems to allow customers to receive packages in about 30 minutes after placing an order. The company also envisions launching airborne fulfilment centres (AFC) soon whereby a giant drone can carry smaller drones and deploy the latter for delivery in high-demand areas. Amazon’s AFC will be a disruptive technology because it will introduce a new product delivery approach other than relying on vehicles and other delivery trucks. The AFC will also challenge the current retailers who are dependent on limited channels of delivery, notably road-based mediums, to improve their delivery system. Besides, Amazon’s AFC and drone services will help the company secure a larger market of online shoppers by offering the value of convenience, whereby purchased products are delivered within the least time possible.
How Walmart should Treat the Disruptive Innovation in the three Management Tiers
Automated Warehouses
Despite being an impactful, disruptive technology, automated warehouses may be treated differently on various management levels depending on their utilization and functionality in each tier. For example, at the enterprise tier, Walmart may vet the automated warehouses on a functionality basis, which is standardly targeted towards increasing the order fulfilment rate and meeting the growing demand for online purchases. As the literature suggests, firms should pursue a disruptive technology if it matches the entity’s size, resources, processes, and values (Danneels, 2004). At the enterprise management level, the automated warehouses may have a low-end disruptive innovation because they do not fit the processes at this tier. After all, Walmart’s enterprise management tier focuses on developing policies to address unmet consumer needs rather than delivering direct value to the clients. Although the enterprise management level may have the flexibility and resources to institute disruptive innovations, it would not be viable to pursue automated warehouse technology because it does not directly impact this management stage. Therefore, because the technological disruption scope is less critical at the enterprise level, it should not be treated with urgency in the immediate future.
Like the enterprise level, Walmart’s organization level should not treat the disruptive innovation with urgency because the former is already at play in its primary activities. Walmart’s organization management level is a significant point of the company’s value chain where consumer’s orders are received, fulfilled, and dispatched to consumers through its trailers and trucks. Walmart has been transforming a majority of its brick-and-mortar stores into fulfilment centres to facilitate online shopping, especially amidst the pandemic that has triggered a rise in online purchases. A portion of the company’s fulfilment stores is currently automated with robots that pick items from the shelves and bring them to the picking station for assembly (Repko, 2021). This information implies that automated warehouses are used at the organization level’s primary activities. Thus, as Nagy et al. (2016) suggested, this technology has no new functionality nor technical standard at Walmart’s organization level. Therefore, while automated innovation is used in primary activities at the organization level, it is not disruptive because Walmart already adopts it. For this reason, the organization-level management tier should not treat this technology with immediate urgency.
The individual management level in Amazon revolves around task performance and delivering goods to the final consumers. Because of the nature of activities at this management level, an automated warehouse may not have a significant functionality. Therefore, the individual-management level should not treat the technology with immediate urgency.
No-Cashier Stores
As mentioned, Walmart’s enterprise management level mainly focuses on policies and ways of meeting consumers’ needs. No-cashier stores target to enhance service delivery convenience by eliminating the cash register and queuing in stores. On the one hand, this technology may be disruptive to retail entities that still rely on the traditional cash register system, which implies that it may have new functionality. Nevertheless, no-cashier stores have no primary or secondary effects on Walmart’s enterprise management level. Therefore, the enterprise management level should not treat this technology with urgency.
However, compared with the innovation technologies currently in use at the organization level, it is likely that this technology may require immediate action. According to a Futurism report, Walmart has been working on a new twist of cashier-free stores where shoppers can pick items and walk out without the need to use the cash registers. Nevertheless, this technology is limited because consumers must scan the purchased items using their phones, and the store must have a human workforce to facilitate the activities’ smooth running (Tangermann, n.d.). Therefore, at the organization level, Walmart’s ability to enhance its service system, minimize employee utilization in the cashier-free stores and implement an advanced system that does not require customers to scan the purchased items is imperative. For this reason, Walmart should treat this innovation with significant urgency.
Similar to the organization level, no-cashier store disruptive technology should receive immediate action at the individual level. Task performance at the individual level of management focuses on delivering the final goods to consumers. Currently, service provision at this management level utilizes human resources for task performance, such as scanning purchased products by personal buyers because of the limited use of no-cashier technology in the brick-and-mortar store. Given that Walmart’s business model is changing drastically, from physical to online stores, there is a need to address the disruptive innovation in the immediate future.
Airborne Package Delivery
Walmart’s enterprise management level may regard the airborne package delivery differently from the organization and individual tier of management, implying that this technology’s treatment may also be different across the tiers. On the one hand, the airborne package delivery functionality may not fit the enterprise level’s business process. Notably, the functionality of the technology is to facilitate convenient and fast delivery of orders to consumers. Conversely, Walmart’s enterprise-management level focuses on executive-level processes and strategic decision making. Therefore, because the technology is not used in the primary and secondary activities at the enterprise level, immediate action may not be required at this stage of management.
On the other hand, Walmart’s organization and individual management level may consider treating the airborne package delivery with urgency in the immediate future because of its significant impact on the primary and secondary activities. Currently, Walmart relies on trucks to deliver orders to consumers. Therefore, the automated delivery system is a new functionality because it disrupts traditional delivery channels at the organization and individual level. Besides, this technology challenges Walmart’s delivery systems, which may be prone to traffic delays and prolonged delivery periods. Because the technology is a fit for primary and secondary activities at the organization and individual level, it should be treated with urgency to enhance the company’s competitiveness relative to Amazon.
Conclusion
To sum it up, automated warehouses, no-cashier stores, and airborne package delivery systems are disruptive technologies in Amazon that Walmart should consider to enhance its competitiveness. Nevertheless, the manner in which these disruptive should be treated may vary from one management level to another. Notably, the enterprise management level should treat these technologies with minimum urgency because they do not affect these tiers’ primary and secondary activities. Similarly, the low-end disruptive innovation should be addressed with minimum urgency if it does not add significant benefits to the value chain segment. Most importantly, innovations that do not introduce new functionality, such as automated warehouses and cashier-less stores, should not be treated with urgency at the organization and individual level. However, the management should implement action for innovations such as drone deliveries because they introduce new functionality in the delivery system.
References
Tangermann, V. (n.d.). Walmart is opening a store with zero cashiers. Futurism. https://futurism.com/walmart-sams-club-self-checkout-app/amp
Nagy, D., Schuessler, J., & Dubinsky, A. (2016). Defining and identifying disruptive innovations. Industrial Marketing Management, 57(2016), 119-126. http://dx.doi.org/10.1016/j.indmarman.2015.11.017
Danneels, E. (2004). Disruptive technology reconsidered: A critique and research agenda. Journal of Product Innovation Management, 21(1), 246-258. https://doi.org/10.1111/j.0737-6782.2004.00076.x
Scheiber, N. (2019, July 3). Inside an Amazon warehouse, robots’ ways rub off on humans. New York Times. https://www.nytimes.com/2019/07/03/business/economy/amazon-warehouse-labor-robots.html
Koksal, I. (2020, March 30). Amazon officially selling cashier less store technology to retailers. Forbes. https://www.forbes.com/sites/ilkerkoksal/2020/03/30/amazon-officially-selling-cashierless-store-technology-to-retailers/?sh=32d42e0a6c47
Repko, M. (2021, January 27). Walmart bets bigger on online grocery as it ramps up automated fulfillment at stores. CNBC. https://www.cnbc.com/2021/01/27/walmart-to-ramp-up-automated-fulfillment-at-its-stores-as-online-grocery-grows.html
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