MGMT20132 Innovation and Sustainable Business Development, Central Queensland University, Australia

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Executive Summary: The development of technologies has been driving several innovations in varied field and the same is being reflected on the business aspects of different industries. Most of the organizations have been introducing innovative strategies for gaining competitive advantage in their respective markets, over their competitors. In the following report, the innovative strategy that is being introduced by Amazon.com, Inc. has been discussed. The use of delivery drones by Amazon as Amazon Prime Air have been discussed. The integration of this innovative idea with respect to the business model of Amazon have been elucidated as well.

Introduction: The modern competitive international business market has been demanding the organizations to develop and innovate themselves in varied manner. Innovation has become the key of the modern world that enables an organization in gaining competitive advantage and occupy a strong competitive position in the global market. To achieve the desired competitive advantage, it is important for an organization to have the kind of leader that promotes innovation and also contributes to the development of innovative ideas that would facilitate the process of innovation. One such organizations is Amazon.com, Inc. that has been leading the online commerce due to the various innovations that are introduced by it. In the following discussions, the innovative idea of drone delivery system to be introduced by Amazon, has been discussed to elaborate the extent of innovation that has been achieved by the organization.

Question 1: Succinctly introduce the selected organisation and selected innovation trend.

Answer: Organizational Overview: Amazon.com, Inc. was founded in 1995 by Jeff Bezos and is an internet retailing organization that offer varied products and services. These include wide array of merchandise such as books, electronics, garden tools, home tools, apparels, automotive and industrial products, outdoor and sports products, baby games and toys, along with other general products (Market Line, 2018). It also specializes in providing web service, advertising, publishing, co-branded credit card services and order fulfilment. Amazon has also succeeded in the production and sales of various electronic devices that include Kindle e-readers, Echo, Fire televisions, and Fire tablets. Amazon operates through its website www.amazon.com (Market Line, 2018).

Innovation Trend: The advancements in the technology have resulted in the development of innovations such as drones. These drones are capable of varied kind of activities and one of the purposes that are pursued to be fulfilled through the use of drones include delivery systems (Bamburry, 2015). It has been anticipated that drone delivery systems would soon be implemented for fulfilling varied range of services and in different business sectors. The drones, also referred to as unmanned aircraft vehicles (UAV), are being used y the military for year, however, recently, there has been a rise in its use for commercial use (Fehr Peers, 2019).

Amazon has been working on Prime Air as a future delivery system that has been designed to safely deliver packages to consumers using the drone delivery services, within 30 minutes or less. This innovation would bring several changes, and these include flourish of impulse purchase due to the rapid pace of drone delivery, these would result in the rise of use of robots, influence the consumer rights, would change the outdoors, and impact the neighborhood stores (ARAG Legal, 2019). However, at the moment, the commercial use of the same has been banned in the United States by the Federal Aviation Administration (FAA), and therefore, Amazon has been successful to perform testing of the services of Prime Air in the United Kingdom (Fehr Peers, 2019). It has been estimated that delivery drones would significantly reduce the costs and time for the last mile deliveries, and it could be as low as five cents per mile, with a delivery within 30 minutes (Fehr Peers, 2019).

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Question 2: Succinctly define the following concepts and their relationships: the organisational environment, innovation trend, innovation strategy, innovation capabilities, innovation value creation and capture.

Answer: Relationship Between Organization and Innovations

Organizational Environment and Innovation Trend: The organizational environment of Amazon.com, Inc. is highly dedicated to the various innovation trends. As there is high potential in the innovative trend of using drones for the delivery services, therefore, Amazon has been successfully testing its delivery drone services, Prime Air in the markets of United Kingdom (Fehr Peers, 2019). It is expected that the Prime Air Vehicles would eventually grow and become equivalent to the mail trucks that are seen on the road (Amazon, 2019). This innovation is a part of design thinking that enables an organization or the leader of the company to practice design thinking to develop new innovations all the time for the corporate growth and development (Liedtka, 2018; Liedtka, Ogilvie 2011).

Organizational Environment and Innovation Strategy: The innovative strategy of using delivery drones would allow Amazon.com, Inc. would allow the organization to gain further competitive advantage and maintain a strong position in the global market as a leader of innovation and technological advancements (Welch, 2015). 

Organizational Environment and Innovation Capabilities: The system of Prime Air is being developed in the centers in the United States, Austria, Israel, the United Kingdom and France. Furthermore, the organization would ensure the safety of the delivery drones with the help of built-in sophisticated ‘sense and avoid' technology along with multiple redundancies. Furthermore, with the help of continuous testing, the organization has been gathering data for continuous improvement of the reliability and safety of the operations and systems of delivery drones (Amazon.com, Inc., 2019). 

Organizational Environment and Innovation Value Creation and Capture: The organizational environment of Amazon.com, Inc. have been dedicated to innovations and the value creation and capture from the same. The Prime Air delivery vehicles have been testing through varied design vehicles and it is expected to discover best delivery packages in a wide array of operating environment (Walsh&Falesch, 2015). The characteristics and appearance of the delivery vehicles would continue to evolve and develop over the time to maintain its innovative nature (Amazon.com, Inc., 2019). As safety and security is the most crucial aspect of these technological innovations, therefore, the organization would incorporate small drones into the airspace.

The regulators and designers of the industry are being collaborated with the organization for designing an air traffic management system which would aid in recognizing what drone is being flown by whom, where they are being flown and if the operators are adhering with the operating requirement (Amazon.com, Inc., 2019). In this manner an effective methodology shall be employed for gaining and retaining the value through the innovation of delivery drones.

Question 3: Succinctly describe how the creation of an innovation strategy ensures strategic alignment within organisations and why it is important.

Answer: Creation of An Innovation Strategy Ensures Strategic Alignment Within Organizations: Innovation strategy is highly significant for an organization. The creation and integration of innovation strategy allows an organization to gain and maintain a strong competitive position in the market, both regional and global. Undertaking any kind of innovative idea along with specific goals allow the organizations to map the progress of the corporate, if the innovation is successfully implemented. For any corporate innovative initiative to succeed, it is crucial to align the same with the corporate strategy (Grover, 2017). Innovation and technology play crucial role in the growth of an organization. however, for extracting maximum benefits from it, it is important to implement a well thought business strategy. Furthermore, it is required to be assured that there exists proper alignment between the innovation strategy and business strategy (Grover, 2017). It has been identified there exists a dyadic relationship, that is mutual dependence and continual exchange, between innovation strategy and business strategy. Innovation strategy are guided by the business strategy, while the business strategy is also required to respond to the innovation strategy (Grover, 2017). There exists six characteristics between this dyadic relationship and these include:

• Innovations and competitive strategies influence in an incessant loop.

• Competitive advantage results from appropriate alignment of innovation strategy with business strategy (Grover, 2017).

• The role of knowledge management in the association of innovation strategy and business strategy is of high significance.

• It is important to ensure an effective fit between the business strategy and innovation strategy and for the same, both formal as well as informal efforts are required (Grover, 2017).

• The alignment of the innovation and business strategy implies that an organization is required to make its prominence on the different variables of these strategies for over a considerable period of time.

• The organizational culture plays a crucial role in ascertaining the efficiency and effectiveness of the business and innovation strategies in the organization (Grover, 2017).

The innovative readiness of Amazon.com, Inc. has been determined using the model of ‘Innovation Readiness' that comprises of leadership support, organizational design and innovation practices (Provided in Appendix 1). Through this model, the innovativeness and innovation capabilities and capacities of Amazon have been determined. From the model, it can be deciphered that expert level experience in all the three domains of the model has enabled Amazon to gain and retain a strong competitive position in the global market. Amazon is considered as the most innovative company and the same has been achieved in the year 2017 (Robischon, 2017). Furthermore, through these innovative strategies and operations, Amazon has been successful in enhancing its business strategies, thereby gaining success in the global markets.

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Question 4: Analyse the impact of the selected innovation trend on the selected organisation. You should apply at least one strategy tool to analyse the impact, opportunities and threats to the organisation. Use the business model canvas by Oster alder and Pigneur (2010) to support your analysis and argumentation.

Answer: Impact of Drone Delivery Innovation Trend on Amazon.com, Inc.: To understand the impact of the drone delivery system on the business of Amazon, it is important to first conduct an analysis of the business model of Amazon, which is achievable through the business model canvas that has been developed and explained by Osterwalder&Pigneur (2010). As per the business model canvas, there are nine fundamental factors that are to be evaluated to gain a detail insight regarding the business model of an organization. These 9 factors include key partnerships, value propositions, customer segments, revenue streams, key activities, customer relationships, key resources, cost structure, and channels (Osterwalder, Pigneur, Oliveira, & Ferreira, 2011). The business model canvas of Amazon.com, Inc. is as follows.

Table: Business Model Canvas of Spring

(Source: Market Line, 2018; Amazon, 2018)

As per the business model canvas evaluation of the business of Amazon.com, Inc., it is evident that the organization has the capacity and scope for further innovation and integration of the same in their operational functions and services. The availability of R&D and the affiliation with IT hardware suppliers enable Amazon to conduct their own researches and develop novel innovations that are exclusive to the organization. Therefore, with the help of these technologies and other resources, Amazon shall be able to either develop their own drones or outsource the production or gain drones from external suppliers, which shall be used for the delivery services.

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Question 5: Recommend how the organisation best ensures strategic alignment to address the innovation trend.

Answer: Recommendation: As Amazon has been successfully managing innovations within the organizational developmental functions, therefore, it can be recommended to the firm that they should continue using the innovative strategies to develop Prime Air and work towards introducing the same as a regular service in the markets where drone delivery is permissible. The additional innovative capabilities that can be developed by Amazon would be to introduce robotics in the delivery systems that involve traditional or manual delivery systems. The innovation initiatives of Amazon should focus on enhancing the delivery system as this would provide the company with the highest competitive advantage. Amazon can ensure that it is able to create and capture value from the innovative drone delivery system by keeping the system integrated within the business model in an efficient manner. 

Conclusion: Innovation plays a significant role in the development and growth of an organization. With the help of innovative strategic ideas and introduction of innovative services and products within the business functions provide the organization with more competitive advantages that allow it to gain a strong competitive position in the regional as well as global markets. With reference to the case of Amazon.com, Inc., it has been determined that the company has been successfully integrating and implementing innovations within the business functions from the very beginning and has integrated innovation as a part of the organizational framework that has allowed it to develop as a company and one of the leading and most innovative corporates in the world.

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