Bang & Olufsen: Design Driven Innovation Harvard Case Solution & Analysis

What is your assessment of the competitive situation in which B&O finds itself in 2006? What are they good at? What should they be worried about?

Bang and Olufsen is a Danish audio and video equipment manufacturer company. The company is engaged in targeting customers that are connoisseurs in manufacturing high-tech telephones, televisions, digital music players, DVD players and many other products as well. In 2006, the company experienced infuriated competition globally, and that competition was intense in the electronic sectors especially in audio, video and digital appliances. The company had positioned itself as a company with end-end products and high-end consumers. Major issues faced by the company was lacking in terms of management. Further, the internal structure and the culture of the company were hurting market expansions and profits of the company. The business process and the designs of the product need to be modified on an urgent basis. There was a shift in the external electronic market when the Apple iPod illustrated to be more successful; the company needed to have more focus on the product process and software rather than just design and outer look. In addition to that, the management of the company had envisaged that its products would broaden more deeply into virtual space where the meaning of great design was developing good software that was based on a good network-based interaction. Other than that, the company lacked in market research as well, and that in turn resulted in the company to be more innovative and saving time by having understanding of the market.

The core competency of Bang and Olufsen was in making products physically appealing. The management of the company gave their designers free control to create new products that gave challenge and opportunities to engineers so as to manufacture them. After 2006, there was an increasing trend for the products that offered value in terms of technology along with physical appearance. The company hired Sorensen to handle these issues and as a result of this, the company infused a lab that was based on creating new and innovative ideas known as “idealab." The purpose of idealab was to think out of the box and to develop products that were not dealt from the traditional outlook. Even after taking such initiatives, the performance of the company did not improve because the new CEO of the company had to find ways to tackle the situation.

The company's structure is based on the products based of high quality along with an artistic design that is the point of differentiation for Bang and Olufsen. Further, the company has created products with functionality and appearance that made it instantly recognizable as a company with unique process development and design. As the company is already good in making products that are wonderful in design and lack in software development of the products; therefore, management of the company needs to worry about innovation in the business process and the business itself needs to be altered. In addition to that, the competitive position of the company can also be explained through five forces analysis that has been explained in the appendix.

2.)        B&O’s radical design approach seems at odds with conventional business wisdom at many points – what are the advantages and disadvantages of this approach? How does it help the company compete? Is it sustainable?

The need of the company is to have a business model that is based on a radical change to be effective for the organization. From the information provided, it is clearly evident that the business of the company has not changed much from many years and the company is still following the model that is based only on the physical appearance of the product and not on software enhancements. The company is still following design driven innovation that seems ineffective; thus, the company should now focus on radical innovation strategy approach. One benefit of design-driven strategy is that it is providing great future for the company but at the same time it can be a threat for the company as well. These strategies will help outside designers to make their future in this field that in turn create problems for B & O in the long run.

In order to go with radical innovation strategy, the management of the company needs to bring radical change in the business model so as to work efficiently and effectively. It is a high time for the company to realize that the business model needs to be altered to survive and sustain in this competitive market. In addition to that, the management of the company needs to realize that designers are just for the development of the product and the company should be more focused on the execution of its new and innovative strategies. This can be easily done by making assessments of the external as well as internal environment of the company.

In addition to that, there is clear misalignment between the existing strategy and model of the company with the type of innovation used by the company. Further, management of the company and designers themselves believe that the company is leading in terms of radical innovation. The organization is on the right path by following radical innovation by adopting policies based on design driven innovation. Nevertheless, it is be evident that the company is ......................

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Successful company, recognized throughout the world for exquisite design of consumer electronics, seeks to better integrate the software into their traditional physical processes of product development to meet the needs of post-bid world. Details of the explosion & Olufsen "design innovation, forward" process that works quite differently than many companies, product development process, but it allows the company to produce a very high profit margin products that retain their field for a very long time in the industry in which products come and go very quickly. The case helps students to understand the processes and practices that support the creation of highly differentiated products. It also deals with the changes in the context of the already successful and managing creative employees who are vital to the company's business model. "Hide
by Daniela Beyersdorfer, Robert D. Austin Source: Harvard Business School 24 pages. Publication Date: September 01, 2006. Prod. #: 607016-PDF-ENG

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