Introduction
Dixons Carphone plc is a relatively young company that has seen a rapid growth within few years after being founded; these days, this is a multinational retailer of telecommunications and electronics based in London, UK (Bloomberg 2017). In 2014, the company was formed out of a merger of Carphone Warehouse Group and Dixons Retail (Dixon’s Carphone 2017). The top executives of the two companies are still in charge; the former CEO of Dixon’s Retail, Sebastian James is now the head of Dixons Carphone, and the position of the chairman belongs to Sir Charles Dunstone, the executive of former Carphone Warehouse. Moreover, after the merger of the two companies, the shares were divided evenly between the representatives.
When it comes to the performance of the company, Dixons Carphone is represented by multiple brands such as PC World, Curry’s, Dixons Travel, Know How Carphone Warehouse, iD Mobile, Lefdal, Phone House, Kotsovolos, and Elkjop. Some of these brands are specific only to certain countries; for example, Kotsovolos is presented only in Greece and Elkjop – in the Nordic European countries, and Phone House – in Spain.
Dixons Carphone is a rather successful business that is based on a smart strategy of expansion and penetration into versatile markets. The company has a broad scope of goods and services to offer, thus making itself able to satisfy many different needs of their customers. Also, operation on an international basis, the company has earned visibility and recognition by means of introducing lots of different brands some of which target specific national markets and focus on expanding their popularity and market share in the industries of telecommunications, transportation, and electronics of certain states.
In this paper, the innovative approach and changes introduced by Dixons Carphone will be reviewed, examined, and discussed from the perspective of what is known as BvS innovation framework – a holistic and multifaceted theory of innovation, for the purpose of distinguishing the practices and features of Dixons Carphone that make this company stand out among its competitors.
Innovation as a Concept
The concept of innovation is quite diverse and multifaceted; also, it tends to have a different meaning to different people and organizations. As noted by Betina von Stamm (2008), innovation, as a term, is often used interchangeably with the concept of creativity which may look as if the two phenomena stand for the same meaning; however, while innovation is certainly powered by creativity, it does not consist of it solely. In particular, creativity represents the action or process of generation of new ideas; at the same time, innovation involves putting these ideas into practice which, by itself, is a very complex activity that consists of many layers, aspects, and contributing factors.
In addition to the diversity of its entire process, innovation can also be subdivided into several forms based on its nature and main focus (Zakić, Jovanović & Stamatović 2008). In particular, there exists product innovation that is comprised of changes targeting a certain product and aimed at the transformation of its perception by the consumers (Innovation: definition, concepts and examples 2017).
A good example of this form of innovation is the introduction of a smartphone as a new approach to telecommunication and digital electronics. Moreover, there is process innovation that represents the changes directed at the process of production of a product or the provision of services (to be more precise, this form of innovation does not necessarily change the service or product directly, but it impacts the final result (Innovation: definition, concepts and examples 2017).
An example of this form of innovation is the introduction of machines and equipment helping a surgeon work with a better precision and in a less invasive manner in comparison to performing the same surgery using the older means. Finally, another form of innovation is known as the innovation of business model; it represents the changes that affect the approach with which a certain service or a product is positioned in the market and offered to the consumers (Innovation: definition, concepts and examples 2017). For instance, a firm that is focused on selling houses and apartments could switch to offering these properties for rent.
In addition, as specified by Popa, Preda, and Boldea (n.d.), the forms mentioned above (process, product, and business model innovation) also can be referred to as the secondary characteristics of a process of innovation; whereas its primary features are usually dictated by the industrial context of the planned innovation. In that way, the combination of the altering primary and secondary characteristics of innovations ensure the compatibility between these initiatives and the organizations in which they occur. To be more precise, the same innovative approach, strategy, or plan may be adjusted with the help of taking into consideration the industry in which it will be put into practice, the specific organization that it targets, and the form of innovation that is required.
BvS Innovation Framework Overview
BvS innovation framework was named this way after its founder Bettina von Stamm, a well-known philosopher of innovation. The framework resulted from a thorough and lengthy research conducted by Betina von Stamm in the middle of the 1990s; the philosopher was passionate about developing a deeper understanding of the innovations success; in particular, the researcher wondered what features, actions, and aspects served as the factors contributing to the overall success in business organizations (Innovation Leadership Forum 2014).
Practically, von Stamm intended to identify a specific set of aspects that drive the success in innovations or its absence. After the research was completed, the author was able to name as many as five factors that she recognized as critical in innovations success; they are:
- Physical work environment.
- Processes.
- Organizational culture.
- Strategy and vision.
- Leadership style (Innovation Leadership Forum 2014).
The list of factors outlines by von Stamm is aimed to approach the organizations in which innovation takes place in a holistic and smart manner without isolating versatile aspects of organizations from one another.
Factors Impacting Innovation
Evaluated externally, innovation is usually measured by means of exploring the correlation between the benefits and costs of a particular business and its products or services for the customers (Definition of innovation 2017).
Differently put, the external value factor of innovation is reflected in the relationship of the costs of a product (including its production, delivery, and meaning) to the benefits it offers to the consumers (the importance of a product or service, and its position in relation to the other similar products or services provided by the competing businesses). Practically, the innovative goods and services are preferred to the older ones due to such benefits as sustainable production, ease of use, a more appealing design, or other enhanced and added features.
In contrast to the external point of view Betina von Stamm approached the concept and the practices of innovation from the internal perspective and explored what changes usually take place in organizations before they become able to deliver services and goods of a better quality. To be more precise, looking at the five factors outlined in BvS innovation framework, one can see that the author focused specifically on the internal aspect of innovation and its implementation and impact in an organization. In particular, von Stamm concentrated on the search of the spheres of an organization that are particularly influential when it comes to the implementation of innovation.
However, it would be wrong to say that BvS framework is oriented solely at the examination of the internal factors because in the activities of any organization, internal and external factors impacting innovation are deeply intertwined. The list of the external factors presented by von Stamm is shorter than that of the internal ones:
- Customers.
- Suppliers.
- Industry context (competitors, regulation, industry life cycle) (The BvS innovation framework 2010).
In that way, looking at the Appendix A that presents the BvS innovation framework as a scheme, one can see clearly that all the five factors are linked to customers and suppliers – the two parties that drive the external factors; moreover, all the internal factors are also in relation with the industry context – an ever-present and ubiquitous aspects for any organization. In the following sections, the internal and external factors impacting innovation will be explored in detail as applied to the innovations introduced by Dixons Carphone.
Internal Factors
As it was mentioned previously, the internal factors impacting the success of innovations in organizations are diverse; in BvS innovation framework they are represented by leadership style, company strategy and vision, processes, organizational culture, and work environment (The BvS innovation framework 2010).
Leadership Style
Transformational leadership has been one of the main priorities in the company that appeared after the merger of two powerful firms. The leaders of Dixons Carphone worked hard to create a harmonious organization and dedicated their time and effort to the empowerment and training of their managers in order to stimulate autonomy, creativity, and lifelong learning in their employees (Hill 2014).
As powered by what was known as “the merger of equals”, the leadership style of Dixons Carphone had to be strong enough to maintain the company’s homogeneity without distinguishing between its two halves and alienating them from each other. The leaders of Dixons Carphone served as the main examples of corporate behavior and attitudes and had to defeat the unconscious division of the company into the former Dixons Retail and Carphone Warehouse Group (Hill 2014).
Analyzing Dixons Carphone’s innovative approach using BvS framework, it is possible to notice that the company’s leadership style is directed at other internal factors such as company culture, strategy, and work environment, as well the external factors such as customers and suppliers.
Strategy and Vision
After the merger, the company’s strategy was to start expanding it and strengthening its branches located across Europe (Hobbs 2016; Davidson 2016). Since the company’s success right after the merger was astonishing (in total, they had about one billion pounds in sales), the difficult period came after when the company had to live up to the set standard and not only maintain the success but multiply and maximize it.
The development of strategy was accomplished with the help of fostering learning, knowledge, and powering the rate of innovation from the inside. In fact, some researchers consider the accumulated knowledge of the company and its personnel as one of the most important resources driving the process of innovation internally (Antonelli, Crespi & Scelato n.d.).
Culture
The culture of Dixons Carphone was strongly encouraged by the company’s leaders and managers whose transactional style was aimed at fostering innovation and creative initiative (Hill 2014). Since Dixons Carphone appeared out of a merger of two large organizations, the final business turned out very large; and it is know that for an international company spread out across Europe with about 40 000 employees, it is difficult to the diverse organizational culture; this management was complicated not only regionally (due to different cultures and backgrounds of the countries in which different brands and branches of Dixons Carphone operated) but also structurally (due to the former division into two different firms).
In that way Dixons Carphone had to rebuild its internal attitudes in order to create a new organizational culture suitable for all employees, managers, and executives regardless of their ethnic and professional background (Hill 2014).
Work Environment
In order to adjust the work environment and select the management team more sensitive to the new demands and needs of Dixons Carphone, the executives decided to implement a professional re-shuffle and reorganize the roles, responsibilities, and people in charge (Yeomans 2015). This change occurred soon after the merger took place and was driven by the transformations of the company’s culture and strategies.
However, as reported by Howlett (2017), the work environment in the stores of the company’s brands could use some improvement because there is still a very significant division between Dixons and Carphone’s properties and goods, which can produce negative impact on the order, the quality of services, as well as the processes of the company.
Processes
The processes stand for various activities and tasks carried out by the businesses and their stakeholders for the purpose of achieving business goals (Business process 2016). The major business processes in Dixons Carphone are the management of resources, people, and services, the acquisition of sales, and the improvement of customer relationship and satisfaction (What are the top ten core business processes? 2017).
The acquisition and expansion of sales, as well as strengthening of the branches have become the major focuses of Dixons Carphone’s processes. These goals were targeted with the help of the improvement of the external factors driving innovation such as customer relationships and satisfaction (Hall 2014).
External Factors
When it comes to the external factors impacting the success and rates of innovation in businesses, they are much trickier in terms of control as they undergo a set of different influences apart from those presented by the companies.
Suppliers
One of the major challenges related to Dixons Carphone’s suppliers arose when the UK faced Brexit; this was the case because most of the company’s suppliers were from abroad and many were from the territories of the European Union that the United Kingdom was about to leave (Williams 2016). This is an example of the situation when an external factor such as the suppliers is impacted by the influence coming from the industry context – in this case, the political and economic changes leading to the potential industry and trade regulations.
Customers
Customer satisfaction is one of the major focuses of Dixons Carphone as by means of attracting more consumers and expanding their customer base, the company is planning to strengthen their sales and boost their brand image (Armstrong 2016; Butler 2016). In particular, the company is working hard on the creation of the most innovative and attractive stores; this is done for the purpose of enhancing the customer experience and beating the popularity of online shopping since in the contemporary world, where e-commerce is gaining strength, brick and mortar stores are losing customers and are forced to invent new strategies of making themselves relevant in the modern markets (McClean 2016; Sacco 2016).
In their attempts to attract clients, the brands of Dixons Carphone started to introduce equipment sensitive to the needs and requirements of the consumers in order to assist them with the highest level of efficiency and provide a seamless and pleasant customer experience enabling the options that used to be available only in the online store to be carried out in physical stores of the company’s brands (Dixons Carphone digital workforce is empowered by BT Connect Optimisation with InfoVista technology 2017).
In BvS innovation framework, customers represent the external factor that is deeply connected to such internal factors as company culture and work environment. As it was noted by Howett (2017) in a recent review of the work and services provided in one of the company’s brand’s store, the lack of culture, the absence of employees, and a disorganized work environment made a significant adverse impact on the experience and satisfaction of the customers.
Industry Context
When it comes to the industry context, this external factor is the most global and is located outside of all the other factors in the scheme of BvS innovation framework. In addition, this factor involves a variety of external impacts that power its influences on the organizations and businesses.
In particular, Dixons Carphone faced the impact of industry context when the United Kingdom where the company is based, approached what was known as Brexit – the country’s decision to leave the European Union of which it had been a member for many years (Williams 2016). This shift was expected to produce a significant negative impact on all of the country’s business relations, and especially the ones with the other states of the EU. However, as noted by Sebastian James, the leader of Dixons Carphone, the company was financially prepared to face some losses of revenue and quickly begin its recovery from the influence of Brexit (Williams 2016).
Recommendations
Dixons Carphone has been demonstrating a strong performance in regard to all the aspects and factors mentioned in BvS innovation framework. The sales revenue of the company has demonstrated a steady growth thus strengthening the company’s assets and its preparedness for change inflicted internally or externally. However, it is important to notice that even though the current focus of the company’s brands is to enhance the factor of customer experience and satisfaction by means of introducing new technologies and experiences for the consumers allowing them to navigate the stores easier and find the goods they needs quicker, it is critical that the customer service, company culture, and work environment are enhanced as well in order to match this external factor.
Differently put, it is recommended that the external results such as customer satisfaction are achieved from the inside by means of hiring the appropriate number of people and providing them with sufficient training to match the needed requirements of the in-store customer experience.
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