Report
Introduction
Intense competition in the current global markets has provided a strong impetus for innovation-oriented strategic decisions in organisations. Effective innovation decisions are fundamental to successful new market entry, sustained competitive advantage, and profitability (Marsh, 2012). Technological innovation allows for the commercial exploitation of inventions through new products/services (Marsh, 2012).
The changing competitive environment requires the assimilation and integration of business technology in organisational strategies and value chains. A specific technological innovation is the console used in PlayStation in the video games industry. This report explores the development of gaming consoles as technological innovation product, milestones achieved in this area, and impact on organisations. It also includes recommendations for future developments based on the analysis.
Major Subtypes of Technological Innovation
Advances in business technology have created immense opportunities for business growth. The technological innovations related to the PlayStation are described below.
Consoles
Video games that have impacted on firm operations and interactions with customers fall into three groups console, PC, and mobile (Szirmai, Naude, Goedhuys, 2012). Consoles use a devoted hardware is linked to a screen (Xbox) or handheld device, e.g., Nitendo (Szirmai et al., 2012). In contrast, PC games operate on personal computers based on the Windows OS. Some PC games also run on Mac and Linux operating systems. Other games can be played on PC web browsers or gaming websites. The third category is the mobile games that can be played on handheld phones and tablets.
E-commerce
B2C e-commerce platforms have made it easier to buy or sell online. E-commerce encompasses the application of “electronic communications and information” in business transactions for B2B or B2C value creation (Christensen & Raynor, 2015, p. 56). A range of open source e-commerce software exists that support business processes, improved responsiveness to market needs, and omni-channel experience (social media) for the customers (Raphael & Christoph, 2012). Gaming software firms and distributors transact through e-commerce platforms implemented in their consoles.
Mobile Commerce (M-commerce)
M-commerce entails transactions performed via wireless technology or mobile devices, such as cell phones. It is fuelled by the high mobile phone penetration. M-commerce includes a range of services, such as mobile banking, mobile payment (bills), and order placement by consumers, among others (Hill & Rothaermel, 2013).
Business Intelligence/Analytics
Advances in analytics technologies allow the integration of big data in corporate decision-making. Analytics solutions such as service-as-a-software (SaaS) are utilised to forecast or simulate demand levels and manage logistics in real time for optimised supply chains (Liu, Prajogo, Oke, 2016). Firms also use prescriptive analytics deployed in vendor managed inventory to avoid business uncertainties through what/if considerations.
Enterprise Systems
These software solutions support the integration of a firm’s information processing system and relevant data (Lusch & Nambisan, 2015). Enterprise systems facilitate data sharing within the organisation for effective management operations, reporting, and information flows (Lusch & Nambisan, 2015). Implemented within these systems are applications for order fulfilment processing, enterprise resource planning, customer relationship management, supply chain management, etc.
Important Milestones for Technological Innovation
Software
Advancement in computer graphics software characterised the evolution of the video games. The shift to 3D in the late 1990s was facilitated by the development of 3D accelerator software (Greenspan, 2015). The inclusion of the software in the PlayStation led to improved visual quality of the consoles. At the same time, software developers focused on sports/car races, which became popular with gamers. Licensing of multiple publishers and brands also accelerated development in the gaming industry.
Internet
Another important development in business technological innovation is the evolution of the Internet. The Net invented for research, but it quickly developed into a commercial tool (Hakansson, 2015). It has its roots in the 1960 ARPANET network developed for research. In 1983, the number of connected computers increased to over 200, providing an impetus for the development of the Internet Protocol (IP) for standardised data transmission via the Internet (Hakansson, 2015). The Net was still meant for non-commercial use during this period.
Storage Media
The increase in storage capacity from ROM cartridges to discs accelerated the growth of the gaming industry. The CDs had a larger storage capacity than the cartridges. The development of the discs was an important technological milestone in the gaming industry. The early 2000s saw the launch of the DVD technology, which was deployed in the PS 2 (Greenspan, 2015). DVDs were less costly and had a larger storage capacity than the CDs.
Graphical User Interface (GUI)
The development of a GUI, a navigable World Wide Web, and uniform resource locators (URLs) in the 1990s led to the evolution of integrated web-based consoles. In addition, commercial restrictions were relaxed, giving room for e-commerce investment (Hakansson, 2015). The Internet users also increased, making the Net an attractive commercial tool for organisations.
Impact of Technological Innovation on Management Approach
The managerial implications of technological innovation relate to organisational strategy, structure, and personnel. Having a well-defined innovation strategy is useful in predicting the impact of a firm’s portfolio of technologies on its competitive position. The major strategic solutions for the management of technological innovations in the real world are offensive, defensive, imitative, and opportunistic strategies (Baden-Fuller & Haefliger, 2013).
An offensive innovation strategy is meant to give “technical and market leadership” through launching new products/services (Baden-Fuller & Haefliger, 2013, p. 425). Offensive innovators establish in-house R&D units or linkages with research centres to develop unique technical competencies that give long-term competitive advantages. As a result, such firms are research intensive and thrive on patents. For example, Apple followed an offensive strategy in developing the iPod and iPhone.
Fewer firms adopt offensive innovation approaches. Majority use defensive, imitative, or opportunistic approaches to manage their technological innovation. Defensive innovators avoid the risks of being the first movers by being reactionary (Drucker, 2014). However, they are as research intensive as the offensive innovators. For example, Apple used a defensive strategy to develop improved microcomputer devices in reaction to IBM’s mainframe computers. Firms that pursue an imitative innovation strategy copy current technologies, saving them R&D resources and costs (Onetti, Zucchella, Jones, McDougall-Covin, 2012).
For example, many mobile phone manufacturers imitated the touch-screen technology pioneered in Apple’s iPhone. Firms that follow opportunistic or niche innovation approach capitalise on new opportunities in the market. As such, ‘opportunist’ firms lack unique in-house R&D capabilities, but are responsive to market changes (Metcalfe & Miles, 2012). An example of a firm using strategic opportunism is Google with its niche products – Google Earth, Maps etc. (Metcalfe & Miles, 2012).
Technological innovation also impacts on organisational structures and management styles. An effective managerial approach is required to manage disparate teams – R&D, design/engineering, production, and sales/marketing – involved in the innovation process (Bock, Opsahl, George, Gann, 2012). Project managers should create an atmosphere of open communication and cooperation between the functional teams. Further, strong technical training and gatekeeping function are required to realise the goals of multidisciplinary projects. Firms use either functional or project structures to manage innovation efforts.
Functional structures involve “a higher rate of change of the technology’s knowledge base” than project structures do (Bock et al., 2012, p. 287). The management styles involved in technological innovation include lightweight, heavyweight, and independent, based on the vastness of team responsibilities (Davila, Epstein & Shelton, 2013). Further, the management process may involve project planning tools such as PERT/CPM. For example, DuPont Company employed a CPM algorithm to on-schedule construction/repair of its production plants.
Staffing the organisation is done to reflect the critical roles/functions of personnel in the innovation project. An integrated staffing policy considers multiple roles. The idea generators, i.e., innovators, are required to give creative insights necessary for project initiation, while product champions help advocate for the innovation (Camison & Villar-Lopez, 2014). The sponsor is another role required in innovative organisation.
He/she supports the innovators through resource allocation. An organisation also needs a venture manager to harness entrepreneurial efforts within it. The final role is that of a gatekeeper. They serve as important information linchpins of the firm through their relationships with the external technological environment. Besides staffing, managerial actions are required to stimulate innovation or maintain a ‘creative tension’ through effective job assignments, training/development, and reward systems.
Recommended Future Developments of Technological Innovation
Sony entered into the console market with the PlayStation 2 or PS2. The PS2 was a highly successful console, selling over 140m units (Cunningham, Rhode & Whaley, 2012). It was developed to be compatible with many systems, a strategy followed in the development of the PS3. The PS3 included elaborate graphic designs to target skilled gamers and fans. The release of Sony’s PS3 elicited great publicity due to its advanced technical specifications. However, its development was associated with high production costs. The high costs impact negatively on Sony’s profit margins. The recommended future developments for the PlayStation include:
- Sony should create an online gaming community – online console gaming will offer a virtual reality experience to gamers. Therefore, the online component will be important to Sony’s console business strategy.
- Digital media incorporation – the PlayStation should integrate digital media into the console system. Differentiated digital products such as images, videos, web pages, and music should be incorporated into the PS4 to improve the console’s appeal as a home media centre.
- Movie releases – the PlayStation should be designed to distribute Sony Entertainment films to enrich the gaming experience. Movie releases would constitute a strategic improvement on the PlayStation console.
3-Minute Video Pitch
Sony’s PlayStation development from PS2 to PS3 and now PS4 followed a path of continuous improvement of the technical specifications of its console. An offensive strategy was employed in developing PlayStation’s technological trajectory. The improvements made on PS3 led to better visual quality features and gaming experience provided by the PS4. The firm has developed a network of developers and publishers that drive its technological agenda based on customer experiences and preferences.
However, the online gaming segment is not part of Sony’s console business strategy at the moment. In this view, the recommended future developments of the PlayStation include the creation of an online community to test and rate console releases and the incorporation of digital media, including audio music, into the console to turn the PlayStation into a home media centre. Sony entertainment should also consider launching its edutainment movies through the console to expand its product offerings to gamers.
Reference List
Baden-Fuller, C. & Haefliger, S. 2013. Business models and technological innovation. Long Range Planning, 46(6): 419-426.
Bock, A., Opsahl, T., George, G. & Gann, D. 2012. The effects of culture and structure on strategic flexibility during business model innovation. Journal of Management Studies, 49(2): 279-305.
Boudreau, K.J. 2012. Let a thousand flowers bloom? An early look at large numbers of software app developers and patterns of innovation. Organization Science, 23: 1409-1427.
Camison, C. & Villar-Lopez, A. 2014. Organizational innovation as an enabler of technological innovation capabilities and firm performance. Journal of Business Research, 67(1): 2891-2902.
Christensen, C. M., & Raynor, M. 2015. The innovator’s solution: creating and sustaining successful growth. Boston, MA: Harvard Business School Press.
Cunningham, H., Rhode, M., & Whaley, C. 2012. Video games industry overview: an analysis of the current market and future growth trends. International Business Project. Web.
Davila, T., Epstein, M., & Shelton, R. 2013. Making innovation work: how to manage it, measure it, and profit from it. Upper Saddle River, NJ: Pearson FT Press.
Drucker, P. 2014. Innovation and entrepreneurship. New York, NY: Harper-Collins Publishers.
Greenspan, D. 2015. Mastering the game: business and legal issues for video game developers. Geneva, Switzerland: WIPO.
Hakansson, H. 2015. Industrial technological development: a network approach. London, UK: Croom Helm.
Hill, C. & Rothaermel, F. 2013. The performance of incumbent firms in the face of radical technological innovation. Academy of Management Review, 28(2): 257-274.
Howe, J. 2012. Crowdsourcing: why the power of the crowd is driving the future of business. New York, NY: Crown Business.
Liu, Z., Prajogo, D. & Oke, A. 2016. Supply chain technologies: linking adoption, utilization, and performance. Journal of Supply Chain Management, 52(4): 22-41.
Lusch, R. & Nambisan, S. 2015. Service innovation: a service-dominant logic perspective. MIS Quarterly, 39(1): 155-175.
Marsh, P. 2012. The new industrial revolution: consumers, globalization and the end of mass production. New Haven, CT: Yale University Press.
Metcalfe, S., & Miles, I. 2012. Innovation systems in the service economy: measurement and case study analysis. Boston, MA: Kluwer Academic Publishers.
Onetti, A., Zucchella, A., Jones, M. & McDougall-Covin, P. 2012. Internationalization, innovation, and entrepreneurship: business models for new technology-based firms. Journal of Management & Governance, 16(3): 337-368.
Raphael, A. & Christoph, Z. 2012. Creating value through business model innovation. MIT Sloan Management Review, 53(3): 41-49.
Saebi, T., & Foss, N. 2015. Business models for open innovation: matching heterogeneous open innovation strategies with business model dimensions. European Management Journal, 33(3): 201-213.
Szirmai, A., Naude, W., & Goedhuys, M. 2012. Entrepreneurship, innovation and development. Oxford, UK: Oxford University Press.
Appendix
