Vestas Wind Systems A/S is a large company based in Denmark that develops wind turbine systems as a sustainable power generation option. The renewable energy industry is becoming more important with time because of the need to develop sustainable power options.
Design can play a very important role in creating and sustaining competitive advantage for any business. This hypothesis informed the investigation into how Vestas Wind Systems A/S deals with its environmental pressures in an effort to remain competitive. This paper explores the place and the role of design in the company’s business processes.
Methodology
Analytical tools are widely used in business process management to provide theoretical models to help business managers in decision making. This paper will use five analytical tools to determine the importance of design to Vestas Wind Systems A/C.
The analytical tools chosen for this purpose are PEST Analysis, SWOT Analysis, Porter’s Five Forces Analysis, the McKinsey 7s Framework, and the GE-McKinsey Matrix. The findings from the application of these analytical tools to the operations of Vestas will provide the basis for a discussion that will examine various facets of design as practiced in the company.
Findings
An analysis of the business operations based on the analytical tools described above led to various findings. This section deals with the findings that accrued from the application of each of the analytical tools.
PEST Analysis
Table 1 below summarises the environmental factors surrounding the design operations of Vestas.
Table 1: PEST Analysis.
SWOT Analysis
A SWOT Analysis focuses on the inherent qualities of a business that have an influence on its internal and external performance. The SWOT Analysis for Vestas is presented in Table 2.
Table 2: SWOT Analysis.
Porter’s Five Forces Analysis
Porter’s Five Forces Analysis is ideal for analysing the competitiveness of a company in its business environment. Table 3 shows Porter’s Five Forces Analysis for Vestas.
Table 3: Porter’s Five Forces Analysis.
The McKinsey 7s Framework
Table 4 below shows the results of the analysis based on the McKinsey 7s Framework.
Table 4: The McKinsey 7s Framework.
The GE-McKinsey Matrix
The GE-McKinsey Matrix locates the position of a strategic business unit (SBU) along two axes. The first axis is the market attractiveness of the SBU while the second one is the strength of the SBU. Each of the axes has three levels, which results in a total of nine possible positions for the SBU under review.
The market attractiveness of the R&D division at Vestas is high. It is a source of competitive advantage for the company because of its rich tradition in wind technology design. On the other hand, this SBU is also rated as high on the GE-McKinsey Matrix. The strategic implication is that the company should invest more resources in this SBU to ensure that it reaps maximum benefits from the unit.
Discussion
The above analysis provided the material needed to discuss the role of design at Vestas. The discussion covers four areas of interest.
Reasons that Persuaded Vestas to Focus on Design
The management of Vestas chose to focus on design as a central aspect of the business for several reasons. The first reason is the realization that the company is working in a high growth sector. In the recent years, the price of wind systems has been on the decrease because of technological improvements driven by research.
On the other hand demand for wind generators is on the rise because of the increasing interest in clean energy. The net effect is that the R&D division in Vestas finds itself in a segment where the market is expanding and the business strength of the design division is also increasing.
The second reason that drove Vestas to make R&D a critical component of its activities is the unexplored potential of wind power generation. Until recently, research on wind power generation focussed on a narrow range of parameters that promised the highest energy yields.
Wind power companies focused on developing systems that could meet high power generation demands for their systems to make economic sense to customers. As the cost of making wind machines reduced, the opportunities for developing wind machines for use in areas with lower yields increased. Now there is a need to develop wind generators that can produce power in areas with lower yields because it is becoming economically viable to deploy such systems.
Thirdly, Vestas realised that R &D is a strong source of competitive advantage for the company. Denmark has a very rich engineering tradition in regards the development of wind power machines. It has a long history of using wind generators for power generation. Vestas has always been part of this tradition. In addition, Vestas has the largest wind power technology laboratories in the world. As such, the company has the infrastructure to do better than its competition in R&D.
The fourth reason underlying the choice by Vestas to focus on design is that wind power is competing with other renewable sources of energy for dominance. The operating environment for the wind power industry is identical in several ways to the operating environment for the solar power industry. If the wind power generation sector fails to address some of the challenges it faces, then it may be relegated to second place.
How Vestas Manages Design
Design management at Vestas has three aspects. First, design refers to the activities of the R &D division within the company. This division develops new technologies and it improves existing technologies by deploying research professionals from various fields.
In this regard, Vestas is dedicated to the development of advanced wind generation systems to meet the rising demand for more efficient with power systems. The company’s rich tradition in wind research is a strong source of competitive advantage in this regard. The data accumulated by the company over many years of operations makes its R&D division very influential in the industry.
Secondly, Vestas is always working on new ways of redesigning its business model to take advantage of the emerging business opportunities. This is an application of design thinking that requires practitioners to remain adaptable to new conditions. The company has a well managed service division that handles the installation and servicing of wind power systems.
This ensures that Vestas wind machines are installed with the same care and precision as their design and manufacture. The implication of the company’s growing number of clients is that Vestas needs to expand its service capacity because many more clients will need access to those services.
The third area of design management at Vestas is the design of business processes to support the organization’s expanding business. Vestas has installed in excess of 25,000 wind turbines across the world. These machines are all data collection points for Vestas. The data collected helps to improve the design of future machines under various operating conditions. Similarly, the company’s service division services all the wind power systems installed by the company.
The implication is that the service business unit within Vestas needs redesign to meet the emerging needs of the clients. One of the considerations made by the design team when scheduling the servicing operations is wind availability. Servicing operations take advantage of seasons with little or no wind to ensure that the downtime is as little as possible. This helps to maximise the overall yield of the wind turbines.
How Vestas Integrates Design into its Activities
The integration of design thinking into business activities is a delicate process. Design thinking requires a constant commitment to change, which is very difficult to maintain in large organizations such as Vestas. However, the company has managed to integrate design thinking into many of its business activities.
First, design is well integrated into the R&D division of the company. This is because the company understands that it is in a high-growth industry segment that requires a strong commitment to R&D just to survive. Vestas has made R&D a central component of its operations because of the role it plays in the development and sustenance of competitive advantage in the industry. This commitment to R&D activities helps Vestas to retain leadership in wind power technology.
Vestas is also very good at integrating design in its operations. The fact that the company has a presence in more than 70 counties proves that it has given thought to conducting business in a globalised environment.
This is a demonstration of design thinking in the company. The success the company currently enjoying is the result of its dedication towards developing a global footprint for all its products. In other words, the company is designing itself to achieve market dominance.
The third area that demonstrates how Vestas integrates design thinking into its activities is in marketing management. The marketing of Vestas products aims at presenting the company as an international brand, based on the rich Danish legacy of wind technology. The company brands itself as an entity that understands the priorities in the industry and the needs of its customers. The website of the company features various videos made by top employees to gain the trust of its international customers.
One of the areas in which the company has not integrated design thinking well enough is in the operations of its headquarters. The company is not as assertive in terms of central communication from its headquarters. This is in contrast to its competitors such as GE that have worked hard to remain in the headlines.
The disadvantage of this is that it sells the company short in terms of the PR message given to potential clients. The company needs to infuse design thinking into the management of central communication from its headquarters.
Contributions of Design in the Activities of Vestas
The main contributions of design in the activities of the company are as follows. First, the company has developed a strong brand name in the wind power industry. Its dedication to design gives it the reputation of a firm dedicated to the development of wind power resources across the world. This reputation is the result of making design a central part of the activities of the company.
Secondly, focus on design has ensured that the company keeps developing high quality products. Wind power generation systems are very cost intensive projects for many clients. Therefore, the quality of the equipment and services rendered after the initial purchase is important for customers. Vestas is one of the market leaders in terms of product quality. This is a direct result of the commitment to design.
The third area where the company has enjoyed the benefits of design is in market positioning. The company has used design as its unique source of competitive advantage. Its promotional materials focus on design as the central strength of the company. This has ensured that potential consumers are aware that the market leader in terms of wind power design is Vestas. This form of positioning, coupled with a solid investment in design laboratories and design professionals, makes Vestas stand out in the wind power segment.
The fourth contribution of design to the company is that it has given the company the ability to respond to customer needs. The company collects data from the 25,000 installed machines that help it to feel the needs of its client, and also to improve the designs for its wind power systems.
Finally, the company’s intention to retain leadership in the wind power sector comes from its investment and continued commitment to design. As long as the company keeps on increasing the capacity of its design laboratories, and retaining the best talent in regards to wind design, the company will retain market leadership.
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