GMBA6003 Innovation Management And Entrepreneurship Assignment Sample

Executive Summary

This report focuses on the recent innovation in the selected industry sector that is Artificial intelligence. The selected innovation for this report is a virtual assistant and the selected organization is Amazon. Amazon's Alexa is an innovative product in the area of artificial intelligence. Moreover, this report focuses on the various aspects of innovation and innovative product that includes value proposition of innovative firm, innovation type, and direct or indirect competitors. Apart from this, it also discusses about Amazon's business model and captured value from the particular innovation. Furthermore, the finding suggests that Amazon includes innovation management principles in the organizational process and system. Amazon is an innovative organization and leading in the market due to its innovative product that is Amazon Alexa.

Introduction

This report focuses on recent innovation occurred in the artificial intelligence industry. Artificial intelligence (AI) is a broad branch of computer science that is associated with the development of smart machines. It mainly focuses on the development of an intelligent machine that works and reacts like a human being (Lu et al. 2018). Moreover, the artificial intelligence industry market size is USD 24.9 billion at a global level and it has been predicted that its market size will increase by 46.2 per cent from 2020 to 2025. Furthermore, this report will highlight the analysis of selected innovation that is virtual assistant Amazon Alexa. It also includes discussion regarding unique value proposition, innovative type, and competitive advantage of selected innovation and innovative companies.

Analysis of Innovation

In simple terms, the virtual assistant is known as a digital assistant and artificial assistant. It is the application program that recognizes natural language and completes every command for the users. The well-liked virtual assistants are Apple’s Siri, Google Assistant, Amazon Alexa, and Microsoft’s Cortana. It needs huge amounts of data, which nourish artificial intelligence platforms that include natural language processing and machine learning. It has been determined that virtual assistants require a large amount of personal information and always ready to listen to the voice command (Song 2019). It retains the voice interactions and personal details in order to enhance the user experience. In addition to this, virtual assistant providers also uphold privacy policies that explain how every organization uses and share personal details. In various cases, organizations do not share the customer identifiable information without a customer's permission. Moreover, it has been determined that virtual assistants are evolving to offer more ability and value to consumers. As voice recognition technology enhances, virtual assistant use will be increased in the business work-flow.

Furthermore, the selected innovation in the area of artificial intelligence is Amazon Alexa which is simply known as Alexa. It is the virtual assistant AI technology developed by Amazon Company. This was the recent innovation in the sector of artificial intelligence. This technology is competent in voice interaction, setting alarms, providing weather information, music playback, and other real-time information. It also has the capability to control several smart devices and users can also broaden the Alexa abilities by installing “skills” such as audio features and weather programs. In simple terms, Alexa is the artificial intelligence that lives human beings. It has been determined that in year 2018 more than 10, 000 employees have worked on Alexa and related products. However, in 2019 it has been announced that Amazon’s team has sold 100 million Alexa-enabled devices (Chung, Park and Lee 2017). It performs various types of functions which include technological advancements, home automation, music, ordering, music, messaging and calling, and so on.

The Value Proposition of Innovation

Value Proposition Chart of Amazon Alexa

The value proposition is a tool that supports ensuring that product and service of the organization positioned around the consumer's value and needs.

Figure 1: Value Proposition

Following is the value proposition of Amazon’s Alexa-

Product

Amazon Alexa

Value map-Pain Relievers

1. Virtual Assistant

2. Rationalize shopping process

3. Save time

1. No more waiting in line

2. No more driving to the store

Value proposition: Gain Creators

1. Produce savings

2. No more waiting

3. Outperform compare to other virtual assistants (Siri)

4. Play music to fill home

5. Simple design that is visually pleasing

Customers Profile: Pains

1. Lack of a home stereo system

2. Wasting time at the store

3. Stores selling out of inventory

Customers Profile: Gains

1. Organization offer two-day shipping

2. Home system monitor

3. Time-saving

4. Guaranteed low prices

Customers Profile: Jobs

1. Receive support around the house

2. Listen to music

3. Observe home systems

4. Reorganize online shopping

Amazon's innovation Alexa is supporting the consumers to do all sorts of tasks as well as offer the personal assistant. It has been determined that it has 15000 skills however only a few skills are used by all. Majorly, users ask weather or play music, and so on. Moreover, the significant value position of Alexa is that it is a smart assistant (Becker and Troendle 2018).Furthermore, Alexa is similar to the Kindle platform and Prime video platform in some aspects but it is also a very different in other ones. In addition to this, it is also very different from Google's smart assistant and Apple's Siri. Amazon Alexa supports the consumers in various aspects such as entertainment, communication, smart home, and shopping, etc. In the context of Alexa, the platform is stimulated by different network effects with the value proposition improved by the ecosystem of smart devices and customer experience driven by voice control.

Innovation Type

It has been determined that there are various ways a company can innovate. Mainly there are three types of innovative business model innovation, process innovation, and product innovation. To stay in the market, all companies need to undertake each type of innovation at some level. In addition to this, innovation is divided into two dimensions; market and technology which provide the four types of innovations (Demircioglu, Audretsch, and Slaper, 2019).

Figure 2: Innovation type

Through the analysis, it has been determined that Amazon is considered as the tech giants and continued to invest in research and development to uncover new areas of the opportunity. It has been determined that the company has spent $12.5 billion on research and development and 11.7 per cent of net sales. It has allowed the Amazon to enhance and diversify its presence as a technology beyond e-commerce by expanding digital voice assistant (Alexa). It has been observed that Amazon Alexa is the first standalone piece hardware devoted to artificial intelligence and natural language processing therefore it is considered as radical innovation type (Naranjo‐Valencia, Jimenez‐Jimenez and Sanz‐Valle 2017).

In simple terms, radical innovation includes developing revolutionary technology. However, technology has changed over the last decade, and it has brought a digital era with an increase in the amount of data at hand to train models from and also advancement in processing power. Amazon Echo that is Alexa is the first far-field device. It is a fully-fledged virtual assistant instead of a voice search device. It depends on machine learning and offers more accurate data. Further, through analysis, it has been observed that the target market of Alexa includes ideal users under age 44. The largest market segmentation is 18-29 years old at 24 per cent and 30-44-year-olds include a 20 per cent user base. However, in the present scenario, the fast-emerging target market for Amazon Alexa is kids (Naranjo‐Valencia, Jimenez‐Jimenez and Sanz‐Valle 2017)

USP of Alexa

The USP of Amazon Alexa is that it has the capability to react over voice command and provide information to its users. These devices are powered by Amazon’s digital assistant Alexa which answers all the queries of users. Setting up Alexa is very simple and capable to perform any instructions which are given by the users. It has been depicted that another USP of Amazon Alexa is home automation with IoT devices. It simply connects with the home devices and directly talks with connected devices as well as can give voice commands. For instance, Philips Hue light bulbs can be operated by Alexa (Purington et al. 2017). Amazon Alexa has created value for its customers as well as capturing the value from the sales of its products. It has been observed that Alexa act as a personal assistant which includes more than 1000 different and unique skills. The very basic skills area playing music and retail features but it has added some functionalities such as checking bank accounts, calling Uber drivers, ordering pizza, and so on. From all these features Alexa has permitted Amazon to position itself as a significant software player as well as allow the consumers to use the hardware they like while remaining the part of Amazon Alexa. Presently, Alexa is integrated with more than 7000 products and services ranging from appliance to outlets.

Identification of Direct and Indirect Competitors

Through the analysis, it has been determined that Amazon Alexa is no more alone in the race of virtual assistant or voice-enabled device. Some companies such as Google and Apple have entered this sector with devices like; Google small home mini, Home Hub, and so on. Along with this, Apple has also entered in the race of AI-based smart speaker. Additionally, there are various indirect competitors of Amazon Alexa; any music streaming services such as Pandora or Spotify, online news provider platforms such as Google and Facebook, any company in the digital health care area of research and care such as Fitbit and so on (Yoffie et al.2018). It has been observed that Amazon Alexa is facing intense competition with its direct competitor. It has been analyzed that threat from substitutes is low because there is no complete substitute product of smart speakers in the market as users demand for smart speakers.

Attempts to Exploit the Knowledge and Capability of Amazon

It is known that Alexa has dominated the virtual assistant space in recent years. However, the organization is depending on the open-source innovation to develop the ability of cloud-based voice service platform. This indicated that Amazon cannot only depend upon internal resources in order to build the required abilities. The open-source offers the outcome called skills that it is equal to apps for a smartphone. Apart from this, it has been determined that more than 450 people participate in the organization's technical conference and met top engineers and pioneers who are accountable for the development of Amazon's various products which also includes Amazon Alexa and Echo. This technical conference focuses on machine learning, artificial intelligence, and the future of technology (Kepuska and Bohouta 2018).Presently, Amazon is the market leader in the area of smart speakers which is based on the Alexa platform. However, in the 2018 first quarter, Google Home services have shown triple-digit growth so in order to uphold market leadership and enhance the adoption both by content /other device manufacture providers and end consumers for promoting open innovation which is the key factor for Alexa's success.

Figure 3: Smart Speaker user by brand

Furthermore, to increase the adoption and the appeal of the Amazon Alexa platform, the organization needs to enter the strategic alliance with key partners for more reinforce the open innovation. Amazon needs to encourage the language earning of Alexa to enhance geographic expansion. Presently, it speaks only six languages, and the capability to speak the language is essential for voice service products to spread out internationally ( Tou et al. 2019).

Business Model

Following is the business model of Amazon Alexa-

Key Partners

1. Voice platform acquisition (Yap and Evi)

2. App ecosystem (WeMo, iFTTT)

3. Integration of Alexa into cars by Ford get announced

4. Content providers (iTunes and Spotify)

Key Activities

1. Software development

2. Software updates

3. Third-party integrations

4. Design of Alexa

Key Resources

1. New sales channel for Amazon

2. Software development kit

3. Third-party integrators

4. Need a wireless internet connection in order to work (Joyce and Paquin 2016).

5. Amazon web services as an infrastructure

Value Proposition

1. New voice platform to make life easier of users

2. Offer new interface to the internet (making calls, shopping from amazon, controlling smartphone, setting reminders and so)

3. Use Alexa as a voice-activated virtual assistant at the workplace (assistant tools, conference room setting, user management, and skill groups)

4. For developers, it is a new platform to develop products and services

Customer Relationships

1. Voice shopping

2. Dedicated voice-controlled gadget

3. Personalized features

4. Prime bundle

5. Exclusive shopping deals

Channels

1. Amazon.com

2. Amazon eco

3. Alexa skill kits as a collection of self-service

Customer Segments

1. Internet users

2. Early adopters

3. Business customers

4. Developers

Cost Structure

1. Marketing

2. IT operations

3. Hardware

4. Cost of software development and R&D

5. Research and innovation in AI

6. Cloud computing provider

7. Engineers

Revenue Streams

1. Retail sales (Echo dot, echo plus, echo spot, and eco snow)

2. Sale of accessories

3. Data as per the user preferences and everyday lives

4. Additional retail sales for Amazon’s ecommerce platform

5. Alexa for Business ($ 7 per shared device and $3 per enrolled user)

Captured Value

Amazon launched its innovative product the Echo with its AI- Alexa. This product merges with core elements of AI and e-commerce in an architectural innovation that offers an all-encompassing customer experience. Through this innovation, the organization has created value for its user as well as captured value from an estimated 8.2 M unit sales of Alexa. The innovation of Alexa ensures that it offers a broad range of skills to users through its integrative software. This product has permitted Amazon to position itself as an important software player that allows users to use the hardware (Lopatovska and Williams 2018)

Innovation Management Principle

Yes, the innovative organization Amazon has used the innovative management principles in its organizational process and systems. In the following ways, the organization has used innovative management principle-

1. Amazon drives innovation from the top- It has been identified that CEO Jeff Bezos has spent most of the time on innovation. Amazon CEO considers that his job is to determine and refine the innovation roadmap which helps to make a position in the market (Vasilev et al.2017).

2. Amazon considers ideas as assets- There are various companies that consider their assets are equipment, plants, and employees but Amazon value on its ideas. As per the leader of Amazon, enabling technologies, effective ways of operating and unconventional concepts are more significant. The constant stream of ideas helps to grow the organization. Ceo Bezos's function is to develop the cultural alignment towards value and considering ideas at all levels. He also has sense of urgency to speed their implementation.

3. Move fast, experiment constantly and fail fast- It has been observed that Amazon bravely move towards innovation and experiment such as it comes into the Kindle e-reader and establish the smart speaker category. For various operations, Amazon is always ready to move first to test as well as ready to fail.

4. Practices data- driven, customer-led innovation- Amazon always focuses on the new device and new business model as well as it uses new approaches towards the innovation practices. The organization always believes in stimulating and developing models. Amazon has artificial intelligence engineers who are rooted in a very business unit (Allen 2019).

5. Risk-taking culture – As already stated that Amazon considers all ideas and no single manager has the authority to deny an idea. It experiments with the new thinking approaches.

Conclusion

It can be concluded that a virtual assistant is the innovation in the area of artificial intelligence which work on natural language and complete each command of users. Moreover, the innovative organization is Amazon Alexa which works on AI technology and capable to work on voice interaction, setting alarms, and offering other real-time information. Through the value proposition of Alexa, it has been determined that it support its customers to do all types of task over voice control. Amazon Alexa focuses on radical innovation because it is the first organization to work on artificial intelligence and natural processing. The USP of Alexa is that it works on the voice command and offers information to its user. However, there are various competitors of Alexa such as Siri and Google Home, and so on. Amazon is the organization that takes a risk and focuses on innovative products in order to satisfy the customer's requirement.

References

Allen, J.P. 2019. Inclusive Innovation and Entrepreneurship in the New Digital Era. In Weizenbaum Conference (p. 7). DEU.

Becker, T. and Troendle, T. 2018. Alexa, Can You Get me an Insurance? A Structured Approach to the Hyped Technology of Voice‐Based Assistants. The InsurTech Book: The Insurance Technology Handbook for Investors, Entrepreneurs and FinTech Visionaries, pp.250-253.

Chung, H., Park, J. and Lee, S. 2017. Digital forensic approaches for Amazon Alexa ecosystem. Digital Investigation, 22, pp.S15-S25.

Demircioglu, M.A., Audretsch, D.B. and Slaper, T.F. 2019. Sources of innovation and innovation type: firm-level evidence from the United States. Industrial and Corporate Change, 28(6), pp.1365-1379.

Joyce, A. and Paquin, R.L. 2016. The triple layered business model canvas: A tool to design more sustainable business models. Journal of cleaner production, 135, pp.1474-1486.

Kepuska, V. and Bohouta, G. 2018, January. Next-generation of virtual personal assistants (microsoft cortana, apple siri, amazon alexa and google home). In 2018 IEEE 8th Annual Computing and Communication Workshop and Conference (CCWC) (pp. 99-103). IEEE.

Lopatovska, I. and Williams, H. 2018, March. Personification of the Amazon Alexa: BFF or a mindless companion. In Proceedings of the 2018 Conference on Human Information Interaction & Retrieval (pp. 265-268).

Lu, H., Li, Y., Chen, M., Kim, H. and Serikawa, S. 2018. Brain intelligence: go beyond artificial intelligence. Mobile Networks and Applications, 23(2), pp.368-375.

Naranjo‐Valencia, J.C., Jimenez‐Jimenez, D. and Sanz‐Valle, R. 2017. Organizational culture and radical innovation: Does innovative behavior mediate this relationship?. Creativity and Innovation Management, 26(4), pp.407-417.

Purington, A., Taft, J.G., Sannon, S., Bazarova, N.N. and Taylor, S.H. 2017, May. " Alexa is my new BFF" Social Roles, User Satisfaction, and Personification of the Amazon Echo. In Proceedings of the 2017 CHI Conference Extended Abstracts on Human Factors in Computing Systems (pp. 2853-2859).

Song, Y.W. 2019. User acceptance of an artificial intelligence (AI) virtual assistant: an extension of the technology acceptance model (Doctoral dissertation).

Tou, Y., Watanabe, C., Moriya, K., Vurpillat, V. and Neittaanmäki, P. 2019. A new concept of R&D in neo open innovation: transformation of R&D triggered by Amazon. International Journal of Managing Information Technology, 11(1).

Vasilev, E.M.A.V.L., Bakhvalov, S.I., Prikhod'ko, A.N. and Kazakov, A.V. 2017. Internal control in the system of innovation management in the modern business environment. International Journal of Economic Research, 14(15), p.409.

Yoffie, D.B., Wu, L., Sweitzer, J., Eden, D. and Ahuja, K. 2018. Voice War: Hey Google vs. Alexa vs. Siri.

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