INNOVATION MANAGEMENT FOR A

SUSTAINABLE COMPETITIVE ADVANTAGE

Submitted to: Sir Tahir Aziz Khan

Section: MBA 11A

Submitted By:

Rizwan Ahmad Sardar CIIT/FA08-MBA-121/LHR

Problem Statement:

It has become a Herculean task for companies to sustain their competitive edge in this
cut-throat market.

Research:

In today market customer behave very rationally, looking for more value, Then either

The value is in term of money, pleasure, status and so on. For sustaining the

Competitive advantage thus become the prime priority and challenging task for

Companies.

Competitive advantage of an organization involves gaining an advantage over other

competing firms with regard to the design, delivery, and strategies of the firm. Gaining
competitive advantage entail a set of specialized skills, assets, and capabilities for the
organization. Innovation is the ability to envision and apply creative solutions to
problems. It is an effective tool towards gaining sustainable competitive advantage. In
addition, the firm has to optimally utilize its internal resources and capabilities to exploit
external opportunities in order to gain sustainable competitive advantage.

Sustainable competitive advantage is the focal point of your corporate strategy. It

Allows the maintenance and improvement of your enterprise's competitive position in

The market. It is an advantage that enables business to survive against its

Competition.

Over a long period of time hyper competition is a key feature of the new economy.
New customers want it quicker, cheaper, and they want it their way.

The fundamental quantitative and qualitative shift in competition requires

organizational change on an unprecedented scale. Today, your sustainable
competitive advantage should be built upon your corporate capabilities and must
constantly be reinvented.

According to the new resource-based view of the company, sustainable competitive

advantage is achieved by continuously developing existing and creating new
resources and capabilities in response to rapidly changing market conditions.

Among these resources and capabilities, in the new economy, knowledge represents
the most important value-creating asset.

The opportunity for your company to sustain your competitive advantage is determined
by your capabilities of two kinds distinctive capabilities and reproducible capabilities -
and their unique combination you create to achieve synergy. Your distinctive
capabilities - the characteristics of your company which cannot be replicated by
competitors, or can only be replicated with great difficulty - are the basis of your
sustainable competitive advantage. Distinctive capabilities can be of many kinds:
patents, exclusive licenses, strong brands, effective leadership, teamwork, or tacit
knowledge. Reproducible capabilities are those that can be bought or created by your
competitors and thus by themselves cannot be a source of competitive advantage

Capability represents the identity of your firm as perceived by both your employees
and your customers. It is your ability to perform better than competitors using a
distinctive and difficult to replicate set of business attributes. Capability is a capacity
for a set of resources in an integrative way to perform a stretch task.

In the capability model, senior managers are predominantly concerned with issues
about the quality of products and services provided to customers (external and
internal), the flow of value-added work, and roles and responsibilities.

The dominant view on performance measurement shifts from the traditional focus of
actual-vs.-budget to a more balanced model that includes the timeliness, quality, and
cost of providing products and services to customers.

Allocation and budgeting of resources moves from the traditional practice of individual
units vying for resources based on their own needs toward cross-group teams that
jointly assess resource needs based on the flow of work needed to create value to
customers. Problem solving would seldom involve situations in which unit managers
 had to compete with each another; instead, organizations would adapt to departmental
interdependence, recognizing that issues are best addressed through cross-group
problem-solving sessions focused on providing services to customers and the required
flow of work.

Through continued use, capabilities become stronger and more difficult for competitors
to understand and imitate. As a source of competitive advantage, a capability "should
be neither so simple that it is highly imitable, nor so complex that it defies internal
steering and control." Capabilities grow through use, and how fast they grow is critical
to your success.

The first step is to understand where the greatest deficiencies lie, and which levers will
deliver the most impact. For many organizations, the most critical levers to assess
initially include structure and metrics, though establishing innovation processes and
providing employees with new skill sets are also critical drivers of culture. The act of
visibly sponsoring (let alone personally driving) specific initiatives focused on creating
new organizational capabilities that

Promote innovation serves to send a message and establish new symbols and stories
that reinforce a culture of innovation.

One of the challenges in defining strategies for shaping culture is that culture is
influenced by just about everything a leader does. From major organizational structure
redesigns to passing comments that convey subtle value judgments, culture is
dynamically created and re-created every moment of every day. Understanding the
broad strategic levers that influence culture is usually the best starting point.

By viewing culture as the result of various explicit and implicit decisions, actions and
events that have transpired over time, it becomes possible to identify the factors that
shape and drive culture. The following model suggests that culture results from the
ongoing interplay between several variables including:

The external environment emerging trends, competition, customer, technology,

environmental, regulatory and other factors that influence the organization from
the outside
 Strategy and business model the organizations explicit (or implicit) strategies
for competing and growing within the external environment

Leadership how the organizations leaders influence strategic direction and

day-to-day operations

Processes how strategies are executed and how work is accomplished through
day-to-day practices and interactions

Structures the formal (and informal) organizing principles that enable (or inhibit)
collaboration and guide behavior

People the skill sets and mindsets of individuals that work together to achieve
common goals, including employees, partners, suppliers, etc.

Metrics & Incentives the formal (and informal) measures that drive the behavior
of individuals, teams and departments

Technology Capabilities that provide the basis for providing and delivery value

By developing specific innovation-focused behaviors behaviors targeted at addressing

the below the surface roots of culture it becomes possible to shift an organizational
culture away from risk aversion and toward risk taking, away from insular thinking and
toward external exploration, and away from a not invented here attitude and toward
one of open innovation.
To foster sustainable innovation, todays leaders must take a proactive role in crafting
an organizational culture that supports the kinds of behaviors that help achieve their
long-term innovation objectives. Three specific strategies can be used for creating a
culture of innovation: Envisioning, Communicating and Sponsoring. Collectively, these
strategies support both the strategic levers of culture as well as the more mundane and
subtle sources of organizational culture.

Envisioning: involves creating a vision of ideal future, a state that is creative,

compelling, and meaningful. This future state includes the traditional vision statement
but ensures that the business vision is high impact and describes the unique long-term
difference the company can make for its customers, the community and the world. But
envisioning doesnt stop with envisioning the business. Leadership must also outline a
vision for innovation itself a vision that describes the importance of innovation to the
organization in achieving its business vision. In most cases, innovation will be a critical
success factor for achieving the business vision, and this relationship should be clearly
articulated as a rallying cry.

Communicating: Communicating for culture change goes beyond traditional corporate

communications. While formal communications can certainly serve a role in driving
culture change, creating a culture of innovation means becoming attuned to informal
communications. Leaders can begin by first gaining sensitivity to the existing informal
communications within their organizations. An understanding of the stories, traditions,
symbols and rituals that implicitly direct employees, partners and even customers about
the right way, how things really work and whats really valued is essential for
assessing the true nature of ones organizational culture. Some of these will foster a
culture of innovation while others may limit peoples ability to move beyond these
restrictive messages and assumptions.

Once existing informal communications are understood, it becomes possible to identify

opportunities for reinforcing positive messages and overcoming those that impede
innovation. This includes creating new stories, symbols and rituals that establish a fresh
dialog and that promote values, norms and assumptions more consistent with a culture
of innovation. For example, one company interested in addressing a serious deficiency
in risk taking established a Golden Turkey Award that was given quarterly, with a light-
hearted yet serious spirit, to the individual or team with the greatest innovation failure.
Given publicly by the CEO, the award became a symbol of the importance of accepting
and proactively learning from failure as an essential element of the innovation process.

Surf Excel Analysis

We have taken the example of Surf excel for writing case study analysis and for
showing that how it is sustaining its competitive advantage through managing
innovation.

In this case innovation management would be in form of Unilever strategies, 4Ps for surf
excel and other points which comes in analysis part.

Company History and Growth:

Unilever Pakistan Limited manufactures and markets home and personal care products,
beverages, ice cream, and spreads in the United Kingdom. The company provides food products,
such as soups, bouillons, sauces and dressings, noodles, complete meals, margarine and spreads,
olive oil, and tea, as well as frozen foods; cleansing and hygiene products for the home care
market; and skin cleansing, deodorants, and antiperspirants for personal care market.
It offers its products under Close Up, Axe, Dove, Rexona, Sunsilk, Wheel, Rafhan, Surf Excel,
Comfort, Lux, Ponds, Lifebuoy, Lipton, Brooke Bond, Energile, Knorr, Pearl Dust, and
Supreme brands. The company was founded in 1872 and is based in Karachi, Pakistan. Unilever
Pakistan Limited operates as a subsidiary of Unilever Overseas Holdings Limited.
Surf Excel is the oldest detergent brand to be present in Pakistan since 1960. We have always
believed that dirt is a valuable way to enrich our lives, both young and old. To ensure that
everyone, anywhere in the country, can share in this initiative, we're investing heavily in
developing a range that suits the pockets of all income groups. This has included launching
affordable skus that not only offer the top-clean advantages of Surf Excel, but also reduce the
time, physical effort and amount of water needed to wash clothes by hand.

Art from the Heart

Art from the Heart speaks to children all over Pakistan and enforces the message of doing well
for others. Surf has always believed in experiential learning and one aspect of learning is the
selfless help for others. And in the process if your clothes get dirty, then dirt is good.

Surf excel 30g Surf excel 2kg Surf excel 125g Surf excel 1kg

Surf excel has been following the Unilevers message

I.e. add vitality to life. In the beginning Surf Excel was facing competition from Ariel, the
product of P&G. but very soon with the tagline Dirt is good, Surf Excel was Successful
in regaining its market leadership. It soon emerged back as the dominant detergent of
the country. The product is decided by matching the marketing insights with the local
insights. The marketing report of the brand should match the regions attitude so that
the product can fulfill and satisfy the customers need and expectation. The packaging is
designed in such a manner that it should it is able to create a Recall value among the
prospective customers. It should stand out among its competitors because majority of
the purchases are impulsive buyings. Price is decided as per the economic situation
and spending pattern of the target market. Distribution pricing strategy is determined in
such a way so as to suit all forms of trade along with customers purchasing power.

Promotion was the most important ingredient in the revival of Surf Excel. The event
Paint Masti created a name of the brand. Re launch of the Surf with the tagline Dirt is
Good helps in differentiating the product, because all other brands are still focusing on
the fact that dirt is bad.

The selection of place to communicate the brands message is a crucial process. The
team of Surf Excel chooses the most effective media, be it print or electronic, at the
most economic and effective time. The target market of Surf Excel is mainly
Housewives as deciders, whereas children as influencers. Surf Excel is available in 4
different packages so that every income bracket can purchase it. The product this year
showed a robust growth and increased profit. This reflects the strong brand equity of
Surf Excel and market acceptance. Surf Excels re penetration in the market is a model
of exemplary marketing strategies.

SWOT Analysis

STRENGTH:
Innovative marketing tactics like dirt is good
Constantly changing as per washing needs.
Strong brand portfolio.
High quality manpower.
Companys strategy to have the right product at the right shop with the right kind
of visibility.

WEAKNESS

Is forced to spend big chunk of money on advertising due to

Impulsive buying behavior.

OPPORTUNITES

Growing needs of rural market

Rising income certainly opening door for more market share
THREATS

Major competitors like Ariel can give competition

Local soaps and detergents can capture lower income market
Analysis of the Findings

Surf excel is a major player in the Pakistani detergent market. today the market is not
declining but shifting towards more perceived value and added brands. So every brand
has to update itself with changes to retain its position in the market.
Unilever, Pakistans largest consumer products company, has a problem. It cannot keep
up with demand for some of its products. These include laundry powder also. Demand
is so strong that, in the case of foods, despite doubling production capacity, Pakistanis
cant seem to have enough of them. But this is just the tip of the iceberg because one
can easily ascertain how much demand is there for Surf Excel as it has 41% market
Share.
One of the areas where consumer product companies are increasingly focusing is
central and southern Punjab where two factors are driving demand. One, a string of
successful harvests has meant rising disposable income for farmers. The second,
interestingly, is 40 or so television channels that broadcast to viewers in this area. They
are the driving force behind building aspirations. This for Unilever is an opportunity for
selling its products.
CONCLUSION:

A stream of innovation and successful re launch of Surf Excel increased value of

Unilevers propositions for consumers. The latest campaign of Surf as Dirt is good has
created a good ground for the success of marketing strategies of Surf Excel. Moreover,
surf as being the product of Unilever has a plus point within itself, but still with an
aggressive campaigning of Dirt is Good has bear increased profits along with market
expansion status of the product as well as the company.

RECOMMENDATION:

The possibilities are endless. For example, shampoo penetration is one of the
lowest in Asia. Similarly fifty per cent of the population still uses laundry soap to wash
their clothes which comprises mainly the low income group. Unilever has 40pc of the
market for detergent powder (Surf Excel). A switch from laundry soap to detergent
powder will be hugely beneficial to Surf Excel and ultimately for Unilever.

Profitable growth will be sustained through focused brand building, innovation and
superior management of the supply chain to achieve cost competitiveness. This will
enable the business to expand its share of consumer spending despite the increasing
level of competition.

References
As Retrieved from:
http://www.unileverpakistan.com.pk/brands/homecarebrands/surfexcel.aspx

www.dirtisgood.com.pk

http://www.surfexcel.com.pk

Strategic Positioning - Sustainable Competitive Advantage

By Mark T. Jordan