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Background
The global corporate culture is entering into an era where
overall look of product is considered as an essential part
of competitive tools (Dobson, 2007). Aesthetic appearance
of the product through design is valued as one of the
ways to differentiate the offerings of the company (Ravasi
and Lojacono, 2005). Nowadays, design is recognized as
strategic resource for the company, since customers are
increasingly paying attention to the design language, i.e. the
combination of aesthetic, symbolic and emotional value
of the product. Moreover, many scholarly research works
have emphasized on the link between design, innovation and
competitive advantage which shows up the rising attention
of the industrial world towards design section (DellEra and
Verganti, 2007). From this notion, a literature based bottomup analysis will be conducted to unfold the link between
the strategic approach of design and the dynamic capabilities
of the company in innovation process to achieve sustained
competitive advantage; and later its managerial implications
will be discussed. The aim of this paper is to relate aesthetic
dimension of a product to the strategic thought on
innovation and to analyze its contribution to achieve and
to sustain competitive advantage within the contemporary
business world. Thus, the theme for the paper is:
Design driven innovation as a differentiation
strategy in the context of automotive industry
The evolution of the automotive industry can be
characterized by the convergence of technologies and
designs (Grant, 2010, p. 538). This pattern is sometimes
expected to breakdown and open up for certain new radical
departures due to the world economic situation and rising
environmental concerns (Magnusson and Berggren, 2011).
Regardless of less differentiation between manufacturers
due to same technological progress in process, new product
segments have continued to appear for the innovation
in design and applications (Grant, 2010, p. 538-539). In
such context, as an integral part of this research work,
relevant empirical examples will be placed based on the
automotive industry.
Design a resource for competitive advantage
Good design is not simply about aesthetics or making a product
easier to use. It is a central part of the business process, adding
value to products, and creating new markets.
~ The British Prime Minister, Tony Blair
(as cited in DellEra and Verganti, 2007, p.3)
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1991). For example, Ducati- the Italian motorcycle brandis famous because it represents Italian industry across the
globe through the authentic Italian style expressed in the
design of each bike (Ducati, 2012) Here, technology can
be imitated by others at certain level but the authentic
design of the product is difficult to be copied and becomes
a firms sustained competitive advantage.
Innovation
an integral part of dynamic capabilities
Teece, Pisano and Shuen (1997) have stated in their
research work:
We define dynamic capabilities as the firms ability to
integrate, build, and reconfigure internal and external
competences to address rapidly changing environments.
Dynamic capabilities thus reflect an organizations ability to
achieve new and innovative forms of competitive advantage.
Several research scholars such as Teece, Pisano and Shuen
(1997), Bowman and Ambrosini (2003), Zollo and Winter
(2002), Zahra and George (2002), Eisenhardt and Martin
(2000) have discussed certain key propositions of the
dynamic capability view; where mostly have reckoned its
role in leveraging firms resources to craft new business
and to introduce innovation to stimulate any strategic
change in congruence of rapid external change. Emergent
research works and literature on the terminology dynamic
capabilities have focused immense importance on its
application to ensure a firms sustained position within
the rapidly changing industry and global economy. Basically
dynamic capability refers to a firms unique ability to achieve
sustained competitive advantage and profitability (Teece,
Pisano and Shuen ,1997; Barney 1991) which depends upon
the firms specific and unique process and routine coupled
with historic path and tradition (Zollo and Winter, 2002).
A firms operational capabilities encompasses its learning
process, transformation of innovation process and thus the
term dynamic innovation capability is evolved (Zollo and
Winter, 2002; Davenport, Leibold and Voelpel, 2006). Once
a firm has achieved its dynamic innovation capability, it
starts to invest ample resources on product development
(Afuah, 2002). The result is either an incremental innovation
i.e. minor changes in existing technology and performance;
or breakthrough innovation, like new technology or greater
customer benefits related to existing offer (Chandy and
Tellis, 2000; OConnor and De Martino, 2006; De Visser
et al., 2010). At this point, it is evident in several research
works that once companies become successful due to
certain resource, their natural tendency motivate them to
exploit it repeatedly and thus they often get crashed by
sudden counter-attack/s (DAveni, Dagnino and Smith, 2010;
Prahalad and Hamel,1990). In another stream of strategic
management research, this disruptive or rapidly changing
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the U.S. in 2012 and also will represent 15% of the market in
Germany by 2020. This Gen Y consumers want to use their
car as a mean to represent their personality, accomplishment
and sense of lifestyle or luxury and brand image while
driving in the road; through a combination of quality, latest
technology and workmanship (Next generation car buyer,
2013; Annual Gen Y automotive survey, 2012). At the same
time, this consumer segment also very much concern about
their affordability and will not hesitate to give up personal
transport due to increased cost (Global Automotive
Consumer Survey, 2014). Thus, automotive industry has
become more challenging and competitive with diversified
demands for companies.
Auto manufacturers have an opportunity to develop innovative
and low-cost personalization options for this powerful consumer
segment.
Joe Vitale,Global Automotive Sector Leader,
Deloitte Touche Tohmatsu Limited
(Annual Gen Y automotive survey, 2012).
But still fewer automotive companies have well-structured
roadmap in collaboration with stakeholders for innovation
and also have clearly defined strategy to take the call; and
others are juggling efforts to balance their innovation
portfolio (The highway to growth, 2013). Due to the
dynamic nature of the industry, it is very difficult to
quantify the success of a specific strategic move rather
than analyzing situations over periods, as companies are
taking a series of strategic actions to face competitions
maneuvers (DAveni, 1998).
31
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Figure 2: Different modes of innovation strategy for Toyota brands and models considering knowledge drivers.
(Source: Adapted from Veganti, 2003; www.toyota.com)
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ed.).
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