Dell’s business model through innovation
Dell established themselves successfully in the 1990s by making PCs available for purchase online. This grew their revenue triumphantly through to the millennium and they have acted creatively to ensure they continue to hold a competitive advantage.
One of the easiest ways to understand a company’s growth strategy is to look at each initiative in terms of Ansoff’s Matrix.
Three main initiatives were implemented by Dell
1. IT consulting service | In addition to hardware and software, Dell looked into the customer service and consulting arena to further their reach to customers. The program was successful and has moved into data storage and management, communications and mobility for flexible IT solutions.
Where does it sit with Ansoff? Market penetration
2. B2B Marketplace | A business to business marketplace where discounted goods could be sold. Although the initiative did not succeed in being a sustainable source of revenue, the concept to provide existing products to a new market was complimentary to the other two innovations.
Where does it sit with Ansoff? Market development
3. Ideastorm | An interesting addition in 2007 which coincided with the beginning of user-generated content (UGC). By allowing users to contribute with ideas and improvements Dell could do multiple things.
- Track patterns in improvement suggestions and adapt accordingly
- Utilise user’s creativity to grow their product line
- Test ideas within an interested and active focus group
Where does it sit with Ansoff? Diversification
Other Innovation Strategies
A similar concept to Dell’s Ideastorm site, Lego Ideas encourages users to engage and interact with the brand through a digital medium. The benefits are mutual. Users get the chance to stretch their creative legs and contribute to a community they are involved in, and Lego are able to monitor ideas for future product diversification.
This concept of engaging entrepreneurs and users as idea generators is no uncommon. In fact a multitude of companies have workshops, think-tanks or programs that target small start-ups to help generate ideas. Some examples are:
|GE | Ecoimagination Challenges||Cisco | Entrepreneurs in Residence Program||Google | Entrepreneurs program|
|Coca-Cola | Accelerator Program||Microsoft | Ventures Program||Turner/Warners Bros | Media Camp|
‘Ideas are the currency of the 21st century’
Dell lead the charge in terms of retailers using an online store. They were strategic and knew the tangibility of their product was not the highest priority for consumers.
Unfortunately, clothing retailers do not have the same luxury. There are some some aversions to purchasing online without being able to take the item into a change-room and make sure it looks good. This means brands need flexible return policies, accurate sizing charts, detailed description of fabric and care.. the list goes on.
A site called Try.com has tackled this issue and partnered with some large retailers to give consumers the chance to literally try before they buy. Zara, Asos, Barneys and Reformation have jumped on board to target the market afraid of the unknown in online shopping.
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Ideas.lego.com. (n.d.). LEGO Ideas. [online] Available at: https://ideas.lego.com/ [Accessed 5 Sep. 2016].
Ideastorm.com. (n.d.). Idea Storm | About. [online] Available at: http://www.ideastorm.com/idea2AboutIdeaStorm?v=1351322692099 [Accessed 5 Sep. 2016].
Lindegaard, S. (2014). 15 Examples of Open Innovation between Big Companies & Startups. [online] Innovationexcellence.com. Available at: http://innovationexcellence.com/blog/2014/08/13/15-examples-of-open-innovation-between-big-companies-startups/ [Accessed 4 Sep. 2016].
Smart Insights. (n.d.). Ansoff matrix – Smart Insights. [online] Available at: http://www.smartinsights.com/marketing-planning/create-a-marketing-plan/ansoff-model/attachment/ansoff-matrix/ [Accessed 4 Sep. 2016].