Innovation Models at British Petroleum

Introduction

Innovation Models at British Petroleum (bp) will be evaluated in this blog. Since the start of the modernization of business and the commencement of modern human civilization, one subject contributed the most to helping people make their lives easy: Innovation. Innovation doesn’t require inventing a completely new product or process or service; rather it also means improving the existing products and processes (Reguia, 2014). Innovation in business has played significant roles throughout history by optimizing products, services, marketing strategies, distribution, production processes etc. The introduction of R&D in the organization doesn’t ensure that the process will result in innovation and creativity; rather innovation comes from a combined effort from the institutional framework, human capital, and infrastructure. This is a business report on developing innovation and creativity in an industrial Gas company called British Petroleum (bp). This is a British Company and one of the energy giants of the world. The company believes that before entering a market and before introducing a new product, the key to success is to conduct extensive innovation on the product area to extensively know the pros and cons including the risks and opportunities. British Petroleum (bp) annually invested more than 266 million US dollars in R&D in 2021 (Statista, 2021). The company employs 60,000 people in over 70 countries globally (Bp United Kingdom, 2018). To apply the innovation models, an innovation projects of British Petroleum (bp) has been assumed which is the Teeth Whitening project.

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Innovation Models at British Petroleum

Definition of Innovation and Creativity:

In business, innovation refers to creating a new product or process with added value or improving the existing product or process, marketing channels, distribution process, production or supply chain strategies to ultimately increase the profits for the company (Bowonder et al., 2010). These authors have also revealed that some people think that innovation and R&D are the same, in fact, R&D is only one factor of innovation; there is a minimum of 50 other factors that actually make innovation. The most important five pillars of innovation are: the willingness of the institutions, the human capital strength of the organization, the infrastructure to conduct research, and demand in the market. These factors play a significant role in making bringing positive outcomes from annotations. British Petroleum (bp) puts significant emphasis on the innovation process of the company. Being a research and science-based organization, British Petroleum (bp) put huge importance on R&D through committee formulation, board discussion, the inclusion of researchers in the team, and investing huge money for the research. All these issues have resulted in making huge sales annually. Now the issue in question is whether to invest in the teeth whitening project and if the product will be sold to consumers or to the industries through licensing the technologies.

Creativity is something that fuels big ideas, and big thoughts and this is the difference creator that makes a certain organization different from others (Nayak, Agarwal and Director, 2011). Innovation and creativity are not the same words, the first term is much broader than the second term, infect innovation comes from creative minds. Creativity refers to the attitude and philosophy of searching for Excellency, new processes, new ways (but must be effective), looking to optimize the current process etc. Creativity also looks to make the differentiation. For example, the designs, and user interface have explicit differences and user-friendliness in the iPhones, which is the most creative company in the world right now. British Petroleum (bp) also has to be creative in innovation, marketing, distribution and in all other ways.

Innovation approaches of British Petroleum (bp):

There are different types of approaches to innovation such as Breakthrough Innovation, Disruptive Innovation, Open Innovation, and Sustainable or Incremental Innovation (Unay and Zehir, 2012). To determine the approach that British Petroleum (bp) followed, it is important to investigate how the company has determined the possible product or service. British Petroleum (bp) Has observed that Plasma is a cleaning agent and it is capable of sterilizing teeth and make the teeth whiter through the more vibrated ionized gas being touched with conducting electricity and energy (Case study). Observing the possibility of using the plasma to make a teeth whitening agent, British Petroleum (bp) has formed a team of researchers to evaluate the possibility of introducing a new product made with Plasma to whiten human teeth. It is clear that there was no existing product on which the company has some options to improve. Rather there is a chance of bringing a completely new product.

Urbancova (2013) has revealed that breakthrough innovation is something that significantly changes the dynamism, and efficiency in the industry through a certain new product or new process. British Petroleum’s (bp)’ approach to innovation matched with breakthrough innovation because the company is likely to introduce a new product through a significant impact on Plasma on teeth whitening. However, the innovative approach of the company has revealed some significant characteristics, which are critically analyzed below:

The innovation is headed by a multidisciplinary team approach: British Petroleum (bp) has formed a research team which included people from multiple research areas such as the core research area, from marketing area, and from the sales area. Gandotra (2010) has revealed that such multidisciplinary inclusion of personnel in a team yield great outcomes. This has happened in the case of British Petroleum (bp).

Collaboration: This feature helps a research team to get inputs from multiple areas powered by multidisciplinary team efforts and collaboration. Kim and Slater (2013) have found that collaboration and coordination in an innovation team help a company to give their best and creative efforts and result in breakthrough innovation. The research team at British Petroleum (bp) have ensured collaboration.

Access to resources: Another significant feature of the innovative approach is that the company has ensured access to the resources such as labs, databases, financial resources etc. (Gryskiewicz et al., 2011). These issues have contributed to innovation.

Encouraging diversity: Diversity is one of the keys to bringing exceptional results and creativity because a diversified team has people from different backgrounds regardless of this nationality, and educational backgrounds (Parjanen, 2012). Such an approach helps a team to get unusual inputs which are different from conventional products. This helps innovation and creativity.

Process of Innovation Management at British Petroleum:

Idea generation is important but generating ideas is only half the job, assessing the ideas, analysis of the ideas, evaluating and finally validating and then keeping the ideas in potential innovations is the key to bringing really successful products or services to the market (Vuong, Tran and Napier, 2013). Innovation management is a methodical way of brainstorming ideas, ranking, evaluating, assessing and finally putting viable ideas into business practices (Lin, 2011). Understanding the innovation process is important because it suggests a systematic approach which helps the company on the right track. Following the management innovation process explains why certain companies are successful and why others are not.

There are different processes of innovation management understanding which is of great importance for research-based organizations such as British Petroleum (bp) or similar other companies. All types of innovation processes might not be suitable for an organization, rather the right fit of the innovation process depends on the types of products they offer, demand in the market, advancement of technology and most importantly, the competitive situation (Mihai‐Yiannaki and Savvides, 2012).

As the above diagram illustrates, the innovation processes can primarily be divided into two areas: The pull process and the Push process. More details are analyzed below:

Push or Pull Innovation process: Push innovation process starts from internal R&D, technological advancement and offering viable products or services to the target customers; whilst the pull innovation process starts from outside the organization, mainly through a real need from the marketing or customers’ perspectives (Johnston and Bate, 2013). British Petroleum (bp) has invented the teeth whitening technology or idea, and they are finding ways to place the viable product in the marketplace. This is a push innovation process because the invention has come from inside the organization. As a result, British Petroleum (bp) already knows the target market, possible sales, and marketing strategies that could be used. The most important advantage of this process is less risk because the company already have done research on the product and the market, therefore, there is less risk of failure. On the other hand, British Petroleum (bp) has also faced a challenge in following this push process: it has to invest a huge amount in R&D, it needs to put serious efforts and concentration into the work, it needs to make decisions if research should be continued which involves risks as well as return.

Phase-Gate Innovation process: This is a famous process of innovation management in which the ideas are generated in a lot of numbers, and the ideas go through a certain process, at the final stage (the phase gate); the ideas qualify the predetermined principles and forwarded to next levels and are funded for further research or implementation (Im, Montoya and Workman 2013). The case study of British Petroleum (bp) revealed that the company has over 100 projects in R&D, and finally, the company evaluates every project to determine if they will be implemented. Therefore, British Petroleum (bp) has this process in operation. The advantage of this process is that it helps the organization to make a large number of ideas and finally result in the implementation of the most viable ideas.

Lean startup Innovation process: This is a push-based innovation process which implies that the right and capable people should be placed in innovation to create as many ideas as possible (Jaiswal and Dhar, 2015). The researchers of this process conduct extensive research on the market needs and risks. Based on their finding, the company introduced a new product.

Roles of Creativity in Innovation Management:

Creativity and innovation are not the same, they are different. Creativity is the process of generating new thoughts, and noble ideas through imagination and of course not through reason or logic (Bilton, 2014). When a business has creative minds, it is guaranteed that it will have new approaches and different systems than other organizations.

On the other hand, innovation happens when a creative idea is explored more and implemented the idea to a new product. Therefore, creativity and innovation go hand to hand. In summary, creativity is the process of generating something new; whilst innovation is the process of implementing the newness. Creativity plays an important role in innovation management because a company will not find ideas for further research if they lack creativity. British Petroleum (bp) have people with creative minds, this is reflected in their job where some of the researchers have found the use of Plasma as a substance to whiten teeth, this is of course something differently new.

7-Stage model of New Product Development (NPD) on British Petroleum

This is a systematic approach to new product development in which the process starts with brainstorming an innovative idea and ends with lunch. This is a complete product innovation cycle, some of the stages are done by R&D, and some stages are conducted by the marketing and production teams.

Stage 1: Product Idea Brainstorm: This is the first stage of the new product development cycle, and it is conducted by the R&D of an organization (Eppler, Hoffmann and Bresciani, 2011). British Petroleum (bp) has already finished this stage because they know their product. However, this stage can be either a push or pull process, depending on the philosophies of the company. British Petroleum (bp) followed the Push technology process because the possible product: Teeth Whitening, has been invented because of technological advancement and careful observation of the researchers.

Stage 2: Evaluating the ideas: This stage evaluates the possibility of implementation, and assesses the market opportunity, and profitability of the innovative idea of product or service (Munizu and Hamid, 2018). British Petroleum (bp) is exactly in this stage of the New Product Development model. Now the company is assessing the issues to conduct further research, production ability, marketing strategies etc. The company has also considered how the goods should be marketed. One important consideration at this stage is that British Petroleum (bp) must consider the competitiveness of the teeth hygiene market and the reality of customers’ expectations from the companies.

Stage 3: Collecting feedback and assessing market evaluation: At this stage, the company should collect feedback from suppliers, customers, experts, retailers and other possible stakeholders to assess the value of the new product (Parjanen, Harmaakorpi and Frantsi, 2010). British Petroleum (bp) has not yet reached this stage. After completing the research work, British Petroleum (bp) should conduct this stage.

Stage 4: Using social media for assessing possibility: This stage is an extended portion of the immediately above the stage. The company should utilize the value of social media to assess the acceptance of the product and to understand the reactions and engagement of the possible customers (Damanpour and Aravind, 2012). British Petroleum (bp) must keep in mind that only the utility of the product should be shared, the main functionality of the plasma must not be shared with mass people.

Stage 5: Prototyping and marketing: The company will make some physical steps to make the product visible through this stage, in which initiatives are taken to make prototypes and to make decisions on how the products will be sold (Box and Woodall, 2012). British Petroleum (bp) should make the prototype of the whitening product either in a cylinder or put it into the toothpaste or in some other means. Whatever is the decision, it should be decided at this stage. British Petroleum (bp) might sell the products directly to consumers, or to some existing toothpaste manufacturers through a licensing program.

Stage 6: Market testing: Based on the agreed decision of stage 5, British Petroleum (bp) should do the market testing in which the company should distribute the prototype products to some limited target customers. Customers should be advised to use the product. British Petroleum (bp) should collect the feedback about price, usage, and value addition of the product. The company must put the feedback into practice production so that the final product meets the preferences of the customers.

Stage 7: Preparing for lunch: This is the final stage of the model where British Petroleum (bp) should take preparation to finally lunch the production. The company should make sure that the feedback of the customers is implemented in the production model, and the company should also determine the production quantity.

The role of Product Development Manager at British Petroleum’s innovative Projects:

The role of the product development manager is outstanding in the teeth whitening project of British Petroleum (bp). The person who does research on the product in order to find out the benefits and side effects of the product and help a company to take the decision about the product that they will work with the product or not (Proctor, 2005). In every segment of product development, these managers play a significant role. The product manager of British Petroleum (bp) has found the idea of making use of Plasma in order to make teeth whiter. He has researched the concept of utilising Plasma to make teeth whiter in the product development segment. The roles he played in the project have been analyzed below:

Founded unfulfilled demand customers’ demand: There are many customers who want exclusive features of products and existing products do not fulfil their demand therefore the customers purchase less from the existing companies (Bucolo, and Matthews, 2011). Companies can target these customers to make their business highly profitable. Teeth whitening product is that type of demand of the customers’ group which was founded by the project manager of British Petroleum (bp). He has shown that existing products in the market are unable to meet the need of customers. The project manager has helped British Petroleum (bp) to see the available business expansion scope. Therefore, the company will be capable of utilizing this opportunity and expanding its business.

Recommended business expansion plan: Bernard the product manager of the company recommended technology licensing for the company’s business expansion plan. Technology licensing is the process through which an organization conduct business deals with a reputed organization and get the right to use the trademarks, services marks, patent, trade secrets, copyrights etcetera intellectual property (Maier, Olaru, and Maier, 2013). Companies do not need to give extra effort to establish the reputation of the product because the reputation of the country attracts customers toward the product. If British Petroleum (bp) start selling the new teeth whitening product, the company will be capable of operating the new business at lower risk. The reputation of the company will create customers for teeth whitening. It seems that the product development manager has recommended an effective business expansion plan that would be highly beneficial for the company.

Taken steps to create new value for customers: When product managers invent new products or services, they create value for customers because the products meet customers’ unfulfilled demand (Anderson, Potočnik, and Zhou, 2014). The new teeth whitening product of the product manager will also help the company to create value for customers. The available toothpaste on the market is unable to make teeth whiter than Plasma does, which will solve customers’ problems easily by making their teeth whiter. By solving their problems British Petroleum (bp) will be capable of delivering value for customers. When customers see that the new teeth whitening product works well and create value for them, the products will get an enormous response from customers. As a result, sales of the product will increase enormously, and the company will be able to generate higher revenue. It refers that the product development manager has developed the best product for the company to ensure their growth.

Analyzed competition of targeted market: Bernard has analyzed the competition of the targeted market to show the rivalry that British Petroleum (bp) will face. He has found the top competitors of the market are Proctor & Gamble, and Colgate has the highest market share in the toothpaste industry across the world. Global customers have trust in these brands and purchase their toothpaste more which refers that the teeth whitening product of British Petroleum (bp) will face a high threat of rivalry in the market. The products manager has been informed about the competition and this will help the company to strengthen their competitive advantage by considering the competition.

Different Models of Innovations at British Petroleum

The conceptual framework that recommends a specific form by which a company innovates their products and services is the innovation model (Dereli, 2015). Two key innovation models are evaluated below:

Closed Model of Innovation at British Petroleum:

The process through which innovation is conducted within a company by utilizing the technologies, resources and laboratories they have with the help of their workers and research is closed innovation (Teodorescu et a., 2015). All processes and work related to the innovation are conducted within the company. The outcome of this kind of innovation is pre-determined, and it reduces the propensity of arrival with new products. This research brings limited results because the innovation is conducted within a company with limited resources and capabilities of its own workers and researchers. Therefore, the invented product has limited features and cannot meet the expectation of the research. The target of this innovation is not landing with a new product. But closed model innovation assists companies in utilizing their internal resources effectively by ensuring maximum use of the resources (Higgins, 1994). If British Petroleum (bp) apply a closed innovation model, no outsider will interfere in the innovation process, and the company have to invent the product by utilizing its own resources and capabilities. It will help the company to develop a unique product which is not available in the targeted market. They will be able to protect their intellectual property and competitors will not be able to copy their intellectual property.

Companies use their internal resources such as laboratories, marketing departments etcetera to conduct this research. British Petroleum (bp) will also be able to conduct this research by utilizing their laboratories and workers of different departments. It will assist the company in ensuring the maximum use of its internal resources. Therefore, this innovation costs lower than the closed innovation approach. British Petroleum (bp) will not need to buy any resources from outside of the company. Even they do not need to pay additional costs for researchers because the research will be conducted through their own researchers. It will also help British Petroleum (bp) to generate unique ideas and they will be able to maintain the confidentiality of the formula of the invented product. Therefore, competitors will not be able to steal the invented idea. But British Petroleum (bp) collaborates with licensing companies and universities that conduct research and the company innovates products with the help of these partners. Because of these collaborations, the company have not applied closed innovation approach in developing the teeth-whitening product. British Petroleum (bp) could apply this approach in order to minimize innovation costs by utilizing its internal resources. Even the company could ensure the security of their intellectual property better with this approach.

Open Model of Innovation at at British Petroleum:

Open model innovation is the approach in which innovation is conducted by utilizing external collaboration and internal resources (Curran, 2010). Internal resources refer to the workers, laboratories, assets etcetera. External collaboration means the deals of a company with the outsiders of the company such as universities who conduct research, research organizations and external professionals. It is the most effective innovation model that assists a company to get the best ideas because they conduct innovation by utilizing both internal and external sources. Open innovation involves suppliers, universities, competitors, customers etcetera parties within the innovation process, therefore, companies have to pay an additional amount for their invention but ensure the best outcome of the research. Therefore, most companies use open innovation approach.

Most of companies use open innovation approach in order to invent new products and services. There are many reasons o using this model. It creates vast opportunities for innovation. This kind of innovation is conducted in order to invent new products and services which is not available in a market. Companies can select the best people to work with within the company and outside of the company. They get a broader array of ideas, technologies and IP to choose from them, which is suitable for the company. Companies can reduce innovation costs by conducting outsourcing which is a great scope of open innovation. Expert professionals turnover is high in this innovative approach because the experts do not work long with a company and companies support this turnover of professionals which makes much logic. Open innovation also welcomes a broader array of expertise which help the company to build a better business model.

British Petroleum (bp) applies open innovation in order to develop its business model. The company have made an investment of £1million for the development of a teeth whitening formula by using plasma (Case Study). A research team from the University of California researched for 12 months on the plasma teeth whitening project. Then the team gave given a final result, which is positive. Open innovation helps British Petroleum (bp) to get a broader array of expertise by which it becomes able to make its business model more effective. By applying this model, the company can invent completely new products that are new in the market. British Petroleum (bp) has become capable of reducing its innovation through outsourcing research. But there is a risk that competitors can listen to the research British Petroleum (bp) has conducted and they can bring the teeth whitening product to the market before the company. It is tough to keep the news of research confidential because of involving external parties in the innovation process.

Schumpeterian views on the closed and open innovation models:

Schumpeter published his theory named “The Theory of Economic Development”, which was published in 1912; he expressed his views on innovations conducted by the contemporary companies of that time (Sandulli et al., 2012). He opined that business organizations can expand their business and can increase investment due to innovations which help them to create completely new products or add value to existing products. Such innovations happen mainly because of technological innovation and the advancement of science. The theory is based on the assumption that the market is generally in an equilibrium position; the moment companies go for innovation, product prices increase because of the cost of innovation (Courvisanos, 2012). However, prices start to decline when companies go for mass production.

The above theory was published in the early 1900s. Therefore, many of the perspectives of that theory do not match the current economic system of the world. Firstly, innovation doesn’t always mean cost and price increase, nowadays, innovation is the best way to make the product efficient, bring efficient and cheap but effective products and services and meet the needs of the whole world, thus reducing the price at the first offering.  Therefore, the background of the theory is no more valid.

Planned and emergent models of Innovation at at British Petroleum:

The process in which areas of research, services and products that will be offered, etcetera stuff related to innovation are done with planning is called planned innovation (Trimi, and Berbegal-Mirabent, 2012). By using the planned model, companies can reduce risks because proper planning ensures better results from innovation. But the facilities of planned innovation are also narrow like a closed innovation approach which is the noticeable weakness of the approach. In this research approach, the researchers are not allowed to research outside the given task which means they are not allowed to explore more than the recommended area. Therefore, companies do not get a potential outcome from the innovation and miss the new opportunities for developing products and services. Companies focus on developing their own perceptions and do not focus on the change in customers’ demand of market trend because the company do not take a view from external sources. Nokia is the perfect example of a company that used planned innovation. Nokia was the boss of the mobile manufacturers but the company conducted planned innovation, they did not focus on the changing demand of customers and market trends that removed the company from its leading position. British Petroleum (bp) do not apply a planned approach because it finds out the market gap and focuses on the changing market trend, including customers’ demand. Even the company gives the researchers independence to explore outside of the recommended area which helps the company to invent new products which can capture the potential market for the company.

The emergent model refers to the innovation approach where companies give independence to the employees and researched to research new products and services (Naranjo‐Valencia, Jiménez‐Jiménez, and Sanz‐Valle, 2011). The emergent model brings the best outcome of research because researchers can explore without any restriction. British Petroleum (bp) applies this innovative approach. The company do not set any restrictions for employees and researchers therefore, they become able to give full effort to the research that brings the best outcome from the research. The company has given the University of California the research project on teeth whitening and given them the time researchers required. The research team have completed their research successfully and given a positive result.

Recommendations on the innovation project of British Petroleum (bp)

British Petroleum (bp) should invest in the teeth whitening project: Existing toothpaste that is available on the market does not make teeth whiter than plasma can. It refers that the teeth whitening project of British Petroleum (bp) will be able to capture the customers who are finding these types of products to make their teeth whiter. The product will effectively make teeth whiter without any side effects will encourage customers to maintain repeatable sales and will suggest others purchase the product. The unique feature of making teeth whiter will create an outstanding image of the product in customers’ minds. Therefore, British Petroleum (bp) should invest in the teeth whitening project to become profitable.

The company should start with technology licensing: Teeth whitening product of British Petroleum (bp) is new in the market therefore, customers will not buy the product, and it will take time to create customers for the new product. To avoid this problem, British Petroleum (bp) should go with technology licensing for the project. If the company enter the market with technology licensing for its teeth whitening project, it will reduce the risk of fewer customers for the product. British Petroleum (bp) will be capable of using the intellectual property of any reputed toothpaste company which have a great impression on customers’ mind. Therefore, customers will buy the teeth whitening product because of their trust in the reputed company. It will also minimize the marketing cost of the company because British Petroleum (bp) had to promote more to establish its toothpaste brand.

British Petroleum (bp) should conduct open innovation always: Open innovation welcomes a wide array of scopes for innovation that helps companies to invent new products therefore, British Petroleum (bp) should stay with open innovation for future research. Out of this approach, the company will be capable of developing great new products or services because researchers get full independence to explore. The company will not interfere in the research, which will help researchers to bring the best result of the research. It will help British Petroleum (bp) to reduce innovation costs by outsourcing the research. By reducing research cost, the company will be capable of increasing its profit level. Even they will be able to develop their business model more by welcoming a wide array of expertise within the company.

The company should make some samples to find out the demand for the new product: Bringing huge production of the teeth whitening product in the starting will cost higher, and people may not purchase more because of the newness of the product. British Petroleum (bp) should make some samples of the product and distribute it to some customers, suppliers and others to see the effectiveness of the product. They should bring huge production after observing the demand, which will help the company to predict growth.

Conclusion

The concept of making teeth whiter is a new concept, and many customers want this type of product for sure which refers to the vast growth opportunity of the project. British Petroleum (bp) has identified the market gap, and they should start the process of making the product. But the company should make a sample first to observe the acceptance of the product by collecting reviews from the people who will use the sample product. It will help the company to make the right decision by evaluating the result of the step taken. If people give a positive review, British Petroleum (bp) can start producing the product to distribute it in the market.

References:

Box, G.E. and Woodall, W.H., 2012. Innovation, quality engineering, and statistics. Quality Engineering.

Bp United Kingdom, (2018). Where we operate. [online] United Kingdom. Available at: https://www.bp.com/en_gb/united-kingdom/home/where-we-operate.html. [Assessed on: 29 March 2021]

Statista, (2021). BP: R&D spending 2021. [online] Available at: https://www.statista.com/statistics/302538/expenditure-on-research-and-development-of-bp/#:~:text=BP. [Assessed on: 28 March 2021]

Bilton, C., 2014. Manageable creativity. In Creativity and cultural policy. Routledge.

Bowonder, B., Dambal, A., Kumar, S. and Shirodkar, A., 2010. Innovation strategies for creating competitive advantage. Research-technology management.

Courvisanos, J., 2012. Cycles, Crises, Innovation: Path to Sustainable Development A Kaleckian-Schumpeterian Synthesis. Edward Elgar Publishing.