Innovation and creativity in organisations

Introduction

Innovation and creativity in organisationsSmart thermostats represent an evolution of this product that started in 1830 when Scottish chemist Andrew Ure filed a patent for the bi-metallic manually set thermostat that solved the need for consistent temperatures in Europe’s textile mills[1]. The next significant advancement came in 1885 when Albert Butz patented the automated pulley system thermostat that was called the “damper-flapper”, which automatically regulated furnace heat[2]. This thermostat led the way for the formation of the Butz Thermoelectric Regulator Company, and then the Electric Heat Regulator Co., of Minneapolis, MN that became Honeywell International[3].

The next revolution came in 1968 when Honeywell of the United States introduced the programmable W884[4]. Innovations caused Centrica to foresee as well as respond to customer demands for devices that simplified the programming of thermostats[5]. This led to an agreement with Honeywell in 2009[6]. This was an organisational approach as the company recognised its limitations by forming an association with the more technically established Honeywell. The environmental aspect represented reducing energy consumption.

Modern technologies such as semiconductor chips and wireless features resulted in the smart thermostat[7] which is the focus of this study. Organisation processes will be explored in the next section (the innovation) that reveals how the company developed the product as a team effort. HIVE smart thermostat serves as the basis for this investigation regarding ‘Innovation and creativity in organisations’. The Hive was introduced in 2013 by Centrica[8]. This represented an implementation process that changed the dynamics of the. British Gas held the gas trading, sales and services as well as operations concerning gas production in the Morecambe gas fields (North and South) that were transferred to Centrica in 1997[9]. This has been brought forth to clarify references in this study that refer to British Gas and Centrica since these company names are interchangeable.

This exploration will delve into varied aspects that include environmental and organisational conditions, along with organisational and implementation processes to explore the development and outcomes of this innovation. This will include sustainability concepts and theories where sustainability consists of economics, ecology, culture, and politics[10]. Stubbs and Cocklin[11] explain that sustainability represents a challenging social area that considers ethical consumerism, international and national sustainability trends, along with individual lifestyles. These represent three sustainability dimensions of environment, society, and economy where environmental limits constrain the other two areas[12]. The Venn diagram provides an illustration of the above:

The above diagram aids in understanding the interconnected links between ‘’ environmental, societal, and economic aspects” that illustrate an economy and society should be “… in equilibrium with basic ecological support systems”[14]. The above three aspects provide an understanding of the concept of sustainability that is also the foundation of the Triple Bottom Line[15]. In terms of theories of sustainability, Stubbs and Cocklin[16] advised these three areas attempt to integrate and prioritise society’s response to cultural and environmental issues. The Brundtland Report of 1987 embodies the above[17], as does the ‘weak’ model of sustainability[18]. It (weak model) espouses that future generations should not be left any worse off than we presently are (as opposed to strong sustainability that prioritises preserving a species or ecosystem)[19]. The economic model of sustainability proposes sustaining opportunities is an investment, whilst the ecological model seeks to sustain diversity in a biological manner and attempt integrity ecologically[20]. The political model is concerned with how global and local environmental issues impact current and future life[21]. In terms of the above, the weak and economic models will apply since this study represents looking at a business issue.

In addition to the above, sustainability will weave the following into this study:

This will aid in understanding the resource-based theory of sustainability that focuses on firm innovations and their use of internal resources [23]. These are used to guide strategic choices and decisions to achieve or develop a competitive advantage[24]. This is further explained by the resource-based-view (RBV) theory that links what a company does (internal capabilities) to the external environment in terms of what the market is demanding and what its competitors are offering[25]. Paiva et al[26] as well as Ambrosini et al[27], and others advise that RBV can be a source of development in terms of internal competencies that when they are applied can potentially result in a competitive advantage. This is applicable to the development and market introduction of Hive.

The following figure shows the manner that the above concepts and theories are linked:

The above exploration of sustainability regarding concept, and theories were included to provide a reference point for when they are brought forth in other sections.

The Innovation

A key aspect is the company’s foresight in forging a relationship with Honeywell to develop sustainable approaches to the marketplace[29]. This represented the beginning phase of the resource-based view that showed the company was expanding its capabilities (what it does) by developing internal competencies. This would aid in positioning Centrica in terms of competitors regarding customer needs for a more convenient thermostat[30].

In terms of organisational conditions, a brief background on the company aids in understanding the innovation. The first Hive model (introduced in 2013) had three key developmental aspects[31]. The underlying objective represented designing and creating a unit that provided customers with a means to remotely control heating and hot water temperatures[32]. The company stated its second step in the process represented providing a way for customers to have an improved method for heating and hot water aspects that included upgrades to the product using ongoing customer feedback[33]. This was an important consideration in the organisational process as it helped to guide development, and that the initial design needed to have a base for subsequent additions and improvements[34]. The third step was to completely redesign the manner the company approached thermostats since it was creating a new approach (smart) [35]. In terms of the latter (third step), this represented the resource-based view that utilised a strategy of building on the initial design for further upgrades that centered on applying its competencies (see Figure 3, Integrated Conceptual and Theoretical Framework). It also represents the shareholder view that was also referred to in.

The specific characteristics of the innovation start with recognisable functionality[36] that was a feature of the first units in 2013. The traditional dial format was retained to make it recognisable to customers, and it incorporates a push access on the dial to bring up the programming menu[37]. Hive’s main rivals (the Ecobee, Honeywell, and Sensi) use a digital output display, only the NEST uses the same dial format as the Hive[38]. The Hive can control a home’s water heater using the dial, or by the wireless app[39]. These are characteristics that refer to utility theory regarding customer decision making[40]. Utility theory (regarding customer decision making) proposes that they make decisions based on the expected outcomes (in this case remote control use, saving money and ease of use).

The most interesting characteristic is the remote control wireless app (iOS and Android) that looks and operates like a physical thermostat dial:

This design feature helps to make the transition to wireless remote use seamless, user-friendly and eliminates frustrations for customers that are not savvy in using applications[43]. This is another example of utility theory in customer decision making.

Whilst the above list of characteristics seems brief, this actually represents the major feature of the Hive as converting to its use is similar to a regular thermostat dial.

[1] David Gray. Centralized and automatic controls in ships, London: Pergamon Press, 2014.

[2] Prothermostats. 100 Years of Programmable Thermostats. 2017. http://www.prothermostats.com/history.php. (Accessed 2017-11-11).

[3]Ibid

[4]Ibid

[5]Ibid

[6] Honeywell. British Gas and Honeywell working together. 2009. https://www.carbonbrief.org/gas-from-norway-coal-from-russia-eight-graphs-on-the-uk-energy-systemhttp://www.honeywelluk.com/news/British-Gas-and-Honeywell-working-together/. (Accessed 2017-11-11).

[7] Prothermostats. 100 Years of Programmable Thermostats. 2017. http://www.prothermostats.com/history.php. (Accessed 2017-11-11).

[8] Centrica. British Gas product launch makes the connected home a reality. 2017. https://www.centrica.com/news/british-gas-product-launch-makes-connected-home-reality. (Accessed 2017-11-11).

[9] Steve Thomas. A perspective on the rise and fall of the energy regulator in Britain. Utilities Policy 39, no.4, 2016, pp. 421-49

[10] Marina Linnenluecke and Andrew Griffiths. Corporate sustainability and organizational culture. Journal of World Business 45, no.4, 2010, pp. 357-366.

[11] Wendy Stubbs and Chris Cocklin. Conceptualizing a “sustainability business model”. Organization & Environment 21, no. 2, 2008, pp. 103 – 127.

[12] Ibid

[13] ConceptDraw. Path to sustainable development. 2016. https://conceptdraw.com/a99c3/preview–Venn%20diagram%20-%20Path%20to%20sustainable%20development. (Accessed 2017-11-11).

[14] ConceptDraw. Path to sustainable development. 2016. https://conceptdraw.com/a99c3/preview–Venn%20diagram%20-%20Path%20to%20sustainable%20development. (Accessed 2017-11-11).

[15] Bob Willard. The new sustainability advantage: seven business case benefits of a triple bottom line. British Columbia: New Society Publishers, 2012.

[16] Wendy Stubbs and Chris Cocklin. Conceptualizing a “sustainability business model”. Organization & Environment 21, no. 2, 2008, pp. 103 – 127.

[17] Renee Kemp and Pim Martens. Sustainable development: how to manage something that is subjective and never can be achieved? Sustainability: Science, Practice, & Policy 3, no. 2, 2007, pp. 32-39.

[18] FionaTileyand  William Young. Sustainability Entrepreneurs. Greener Management Journal 55, no. 7, 2009, pp. 79-92.

[19] Ibid

[20] F. Delrue, P. Setier, C. Sahut, and L. Courac. An economic, sustainability, and energetic model of biodiesel production from microalgae. Biosource Technology 111, no. 4, 2012, pp. 191-200.

[21] Stefan Schaltegger and Florian Ludeke-Freund, Erik Hansen. Business cases for sustainability: the role of business model innovation for corporate sustainability. International Journal of Innovation and Sustainable Development 6, no. 2, 2012, pp. 15-22.

[22] Geoffrey Wells. Sustainable Business: Theory and Practice of Business Under Sustainability Principles. London: Edward Elgar Publishing, 2013, p. 30.

[23] Jay Barney and David Ketchen, Mike Wright. The future of resource-based theory: revitalization or decline? Journal of Management, 37, no. 5, 2011, pp. 1299-1315.

[24] Ibid

[25] Jeroen Kraaijenbrink, J. Spender and Aard Groen. The resource-based view: A review and assessment of its critiques. Journal of Management, 36, no.1, 2010, pp. 45-53.

[26] Ely Paiva, Aleda Roth and Jaime Fensterseifer. Organizational knowledge and the manufacturing strategy process: a resource-based view analysis. Journal of Operations Management 26, no.1, 2008, pp. 115-132.

[27] Veronique Ambrosini, Cliff Bowman and Nardine Collier. Dynamic capabilities: an exploration of how firms renew their resource base. British Journal of Management 20, no.1, 2009, pp. 9-24.

[28] Geoffrey Wells. Sustainable Business: Theory and Practice of Business Under Sustainability Principles. London: Edward Elgar Publishing, 2013, pp. 33

[29] Honeywell. British Gas and Honeywell working together. 2009. https://www.carbonbrief.org/gas-from-norway-coal-from-russia-eight-graphs-on-the-uk-energy-systemhttp://www.honeywelluk.com/news/British-Gas-and-Honeywell-working-together/. (Accessed 2017-11-11).

[30] Ha Hoang and Frank Rothaermel. Leveraging internal and external experience: exploration, exploitation, and R&D project performance, Strategic Management Journal 31, no. 7, 2010, pp. 734-758.

[31] Wired. The story of Hive: how thinking like a startup helped British Gas hook up our homes. 2016. http://www.wired.co.uk/article/story-of-hive (Accessed 2017-11-11).

[32] Ibid

[33] Ibid

[34] Ibid

[35] Ibid

[36] Yurii Tyunnikov. Interrelation of evaluation and self-evaluation in the diagnostic procedures to assess teachers’ readiness for innovation. European Journal of Contemporary Education 16, no. 2, 2016, pp. 248-256.

[37] Matihew Rabin. Risk aversion and expected-utility theory: A calibration theorem, Handbook of the Fundamentals of Financial Decision Making. London: World Scientific Europe, 2013.

[38] Alan Henry. Five Best Smart Thermostats. 2015. https://lifehacker.com/five-best-smart-thermostats-1717145893. (Accessed 2017-11-11).

[40] Matihew Rabin. Risk aversion and expected-utility theory: A calibration theorem, Handbook of the Fundamentals of Financial Decision Making. London: World Scientific Europe, 2013.

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