To ensure that the organization effectively operates in its designated market segment, it is important to practice innovation as a method for maintaining a competitive advantage. However, several market segments experience major challenges in nurturing innovation as a strategic way to capture larger market shares. In this report, the business case of Philip Morris International (PMI), a worldwide tobacco company, will be used to demonstrate how innovation could be implemented in a heavily-regulated industry based on the previous individual experience and overall familiarity with innovation efforts and operations.
Benefits of Change and Innovation
Organizational changes are primarily caused by the economic shifts, the need for maintaining competitive advantage, and addressing consumer behaviors. The aspect of innovation correlates with change, while one is primarily associated with a notion of customer-centricity. For the heavily-regulated tobacco industry, the innovation aspect is paramount, since one requires considering both health and environmental factors to ensure the adoption of both product and placement strategies. Furthermore, a consistent approach in retailing that carefully meets customer needs and expectations is essential in matching risks related to government regulation and customer retention, suggesting future elaboration on risk mitigation strategies. For the case of PMI, the first benefit of change and innovation is clearly associated with the importance of addressing the risks of tobacco consumption in terms of healthcare, while the second results in the production of electronic devices that allow balancing the principles of the smoke-free environment and sustainable production as a new company strategy (Li, Zhang, and Zhan, 2018). However, the implementation process was rather costly and has not been equally adopted across the pilot markets, requiring further sensing of consumer tastes.
Barriers to Change and Innovation
There are two main barriers that might prevent PMI from expected change and implementing innovative technologies. First, considering the polar regulation norms related to tobacco consumption, the deployment of new electronic devices and tastes might require additional time to reach targeted consumers. For the organization, it means that innovation efforts require more time to be explicitly analyzed and populated to the market, which is also associated with additional costs for deployment. Second, it is important to address the aspect of customer loyalty and brand involvement, given that electronic cigarettes basically change the perception of the smoking culture and, therefore, require additional engagement effort to attract the existing consumer base to change their perceived habits. Specifically, certain consumer groups might confront the idea of using electronic smoking devices coming at a higher price, while others might express personal dissatisfaction with the quality of the device or tobacco taste. However, the alternative barriers such as striving to compete demonstrated by the other tobacco companies should be considered as the obstacle to performing flawless organizational changes.
To overcome barriers to innovation and change, the following strategies could be implemented:
- The overall strategy is based on the marketing communication mix, where the focus on social media channels is made. It is important to initiate one at least two months prior to the product launch, featuring new flavors and referral program opportunities.
- The price focus should be customized based on the existing brand loyalty principles, while eventually increasing for the premium services.
Planning, Monitoring, and Review Techniques
The planning process relates to the project management principles and, therefore, is executed through the development of the project change plan. A formal document that outlines business objectives, milestones, and key deliverables are required for the innovation establishment. For the chosen case of PMI, the formal project planning document is required to understand the smoking habits of the research participants based on the demographic characteristics, as well as realize the project scope respectively.
The proposed monitoring process that relates to the current report encompasses two distinct methods. The first is collecting customer feedback related to the quality of services provided. For the chosen case of PMI, it could be realized through the use of chatbots, virtual assistants, or call-center services in remote locations, while opening boutiques in larger cities would be beneficial. The second monitoring opportunity is the use of electronic surveys, which eventually provide insights related to customer preferences and expectations. Their deployment depends on the integrative approach to communicating with customers and is best realized through point-of-sale contacts.
The review process is best initiated based on the main project management plan and therefore requires specific actions related to the planning process. First, the planning cycle for innovation requires having pre-aligned meetings on a weekly basis to understand if marketing communications are initiated in the right direction. Second, all reviews should be based on the feedback collected from the targeted population groups and therefore might require using statistical modeling and visualization. Finally, for the review process, it is important to follow the appropriate communication standards to ensure that all analyzed cases are further integrated into the main innovations plan and thoroughly followed. To achieve this, it is important to engage key stakeholders and communicate specific procedural changes required for the major operational activities.
Human Effects of Change and Innovation
Both change and innovation processes significantly depend on human intervention and reactive behaviors. For the case of PMI consumers and the associated benefits of introducing electronic devices as an alternative to traditional cigarettes, it is important to reflect on the following perceptional limitations. First, a transition towards electronic devices assumes a confrontational experience of smoking, which means that consumers would think twice prior to switching to the ‘new’ smoking experience. It means that the company should have a robust communication approach targeted toward a selected group of consumers instead of a narrow strategy to promote innovation to specific individuals. Alternatively, a human effect should be observed from the loyalty perspective, where specific consumers would reject the aspect of electronic smoking as innovation and would prefer to stick to the traditional ways of smoking habits without expanding of habits to the digital devices. Considerably, human behaviors should be managed through education and training, using the advantages of digital marketing, social media, and corporate reputation.
Innovation and change are highly recommended to be practiced on the organizational level. However, for the heavily regulated industries such as tobacco companies, it could be more complicated compared to the other consumer-focused organizations and requires constant organizational effort to manage customer-centricity and optimize business operations. The analysis of barriers to change and implementation of the robust monitoring procedures are required to ensure that transformational change strategies are consistent with anticipated business objectives. Furthermore, customer centricity and focus on the best available service opportunities are likely to enhance innovation strategies employed by an organization. Hence, it is important to consider multiple factors prior to performing an organizational change in highly regulated firms, eventually creating new industry standards for nurturing innovation.
Li, L., Zhang, Q. and Zhan, X. (2018) ‘Study on the influence factors of tobacco market demand and efficiency evaluation’, International Journal of Information Systems and Supply Chain Management, 11(1), pp. 1-15.