Innovation Management at Burberry

INNOVATION MANAGEMENT AT BURBERRY
Student’s Name
Course
Professor’s Name
Institution
Location
Date
Innovation Management at Burberry
Executive Summary
The purpose of this report is to examine innovation management at Burberry, a multinational fashion/luxury brand based in the United Kingdom. Burberry’s internal and external factors, as well as its core strategy, are examined to provide an insight into how the company manages innovation. Information about the company is acquired from its corporate website. Also, themes and concepts of innovation are incorporated in the report. The report finds that Burberry has successfully used process innovation to remain competitive. Also, the report finds that even though Burberry has an organisational culture and leadership that supports innovativeness, it is still struggling with issues of sustainability. The report recommends the use of radical innovation to entirely change Burberry’s business model and supply chain process to enhance sustainability.
Table of Contents TOC \o "1-3" \h \z \u Executive Summary PAGEREF _Toc72542667 \h 21.Introduction PAGEREF _Toc72542668 \h 41.1.Burberry: Company Overview PAGEREF _Toc72542669 \h 52.Internal Factors PAGEREF _Toc72542670 \h 62.1.Organisational Leadership PAGEREF _Toc72542671 \h 62.2.Organisational Structure PAGEREF _Toc72542672 \h 72.3.Organisational Culture PAGEREF _Toc72542673 \h 83.External Factors PAGEREF _Toc72542674 \h 93.1.PESTLE Analysis PAGEREF _Toc72542675 \h 94.Strategy for Innovation Management PAGEREF _Toc72542676 \h 124.1.Core Strategy PAGEREF _Toc72542677 \h 124.2.Process Innovation PAGEREF _Toc72542678 \h 124.3.Burberry’s Innovation Process PAGEREF _Toc72542679 \h 135.Recommendations PAGEREF _Toc72542680 \h 146.Conclusion PAGEREF _Toc72542681 \h 15References PAGEREF _Toc72542682 \h 16
1 Introduction
In a competitive business environment that is constantly changing, firms need to come up with new and creative ideas to help them compete and survive. Innovation management allows firms to successfully turn an idea into reality through the various phases of innovation (Goffin & Mitchell 2017, p.17). Companies that successfully manage their innovative ideas not only thrive in their respective industries but also become trendsetters. However, successful management of the innovation process is highly dependent on external and internal factors affecting a company (Shatilo 2019, p.86). Externally, micro-environment factors, such as competitors and consumers, as well as macro-environment factors, such as economic and legal factors, affect the decision-making process associated with innovation. Internally, factors such as organisational leadership and culture, also affect how innovative ideas are translated into reality.
The fashion and luxury industry has been greatly shaped by innovation. Fashion/Luxury brands can constantly meet the changing needs of their consumers by being innovative and managing their innovation successfully to enhance sustainability. In the United Kingdom (UK), the fashion industry is known for its creativity, innovativeness, and uniqueness (Alliance Experts, n.d.). However, to achieve this status, a lot of investments have gone into the industry. For instance, in 2020, the industry received £2 million to support fashion firms and independent designers, among others, in generating innovative ideas that will solve the current problems in the industry (Fibre2Fashion, 2020). While such efforts are collaborative, individual companies in the industry also invest time and money to generate and manage innovative ideas that give them a competitive advantage. One such company is Burberry, a fashion/luxury brand that has remained relevant for decades due to its innovativeness.
1 Burberry: Company Overview
Burberry is a UK-based fashion/luxury brand that was established in 1856 (Burberry, n.d). Burberry is widely known for its trenchcoat, which has evolved from a military trenchcoat during the First World War to an iconic, modern-day piece of fashion (Bass-Krueger, 2019). This evolution has been attributed to its innovative design. Other products include men's and women's clothing and accessories, children's wear, and fragrances. Its focus on innovation and creativity is engrained in its purpose statement “Creativity Opens Spaces” which has allowed it to focus on providing innovative products to its clientele by being forward-thinkers with great imagination (Burberry, n.d.).
Burberry’s business model is centred around designing, sourcing, manufacturing, and selling products (Burberry, n.d.). The designing part happens during the initial product development stages. It allows the company to design products that are sustainable as well as fitting to the needs of customers. The sourcing part of their business model involves using innovative ideas to acquire sustainable and quality materials globally. The manufacturing part involves the actual making of products. This happens at Burberry manufacturing locations as well as third-party locations. Selling entails delivering the products to consumers. This occurs through physical and online stores as well as through wholesale and licensing partners. However, the company indicates that the current business model is not very sustainable and as such, it is still figuring out innovative ways of developing a circular business model (Burberry, n.d ) that will prevent depletion of natural resources.
In recent years, Burberry has realized the importance of innovation in enhancing sustainability in an industry that has received attention due to its role in environmental degradation. Burberry recently launched its strategy that will facilitate sustainability, thereby creating long-term profitability for shareholders (Burberry, n.d). To better understand Burberry’s innovation process, a review of the internal and external factors that influence its success will be conducted. Then, its current strategy for innovation management will be analysed and recommendations for improvement will be provided.
2 Internal Factors
2 Organisational Leadership
Leadership plays an instrumental role in the innovation process. Leadership styles and traits influence the innovation climate and process. For instance, transformational leaders have a positive impact on organisational innovation (Zuraik & Kelly 2018, p.11). Burberry's leadership has changed over the years. Before its current Chief Executive Officer (CEO) Marco Gobbetti, Burberry was under the leadership of Christopher Bailey. Bailey joined the fashion firm as a creative design director and rose through the leadership ladder to CEO. As the CEO, he is accredited for saving the company from dying through his innovative ideas (Petter & Cox, 2017). For instance, he was responsible for introducing the see-now, buy-now model that made seasonless pieces in the catwalk show accessible for purchase as soon as the show ended. When he became CEO, Bailey also served as the chief creative officer (Petter & Cox, 2017). However, the company soon realized that even though Bailey had promoted innovation and brought the company to stardom, serving under the two roles meant that one role would suffer. The management and business side of the company needed new leadership and Bailey stepped down as CEO.
Under the leadership of Marco Gobbetti, Burberry has focused on a turnaround strategy (Uttley, 2020). The focus has been mostly on restructuring and more production of high-end products to help Burberry catch up with its competitors. More importantly, Gobbetti has been instrumental in enhancing creativity at the company through training opportunities and listening to the idea shared by employees (Burberry, 2019). Beyond the company, the CEO is also focused on ensuring that diverse students can learn about creative arts by offering extensive scholarships. While seeking an innovative means of reaching to the younger consumers who have embraced digital retail, Burberry has also collaborated with Farfetch, thus establishing an innovative solution for reaching out to younger consumers (Burberry, 2018). There were also several innovative launches in 2018, soon after Gobbetti took over, aimed at increasing handbag sales. This is an indication that Gobbetti has focused on product innovation during his tenure.
3 Organisational Structure
Organisational structures can be centralised or decentralised. In centralised structures, control and decision-making are at the top (Kalay & Lynn 2016 p.127). Low-level employees have little to say because they receive information through the chain of command. In decentralised structures, decision-making can occur at the lower levels of the chain of command (Kalay & Lynn 2016, p.127). There exists a relationship between organisational structure and innovation. When it comes to innovation, decentralised organisational structures enhance innovation among members of an organisation more than centralised structures (Kalay & Lynn, 2016; Darvishmotevali, 2019). Due to the low decision-making ability among low-level employees in centralised structures, the flow of innovative ideas from employees to leaders is inhibited. Figure 1 presents Burberry’s organisational structure. The structure is a centralised structure where information trickles down from the CEO, through leaders and managers at different levels, to employees at the bottom of the structure. This structure might be inhibiting the flow of more innovative ideas from low-level employees to top management.
Figure 1: Burberry Organisational Structure
Source: (The Official Board, 2021)
4 Organisational Culture
               Culture refers to a set of beliefs, values, attitudes, and behaviours shared by a group of people and are cemented within the group over time (Tian et al. 2018, p.3). Different organisations have different cultures based on what values, beliefs, and attitudes guide the behaviour of group members. Each culture has different underlying factors and these factors can either promote or impede innovation. For instance, organisational cultures that are characterised by risk-taking, open-mindedness, employee participation, and learning behaviours promote innovation (Tian et al. 2018, p.6). The absence of such characteristics among a collective may impede innovation. 
               Burberry’s organisational culture is characterised by innovativeness, sharing of knowledge, teamwork, open-mindedness, and transparency, as well as being future-focused (Burberry, n.d.). As revealed earlier, open-mindedness and learning are some of the factors that enhance innovation. Employees at Burberry share knowledge and experiences, which is a form of learning and this promotes innovation. In addition, being future-focused allows the organisation to anticipate changes and develop innovative ideas for dealing with the changes. Through teamwork, employees can combine their ideas to generate more innovative solutions to existing and expected problems. Based on these factors, it suffices to say that Burberry’s organisational culture is innovation-focused. 
3 External Factors 
5 PESTLE Analysis
* Political 
               Political factors such as political stability, government support for industry, and policies affect business activities and their financial outcomes (Perera 2017, p.8). Burberry operates in different countries that have different political environments. The success of any firm is influenced by the political stability of the country it operates in. For instance, Burberry sales dived because of the political unrest that was happening in Hong Kong. The 10 Burberry outlets in Hong Kong account for 8% of sales from the Asia region and the political instability greatly affected those sales as revealed in an article by Saker-Clark (2019) published in the Belfast Telegraph. Similarly, Brexit raised some political issues for Burberry, especially in relation to taxation, which falls under government policies. According to Rojas (2021), the removal of the zero value-added tax shopping that had been placed to encourage foreigners to shop in the UK would reduce Burberry’s sales in the UK. 
* Economic
               Economic factors such as purchasing behaviours, customer attitudes, income levels, foreign exchange rates, and financial market efficiencies influence how a company performs (Perera 2017, p.10). The key economic issue that is affecting and may continue to affect Burberry is the current COVID-19 pandemic. As an economic issue, the pandemic has reduced the number of tourists visiting the UK, as well as any other country where Burberry is operational. It has also reduced the number of buyers in the physical stores due to the social distancing measures. Overall, the pandemic has affected the purchasing behaviours of consumers around the world and a decline in sales has been recorded (Rojas, 2021).
* Social-cultural
               Here, factors such as demographics, social norms, cultural values, and beliefs, among other social and cultural iss...