Fujitsu Limited Case

Impact of Strategy on Successful Innovation: The Case of Fujitsu Limited

Innovation, both product- and process-wise, has increasingly become a crucial source of competitive advantage in today's business world. Organisations that continually reinvent their products and processes in accordance to environmental dynamics achieve greater success in the marketplace compared to those that pay little or no attention to innovation (Beyene & Wu, 2016). Successful innovation, however, is predominantly dependent on an organisation's business strategy (Hajar, 2015). A firm's strategic orientation determines the extent to which it introduces new products or new ways of doing things. In other words, without the right strategy, an organisation may not innovate successfully. The connection between strategy and innovation is particularly true for Fujitsu Limited, a Japanese information and communication technology (ICT) company. With reference to Fujitsu, this paper discusses the impact of strategy on innovation. Attention is particularly paid to how the company has capitalised on the value of the business strategy process, how the firm can improve strategic innovation, what information should be leveraged within a business strategy, and how business strategy may be used to further innovation within the organisation.

Fujitsu was founded in 1935 as a subsidiary of Fuji Electric. Initially, the firm manufactured telephones and automatic exchange equipment, but later expanded to computers and ICT services with a mission to exploit ICT to generate value for both businesses and the society. The growth was mainly fuelled by extension of its central businesses as well as acquisitions. By 2000, Fujitsu was the top ICT firm in Japan, delivering a wide array of ICT products and services, including big data, cloud, and security solutions. With about 95,000 pending and approved patents worldwide and 162,000 employees in 420 subsidiaries spread across more than 100 countries, the firm's revenues were $46 billion as of 2014 (Edmondson & Harvey, 2016). This makes the firm one of the largest ICT companies in the world. Presently, the firm is focusing on increasing its competitive advantage in the North American market, which is dominated by IBM, Accenture, and Hewlett Packard (HP).

Fujitsu's impressive performance over the years can be attributed to its business strategy, which has orientated the firm towards innovation. Before proceeding further, it is important to understand what business strategy means. Essentially, a business strategy denotes the means a firm utilises to achieve its goals and objectives (Hill & Jones, 2012). It refers to the scope of a firm's business activities -- what, where, and how it produces. A firm's competitive advantage emanates from its business strategy. This may be in relation to product differentiation, economies of scale, prices, and so forth. Whereas there are different frameworks for examining business strategy, a common framework is Miles and Snow's model. The framework categorises firms into four groups: prospectors (broad product line and focused on innovation and exploiting market opportunities); analysers (operate in two or more product-market areas); defenders (limited product line and focused on enhancing the efficiency of the current operations); and reactors (lack a steady strategy, often reacting when forced by marketplace pressures) (Hajar, 2015).

Based on the above typology, Fujitsu can be described as a prospector as far as its strategic orientation is concerned. Exemplifying innovation, the firm boasts several products, ranging from servers and mobile devices to storage hardware, microprocessors, software, and cloud computing solutions. The firm continues to exploit opportunities in the ICT marketplace. Recently, in partnership with TechShop, a Silicon Valley start-up, the firm has introduced a mobile makerspace dubbed TechShop Inside (Edmondson & Harvey, 2016). Aimed at fostering learning in science, technology, engineering, arts, and maths across all ages, the mobile makerspace is a 24-foot mobile trailer equipped with mini 3D printers, laser cutters, tablets, and other electronic equipment. The trailer provides students with an environment for hands-on learning, an undoubtedly powerful and transformative innovation as far as student learning is concerned. Without its strategic orientation, it is unlikely that Fujitsu would have exploited the limitless possibilities the world of technology offers. This clearly demonstrates the impact of strategy on innovation. Indeed, as put by Hajar (2015), strategy significantly drives innovation. A strategy that orientates a firm towards market opportunities as well as new products and processes will organise its resources, capabilities, and competencies around innovation.

One impressive aspect about Fujitsu's innovation processes is how the firm capitalises on the business strategy process. The business strategy process basically entails defining the firm's strategic direction and allocating resources to pursue that strategy (Hill & Jones, 2012). It involves setting goals and objectives, identifying mechanisms of achieving those goals, and mobilising the resources necessary for the achievement of the goals. This process is driven by data relating to the firm's internal and external environment. The firm must consider its strengths and weaknesses, the market, the competitive environment, and the larger macro environment. Leveraging this data aids in determining the strategy the firm uses to compete in the marketplace.

To achieve its mission and vision, particularly with respect to the North American and the larger global market, it became imperative for Fujitsu to adjust its approach to innovation. It was important for the firm to embrace open innovation. Generally, open innovation is an approach to innovation where an organisation takes advantage of both internal and external knowledge to drive innovation (Edmondson & Harvey, 2016). It entails collaborating (both domestically and internationally) with customers, other business organisations, research institutions, and other valuable entities in the innovation process. Though Fujitsu has historically been committed to innovation, it was quite reluctant to embrace open innovation. The reluctance was in large part due to organisational culture differences and the fear that collaborating with other firms would obstruct its internal technology development processes. The firm, however, realised the value of collaboration with other business entities in accelerating innovation. Collaborating with TechShop and other Silicon Valley companies enabled Fujitsu to strengthen its core capabilities and enhance its brand awareness in the global market. With the rapid evolution of the internet and the immense opportunities it promised, open innovation placed Fujitsu in a better position to exploit the opportunities.

When contemplating its open innovation strategy, Fujitsu carefully assessed its resources and capabilities as well as opportunities in the ICT market. The firm realised that though it had strong innovation capabilities, it would not successfully pursue the North American market and increase the awareness of its brand without access to Silicon Valley resources. The firm put together a team to lead the process of forming strategic partnerships with Silicon Valley companies. The partnerships accelerated TechShop's expansion into the international market, supported the birth of TechShop Inside, and led to the introduction of cloud computing and design and manufacturing services.

As seen from its history, Fujitsu has been in the business of innovation. Introducing new, more innovative products is what has kept the firm going in the rapidly changing technology environment. Even so, there is still room for improvement. It is imperative for the firm to enhance its strategic innovation. According to Pisano (2015), innovation capabilities may diminish if an organisation does not constantly reinvent its strategy. Hewlett-Packard (HP), Yahoo, and Nokia are ideal examples of innovative companies that have failed to sustain their innovation performance. The possibility of Fujitsu falling in the same trap cannot be ignored altogether in spite of its strength and popularity.

To enhance strategic innovation, Fujitsu must have an innovation strategy. A strategy denotes "a set of coherent, mutually reinforcing policies or behaviours aimed at achieving a specific competitive goal" Pisano (2015, paragraph 2). An effective strategy is characterised by alignment between the various components of an organisation, clear communication of goals and objectives, and efforts focused on those goals. Though firms often define their business strategy and how their functions (marketing, R&D, finance, and so on) will support it, they sometimes, if not usually, fail to align their innovation endeavours with their business strategy.

In the absence of an innovation strategy, it may be quite difficult for a firm to sustain its innovation efforts. The firm must have what Pisano (2015) refers to as an innovation system -- a consistent set of mutually dependent structures, processes, procedures, and policies that inform how an organisation looks out for problems in the market and designs solutions to solve them. It is true that Fujitsu has adopted an innovation-oriented culture. However, the cases of Nokia, Yahoo, and HP mentioned above are evidence that even the most of innovative companies can be failures. The firm can sustain its innovation efforts by ensuring all its functions pursue the same priorities, having a clearer sense of how innovation adds value to its customers, investing in innovation continuously, focusing more on disruptive innovation as opposed to routine innovation, as well as ensuring complementarity among its assets, capabilities, and products (Pisano, 2015).

On the whole, an innovation-oriented business strategy is important for sustaining innovation. An organisation is less likely to remain innovative in the long-term if its structures, processes, policies, resources, and capabilities are not organised around innovation. For Fujitsu to avoid the trap companies like Nokia and Yahoo have fallen into in the course of their existence, it must ensure consistency in all its components. It is well known that an organisation is a system comprising several interrelated components. The components work together to achieve a certain defined end. For this to be achieved, however, the elements must be properly aligned with another -- they must speak in one language. Conscious to dynamics in the operational environment, Fujitsu must strive to achieve coherence in all its components -- from decision making structures and functions to assets and competencies. They must all prioritise innovation. As a result, the firm will be better placed to maintain its competitive advantage in the rigorously competitive technology marketplace.

References

Beyene, K., & Wu, C. (2016). The impact of innovation strategy on organisational learning and innovation performance: do firm size and ownership type make a difference? South African Journal of Industrial Engineering, 27(1), 125-136.

Edmondson, A., & Harvey, J. (2016, January 14). Open innovation at Fujitsu (A). Harvard Business Review, 1-20.

Hajar, I. (2015). The effect of business strategy on innovation and firm performance in the small industrial sector. The International Journal of Engineering and Science, 4(2), 1- 9.

Hill, C., & Jones, G. (2012). Essentials of strategic management. 3rd edition. Boston: Cengage Learning.

Pisano, G. (2015). You need an innovation strategy. Harvard Business Review, June Issue. Retrieved from: https://hbr.org/2015/06/you-need-an-innovation-strategy