Lotus Elise Development: Innovation, Barriers, and Strategy

The Opportunity and Concept Behind the Lotus Elise

In this case, Lotus had the opportunity to build upon its brand image and name recognition by producing a brand-new sports car that would appeal to a specific market segment. Some observers argued that the opportunity was significant enough that Lotus would suffer considerably if it failed to take advantage of the circumstances. The opportunity was not fleeting in nature — it could be approached with a long-range goal and vision — but persistence, creativity, and innovation would all have to be central to the effort.

The concept was to use the strengths of the Lotus name and the company's reputation in the automotive industry for building fine racing vehicles, and to mass-produce a sports car that would be fun to drive and affordable (or at least not prohibitively expensive), while also being more lightweight than typical vehicles, producing less drag, and remaining aesthetically pleasing. Creating such a vehicle would be a massive undertaking, especially since Lotus had never attempted this type of project before. It would require a particular organizational culture and environment in order to provide optimal conditions for development.

Factors Shaping Collaboration and Innovation

Factors that had to be considered included how the involved departments would communicate and make decisions, how potential conflicts would be resolved, and how individual and group roles would be determined.

A major concern was the personal attitudes of employees in each division and how they would work together to foster the creativity and innovation necessary to complete such a significant endeavor. One report justified the company's approach by noting that "attackers dislodged incumbents when ballpoints supplanted fountain pens, when diesel-electric locomotives prevailed over steam locomotives, when electro-mechanical calculators were displaced by electronic calculators, and when vacuum tubes gave way to transistors" (Day & Schoemaker, 2000, p. 9). Each of these innovations was created through ingenuity applied to existing products — much like Lotus's goal of creating a vehicle that would be more affordable and appealing to a broader audience.

The case study on innovation management makes clear that "innovation must combine elements of knowledge, information, and creativity. This means that engineers now and in the future need to combine individual and team working skills" (Von Stamm, 2008). In order to accomplish that innovation and put those skills to the test, employees from two different divisions — and, some would argue, two different mindsets — would have to come together, work collaboratively, and bring their respective strengths and weaknesses to the table so that both divisions could benefit from each other. Each division had a role to play in bringing the project to fruition. There were many potential conflicts between the two divisions, and of course between individuals who thought along entirely separate lines, especially when undertaking such an ambitious project. Even more challenging was the fact that this type of transition would require a wholly new mindset from all employees involved.

Barriers to Creativity and Cross-Divisional Work

Some of the barriers present in this project that could have inhibited creativity included the fact that, culturally, the two divisions most involved in the process tended to view new product creation in two very specific and very different ways. Engineers typically focused on how the car could be manufactured efficiently, while designers typically sought to create a vehicle that adhered to certain appealing lines and forms. Drawing on the Creativity for Innovation framework (Exhibit A), it is evident that individual attributes combined with conceptual skills lead to organizational processes that produce creative behavior, ultimately resulting in innovation. The design division at Lotus displayed the risk-taking and originality that was complemented by the organizing, rearranging, and idea-generating work of the engineering department. Together, these qualities fostered an organizational process that produced creative behavior and led to the Elise through innovation.

One clear example of a potential barrier occurred when the visual identity of the automobile was threatened by a high drag factor, and the engineers felt there were only a few options available. However, "under the mediation of other team members a compromise was finally reached, and a spoiler added" (Case Study, p. 175). Another barrier arose from the fact that the in-house team was not the only group working on the design of the new vehicle. The lack of communication between senior leadership and those working on the project day-to-day could have had a devastating impact on the team's work and morale.

As the study notes, "it was fortunate for the in-house team that their idea was considered to be the most progressive, innovative and different" and more aligned with the key brand values of the company than the other designs (Case Study, p. 174). One additional area of concern was the possibility that, even if the designers and engineers collaborated efficiently and on time, the product might prove too costly to produce. As one study determined, sustaining a business model requires a "means to capture a portion of the value created from innovation" (Chesbrough & Appleyard, 2007, p. 58).