Bbva case study analysis Essay

1. launchingIt has been claimed that BBVA has implemented an assailcapable substructure, a paradigm that assumes that firms can and should hire outside ideas as well as inhering ideas, and internal and external paths to market, as the firms look to advance their utilize science says Chesbrough (2003)1. BBVA is seeing itself positioned right and succeeded for intents. It is hazard that whether the purpose at BBVA is succeederful and extremely recognized break basis admission.This essay will sample how BBVA build their capabilities to embed an unclouded mutation approach in their organisation and outline almost challenges when BBVA travel forward to more open creative activity in the near future. 1.1 BBVAs Key CharacteristicsBBVA (Banco Bilbao Vizcaya Argentaria) is a international Spanish banking group, providing a wide range of financial table dish ups for both carees and consumers. BBVA is ranked as the sulfur largest bank in Spain. As its headquartered in Madrid, BBVA mainly resides on Latin American countries. It in any case has a knockout presence in southern Europe, and has expanded into the United States and some countries in Asia. In 2012, BBVA employed more than 115,000 people and served over 53 million guests in 32 countries with around 8,000 branches2. BBVA implements customercentric approach as its centre business and positioning of the BBVA brand3. Not only BBVA pore on a strong customer orientation but likewise a dedicated insertion. 2. transmutation at BBVA2.1 Core activities and principlesoer the last decade, BBVA has inclined more customer-centric and gave a lot of attention to mental hospital. In 2007, the BBVA innovation centre was found in Madrid, where many different advance(a) projects were born and passed through an experiment procedure, beginning from prototype formulate to testing process. Following this, the 1Chesbrough, H. 2003. absolved inception The New Imperative for Creating and Profiting fr om Technology. Cam twosome, MA Harvard Business civilize Press.2BBVA pigeonholing Highlights online, BBVA, Available from http//shargonholdersandinvestors.bbva.com/TLBB/micros/bbva2012/en/Highlights/BBVAGroupHighlights.html 2 October 2013 3BBVA Annual Report 2012 online, BBVA, Available from2 October 20132Innovation at BBVAOperations centeringoutcomes atomic upshot 18 analyzed and valued before launching the innovation projects, which are formed under BBVAs innovation and customer orientation approaches. It has been claimed that the following three main principles are extremely helpful to BBVA in the successful beginment of freshly services. (Ramis-Pujol and Drege, 2011)4 1) Continuous customer orientation and expertness Start with the analysis of the customers (customer brainstorm) 2) Proactive outward-looking Look for and welcome the ideas from the outside to the company Start-up fairs and sponsor ideas competition3) Teamwork and simultaneous feedback loops for fast deci sions on innovation project progress Good communication within team for each one innovation project is reviewed and questioned weekly However, it is doubted that with these underlying principles how BBVA ensure that their lead from innovation is maintained.2.2 Innovative ProjectsAccording to BBVA innovation center, there are a number of continuous successions of innovations offering to their customers needs. Most of BBVA advance(a) projects were idea-led and technology-enabled. When BBVA guideed its projects, it is apparent that those projects were operate from the unmet needs or customers needs that are non available on the market, which Von Hippel E. defined as user-driven innovation5 As Ramis-Pujol andDrege (2011) studied innovation at BBVA, they found that BBVA developed a large number of new banking services within only two years.They overly examined some projects relevant to innovation put on (see table 1) that described how BBVA identified the market and developed thes e projects before launching to the market. After implementing, some projects were highly successful but some were not. Despite a overlook of achievement in some projects, BBVA is console able to exploit the experience made within the projects and to share valuable friendship to other progressive projects.4Ramis-Pujol J. and Drege H., 2011. baptistery study of Innovation at BBVA. ESADE University. Von Hippel E. (20 August 2013), User-driven innovation online, BBVA Innovation Center, Available from 1 October 201353Innovation at BBVAOperations vigilanceTable 1 Some of the innovative projects in BBVA6ProjectsType of Projecttu ceuntasOnline personal financemanagement servicePartnerStrands.com(24% acquisition)TV casting delegateSmall IT firmPartner operateseparatelySearching and networking webfor SMEsSwendish design companyN/APOKtpresentoecontaAccounting service for SMEsVirtual DocATMStored Document OnlineStudy on customers use oftechnologyATM software and hardware instructionsecon ta & external expert(70% acquisition)Virtual Doc(70% acquisition)IDEO(Signed contract)ATM requireInvolvement enounce project teamActively involvedPartner operateseparately versed expert countenanceinvolvedInstead of doing all processed itself, BBVA seeks partners or external experts such as the technologists outside of BBVA, who had experienced in this area, to help it embed the technology around its innovative ideas that BBVA wants to deliver to the markets. Although it has the partnering companies in their innovation, it has been argued that some of the BBVA innovative projects may seem to be outsourcing than open innovation. According to Belcourt M. (2006)7, outsourcing refers to a contractual family for the provision of business services by an external provider. The followings are the example for this argument1) POK once BBVA had the idea to introduce TV casting show in do to get closer to younger target groups, BBVA hired a small IT firm to independently develop the soc ial media technology and selling for POK project. 2) ATM the service was built in partnership with IDEO, the best-known product and service protrude Company, by signed the contract. IDEO provided the detailed study of customers needs and observation of how people be declared at ATMs. 3) Tpresento, the yellow-bellied pages website for SMEs, BBVA selected the Swedish design company to provide a website design for this project.8.6Summarized from Ramis-Pujol J. and Drege H., 2011. Case study of Innovation at BBVA. ESADE University. p.7-16. Belcourt M., 2006. Outsourcing The Benefits and the Risks. journal of Human Resource Management Review, 16(2), 269-279. 8Ramis-Pujol J. and Drege H., 2011. Case study of Innovation at BBVA. ESADE University. 74Innovation at BBVAOperations ManagementAccording that the small IT firm, IDEO and Swedish Design Company were paid to work for BBVA, it was probably evaluated that BBVA externalized those companies and these BBVAs innovative projects look m ore like outsourcing than open innovation. Moreover, regarding a service differentiation that provides prioritized service qualities to multiple classes of client requests says Zhu H. et al., 2001)9, it can be seen that BBVA tried to tag their services related to innovation to serve their multiple customers (innovation shoppers). Although BBVA tried to make them look very different, the service itself is exactly the same. The example for this is the ATMs, BBVA differentiates the ways customer access to the bank but still provides core banking service to the customers.2.3 stretch innovation at BBVABBVA has embedded an open innovation as described above in their organization. They were aware that good ideas and expertise did not always reside inside the organization but the quislingism side by side with internal and external expertise. Chesbrough H. et al. (2006)10 founded that this practices will extend to suppliers, customers, partners, third parties, and general company as a wh ole. It is considered important that open innovation would relate to a degree of involvement amidst internal knowledge and external partners.Chesbrough (2012)11 points out that there are two important kinds of an open innovation. The premier(prenominal) one is outside-in open innovation, opening up the process of companys innovation to many external inputs and contributions. In case of BBVA, it seeks out potential partners, who already had experience have experienced in new technologies, and then form a productive relationship with them. The example for this is Tu cuentas project, a unique service image providing online funds management. BBVA invested 24% acquisition in Strands.com (the innovative IT Company), relying on this company in order to develop and maintain an application of the personal finance analyzer.9Zhu H. et al., 2001. Demand-driven service differentiation in cluster-based network servers. In INFOCOM 2001, ed. 20th Annual Joint Conference of the IEEE Computer an d Communications Societies. Anchorage 22-26 April 2001. IEEE, 679 688, vol.2. 10Chesbrough H et al. 2006. outspoken Innovation, Researching a New Paradigm. New York, NY Oxford University Press, 1-12. 11Chesbrough, H. 2012. Open Innovation. Research-Technology Management, July-August 2012, 20-27.5Innovation at BBVAOperations ManagementThe second kind of an open innovation is inside-out, which organisations are required to allow the unused ideas to escape outside the organisations for others to apply in their businesses. Chesbrough (2012) discovered while doing his research that Xerox traded their misfit or unsuccessful projects into the market. It also found that those false negative projects that did not provide benefit to the Xeroxs core business model might haveessentially more value if they could be commercialized through a different business model. Unlike Xerox, BBVA actively absorb external technology but they do not transfer unused projects to external partners.The example of the organization that applied both outside-in and inside-out open innovation is Procter & Gamble, not only they embrace outside-in open innovation via its Connect+Develop approach12(the practice of tapping external adroit property development to accelerate internal innovation) but also share their internal asset development and know-how to help others outside the company.On the other hand, the antithesis of the open innovation is a close innovation, which internal innovation activities lead to internally developed products and services that are then distributed by the firm. (Chesbrough 2006, p.20). Some researchers (Lichtenthaler U, et al., 2011)13 mention active employee attitudes that a close innovation is characterized by high level of employee attitudes that would not like to acquire technology from external sources, and instead would like to emphasize on internal development of new technological knowledge.They also would not like to transfer companys technologies. The comp any that embedded with those attitudes would not pay occurrence attention to open innovation initiatives. Therefore, the negative attitude of acquiring external knowledge might frustrate the open innovation approach. In order to weight which approaches among the open and the close innovation applied to BBVA, how BBVA implemented implementation whether pure open or close innovation is needed to be considered thoroughly as follows. Regarding the BBVAs innovative projects, it does not exactly acquire new technological knowledge from the 12P&G Open Innovation (2013) What is Connect+Develop? online, P&G, Available from http//www.pgconnectdevelop.com/home/pg_open_innovation.html 7 October 2013 13Lichtenthealer U. et al., 2011. Is your company ready for open innovation?. Journal of MIT Sloan Management Review, 53 (1), 4548.6Innovation at BBVAOperations Managementoutsiders or the outsiders only partly transferred the knowledge to them. BBVA builds relationship with external partners in order to strengthen and speed up their internal innovation process but they do not sincerely gain the new knowledge and know-how from them. In some projects such as POK and tpresento, BBVA just paid money and assigned their partners to work for them. This leads to a low level of engagement between BBVA and partnering companies. In addition, there is a small evidence of the customer engagement in the innovation process be seen as another(prenominal) indication of the open innovation.As mentioned earlier, BBVA intends to move forward to the open innovation and it has embedded the environment of the open innovation through their organization. It is likely that what BBVA has being done go beyond the close innovation. Therefore, it can be concluded that the innovation at BBVA has been a slightly open innovation approach but how could BBVA figure about a system that was more open is still questionable.3. Challenges in moving towards to an open innovationUncertainty in the future might lead to a number of managerial challenges. The followings are some potential dangers that BBVA might be aware of when keep moving towards to more open innovation approach.3.1 authorization Dangers in the futureCentralising innovationAccording to the innovation centre in Madrid, the customer insight department and all innovation projects are centrally manage within this centre. Although the centralisation brings BBVA the effectiveness of ascendancy control and uniformity in action, BBVA should be aware of localised control of customer service and customer satisfaction. Successful launching new services in Madrid do not mean the success in anywhere else of the world. For better customer satisfaction, having localised innovation centres and synergies between customer insight and innovative department would enable better understanding of local customer needs. However, localisation mightbring a higher(prenominal) cost to support their needs.7Innovation at BBVAOperations ManagementHigh be of investmentAlthough the more collaboration with external partners would be able to strengthen an open innovation, it also raises the be of idea generation and expenses of more employee involvement. Increased investments are required to create a number of innovative projects. BBVA should consider implementing mechanisms for reducing the investment costs.Intellectual property (IP)As BBVA has launched many innovative projects, it is crucial that it has to focus on strategy that prevents the imitation from its competitors. BBVA may attempt to protect its innovations through patents, trademarks, copyrights or trade secrets. However, creating a barrier dependent on its unique skills should also be considered. The companys belief in literatures regarding the open innovation framework This is a big danger of the company that believes in innovation literatures or theories. Some academics are still publishing the success cases of the innovation, sending the message that the implementat ion of the open innovation will be beneficial and bring more customers.Then the company will be able to provide better services. It is suspected that those literatures might base on the research conducted via interviewing the existing customers by spark advance questions. Carlsson C. and Walden P.(2007)14 discovered that although the research on TV restless showed the evidence that there would be a higher demand, the situation went wrong when the product was launched into the market and found that the demand was not actually there. So, it is important to consider the reliable of the literatures.Employees attitudesSince the management team has embedded open innovation environment in BBVA, it may seem that its employees attitudes would concur with both outside-in and inside-out open innovation approaches. However, there is a lack of an evidence to prove that most 14Carlsson C. and Walden P., 2007. busy TV To Live or Die by Content. In HICSS 2007, ed. 40th Annual Hawaii Internation al Conference, Waikoloa January 2007. Finland System Science 2007, 1-9.8Innovation at BBVAOperations Managementor all of BBVAs employees agree with those approaches, or they would have to accept it because they have to follow the managements policy. They might not be willing to support the company approach. It is thus important that the BBVAs management needs to encourage all employees to be continuously innovative and to get involved in the open innovation, not only the innovation centre but all sections in the organisation.3.2 More open innovation at BBVALaunching a number of innovative projects, BBVA builds an international innovation network with many leading technology companies, academic institutions, and commercial organisations15. BBVA has to ensure that each of their partners is a bridge towards the inside and outside of the organisation. Moreover, in order to develop and speed up the pace of the open innovation in BBVAs core business banking, BBVA may let the outsiders of fer new technological knowledge or new innovation.Then, do business with those innovation suppliers and acquire that knowledge into BBVAs innovation processes. some(prenominal) BBVA and the suppliers would more directly engage with their core business that they set off parallel with banking innovation. BBVAs lively banking service called Compass 16. is best described as the high level of partnership engagement between BBVA and many mobile phonecompanies. BBVA does not know about technology on mobile phone.Likewise, mobile phone companies do not know how doing banking service, but the intellectual afford defined the project and cogitate them to work together. This is the open innovation because they try to learn more details and understand each core business. This new service might be a differentiation but it does not change in fundamental of banking business service.15Ensor B. (9 November 2012), Innovation Lessons from BBVA online, BENJAMIN ENSORs BLOG, Available from http//blogs .forrester.com/benjamin_ensor/12-11-09-innovation_lessons_from_bbva 1 October 2013 16PRNewswire (7 August 2013), Mobile banking update allows BBVA Compass customers to pay people using text, email online, rube Finance , Available from http//finance.yahoo.com/ parole/mobile-banking-allows-bbva-compass-152200662.html 7 October 20139Innovation at BBVAOperations Management4. ConclusionAlthough BBVA is claimed that it does not implement a to the full open innovation, what BBVA has done by launching a number of innovative projects and increasing level of engagement of both outside-in and inside-out partners, might be proven that BBVA is ready to move forwards to a genuinely open innovation. However, outsourcing and service differentiation issues have been argued among the BBVAs innovative projects. This might be led to a conclusion that BBVA has implemented a slightly open innovation approach. In addition, it is not to say that managing an open innovation approach iswithout challenges . BBVA should have to prepare possible strategies to cope with potentials risks that might stem from both internal and external factors.10Innovation at BBVAOperations Management5. ReferencesBBVA, 2012. BBVA Annual Report 2012 online, BBVA, Available from 2 October 2013BBVA, 2012. BBVA Group Highlights online, BBVA, Available from http//shareholdersandinvestors.bbva.com/TLBB/micros/bbva2012/en/Highlights/BBVAGroupHighlight s.html 2 October 2013Belcourt M., 2006. Outsourcing The Benefits and the Risks. Journal of Human Resource Management Review, 16(2), 269-279.Carlsson C. and Walden P., 2007. Mobile TV To Live or Die by Content. In HICSS 2007, ed. 40th Annual Hawaii International Conference, Waikoloa January 2007. Finland System Science 2007, 1-9. Chesbrough, H. 2003. Open Innovation The New Imperative for Creating and Profiting from Technology. Cambridge, MA Harvard Business School Press.Chesbrough, H. 2012. Open Innovation. Journal of Research-Technology Management, July-August 2012, 20-27.Chesbrough H et al. 2006. Open Innovation, Researching a New Paradigm. New York, NY Oxford University Press, 1-12.Cloyd G. and Euchner J., 2012. Building Open Innovation at P&G. Journal of Journal of ResearchTechnology Management, July-August 2012, 14-19. Ensor B. (9 November 2012), Innovation Lessons from BBVA online, BENJAMIN ENSORs BLOG, Available from http//blogs.forrester.com/benjamin_ensor/12-11-09-innovation_lessons_from_bbva 1 October 2013Lichtenthealer U. et al., 2011. Is your company ready for open innovation?. Journal of MIT Sloan Management Review, 53 (1), 45-48.PRNewswire (7 August 2013), Mobile banking update allows BBVA Compass customers to pay people using text, email online, Yahoo Finance , Available from http//finance.yahoo.com/news/mobile-banking-allows-bbva-compass-152200662.html 7 October 2013Von Hippel E. (20 August 2013), User-driven innovation online, BBVA Innovation Center, Available from http//www.centrodeinnovacionbbva.com/en/news/26230-user-d riven-innovation 1 October 2013Ramis-Pujol J. and Drege H., 2011. Case study of Innovation at BBVA. ESADE University. P&G Open Innovation (2013) What is Connect+Develop? online, P&G, Available from http//www.pgconnectdevelop.com/home/pg_open_innovation.html 7 October 2013 Zhu H. et al., 2001. Demand-driven service differentiation in cluster-based network servers. In INFOCOM 2001, ed. 20th Annual Joint Conference of the IEEE Computer and Communications Societies. Anchorage 22-26 April 2001. IEEE, 679 688, vol.2.11