BMW's Innovation Strategies

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Case Details:

Case Code : BSTR060
Case Length : 11 Pages
Period : 2002 - 2003
Organization : BMW
Pub Date : 2003
Teaching Note :Not Available
Countries : Germany
Industry : Auto and Ancillaries

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"The future will come on its own, progress will not."

"The truth is that innovation is a key element for BMW's success in the premium market and one of the key motivations to buy a BMW."

- BMW Group, at the OCI Award Presentation, in October 2002.

On the Winning Edge

In October 2002, the world-renowned automobile manufacturer from Germany, BMW Group AG (BMW) was awarded the 'Outstanding Corporate Innovator (OCI)' title for 2002, by the Product Development & Management Association (PDMA).¹

This award was given for BMW's 'demonstrated exceptional skill in constantly creating and capturing value, through its innovations and development of new products'. Commenting on BMW's selection for the award, the Chairman of the OCI Awards Selection Committee said that the company had shown a strong strategic commitment to innovation. The award came as a major recognition of the company's decision to let innovation be the driving force for its product development process throughout the late 1990s. Industry observers expected this development to further help BMW establish itself as one of the leading players in the premium segment of the global automobile market. According to analysts, BMW's innovation management system, developed in the late 1990s was the main reason behind the company winning the OCI title.

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This innovation management system enabled BMW to exploit various path breaking technological innovations, right from the idea generation stage to the market introduction stage. This system enabled BMW to develop a continuous stream of new products and brands. Company sources admitted that by focusing on new product development practices using the innovation approach, BMW successfully withstood competitive pressures and held on to its market position.

Background Note

The Munich (Germany) based Bayerische Motoren Werke AG (BMW) was founded, as an aero-engine manufacturing company in 1917. After World War I, the company faced problems due to the severe restrictions that were placed on the aircraft construction business in the country. BMW then decided to move into the production of motorcycles and passenger cars. The company undertook a series of acquisitions and joint ventures with various motorcycle and car companies. In 1923, the company launched its first motorcycle model, BMW R32. In the early 1920s, when the government eased the restrictions, on the business, BMW once again entered the aircraft construction business. However, the company continued to focus on the automobile business.

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1] PDMA is a US-based not-for-profit organization that works towards improving the effectiveness of companies/people involved in developing and managing new products (goods and services). PDMA gives the OCI Award to recognize the efforts undertaken by companies in successfully developing new products.