Why Employing an Innovation Strategy Is Vital for Your Business | SetSchedule

Strategy is commonly defined as choosing among any number of options in order to have the best chance of succeeding, and using innovation is one of the ways to achieve your goals. Without strategies and innovation, the chances for long-term success are hardly possible  — look at the companies and industries that didn’t survive tectonic shifts in the business world, such as video rental stores, publishers and big box retailers, just to name a few.

What Is Innovation?

Innovation, a noun, is defined as “something new or different introduced.”  Business leaders have been asked, “What is innovation?” and the answers vary from person to person, but all have a similar theme, as shown below:

“Innovation distinguishes between a leader and a follower.” — Steve Jobs

“The true sign of intelligence is not knowledge but imagination.” — Albert Einstein

“Software innovation, like almost every other kind of innovation, requires the ability to collaborate and share ideas with other people, and to sit down and talk with customers and get their feedback and understand their needs.” — Bill Gates

“There is no innovation and creativity without failure. Period.” — Brené Brown

OK, so now we start to see a theme here. Innovation (in the general sense) is introducing something new and/or different; but in a business sense, it’s a two-pronged process — about bringing something new and innovative to the customer base while adding value to the company. So, in the big picture, it’s a real win-win, helping both the company and the customer.  

What Is an Innovation Strategy?

The word “strategy” is defined as “a plan, method, or series of maneuvers or stratagems for obtaining a specific goal or result.” So, now that we’re familiar with the words “strategy” and “innovation,” putting them together gives a whole new meaning to them. According to Planview.com, an innovation strategy is defined as “a common innovation mission and a detailed plan that aims to create new value for which customers are willing to pay. It includes a set of policies or behaviors geared toward achieving future organizational growth.”

Types of Innovation Strategies

There are four different types of innovation strategies. They are the following:

• Routine innovation: This is the simplest (and most common) innovation strategy. It is usually the introduction of a new product or updated version of a current item that will serve its customer base. An example: When Apple introduces a new product, such as the iPad, it is almost always something that fits in well with the needs of users of its other products and services.
• Disruptive innovation: This is a change-up on the way things are currently done by the company and/or its competitors. It is a new business model or way of doing business. Adobe’s change from a pay-once model to a subscription model for its Creative Suite software is an example.
• Radical innovation: This is a type of innovation that fits within a company’s existing business model. In many cases, it involves new technology that fits into the current framework of the company. Although ultimately rendered obsolete by newer technologies, an example of this type of technology was Amazon’s introduction of its Dash Buttons, which were small internet-enabled devices that allowed customers to replenish consumables, such as razor blades, laundry detergent, paper towels and other items, all with a simple touch of a button.
• Architectural innovation: A hybrid model, which combines both a pivot in a company’s business model and the introduction of a new technology, the architectural innovation model is the least common type of innovation and presents the most challenges. An example of this type of innovation is Polaroid’s ability to change when film stopped being used (for the most part) once digital photography was introduced. This strategy proved simple (and inexpensive enough) for the general public to engage with.

Where Do Innovation Strategies Fit In?

When considering an innovation strategy, understand that it is simply a commitment by the company to develop a set of policies or behaviors that point to a specific, predefined goal. In most instances, the goal is to develop a product and/or service that will grow market share, create value and ultimately help develop or strengthen brand loyalty.

Striving to create value for your customer base is a key motivation to innovate. It can help a current product work better, become more valuable or indispensable or even less expensive. Of course, what you do and/or offer is largely dependent on your sector, competition and customer base. Companies must consider how their products and services retain customers and strengthen brand loyalty. For example, Apple has developed an “ecosystem” for its users, so that customers with a Mac and iPhone can easily integrate one of its other products, such as an Apple Watch or iPad, into their lives.

Knowing your customers, their wants and needs, and even anticipating their wants and needs, is a vital component of developing an innovation strategy. Therefore, turning customer input into innovation is one of the important ways of developing new (or of tweaking existing) products and services.

How to Develop a Well-Defined Innovation Strategy

An effective innovation strategy contains the following elements.

• Determining the objectives: An old cliché — if you don’t know where you’re going, you’ll never get there — is one way to look at your objectives. Knowing the endgame of your strategy — the what, the how and the why of things — will help you home in on exactly what you want to achieve.
• Researching the market: Knowing who your customers are, what they want and what’s important to them is also key. What do they want? What values do they consider important? What keeps them away from the competitors?
• Defining your unique value proposition: Knowing how your innovations are going to help others is also important. What value are you adding? How is it going to be accepted by your customers? Are you creating a new paradigm or are you playing catchup to your competitors?
• Assessing and developing your core capabilities: Knowing your strengths (and weaknesses) and your capabilities is another factor in developing a winning innovation strategy. This requires a focused look at your company’s culture, research and development capabilities, values, skills and knowledge.
• Instituting innovation systems and techniques: Knowing what systems need to be in place to win is key. Who (and how) is going to oversee the big picture? What roles do the various departments play in bringing this all together? Having this mapped out in advance will help your innovation strategy — not an easy process in the best of times — flow more smoothly and avoid unexpected issues along the way.

Examples of Successful Innovation Strategies

The business world is chock full of innovation examples, particularly in the tech world. Here are three companies that are notable for successful innovation strategies.

Amazon

Amazon broke the mold from the word “go,” and continues to do so on a regular basis. Creating Amazon Prime — a program that includes free two-day (or in some instances, faster) delivery, streaming audio and video content, free access to a large library of Kindle books, and free photo storage, among other perks, was revolutionary in the business world. These innovations challenged others in the same space, and the strategy remains one of the most popular of Amazon’s many innovations.

Salesforce

A cloud-based software company with headquarters in San Francisco, Salesforce is a leader in the customer relationship management (CRM) space. Its corporate culture and its strength in keeping its eye on the marketplace and exactly what its customers want and need (and predicting those wants and needs) is what has kept Salesforce on Forbes’ list of innovative companies since the inception of the list in 2011.

In Closing

 As you’ve probably realized, innovation strategy is absolutely essential for any viable business to not only grow, but to survive. Knowing the market, where your company fits and where your industry is going are all key elements to developing a winning innovation strategy.

Business textbooks are loaded with examples of companies that didn’t respond to changes in the market (or acted too late in the day), missed out on opportunities or simply failed to evolve. These cautionary tales — including Radio Shack, Blockbuster and Pan-Am, along with scores of others — should be enough to convince every company that an “evolve or die” mantra should be an indispensable part of its corporate culture.

Chris Capelle is a technology expert, writer and instructor. For over 25 years, he has worked in the publishing, advertising and consumer products industries.

Sources

Harvard Business Review - You Need an Innovation Strategy 

Forbes -  The Most Innovative Companies of 2020 According to BCG 

e-Careers - 10 Businesses That Failed to Adapt