Innovation Strategy: How to Create and Implement a Plan that Delivers Results
Published: 13 July, 2022
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Have you ever wondered what goes into creating a great technological device? Innovative strategies play a key role in how products are created. An innovative strategy is a plan used by businesses, companies, brands, and organizations to boost the delivery of products and services. (also see the difference between innovation and invention)
Innovation strategy is essential for companies that want to gain a competitive advantage. An excellent innovation strategy should be inspiring and add something unique to the product and services being developed. As an organization, you want to increase your product and services’ overall value and create something brand new that will attract potential customers.
Innovative strategies should be creative and be out of the ordinary. When thinking about innovative strategies, it’s impossible not to think of Microsoft, Apple, or Google. Apple, for instance, has created and continues to create unique products and services of tremendous value and success. iWatch, iPad, and iPhones are Apple’s innovative products born out of excellent innovative strategies. However, smaller businesses might not record Apple’s success in one day. The truth is that you can never underestimate what successful innovation strategies can bring your company.
Growth and innovation go hand in hand. The critical part is to set up a reliable innovation strategy. The UNITE Business Model Innovation Patterns summarize 95% of all business model innovations. In combination with the UNITE Innovation Approach, you have all the necessary tools at hand to systematically innovate your business model.
In this post, we will consider what is innovation strategy? business innovation strategy, innovative captive strategies, innovation strategy examples, strategy, and innovation.
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What is Innovation Strategy?
The innovation strategy is a plan that outlines how a company will use its resources to achieve its goals of innovation, value creation, and competitive advantage. This strategy should take into account the business’s competitive and technological environment, as well as external challenges and opportunities. It serves as a guide for making decisions related to innovation.
Innovation Strategy Importance
Innovation strategy is a crucial component when a new brand identifies gaps in the industry or overlooked segments. We, at Digital Leadership, provide Innovation Consulting service to assist businesses in capitalizing on emerging technology opportunities. Our expertise lies in developing customized strategies, launching new ventures, and cultivating positive relationships, all aimed at driving innovation, transformation, and business growth.
An excellent innovation strategy can:
- Clarify goals and priorities: An effective innovation strategy outlines the goals and priorities of an organization’s innovation activities and helps focus resources and energy on reaching those goals.
- Foster alignment: With an effective innovation strategy in place, different sections within an organization will achieve common goals rather than pursuing individual goals and priorities.
- Keep business from priding on its last success: Even businesses that start as innovators must continue to strategize and innovate intentionally to remain relevant in their field of endeavor.
- Help businesses achieve long-term success: Without an effective innovation strategy in place, a company is not likely to maintain a competitive advantage and keep customers engaged over the long term.
How to Develop an Effective Innovation Strategy?
1- Have a Clear Objective and Strategic Approach
The first step to developing an effective innovation strategy is to define your business innovation objectives and the strategy behind them. As a principle, your innovation strategy should help support your overall business objectives.
2- Know Your Target Audience and Top Competitors
The second step to developing an effective innovation business strategy is defining your target market. No matter what you do, not everyone will patronize your products and services. Therefore, you need to know who your potential customers are and strategically plan on how to attract them, and to do that you can understand your customers and their needs by applying the Jobs to Be Done Theory.
To innovate and respond to your customer’s needs, you need to study, listen and understand what they truly want.
3- Define Your Value Proposition
After having a clear objective/strategic approach and knowing your target audience, the next thing you need is to define your value proposition. This, to us, is the most important step in developing an effective innovation strategy. Defining your value proposition has to do with asking yourself strategic questions such as How will you win? What type of innovation strategy will you adopt to give you the highest level of competitive advantage?
Therefore, you need to focus on creating values that help your customers spend less money and are willing to pay for the products and services you’re offering.
4- Assess and Develop Your Core Areas of Strength
When accessing your core areas of strength in business, you need to consider the following areas:
Your ability to connect and develop these capabilities are essential in developing an effective innovation strategy.
5- Establish Your Innovation Systems and Techniques
To develop an effective innovation strategy, you need to identify the strategic business innovation systems and techniques you need to put in place. You need to define which innovation systems you need to link your innovation infrastructure elements.
You need to understand that there are different innovation strategies, and not all of them are needed at every stage of your business growth. Therefore, you need to know the ones to employ to give you the desired business outcome you seek to achieve.
How to Implement an Innovation Strategy?
After you’ve put everything in place and picked your strategic approach to innovation, it’s time to put your innovation strategy to work. Your long-term strategic goals give structure and support to your innovation work. You need to realize that you will not achieve your overall goals in one day, but setting boundaries, staying focused on your end goals, and being consistent is the only way to achieve anything worthwhile in your business.
Align All Innovation Strategies with Your Business Goals
Most businesses struggle to bridge the gap between business goals and innovation strategy. Therefore, to succeed with innovation strategy alignment, you need to aim to communicate the role of innovation within the confines of your business. In addition, you need to ensure that the innovation strategy and process are fully embedded into your business strategy.
Integrate and Communicate Your Strategy to Your Team
There is no way you will succeed in business without an excellent team working with you. In addition, they need to be aware of the strategies they’re adopting to achieve the business goals. To integrate your innovation strategies into your organization, you need to partner with the right people within and outside your organization and set individual goals that will favor your innovation strategy.
Measure Your Growth Systematically
Systematic measuring is the best way to adapt to changes in the business and position your team to achieve better outcomes in the future. Also, picking the right optimal measurement metrics helps control the progress.
Innovation Strategies Examples
Let’s discuss innovation strategy examples and how leading brands in the world used excellent innovative captive strategies to attain greater heights.
The Innovation Strategy of Microsoft
Microsoft has struggled to achieve radical innovation. That may soon change. Now, Microsoft’s innovation strategy involves going for R&D to advance its position in a range of markets – including healthcare.
Although the company used incremental innovation to remain relevant over the past years, it struggled to achieve radical transformation. However, the narrative is already changing with Microsoft’s innovative R&D strategy, which seeks to position them ahead of its competitors.
The Strategy and Innovation of Google
Google’s innovative strategies span through different matrices; as such, it is difficult to associate them with just one innovation archetype. However, the notable success recorded by the parent company can be traced to its heavy investment in R&D. This clearly shows that it is leveraging and targeting architectural, disruptive, and radical innovation.
The innovative captive strategies of Apple
In time past, Apple was known for outsourcing R&D initiatives instead of focusing on product rebranding and development. However, the narrative has changed recently; the company began developing capacity in-house via internal accelerators and acquiring startups associated with their line of operation.
The Innovation Strategy of Samsung
Samsung’s innovative strategy all these past years has been about incremental innovation (as clearly seen in its curved mobile phone screens). The organization’s innovation plan in recent years has been to diversify its portfolio. Currently, its R&D section is exploring digital health, autonomous mobility, privacy, security, infrastructure, internet of things, artificial intelligence, machine learning, data-center infrastructure, and lots more. Samsung is also investing strategically in several external initiatives to reinvent its brand and businesses.
The Innovative Captive Strategies of Amazon
Having recorded tremendous progress in business over the past few years and scaling impossible heights, Amazon is maintaining its startup culture while scaling up. Creative innovation is the bedrock of Amazon’s strategies- not just the R&D innovative strategies.
For most small businesses, innovations are small improvements to existing products and services. However, innovation can also be seen as a revolutionary technological invention or digital business model that changes activities in the industry.
To learn more about these innovations, let’s consider the various types of innovations.
Incremental innovation involves making a series of improvements or upgrades to an organization’s existing products and services. The upgrades made to the products and services are aimed at improving an existing product’s competitive differentiation, productivity, and development efficiency.
Disruptive innovation is a type of innovation that creates a new value network and new market and eventually displaces existing/leading products, services, and established firms. It generally refers to a kind of innovation that transforms highly expensive and sophisticated products and services (only accessible to high-class customers) into those affordable to all categories of users.
This innovation is also called incremental innovation and it refers to a type of innovation that happens on an incremental basis in response to customer and market demands for products and service improvement.
Product innovation is a common form of innovation in the business world. It is related to improving the nature/features of products and services. Various components of the previous products and services are improved to get better ones that attract more potential customers.
Product innovation involves fundamental new technologies and can build combinations of existing technologies in different ways. Product innovation can give birth to a new product that has never been in existence before.
Service innovation is a product, service, or concept that is greatly improved in new or existing markets. For instance, this could be a new client distribution channel, client interaction, a system that improves process transmission, or a new service/solution in the client interface.
The way you deliver your services is a great way to stand out in business, attract more sales, generate more value for potential customers and generate more shares/revenue for your business.
A key goal of every successful business is providing products and services that make life easier for customers and meet their needs. The more you meet customers’ needs, the better your future as a corporate organization.
Uber is a key example of an innovative service company that has experienced growth beyond its core business values worldwide.
Business Model Innovation
Business model innovation refers to the way companies work to make money. It consists of core channels, strategies, resources, values, and target customers. It is a fundamental change in the way companies provide value for their target audience and potential customers. In practice, business models innovation happens by developing new pricing mechanisms, sales channels, and sources of income.
The limitation of business models innovation is that skills and processes optimized for business success may become transformation targets.
To create a new business model, you need to work on disruptive innovations and change the fundamental decisions your business is working on.
For any innovation to be effective, it needs to be visible, i.e., people need to know how to find it and benefit from it. The main goal of market innovation is to increase markets shares or open a new market. Therefore, innovation is mostly considered marketing innovation if it significantly changes the traditional marketing strategy of the company concerned.
The ability to connect with your potential customers is an important component, and there is always room for improvement in customer engagement and relationships. In addition, due to advancements in technology and customer preference, new marketing innovations are needed to promote new and existing products, services, concepts, and processes.
Architectural innovation refers to the reconfiguration of existing products and services technologies that bring about improvements in every way possible. Examples of architectural innovation include flexible manufacturing systems and computer network systems. In this innovation, the main components of a product remain the same and bring about progressive growth in the business, attract more potential customers, and increase revenue.
Social innovation is a technological innovation that seeks to meet social needs better rather than solving existing business problems. It is a new practice and can be provided or funded by commercial or public entities. Social innovation is very important for many reasons. For example, it improves working conditions, develops communities, provides more education, and improves population health.
Innovation strategy is about making the right choice between several possible feasible options and strategies. To succeed in developing the best innovation strategy, you need to identify the best innovative captive strategies to position your business for success.
However, you must note that choosing the right innovative strategies and innovation strategy is just the first step; you need to also create a strategy for testing and validating the approach that suits your business.
For your strategy and innovation to work, seamless integration and strategic alignment to your core values and objective is the key. Succeeding in any business innovation strategy takes a combination of the right practices, skills, hard work, consistency, focus, and the right knowledge. We put up this post to help you succeed in all your business endeavors. Therefore, we hope that the information we have provided in this post will position you strategically for business growth.
Frequently Asked Questions:
1. Improve – Horizon 1: Improving a business (model) means making incrementally small changes in order to execute your current systems and processes more effectively. This is well understood since this is what most people work on every day.
2. Transform – Horizon 2: Transforming an existing business (model) is focused on evolving your existing business in new ways – you seek to change at least one part of your business model in a more significant way, i.e., a step-change.
3. Innovate – Horizon 3: Innovating a new business model is focused on radical innovation – you venture beyond and explore unknown business models through innovation of the business model itself.
1. Incremental Innovation
2. Architectural Innovation
3. Disruptive Innovation
4. Radical Innovation