Innovation strategy is an approach to pursuing new growth opportunities. It is a proactive approach involving the simultaneous development of new products, services, and technologies. The objective of innovation strategy is to generate new sources of growth, which are sustainable in the long run. It has three main components: product innovation, service innovation, and process innovation. Innovation strategies are usually deployed alongside market penetration or market development strategies.
There are many benefits of an innovation strategy. One of the most important is that it can help companies stay on top of the latest developments in their industry. It also allows more opportunities to generate new ideas and find new solutions to problems. An innovation strategy helps keep employees passionate about their work by giving them the ability to contribute their own creative ideas.
Companies are embracing an innovation strategy more than ever before. This fact can be attributed to the many benefits that come with it – one being that it keeps companies on top of what’s happening in their industry.
What Are the Types of Innovation Strategies?
Companies can use different types of innovation strategies to ensure that they keep up with changing times and remain fresh for their customers. The four different types of innovations are Incremental, Disruptive, Architectural, and Radical.
1. Disruptive Innovation
Disruptive innovation is an idea that was first coined by Clayton Christensen in his book “The Innovator’s Dilemma” in 1997. The term disruptive innovation is used to define the process where new technologies cause “lower-end” products to disrupt the market for “higher-end” products, eventually making the lower versions people’s preferred choice.
According to Christensen, there are two types of innovations: sustaining innovation and disruptive innovation. Sustaining innovations only result in slight performance improvements over existing competitive offerings. On the other hand, disruptive innovations are aimed at new or existing markets with new offerings that are often low priced and lower quality than their competition.
A few famous examples of disruptive innovation include how digital photography made film photography obsolete and how cellphones killed landlines.
2. Routine Innovation
Routine innovation is defined as innovating in the process of continual improvement by identifying and implementing creative solutions to existing problems. It is the natural and most effective way to innovate in any industry.
The routine innovation method is all about testing ideas frequently and then iterating on them to find the best one. Some businesses, such as Google, use it specifically during their early ideation stage before they commit to producing anything final.
Steve Jobs, CEO of Apple, is one of the most well-known routine inventors. Many of Jobs’ most significant breakthroughs (like the iPod, iPhone, and iPad) were based on existing technology that were widely accessible, which he combined with stunning designs and savvy marketing. He was able to transform the ordinary into the remarkable through reinvention.
3. Radical Innovation
Radical Innovation is about finding new ideas that are likely to be disruptive to the status quo. There are two ways that people can create radical innovation. The first way is by taking a known product and improving it in a way that has not been done before. The second way is by creating something completely new.
However, radical innovation needs to be well thought out before implementation. Companies need to make sure it aligns with their mission and values. The business model should meet specific requirements, which are:
- The new idea should not be too innovative, or it will create chaos in the company.
- It should not be too abstract, or it will confuse people.
- The new idea needs to have a clear vision and goal so people know what they are working on.
An example of radical innovation is the invention of the iPhone, which paved the way for the modern smartphone market.
4. Architectural Innovation
Architectural innovation is the idea of creating something new and different and making a difference in the world. The term architectural innovation is often used to describe an invention or discovery which has influenced modern architecture and design. These inventions may be anything from a new structural system like the flying buttress to a new type of window such as those using stained glass. Another example of architectural innovation is the Sony Walkman.
What Is the Importance of Creating an Innovation Strategy in Business?
Developing an effective innovation strategy can clarify priorities and goals. An innovation strategy lays out the goals of the organization’s innovation activities and helps focus efforts on reaching those goals. It is important to have an innovation strategy in place. Without it, companies are less likely to develop breakthroughs or innovative products. A systematic, strategic approach to innovation is integral for success. It helps organizations grow by building on current strengths and exploring new opportunities.
A product innovation strategy is crucial for any business because it helps them anticipate changes in the market, react to consumer needs, and stay ahead of the competition.
There are four elements that need to be considered when creating a product innovation strategy: problem identification, idea generation, product development, and testing. It is essential that you identify the problems that your product or service is trying to resolve before you can develop ideas on how to address these issues.
What Are the Steps for Developing an Innovation Strategy?
One way to make sure that your business stays on top of the latest trends and advances is by developing an innovation strategy. The following are some key steps to take when creating this strategy.
- Determine the strategic approach to innovation and the objectives.
- Identify the opportunities and threats.
- Identify areas for growth.
- Understand customer needs and desires.
- Assess and develop your core capabilities.
- Establish your innovation systems and techniques.
The following are some of the best practices to make your innovation strategy work.
- Establish an innovation center in your company to create a culture of innovation in the team. Encourage people to openly share their opinions and thoughts, which may lead to developing innovative ideas for your business.
- Appoint an expert in this field who will strategize and implement innovative ideas in the company. This person will take care of strategizing and implementing creative ideas in the company.
- Create a long-term plan for research, development, product design, etc., to keep up with competitors’ innovations throughout the year.
- Keep track of all innovations that happen globally, so you are aware of what has been done before and which innovations are worth pursuing further to enhance.
The objective of an innovation strategy is to examine all the possible choices and make the best-educated decision by weighing them up. To identify your best strategy, you need to explore all potential strategic choices and give them a thorough evaluation. But it’s crucial to make the right choices and test and evaluate your solution.
To make your innovation strategy work, alignment and integration with existing company practices are key. Successful communication and the dissemination of metrics that relate to both the company and individuals will help you make innovation a continuous practice. Succeeding in innovation takes a combination of skills, knowledge, and practices. You also need to be willing to put in all that hard work.
What Are the Tools Used in Innovation Strategy?
The tools typically used in innovation strategy are brainstorming, mind mapping, and the lean startup methodology.
The first tool that is often used is brainstorming. This tool is used to generate as many ideas as possible by inviting everyone’s input. The next tool that is often used is mind mapping. It helps visualize a problem and its solutions by using a diagram with branches of thoughts and ideas, with each branch having a word or phrase attached to it.
The last tool often used in innovation strategy is the lean startup methodology which can be used to innovate rapidly at lower costs. This happens by identifying risks early on and testing different assumptions before investing too much time and money into the project.
In this section, you’ll find some of the tools for idea generation and idea validation.
- Kanbanize (a Kanban tool for Lean/Agile Project management that can help you with visualizing processes for validating project ideas).
- Idea Drop
Which Sectors Can Innovation Strategy Be Used in?
Innovation strategy can be used in many sectors, including the automotive industry, healthcare industry, finance industry, government sector, information technology, software development, architecture.
The success of any innovation strategy depends on the type of innovation strategy that you are trying to implement. For example, automotive companies can use an innovation strategy that focuses on new product development, which will be different from the healthcare company that will focus on service innovation. There are many different types of innovation strategies, so it is crucial to choose one that best suits your needs.
Which Companies Do Use Innovation Strategies?
Innovation is the key to success in any industry. The most successful brands are always trying to find new ways of improving themselves while keeping up with the latest trends.
Many companies use innovation strategies to not only improve their processes but also create new products. This can be done by launching a new product, testing a new market, or just developing a better way of doing something that they’re already doing.
The best example for this is Google that has innovated in many different ways over the years, including voice search and driverless cars. Another great example of an innovative company is Nike that constantly evolves its business model by making sure it’s on-trend with what’s happening in society. There are so many innovative companies working on AI projects, such as Facebook, Apple, Google, and Microsoft.
The following is a list of the most innovative companies in recent years.
- Tesla Motors
What Are the Examples of Innovation Strategy?
The following are examples of innovation strategies.
- Google: Google has innovated in many different ways over the years, including voice search and driverless cars. One of Google’s eight pillars of innovation is to “never fail to fail.”
- Amazon: Amazon is another company that innovates constantly. One of the most famous innovations from the company is Amazon Echo and Alexa Devices. Amazon is continuously pushing the boundaries of innovation. They recognize that they need to constantly think about the future, not just for themselves but also for their customers. Their founder and CEO, Jeff Bezos, spends a lot of his time focusing on where humanity will be in that time span.
- Apple: Apple is well-known for its innovations in services, software, and hardware. Apple’s innovation strategy relies on a structure that revolves around functional expertise. According to an article from Harvard Business Review, Apple believes that “those with the most expertise and experience in a domain should have decision rights for that domain.”
- Tesla Motors: There is no doubt that Tesla’s cars are one of the most innovative achievements we have seen in automobile manufacturing. Tesla’s innovation strategy focuses on winning support for a disruptive idea and bringing new technologies to the market.
- L’Oreal: One of the first retail companies to use augmented reality (AR) in their marketing campaign was L’Oreal. Thanks to augmented reality, the company has launched a new and innovative marketing campaign in which you can explore their products virtually through an app. Millions of people have already done this for themselves and found new beauty products.
What Are the Resources to Create an Innovation Strategy?
It’s important to mention some of the most notable books, articles, and case studies on how innovation strategy works.
What Are the Articles about Innovation Strategy?
This is a list of the most important articles on innovation strategy.
- You Need an Innovation Strategy by Harvard Business Review
- The eight essentials of innovation by McKinsey
- Innovation in a crisis: Why it is more critical than ever by McKinsey
What Are the Books about Innovation Strategy?
This is a list of essential books on innovation strategy.
- Business Model Innovation Strategy: Transformational Concepts and Tools for Entrepreneurial Leaders
- The Three-Box Solution: A Strategy for Leading Innovation
- Design a Better Business: New Tools, Skills, and Mindset for Strategy and Innovation
- Corporate Entrepreneurship: Innovation and Strategy in Large Organizations
- The Lean Strategy: Using Lean to Create Competitive Advantage, Unleash Innovation, and Deliver Sustainable Growth
What Are the Case Studies about Innovation Strategy?
This is a list of the most important case studies on innovation strategy.