PLAN | Innovation Strategy
Thomas Edison said, “I don’t want to invent anything that nobody will buy.” The most important point about developing a strategy for innovation is to make something useful—a product or service people will buy.
That is easy to say, but much harder to do.
In formulating an innovation strategy, it is paramount to be aware that when the entire landscape of innovation is considered there are two broad categories of innovation—incremental and radical.
Developing a strategic, long-term approach to innovation begins with an organization looking outside itself to determine what markets, sectors, applications, product types, and technologies have significant growth potential. Ideally, these are areas that are at least somewhat adjacent to existing markets in which it currently participates.
This should include an assessment being performed should to determine the company’s core competencies. By identifying the unique capabilities of the business they can be leveraged to advantage in other markets, applications, and sectors. The goal is to work from an organization’s strengths and base of knowledge instead of starting from zero in an entirely new market about which nothing is known.
When developing an innovation strategy, it is important determine whether to purse product/service innovation or business-model innovation.
This is because Business-model innovation involves the design or architecture of an entire system by which the enterprise provides value to customers, its actual delivery, and the related customer recruitment. This involves identifying how it plans to entice customers to pay for products/services and converting those payments to profit.
The ultimate in Business-model innovation is to develop Business-model platform innovations. Historically, and even more so now, creating Business-model platform, radical innovations that are in fact business platforms are where enormous profits reside. Consider recent successful companies that are getting billion-dollar valuations—AirBnb, Uber, Instagram, Whatsapp – these are all Business-model platform innovations.
What is a platform? It is a business model that creates value by enabling exchanges between two or more interdependent groups, usually consumers and a service or product provider. It is founded on the concept of providing a “one-to-many” service model and it establishes an entirely new marketplace in which they are operator of the market.
In relation to the above innovation approaches the objective is to have a relatively steady and stable flow of innovations. This requires the right balance of projects in an organization’s “portfolio” of innovations.
This includes maintaining an optimal mix between bold long-term, high-risk projects and less risky short-term projects; likewise, between maintenance versus growth projects and between major new products and enhancement of existing ones. The objective of proper portfolio management is to create a steady flow of emerging innovations instead of a feast or famine situation with regards to innovation.
What we do – We guide organizations with how to develop a successful innovation strategy that utilizes their strengths to provide when with the results they desire.
