More on this in our series about innovation and strategy.
What is not an innovation strategy? The answer lies in the nuances of what true innovation is, and understanding what it isn’t is equally critical.
We will navigate through the realms of imitation, incremental innovation, the absence of strategy, short-term focus, isolation from the wider business strategy, neglect of customer feedback, overemphasis on technology, risk aversion, and the pitfalls of siloed thinking.
It is not Imitation Strategy!
Simply copying or imitating what other successful companies are doing is not a genuine innovation strategy. While learning from competitors or industry leaders can be valuable, true innovation involves creating something new or significantly improving existing methods, products, or services. Imitation capabilities focus on mimicking competitor offerings, whereas innovation capabilities relate to offering new products or services to customers1. Imitation is not just mindless repetition; it’s an intelligent search for cause and effect, and it can be more important to business growth than innovation3i. However, good imitation is difficult and requires intelligence and imagination3. Imitation and innovation both strive in today’s market, and imitators should develop capabilities to learn more from benchmarking and imitate in a more innovative way5.
It is not Incremental innovation!
Incremental innovation involves making gradual improvements or refinements to existing products, services, or processes, while radical innovation focuses on introducing significant and transformative changes that disrupt industries and create new paradigms245. Incremental innovation carries lower risk, allows for continuous improvement, and is cost-effective25. On the other hand, radical innovation has the potential to provide disruptive market advantages, future-proof organizations, delight customers, unlock new opportunities, catalyze ecosystem development, attract top talent and investment, and create global impact235. One way to differentiate incremental from radical innovation is to look at the degree of novelty or originality of the product idea1. Another way is to look at the impact on the market or the industry1. A third way is to look at the source of inspiration or motivation for the product development1. The choice between radical and incremental innovation depends on various factors such as industry dynamics, organizational capabilities, market conditions, and risk appetite235. Both approaches have their merits and should be balanced according to the organization’s goals and resources35.
No Strategy at All!
Failing to develop a structured approach to innovation and relying on ad-hoc or random ideas without a clear plan or direction is not a true innovation strategy123456. Effective innovation requires a deliberate and well-thought-out process that aligns with the organization’s goals and resources123456. An innovation strategy should be inspiring, unique, and add value to the products and services being developed3. It should take into account the business’s competitive and technological environment, as well as external challenges and opportunities345. An innovation strategy should clarify priorities and goals, help focus efforts on reaching those goals, and align innovation with business strategy45. Developing an innovation strategy involves a clear understanding and articulation of specific objectives related to helping the company achieve a sustainable competitive advantage2. An innovation strategy should define the people, processes, programs, and targets/metrics required to measure success5. It should also include a playbook for innovation, which consists of tools, methods, and processes that will be used to achieve the innovation plan5. An effective innovation strategy should be simple, clear, and easily understood by everybody involved5. The final challenge facing senior leadership is recognizing that innovation strategies must evolve2.
It is not Short-Term Focus!
Balancing short-term and long-term innovation goals is crucial for sustainable success123456. An innovation strategy that prioritizes short-term gains at the expense of long-term innovation may not lead to sustainable success1. Innovation should be balanced with a forward-looking perspective that considers both immediate and future needs123456. Short-term innovation can have far-reaching results that influence where a company or product stands in the marketplace, its sustainability in the fluctuating economy, and its potential in untapped territories and regions1. Long-term innovation, on the other hand, can be transformational for both the company and the industry3. To balance short-term and long-term innovation goals, companies should look at innovation as a long-term prospect and see the whole picture, including end goals, total product offerings, and budget limits1. Companies should also select the few projects that need to move forward and look at them as a portfolio of short-term, medium-term, and long-term projects3. Short-term projects often include product line extensions and enhanced features, while medium-term projects often include new platforms that offer significantly enhanced performance, lower cost, or greater ease of use3. Long-term projects often include the dreams, such as a problem with no clear solution, but if one is found, it will allow the company to leapfrog the competition3. Companies should also ensure that Horizon 3 ideas survive the transition to Horizon 2 and Horizon 1 and avoid holding Horizon 2 businesses to Horizon 1 standards2. Finally, companies should adapt their innovation strategy and be flexible, driven by agile development methodologies4.
It is not Isolated from the Wider Business Strategy!
An innovation strategy that is isolated from the overall business strategy and goals is not effective123456. True innovation should be aligned with the organization’s mission, vision, and objectives123456. An effective innovation strategy should clarify priorities and goals, help focus efforts on reaching those goals, and align innovation with business strategy2345. To align innovation with business goals, companies should ensure that innovation serves a clear purpose and adds value to the organization5. An innovation strategy should reinforce business goals and vice versa6. An innovation strategy should also be communicated effectively to employees, and they should understand how their work contributes to the company’s overall goals6. An innovation strategy should be simple, clear, and easily understood by everybody involved3. An innovation strategy should define the people, processes, programs, and targets/metrics required to measure success3. Finally, an innovation strategy should be flexible and adaptable, driven by agile development methodologies4.
It does not Neglect Customer Feedback!
Incorporating customer feedback and market insights is crucial for an effective innovation strategy123456. Neglecting customer feedback may lead to solutions that do not address real needs or pain points1. Customer feedback is a valuable and immense resource of ideas that can ensure product innovation alignment with current and future needs3. Here are some ways to incorporate customer feedback into the innovation process:
- Identify the outcomes customers want to achieve2
- Use customer feedback to inform product development13
- Analyze customer feedback to identify pain points and opportunities for improvement3
- Let customer feedback lead product development efforts3
- Know where to look for feedback4
- Curate feedback content4
- Listen to customers to fuel innovation5
- Draw out ideas and feedback from customer communities6
By incorporating customer feedback into the innovation process, companies can better understand their markets and innovate smarter1. It can help them develop products that customers actually want and need, rather than products that founders think they need1. Customer feedback should be an essential part of any business’s innovation process3.
It does not Overemphasis on Technology
Focusing solely on technological innovation without considering other aspects, such as business models, marketing, and customer experience, can limit the effectiveness of an innovation strategy1245. Here are some reasons why overemphasizing technology can be problematic:
- Technology is not the only driver of innovation24
- Technology alone does not guarantee success24
- Technology can be replicated or surpassed by competitors2
- Technology can be expensive and time-consuming to develop2
- Technology can be difficult to integrate with existing systems2
- Technology can be difficult to scale2
- Technology can be difficult to market and sell2
- Technology can be difficult to understand and use by customers2
To avoid overemphasizing technology, companies should consider the following:
- Focus on customer needs and pain points145
- Develop a clear understanding of the market and competition145
- Consider the entire customer experience, not just the technology145
- Develop a business model that supports the innovation145
- Develop a marketing strategy that communicates the value of the innovation145
- Develop a plan for scaling the innovation145
- Develop a plan for integrating the innovation with existing systems145
- Develop a plan for training and supporting customers145
By considering these factors, companies can ensure that their innovation strategy is well-rounded and effective.
It is not Risk Averse!
Taking calculated risks is crucial for a healthy innovation strategy123456. Avoiding any risk or uncertainty in innovation can stifle creativity and prevent the pursuit of transformative ideas1. Here are some ways to encourage risk-taking in innovation:
- Embrace failure as a learning opportunity14
- Encourage employees to take calculated risks and try new things145
- Provide resources and support to help employees bounce back from setbacks1
- Set realistic goals and provide a reasonable timeframe for completion1
- Implement a strategic approach to risk-taking, which involves assessing potential risks, quantifying their impact, and developing contingency plans4
- Insist upon a plan to be presented first, to ensure understanding and buy-in across the affected organization5
- Test innovation results thoroughly in pursuit of success5
- Recognize and reward innovation and risk-taking6
- Promote collaboration and diversity in the learning environment6
By encouraging risk-taking, companies can foster a culture of innovation and creativity1456. It can help them stay ahead of the curve and be the trendsetters in their respective industries4. However, it is important to balance risk-taking with financial stability and responsibility4. Companies must learn from failure and assess their tolerance for risk5.
It is not Siloed!
Innovation is often a multidisciplinary effort that requires input from various departments and teams123456. Neglecting to foster collaboration and communication can hinder true innovation1. Cross-functional collaboration, which brings together team members from different departments and areas of expertise to work on shared projects and initiatives, is an effective way to foster innovation123456. By encouraging cross-functional collaboration, companies can break down silos and facilitate the exchange of diverse perspectives and ideas, leading to more creative and innovative solutions123456. Here are some strategies for promoting cross-functional collaboration within your organization:
- Establish clear goals and objectives1
- Encourage open communication1
- Provide opportunities for informal interactions1
- Offer training and development1
- Recognize and reward collaboration1
- Embrace failure as a learning opportunity4
- Provide resources and support to help employees bounce back from setbacks4
- Set realistic goals and provide a reasonable timeframe for completion4
- Implement a strategic approach to risk-taking4
- Pool knowledge and perspectives2
- Generate innovative ideas2
- Streamline processes2
- Produce high-quality products2
- Break down departmental silos2
- Foster a sense of ownership and shared responsibility2
- Promote a sense of investment in the project2
- Assess potential risks, quantify their impact, and develop contingency plans4
- Test innovation results thoroughly in pursuit of success5
- Promote collaboration and diversity in the learning environment6
By promoting cross-functional collaboration, companies can unlock the potential of their organization’s diverse expertise, driving innovation and improving organizational performance
