by Clive Keyte
Welcome to the latest in our short series of strategic business topics. In this series, we will look at strategic thinking, and focus in turn on three key areas; the first being innovation.
The value of innovation
A culture of innovation is vital for any business operating in a ‘normal’ climate – but in the COVID world, it matters more than ever. Organisations which are primed to innovate will naturally be one step ahead of the competition; finding new and better ways to serve customers, discovering better ways to cut operating costs, finding new markets and so forth to unlock value. Innovation isn’t remotely limited to the boardroom, and successful businesses will find ways to create an innovative culture that encourages all employees to be creative, bold, daring and to take ‘smart risks’ in order to find better ways of doing things.
Why you need an innovation strategy
However, although all business leaders are clear that innovation is the key to unlocking long-term competitive advantage (or comparable strategic success measures for non-profits), it is notoriously hard to stimulate innovation. Even when companies become renowned for their innovation – they can struggle to sustain it. Think of Nokia, Yahoo, Hewlett-Packard and numerous tech start-ups. Often, the cause of an innovative demise is deemed to be down to a failure in execution, but the root issue goes far further than this. When organisations fail to create and maintain a culture of continuous innovation, it’s because they lack an innovation strategy.
Interestingly, although businesses will create solid business strategies that capture all of their functional business areas, they will very rarely create an innovation strategy. With this kind of strategy in place, an innovation system can then be created with linked structures and processes that define how organisations find novel solutions to problems and how they prioritise, organise and manage these efforts to best effect; e.g. to support the overall business strategy.
Innovation Landscape Map
There are four types of innovation and they are driven by very different forces. The Innovation Landscape map helps businesses to prioritise how much they invest in the technologies or business models that they need to innovate. Understanding these different types of innovation help organisations of all kinds to approach their ‘best fit’ innovation and manage resources accordingly:
Requires a new business model – such ride-sharing platforms instead of taxis, and video-on-demand services instead of DVD rentals.
Also requires a new business model. Think, internet searches instead of print media for a prime example.
Now, this doesn’t require a new business model and simply happens when a company innovates within its field. For example, Apple might release a new iPhone or Fidelity might create a new index fund.
This also – perhaps surprisingly given the name, doesn’t require a new business model. It occurs when a business moves into a new field to leverage its existing skillsets. Think car engine manufacturers making ventilators during the Covid-19 pandemic.
Why you need your own Innovation Strategy
It’s all very well pointing to hugely innovative brands such as Apple, Pixar, VW or Uber – but for an innovation strategy to be successful, it must be tailored to the precise needs of its owning organisation. It must link in with the overall business strategy and support those overarching aims. Secondary research into what other great companies are doing well will always be beneficial – but this should provide inspiration into best practices to model, rather than a template design to follow.
An interesting case study
To see how a company can embrace innovation over many years – and to do so successfully in a rapidly changing world – we’d recommend this case study on Corning
The paper was written in 2008 and it’s still relevant today, demonstrating how the speciality components manufacturer continually innovates to create value. And even then, it shows that even a strategy success story such as Corning doesn’t mean getting it right 100% of the time. The company’s optical fibre business was decimated in the telecoms bubble of the ’90s. But by having a clearly defined and articulated innovation strategy, which links to its core business strategy and value proposition, Corning has enjoyed repeated successes for more than 160 years.
If you’re keen to formalise the way that your organisation approaches and manages innovation – to bring together all departments and resources in a way that really does unlock genuine value for your customers, shareholders, employees and communities that you serve – then now is the time to look at creating an Innovation Strategy which supports your main business strategy.
Intrafocus are here to help, whatever stage of strategic development you are at. Our first step is usually to host a strategy workshop with your decision-makers, and we can do this remotely using videoconferencing or in-person as required. Please contact us to discuss your needs and find out more about what we can help.
In the meantime, keep your eyes peeled for our second article in this series on strategic thinking soon. Next time we will be focusing on the Strategy Canvas. Until then!