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What is an innovation strategy?

An innovation strategy is a project plan with which the stages of future growth are organized, with the aim of satisfying the “unsatisfactory” needs of customers. It illustrates in detail the added value that the product / service will acquire, stimulating the evolution of the company and putting it in a position to create a better experience for the customer.

The innovation plan contains the policies, research methods and strategies necessary to achieve the set objectives. It is essentially a business model for innovation planning and will be a guide to improving your company’s innovation capital.

Innovation does not happen by chance; Innovation stems from a neat environment that emphasizes the deliberate development of new ideas. Creating an effective innovative mindset is essential for any organization wishing to create competitive advantage, making planning for the future much more effective.

Customer needs will appear very different based on the type of innovation your organization is pursuing. For example with a sustainable innovation plan, you will look at current users and their needs. With a radical innovation plan you will focus on a new, different and “untapped” market to grasp the potential for innovation.

Why is the innovation strategy important?

An innovation strategy focuses on core values ​​of the company:

  • expand to meet growing customer needs;
  • start a new market;
  • increase value to improve customer loyalty;
  • keep the company at the forefront;
  • guaranteeing an optimal response to new customer needs;
  • Clarifies the objectives: Creating an innovation strategy helps formalize some of the most important objectives within the company. When the organization’s goals are communicated and clarified, the priorities are clear within the company and also how your team can effectively achieve them.
  • Create Alignment: Similar to clearing goals, creating an innovation strategy helps create alignment at all levels of the company. Whether it’s individual activities, high-level strategy or operations management, everyone will have a shared idea of ​​the main goals and how to achieve them.
  • Optimize for long-term success: Instead of focusing solely on the immediate future, an innovation strategy clarifies the company’s long-term strategic movement. This provides meaning to short-term activities and gives the company a long trajectory to achieve over time.
  • Promote Collaboration: When innovation is at the heart of a business, collaboration is needed to get things moving. Creating an innovation strategy inherently emphasizes innovation between individuals, teams and departments. This fosters the best environment for innovation to succeed.
Different types of innovation strategy

Not all innovation is the same and when developing an innovation strategy, you need to understand what kind of innovation you will be looking for. Here are the four main types of innovation.

Sustaining Innovation

Sustaining Innovation is the most common type of innovation and focuses on improvement rather than replacement. This type of innovation emphasizes the improvement of existing actions and capabilities by targeting problems known to the user.

Building on your existing capabilities and serving your current customer base is an important point to focus on and is usually very closely aligned with your company’s value. While supporting innovation is always important, it has a lower ceiling than others and can feel stagnant after a longer time.

Disruptive innovation

It’s when you exceed the needs of your existing customer base by providing something greater than their needs and attracting a new market from these capabilities.

Disruptive innovation can meet the needs of existing users while also opening up a new market, but it is usually used to target an untapped market that will replace the existing one.

This style of innovation can be useful when done correctly, but it raises some uncertainty as it puts the health of your existing user base at risk. However, if you do it successfully, you are ready for more growth in the coming months.

Radical innovation

Radical innovation is the boldest innovation strategy of all and requires you to tear down the current market in search of a whole new one. This type of innovation is usually a sign of significant change within an organization and can be indicative of a disruptive effort in a new market.

When leading radical innovation, an organization must incorporate cutting-edge technology with an innovative business model to deliver something that has never been done before. Completing a radical innovation is relatively rare, but it is extremely profitable if completed successfully.

Architectural innovation

Architectural innovation is focused less on growth and more on structural business change. It emphasizes holistic change within an organization, with changes coming from both new technology and a new business model.

Architectural innovation can be very difficult to undertake due to the amount of internal and external changes required to successfully complete it. The pieces of this model are not necessarily innovative when isolated, but they are important agents of change that allow you to innovate your business as a whole.

How to create an innovation strategy

Each innovation strategy will be different and closely align with one of the types of innovation listed above. While every organization has unique goals and different approaches, there are some best practices for creating an innovation strategy that will help any business. Here are some crucial guidelines to follow when creating an innovation strategy.

Analyze your current strategy

The first step in creating an innovation strategy is to understand where you currently are and where you could improve the most. This will be a key point in choosing the type of innovation on which to base your strategy because you will need to determine if you will stop or tackle your target market.

Understanding your brand identity, customer value, and current focus is essential to creating an innovation strategy that fits your organization. During this process, it can be helpful to perform some competitive analysis to determine where other players are evolving in your competitive ecosystem and how this could affect your future changes.

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It is important to conduct an internal analysis at the beginning because it sets the stage for the type of innovation strategy you choose and how you prioritize the future.

Research customer needs

Once you’ve determined your ranking, you need to start researching your customers’ needs. Understanding the changing needs of your customer base is critical to consistently delivering value through your product / service.

Depending on the innovation you’re focusing on, you may want to focus on different areas in relation to your customers’ needs. For example, if you are creating a disruptive innovation strategy, you might briefly consider the needs of your existing user base, but you will strongly focus on your ideal target market, which has yet to be addressed.

These details will be key to developing value and messaging within your business, so it’s important that you build a clear understanding of who your target market is and how you can successfully meet their needs.

Evolve your value proposition

Once you’ve created an outline of who your customers will be, you need to understand why they’ll choose your product / service. This is where your value proposition comes into play.

Your existing value proposition is meant to evolve as you create your innovation strategy. This statement will include the overall change in your business through your innovation, but it will also address why the customer will choose your product and what they will get from it. The value proposition of your innovation strategy should resemble the value you offer with your final product.

This value shouldn’t be the same as it is today, so make sure you understand how your innovation strategy differentiates your business and reflect it in your evolved value proposition.

Formalize the methods of innovation

The last step in creating an innovation strategy is the formalization of the techniques and methods that will contribute to the implementation of the strategy. To execute your innovation strategy consistently and efficiently, you need to understand how to build each step to create a valuable final product.

The pieces that make up your innovation strategy will focus on developing, researching, marketing and communicating your new solutions. It is important to narrow your innovation strategy to specific projects that will contribute to the overall goals you are building towards. Work with team leaders responsible for R&D, development and marketing to understand how you can make your goals achievable and achievable. This is the best thing you can do to make sure your innovation strategy is consistently built and improved over time.

Innovation strategy models

Building an innovation strategy is easier when done in concert with the whole team. To facilitate collaboration, there are a couple of templates that make it very easy to create an innovation strategy.

Cascade Choice Strategy

The waterfall model of choice of strategy allows you to create a holistic innovation strategy in an organized format. It divides each section of the company into its own group. It requires thinking about how each component interacts with each other, ultimately creating a strategy that is well informed and fully integrated.

This model emphasizes the interaction between internal operations, showing how much communication and alignment are vital to successful innovation.

If you want to know more about the strategy choice waterfall model, you can use it for free here.

Matrix of innovation ambition

The innovation ambition matrix is ​​a model that helps determine which innovations should be part of the core business model and which should be part of a radical expansion. When creating an innovation strategy, understanding what kind of innovation you are focusing on is important and using an innovation ambition matrix can help clarify this decision.

Conclusion

Innovation is a key part of any business’s success, and optimizing it can be daunting in the absence of a solid innovation strategy. Hopefully, this guide has helped you understand what an innovation strategy is, why it’s essential, and the first steps you can take to build one yourself.

Ercole Palmeri: Innovation addicted

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