You need an innovation strategy
- The problem with innovation improvement efforts is rooted in the lack of an
- Strategy: a commitment to a set of coherent, mutually reinforcing policies or
behaviors aimed at achieving a specific competitive goal.
- Good strategies promote alignment among diverse groups within an organization,
clarify objectives and priorities, and help focus efforts around them.
- An organization’s capacity for innovation stems from an innovation system: a
coherent set of interdependent processes and structures that dictates how the
company searches for novel problems and solutions, synthesizes ideas into a
business concept and product designs, and selects which projects get funded.
- A company without an innovation strategy won’t be able to make trade-off decisions
and choose all the elements of the innovation system.
- There is no one system that fits all companies equally well or works under all
- Without an innovation strategy, different parts of an organization can easily wind up
pursuing conflicting priorities.
- An innovation strategy should be closely linked to a company’s business strategy and
core value proposition.
Connecting innovation to strategy
- The process of developing an innovation strategy should start with a clear
understanding and articulation of specific objectives related to helping the company
achieve a sustainable competitive advantage.
- A robust innovation strategy should answer the following questions:
o How will innovation create value for potential customers?
o How will the company capture a share of the value its innovations generate?
Companies must think through what complementary assets,
capabilities, products, or services could prevent customers from
defecting to rivals and keep their own position in the ecosystem
One of the best ways to preserve bargaining power in an ecosystem
and blunt imitators is to continue to invest in innovation.
o What types of innovations will allow the company to create and capture
value, and what resources should each type receive?
Companies have a choice about how much of their efforts to focus on
technological innovation and how much to invest in business model
Routine innovation: builds on a company’s existing technological
competences and fits with its existing business model, and hence its
Disruptive innovation: requires a new business model but not
necessarily a technological breakthrough. Also challenges the
business models of other companies.