How to build and implement your company's innovation strategy?

by Ivanna Nösel, on 1/14/21
business-innovation

Do you have a real innovation strategy for your company? In a context where new players, concepts, and trends are constantly shifting the lines on the market, how can you create a place for yourself as a company and assert yourself in an ever-changing ecosystem?

Faced with competition, companies have every interest in giving themselves the best chances to stay in the race. Defining an effective innovation strategy is therefore essential: it points the way to creating and strengthening a sustainable competitive advantage, to ensure your company's performance and sustainability.

What is innovation strategy in business?

Innovation strategy: definition

For a company, an innovation strategy is the implementation of a formalized innovation approach in order to achieve predefined objectives, generally to strengthen its competitiveness.

💡 Business innovation can be found on different levels:

  • technological: introducing innovative products or services to the market;
  • marketing: deployment of an innovative pricing policy, or a new marketing method;
  • organizational: implementation of new processes for a more efficient organization.

An innovation strategy is an expression of the vision of company managers'. It is essential for:

  • giving a direction to follow for the actions to be undertaken,
  • ensure cohesion in the achievement of objectives and set priorities,
  • make good use of the key resources available.

Why innovate in business?

An innovation system aims to break with what already exists while bringing value. The reasons justifying this need to innovate in a company are multiple:

  • the rapid evolution of trends,
  • market volatility,
  • a growing number of competitors,
  • changing uses of increasingly connected consumers, etc.

In order not to lose its competitive edge, a company can therefore rely on its innovation efforts to:

  • constantly adapt and reinvent itself,
  • detect and seize new opportunities,
  • become more attractive or more efficient.

Innovation strategy types: which one to choose?

Here are the main methods of innovation concerning product development:

innovation-strategy

© viima

  • The Need Seeker strategy:
    • Focus: the emphasis is placed on R&D to develop products with high added value.
    • Type of innovation: radical.
    • Examples of companies: Google, Siemens.
  • The Market Reader strategy:
    • Focus: attention is focused on the market and on the needs expressed by consumers to guide R&D.
    • Type of innovation: incremental.
    • Examples of companies: Samsung, Hyundai.
  • The Technology Driver strategy:
    • Focus: efforts are turned towards understanding and anticipating future needs and uses, to meet latent needs.
    • Type of innovation: incremental.
    • Examples of companies: Apple, Tesla.

☝️ Remember that opportunities for innovation do not only lie in new technologies, they can also involve rethinking your business model.

Here is an illustration of the core concepts of innovation.

innovation-strategy

© viima

While this panel reveals what directions can be taken, the innovation strategy you develop is specific to your context and the issues you propose to solve.

Let's take a closer look at how to implement it.

Building an innovation strategy in 6 key points

1. Determine clear objectives

Wanting to innovate is a good start, but it is not a good enough reason. Knowing why we innovate is an essential prerequisite for success.

To determine the objectives of your innovation strategy, identify the issues that most strongly influence the future of your company. Ask yourself what the desired results are, articulate your innovation policy with your medium- and long-term strategic vision, and define the steps to achieve them.

Here are a few questions to ask yourself:

  • What specific issues are driving you to redefine all or part of your business?
  • How does innovation bring value to your potential customers?
  • What difference will my innovation make in the targeted sector?
  • How will my company receive part of the value generated by its innovation?
  • What types of innovation initiatives will enable the company to create value, but also to reap the benefits?
  • What resources need to be mobilized for each project?

2. Detect opportunities for business development

Knowing that your approach to innovation will serve the company's strategic ambitions, you are on the lookout for business opportunities.

To deploy new offers and solutions, undertakes a diagnosis of the ecosystem in which you operate. Indeed, innovation is not risky, it is aimed at an identified market, which is characterized by a demand.

🛠 In order to detect new prospects for the development of your business, use monitoring tools to study both risks and opportunities.

3. Understand your customers and their environment

As with a marketing strategy, focus on your target group. In order for your new offer to be relevant to your customers and attract their support, you need to get to know them better. To do this, you can start by using the definition of persona marketing.

To go further, make sure you don't make assumptions about your customers' needs, but rather understand them by asking the right questions:

  • What problem are you trying to solve?
  • What is the environment in which your targets evolve?
  • How do you want to contribute to the success of your customers?
  • Are you receptive to the reality on the ground and do you solicit their feedback?

Confronting reality is crucial to be as close as possible to their expectations and design the best possible experience.

4. Survey its resources

Audit the resources and processes at your disposal, and more broadly your performance capabilities.

In formulating your strategy, in particular, you take into consideration:

  • the processes in place,
  • human capital, i.e. the skills and talents present,
  • technical knowledge and know-how,
  • physical assets,
  • financing,
  • means and technologies of communication, etc.

5. Set the actors in motion

Who should be involved in the innovation process?

The role of the business leader is essential to create a framework and provide the necessary motivation for innovation.

It is then your employees must be integrated into the process. Giving them space allows ideas and initiatives to emerge in each department and at all levels.

You can set up systems to encourage the ideation and creation process for obtaining an incremental innovation, such as:

  • suggestion boxes,
  • brainstorming sessions,
  • design thinking process,
  • test and learn methods, etc.
  • In addition, the implementation of a knowledge management system will help you to enhance the value of ideas.

🛠 Tools such as collaborative platforms or idea and innovation management software help support this innovation process.

Also think about other stakeholders that you can include, such as partners, experts, or any other successful innovators that can contribute to the success of the process.

Make sure you bring the stakeholders together and formalize their roles as soon as possible, and then move into project mode.

6. Manage innovation projects

A dedicated innovation manager or project leader can be appointed to lead innovation projects and define the means to implement:

  • action plan,
  • team composition, combining key skills and profiles,
  • KPIs and indicators to monitor, etc.

🛠 You can turn to the use of project management or project portfolio management software to steer your innovation projects.

A strategy to reinvent

As we have seen, business strategy and innovation work together. In order for the innovation process to be aligned with your company's objectives and strategic vision, it involves all key departments: marketing, finance, R&D, etc.

If the overall strategy is subject to review and readjustment, the same applies to the innovation strategy, which must adapt to new economic, legal, technological challenges, etc.

To remain competitive, the innovation strategy, like any innovation process, must itself renew, experiment, and adapt.