For companies across all sectors, innovation can be a challenge. Even with time, money and management funnelled into them, attempts to improve innovation often fall flat.
But why is this? There are numerous reasons as to why maintaining performance during times of innovation can be so difficult, but more often than not, it's simply down to the company lacking a clear innovation strategy.
Without an innovation strategy in place, any effort to improve your innovation can end up failing. Much like other business strategies, innovation has to be defined in a strategy that aligns the proposed ways you'll innovate with the wider business strategy and company culture.
To help your company maintain a competitive edge, we'll introduce some different models of innovation and show how you can get started creating an innovation strategy of your own.
The importance of business innovation comes down to one thing: value. If a business wants to thrive, then they have to innovate and improve on a continuous basis.
Whether it's finding new revenue opportunities, optimising existing channels, or generating higher profits; consistent and constant innovation gives companies an advantage, putting them head and shoulders above their competition.
Whether it's because of size or age, businesses of all kinds will have their own reasons for business innovation. From re-assessing its revenue generation to pursuing a completely different industry, the variety of innovation models available to businesses can help them achieve these goals. Here are a few of the common examples:
Business model innovation involves developing new, unique concepts that support a business' financial viability, including its missions and the processes for realising these concepts. The model is largely driven by creating new revenue sources by improving product value and how products are delivered to customers.
Business model innovation's purpose is to address the choice of target segment, product or service offering and revenue model, with a focus on driving profitability, competitive advantage and value creation.
If your company's primary driver for business innovation is increasing its profits, then changing your revenue model may be the answer. The revenue model involves re-assessing products or services or by taking a look at the company's pricing strategy.
Pursuing this model doesn't require innovation to be radical, such as creating new industries or technology; sometimes even changing one element can bring about effective results.
The most radical model of business innovation, the industry model involves altering the industry – or even creating a new industry entirely. Pursuing such a model can breathe new life into existing brands and business, such as Virgin making a move from airlines to broadband.
When creating an innovation strategy, your first step should be to define what you want to achieve with your innovation. Remember, your innovation strategy needs to support your business objectives as a whole and vice versa. Consider your long-term business goals and what's going to continue driving your business forward long into the future.
For the second step, you should gain a thorough understanding of the market you're operating in as well as the customer segment that you're offering value for. If you want to innovate and respond to your customers' needs, then listening to and understanding what they want is crucial.
At this stage, it's important to note that competitive needs are individual and specific. When looking at your competitors, remember that a strategy that may have worked for them might not necessarily work for you.
You shouldn't discount other strategies, as you can learn some useful lessons. But it's your company's own unique value proposition that will play a more central role in your innovation strategy.
Perhaps the most important step in creating an innovation strategy, defining your unique value proposition answers why your customers should do business with you, as opposed to your competitors.
Innovation creates a competitive advantage, so your value proposition should focus on things such as savings your customers can make, larger societal benefits you provide, and how your product is more convenient or durable compared to other products on the market.
When creating a unique value proposition, it's a good idea to identify and exploit uncontested markets, which can be done through value innovation – a process in which a company introduces new products or services that are designed to achieve both product differentiation and low costs. Value innovation's primary focus is on creating new markets as opposed to fighting for a share of an existing market.
Finally, to be able to execute your innovation strategy in a scalable and integrated manner, you should identify the systems you'll need to get there.
Consider which innovation techniques and systems you need to be able to link your infrastructure together. Which of these are the most important systems that are going to support and help you measure the results of your innovation strategy?
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Yes, we've said it before, but it bears repeating: connecting innovation strategy with your business objectives is crucial. It's a difficult task, but it's not impossible. Try communicating the role innovation will play across the organisation; ensuring that innovation is ingrained in the business strategy goes a long way to achieving long-term success.
Your innovation strategy stands more chance of success if everyone is on board with it. Senior management should prioritise making employees aware of the goals and purposes of innovation, integrating the strategy into their duties, to make buy-in and long-term commitment smoother.
To integrate this into the way people work, it's worth creating individual goals that support the overall strategy. Provide employees with clear direction and guidance so that innovation becomes a regular part of their day.
To identify how well your innovation strategy is working in practice, you should be measuring it systematically. Identifying the metrics by which success will be measured lets you track its progress and allows you to adapt to changes to achieve greater success in the future.
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