Read the public relations, marketing and investor relations communications from just about any company or corporation and you will inevitably discover endless claims of how they are leaders in innovation. But are they truly innovators, or is this just marketing-speak?
Certainly, all ambitious companies would like to be known as innovators in their respective industries. But for organizations to truly execute consistently as an innovator, much more will be required than to simply hire exceptional marketing copywriters. Successful innovators build and hone carefully planned and orchestrated strategies around the concept – and they apply critical thinking, organizational design and performance parameters to make it happen.
This article underscores why innovation is increasingly important to success in today’s economy and explores a few of the important building blocks that are essential to developing a well-defined innovation strategy.
Wikipedia does a good job of capturing the essence of innovation as “a new idea, creative thoughts or imaginations, in the form of a device or method” that often manifests as “better solutions that meet new requirements, unarticulated needs, or existing market needs.”
While this is a good high-level start, there are different types and degrees of innovation. An organization can be good at one and lousy at another. So, one of the first steps to developing and articulating an innovation strategy is to define and prioritize the types of innovation that are important in your industry and business and are specific to your customers and competitive environment. Once these are established you can begin to assess and improve internal competencies.
Most organizations can begin by first breaking innovation down into three areas: business model innovation, process innovation and product innovation.
- Business model innovation is when you reimagine how you approach a market or customer base in a significant way. This can involve a wholesale recalibration of your products and value propositions including operating structure, manufacturing, marketing, sales and distribution channels, customer targets and pricing.
- Process innovation involves changing the way you operate in unique ways to increase efficiency, productivity and customer experience. Often process innovation leverages advanced digital technologies, RPA (robotic process automation) and other business processes such as Six Sigma.
- Product innovation can be either “incremental” or “breakthrough” advances in your existing core offerings or new products and services you provide to customers and markets. Product innovation is often supported by agile methodologies or “fail-fast” management philosophies to spur experimentation and continuous iterative development of new solutions.
Are you an innovator?
This is a fair and often brutally honest question for corporate executives to ask of their executive teams and of their companies. If the answer is “no” in any of the three major categories of innovation, it should not be passed off lightly and in fact should be a call to action. Lack of innovation will catch up at some point to your company, with your customers and in the marketplace – and competitors will pounce inflicting serious if not fatal blows to corporate viability. If the answer is “yes,” but a well-articulated strategy and process for executing and measuring innovation in each category is missing, then it’s time for some remediation here as well.
Strategic innovation assessment
Your journey to understanding your innovation strengths and weaknesses ideally should involve a comprehensive analysis of your marketplace from both a customer and competitor standpoint. You will want to create a visual map of your current business models: customer segments, product offered, needs met and unfulfilled or potentially new marketplace needs. In this analysis you will also identify where and when you and your competitors have introduced incremental and breakthrough solutions in product and process to meet these needs. As an output you will be able to assign an innovation “score” to both your organization and your competitors. This “relativity” of innovation between your company and your competition is a critical benchmark to help guide where you will apply resources and capital to drive innovation for competitive advantage within your unique industry and markets.
Following the thorough outside-in analysis above you can then turn your attention to your internal process and product capabilities with a clear understanding of where innovation is strong and where it requires more attention. Over time, your innovation strategy will establish and reinforce a sustainable culture of innovation throughout your organization.
Quantifying innovation is simply good business
Any company of course can claim it is an innovator, but organizations that commit to measuring and improving the way it delivers innovation to customers and markets through a comprehensive innovation strategy are destined to grow faster and achieve greater success in our ever-changing fast moving digital economy.
Partners in innovation
Digital Prism Advisors thrives by helping clients discover and quantify innovation trends in their companies and their marketplaces. We work as your partner and strategic resource to unlock and accelerate new or hidden innovation capabilities within your organization to help you achieve sustained growth and deliver new value to your customers and markets. To further explore the topic of innovation for growth, contact us today.