Best Examples of Applicable Innovation Strategy in Business
Innovation strategy is all about continuous innovation — building an engine that will continuously collect ideas, select the best ones, and transform and execute them into successful projects that create business value.
The innovation strategy will provide a laser focus on “why” you innovate, “what” to focus on, and “how” to successfully organize this.
Furthermore, the innovation strategy, though it will define where to focus the innovation efforts, will show where to “not” focus on (anymore).
In this article, you learn more about innovation strategy in business, its types, how to build one, and see the best examples where it is applied. Let’s start!
Types of Innovation Strategies
As such, there are various innovation strategies that your organization can implement. There are also others that take on a more hybridized approach and only apply what seems to work best for them, which is something you can do too.
Let’s briefly go through the different innovation strategies:
Centralized vs Decentralized
A centralized innovation strategy is where a person or a team has complete control over the innovation initiatives and idea management. All ideas pass through the central body and are overseen by its members.
This approach, though normal for most organizations, limits scalability, which is where decentralized innovation strategy comes in.
With a decentralized innovation strategy, other units or departments of the organization have ownership over their own innovation and ideation efforts with total control over how they want to implement their own process.
Reactive vs Proactive
Reactive innovation is when you get new ideas from engaging with customers and suppliers. This strategy is beneficial in terms of hitting two types of renewal with one effort — improvement and innovation.
Meanwhile, proactive innovation is a strategy that requires you to ask questions to target groups that you want to include to gather insights. Through this, you also get the benefit of generating new ideas for new products by asking questions to your customers.
The best approach to this to design a strategy that makes use of both reactive and proactive approaches. Make sure, however, to put more emphasis on “being proactive” since most ideas from reactive innovation usually come in the form of feedback.
Push vs Pull
The push/pull strategy can often be seen in tech companies. The pull method is the usual approach where the organization identifies a problem first based on information from customers. Only then will the idea generation take place.
Noticeably, this is how most innovation funnels work, including Accept Mission’s very own innovation stage process, a practical innovation funnel that can be applied to both small and large organizations.
In contrast to the pull method, the push method is when the organization innovates based on its own ideas, trends, and technology. Here, the new technological capabilities come first and then search for problems that they can solve.
Bottom-up vs Top-Down
The bottom-up/top-down strategy concerns the pathway for which the process takes place. In bottom-up innovation, inspiration and ideas come from the floor, i.e. customers, employees, and more.
The top-down strategy is reversed, ideas come from senior leadership, i.e. the board and executive members. The contribution is usually done with thought leadership, which is why this method is known to have a “bureaucratic structure”.
The best recipe for success is actually a combination of both pathways. The best ideas come from the most diverse group. However, filtering out the vast number of ideas could be done by those at the top using leadership insights and data, and indicate the strategic themes in which to innovate.
How to Build a Good Innovation Strategy
When the innovation process has a good strategy, the success rate of innovation quickly increases. Clearly, there must be a clear and result-oriented strategy that could deliver results that bring value to the company.
Accept Mission has a model you can use to develop a good innovation strategy.
Step 1: Discovery
To develop the best innovation strategy possible, there must be an investigation regarding the internal and external sides of innovation. To start, you can research how effective the current strategic plans are and conduct sufficient market research.
Some of the specific steps involved here are:
Innovation trends and developments research
Involving customers, partners, and employees in providing input
The information gathered here can then be used to fill out a set of models like SWOT, scorecards, and others, and draw up an initial conclusion for the best direction the strategy could take.
Step 2: Development
In this step, the foundation of the innovation strategy will be built based on the preliminary research and conclusion. The strategy building blocks are also established, including drawing up what the Big Hairy Audacious Goal (BHAG) will be.
Some of the blocks also include:
Vision and mission
Forecast and objectives
One of the keys here is to identify the important target groups in the process and involving customers, employees, and important partners in the process. The foundation for the innovation engine must also be laid down here to optimize the process as much as possible.
Step 3: Building Plans
As the saying goes, “if it is not on paper, it does not exist”. In this step, the plan for the innovation strategy is built as the strategy building blocks become more definite and the first conclusions have been drawn.
Although you don’t necessarily have to write the plans on physical paper, you can use mind-mapping software to draw a roadmap that contains the following:
Other long-term goals
Short-term goals (to help achieve the long-term ones)
In addition, the top-level plan must be drawn with key performance indicators. Everyone’s responsibilities are also drafted here together with the plans for each division and department within the organization.
It is also important to set up a regular meeting schedule to update the stakeholders and recommend necessary adjustments when needed.
Step 4: Launch
After the strategic plan has been formalized, the only thing left is to launch it. In doing so, make sure it is done with energy, like how you would do in a marathon. Stakeholders must be aware of the goals that must be achieved.
The better the launch, the better the innovation strategy will stick. This also helps calm the stakeholders down and keep them in the same boat as the innovation team. Note that it is important to share the strategy and keep it visible to everyone.
Step 5: Execution
Now that the strategy has been launched, the next part is to execute the plans. Innovation strategy is a plan that you revise every year and stick to over the course of that year (and not deviate from it unless the situation changes significantly).
The best ways to keep everyone on board and focused on the right things is by providing insight into the figures, having regular short consultations, and keeping the strategy alive through communication and exemplary behavior.
Brands With Great Innovation Strategies
Brands that have clear success with innovation mostly also have great strategies. Although they do not share everything, you can always determine how their innovation strategies are doing simply from their strategic results.
Let’s start with the first one:
Google, and its parent company, Alphabet, are different from any other brand. They do not rely on one strategy only but combine them to create a powerful innovation engine that could produce legions of innovation projects.
Even if Google has more than 60,000 employees, dozens of products, and $75 billion in revenue, one of their tenets is to learn from mistakes and correct them fast. They are not afraid to fail. In fact, they do believe that it is okay to fail and take risks.
2. Philip Morris International
With more than 3,400 patents, Philip Morris International has made a greater name for itself by initiating one of the leading self-disruption strategies in modern business by investing billions in creating a smoke-free future.
This may seem ironic to some considering that PMI is one of the world’s largest tobacco companies.
This did not stop them though from generating new ideas for tobacco-free products via outsourcing and engaging with more than 65,000 employees around the world. What they did is provide a way for everyone to contribute suggestions and assess the best ones.
Amazon has a regular presence in the news because of its innovative projects and leadership. In addition, Amazon is one of the companies that display a centralized type of innovation.
That is, Amazon drives innovation from the top. Its founder and CEO, Jeff Bezos, spends a lot of his time thinking about how the world will look three, five, and ten years in the future. Meanwhile, it is his lieutenants that implement his ideas.
Most executives are focused on the results within a year or in the next year. Bezos, however, does this differently as he is already baking the results for the third quarter two years from now. As the CEO, he thinks that his job is refining the innovation roadmap and making it even better.
If there is one company here that should not be left out, it is Apple, as it is well-known for its innovations in software, hardware, and services. This led them to grow to a $260 billion company with more than 137,000 employees.
As for their innovation strategy, they rely on a structure that revolves around functional expertise.
According to an article from Harvard Business Review, Apple’s fundamental belief is that “those with the most expertise and experience in a domain should have decision rights for that domain”.
What this means is that when they need to fill a senior management role, they pick someone with deep expertise in that area instead of choosing someone with the best skills and talents for general management. This innovative approach led to extraordinary results.
One of Samsung’s recent innovation efforts is to build a Samsung Strategy and Innovation Center, with the mission to discover and develop groundbreaking technology that will make people’s lives happier, healthier, and richer.
To make it even more colorful, they implemented a Samsung Catalyst Fund.
Through this, Samsung participates in a lot of funding events including its own catalyst fund and extreme tech challenge. This activity helps them work directly with the best and brightest startups and help accelerate their innovation projects while amplifying synergy with Samsung.
Did you know that L’Oreal was one of the first retail companies to use augmented reality (AR) in their marketing campaign?
L’Oreal partnered with Perfect Corporation to integrate makeup products into the YouCam Makeup augmented reality app. Through this innovative marketing campaign, millions of people were able to virtually test L’Oreal’s products and discover new ones from their phones.
The result? The app now has more than 20 million downloads with L’Oreal positioned to become a 100% digital brand.
With Tesla (and other companies by Musk), you never really know what is going to happen next. Critics thought that Elon Musk was out of touch and will fail sooner than later. Now, Tesla is the highest performing automaker in terms of total return, sales growth, and shareholder value.
Tesla’s innovation strategy focuses on how to win support for a disruptive idea and bring new technologies to the market.
Another article from Harvard Business Review narrowed down Tesla’s strategy into two pillars:
Headline grabbing moves
Betting big on its core vehicles
The way Tesla overturns its core product architecture and positioning itself in key bottleneck components has helped it build an innovation capital to win resources and support in order to execute its vision.
Your Own Innovation Strategy
However you frame your own innovation strategy, what is important is that you stick to its main purpose — to provide you with a laser focus on “why” you innovate, “what” to focus on, and “how” to successfully organize this.
Although there are various types of innovation strategies, with some that may not be in this article, the bottom line is that you are free to innovate how you want your strategy to be, even if that means taking in a more hybrid approach.
Next steps: Having an innovation strategy could make or break the success of your innovation. Without a strategy, it is like you’re blindly thrusting your sickle in hopes that you may hit your target.
Accept Mission can help you with innovation strategy. We offer consultancy services including innovation program, innovation strategy, training, and software implementation. Our years of experience can definitely help you with your innovation needs and goals.