CRM Software Quotes
CRM search»CRM Improvement»Innovation Strategy

 Chuck SchaefferInnovation Strategies

4 stars Average rating: 4 (from 108 votes)
 By

Summary

  • The two dimensions to grow your business are products and markets; improving or expanding your products or markets in various combinations creates revenue growth
  • Aligning innovation types with innovation strategies creates the most direct and powerful synergy to accelerate revenue and business growth
  • Managing a portfolio of innovation types and methods lowers risk, creates synergy and generates the most predictable and recurring financial results

There are three types of innovation (product or service, business model and operational) and three innovation methods (incremental, transformative and disruptive). The combination of these types and methods define your innovation strategy.

The most powerful innovation strategies to achieve revenue acceleration focus on improving, expanding or creating products or services. The intersections of product innovation and methods of innovation define the business growth strategies to choose from.

Innovation Strategy

  1. You can advance your existing product in your existing market. This incremental innovation generally focuses on finding increased differentiation or value proposition and may include new simplicity, flexibility, capability, support, performance, reliability or durability. Most companies do this as a matter of routine product evolution by making their products better, faster or cheaper. Benefits are short term and minimally competitive. Incremental innovation success may correlate with customer loyalty. If customer retention is in decline, your incremental investments are likely delivering capabilities considered irrelevant or unimportant to customers. Since virtually all companies improve their products or services, companies that succeed in incremental innovation at a pace less than their competitors incur market share loss. For this type of innovation both risk and payback are low.

  2. You can expand your existing product to attract additional business with your existing market. This type of product innovation is most often accomplished when applying core competencies to create complimentary solutions or add-ons to core products. The goal is to create a new product category and increase customer share with existing customers. For example, Gillette's core competency in making razor blades led the company to also create shaving cream; two products that have a highly correlated demand and sell well together. For this type of innovation, product risk is moderate to high, but market risk is low. Product risk can be mitigated with customer co-creation and a proven prototyping process backed with customer acceptance testing.

  3. Another option is to penetrate new markets by adapting your existing products to those markets. Market innovation transforms core products to new customer markets for market expansion. For example, Tesla applied its core competencies in electric car manufacturing to create solar panels and enter a new market. For this type of innovation, product risk is low to moderate, but market risk is high. Market risk can be mitigated with market research and a firm understanding of buyer and customer insights.

  4. A big bet option is to create new products for new markets. Disruptive innovation most often produces immature and inferior products that deliver new customer value propositions and are followed by successive, quick iterative releases. This type of innovation may create a new category or market and often disrupts or eliminates one or more existing categories or markets. These innovators include the likes of Netflix, Uber, AirBNB, and Apple. For the innovator, it creates a new business model and when successful, may deliver a first-mover advantage. Disruptive innovation is the most difficult and incurs the most risk. But as part of the risk-reward equation, it often generates the breakthrough products or services that create new high margin revenue streams and deliver skyrocketing growth.

Which innovation option is the best? Every company's appetite for risk and reward is different, but for most companies a balanced mix of options makes the most sense. A well-structured innovation portfolio allocates resources (budgets and people) to innovation types in a way that each collectively contributes to the company's growth strategy. An orchestrated combination of incremental to transformative innovation lowers risk, creates synergies, delivers a steady stream of new offerings, and produces the greatest financial upside. End

How would you rate this article?   

 

 

 

Share This Article


Quote

The intersections of product innovation and methods of innovation define the strategy that best drives business growth.

 

Related Articles

 

 

CRM Quote

Follow Us
social
social
social
social

crm search

Home   |  CRM  |  Sales  |  Marketing  |  Service  |  Call Centers  |  Channels  |  Resources  |  Blog