In today’s fast moving business environment, innovation is the key to building a sustainable venture. Creating value for a customer allows a business to gain competitive advantage. Innovation allows a business to provide new solutions to customers, articulate needs and/or add value in new ways to the existing market. By creating value through innovation and other methods, businesses can begin to distinguish themselves from their competition and can be seen as cutting-edge within their industry.
Innovation strategies vary depending on whether the business is a start-up venture or an existing business competing in a mature or growing market. The following include some innovation strategies, as described by Anthony W. Ulwick in his book What Customers Want, which companies may consider using to cope with the fast-paced market.
Product or Service Innovation
Product/service innovation is the most common strategy adopted by companies to avoid the risk of losing the market share. As the name suggests, this strategy allows companies to add new values/benefits to an existing product or service in hopes of capturing and maintaining customers. It is important for businesses to identify the areas where the product or service is underserved and provide solutions that allow a customer to execute the job smoothly.
As an example, Heinz improved their ketchup bottle packaging by making the product more convenient for use. This strategy allowed the company to strengthen their customer loyalty and increase sales.
New Market Innovation
This strategy can be applied when the business recognizes that people (individuals and/or businesses) are struggling to get their work done, and that currently no product/service exists in the market to enable a customer to perform the task. This strategy is beneficial for start-ups because it avoids competing against the big players in the market.
Cell phones and PCs fall under this category of innovation.
Operational innovation focuses on the internal organization. This strategy is applied when the business identifies inefficiency in its operations. It is generally adopted by businesses in the commodity market or if there is not much scope in product/service innovation. Operational innovation focuses on the components of the value chain and identifies ways to cut costs and waste, resulting in increase of efficiency.
Dell is one of the most successful examples of operational innovation.
Disruptive innovation technology can create a new market by introducing a new technology that disrupts the existing market or displaces the earlier technology. It improves the product/service in a way that is not predicted by the market.
Please share your thoughts/opinion about innovation strategy that may have helped you sustain in the market. Have you noticed popular innovation strategies used by your competitors?
To learn more about innovation strategy please read: What Customers Want: Using Out-come Driven Innovation to Create Breakthrough Products and Services by Anthony W. Ulwick (McGraw-Hill 2006, ISBN 9780071408677).
Thank you for reading, and until next week… stay WISE!