5 Business Innovation Models: Identifying the Right Innovation Strategy for You.
Choosing the right Innovation Strategy to pursue is essential for any business looking to create new value, drive success, and remain competitive in the marketplace. Through Innovation, organizations can challenge and improve existing business models, anticipate customer needs before the competition does, identify new products and service opportunities, and stay ahead of the competition with unique experiences. Innovation is paramount for any business looking to succeed long-term and create sustainable growth. So, why is it so hard to build and maintain the capacity to innovate?
While there is no single, commonly cited root cause for failing to innovate consistently. An organization’s deficiency in creating, articulating, and documenting its innovation strategy contributes significantly to a diminished capacity to innovate. The reason is not simply a failure to execute but a failure to align innovation efforts with an organization’s purpose and business strategy. Left unchecked, Innovation can become a clutch of methods, tools, and the latest trends in management thinking with no clear plan and a host of conflicting priorities—even if there’s a clear business strategy in place.
Why do you need an Innovation Strategy?
An Innovation Strategy helps organizations identify and focus on innovation opportunities that support their business objectives. It is a process of determining the best approach for Innovation by holistically considering the organization’s resources, capabilities, competitive advantages, and customer needs. An innovation strategy outlines the activities to pursue to maximize the returns from a company’s innovation efforts.
When it comes to developing an innovation strategy, there are three key steps involved:
STEP 1: Define Your Business Objectives
First, you must define your business objectives and how you plan to achieve them. This includes deciding which areas of Innovation could benefit your business the most and determining how to implement each in terms of organizational structure, processes, technology, etc. It also requires considering the potential risks associated with implementing the innovation activities.
STEP 2: Develop Your Innovation Process
Next, you need to develop the innovation process that your organization will adopt. This includes deciding what tools and techniques will be used for ideation, how ideas will be tested and evaluated, and how to monitor the innovation activities over time. It also involves setting up the systems for innovation management, such as budgets, resource allocation, team structures, project planning, and milestones.
STEP 3: Choose the Right Innovation Model
Finally, it is essential to consider what kind of innovation model would best suit your business objectives. This could include open innovation strategies involving external partners or in-house processes that keep innovation activities internalized within the company’s own four walls. Other considerations might include whether you want to focus on short-term gains or long-term sustainability or adopt a hybrid approach to your innovation efforts.
What Is An Innovation Model?
An innovation model is a conceptual framework used to assess and guide the innovation process. It provides context for innovation initiatives, helping organizations make decisions that lead to successful innovation outcomes and maximizing the potential of their innovation efforts.
It’s important to understand that no single innovation model is necessarily the right one for your company; the context of your business and what you’re hoping to achieve with Innovation should drive which approach is best. For example, a Protector Innovation Model might be suitable if you want incremental improvements to an existing product or service. On the other hand, if you are trying to disrupt an industry or shift into a new market, then an Inventor or Conqueror Innovation Model would likely be more appropriate.
The key is knowing when different innovation models should be used and how they can work together to create maximum impact for your product development efforts.
The 5 Business Innovation Models
1) The Trend Follower
Being one step ahead of the competition and keeping up with rapid changes in the market is easy when you employ a Trend Follower Innovation Model. This growth strategy requires monitoring current and emerging trends to recognize potential opportunities that you can turn into innovative products, services, or business models. A Trend Follower Innovation Model allows you to capitalize on new developments quickly and keeps your organization relevant in an ever-evolving landscape.
2) The Conqueror
The Conqueror Model of Innovation is an organizational concept that outlines how innovative products and technologies disrupt existing industries. This model divides into three categories: the “Conqueror,” the “Defender,” and the “Annexor.” By presenting a new industry value proposition at lower cost or better performance, new products or services storm in to upset pre-existing players during the Conqueror stage. As established entities attempt to protect their marketplace presence by imitating or refining their value propositions to meet the new emerging expectations of the customer base, they assimilate into what we call ‘the Defender’ phase. As the Annexor phase proceeds, market consolidation occurs as the new product or technology develops into an impressive leader, and any remaining companies either get acquired or cease operations.
3) The Problem Solver
The Problem Solver Innovation Model identifies pain points and problems in a customer segment and solves them through systemized creativity. It is perfect for generating organic growth through new product development, design thinking, and other revolutionary processes and disruptive innovation efforts. It stresses the significance of pinpointing a latent need or area of sacrifice stakeholders have with a product or service, accumulating data and facts, and creating compelling new value propositions to capture the opportunity. Then, generating ideas and concepts to deliver the new value created. And validating them as part of the innovation process before launching them into the market.
4) The Protector Model
Companies that adopt a protector-type approach are focused on preserving their foothold in their industry by continually monitoring for potentially disruptive innovations and eliminating threats through partnerships or acquisitions. Industries that favor this innovation management tactic have a slower turnover of their customer base and its products and services. Insurance, pharmaceutical companies, and luxury brands typically employ the protector model, relying on their long-established brand reputations to repel new market entrants.
This model relies heavily on reputation and customer trust to succeed. Organizations adopting this innovation model stay ahead of their competitors by making incremental yet significant enhancements to their already established products and services while consistently tracking industry trends and potentially disruptive forces to their core business.
5) The Inventor Model
When people hear the word “innovation,” many will think about companies that have positioned themselves as innovators, like Apple, Amazon, or Microsoft. There’s an age-old myth when it comes to the notion of Innovation: that of the lone inventor sitting in his lab, hit by a bolt of lightning and a moment of explosive inspiration, and BOOM…out pops the big idea. At least, that’s how the story is typically told. There is some truth to this: for an inventor model to flourish in an organization, it often takes a visionary to set the enabling conditions to pave the way for this to happen—think of celebrated entrepreneurs like Steve Jobs or Elon Musk. But, in truth, it takes a highly talented team operating in a culture that is prepared to fail fast and often to develop disruptive Innovation. These charismatic visionaries and their companies ensure everyone knows their bold ideas, driving them toward revolutionary projects. Inventors are disruptive. Not only do they seek to improve current products, but they also look for game-changing advancements. Thus, their goods and services can cause a shift in the industry that is unlike anything else. But due to this high-stakes growth strategy, many of their inventions are subject to criticism. For example, when Apple first announced the iPhone, it was met with skepticism–now we recognize its revolutionary impact.
Which Innovation Model is the Correct Model for Your Company?
Finding the ideal innovation model for your business depends on various conditions, such as objectives, resources, and industry. To assist you in selecting an appropriate innovation model that suits your needs best, here are some practical tips to bear in mind:
– Align the model with the company’s goals: Selecting an appropriate innovation model can be paramount depending on the desired outcome. A problem-solving approach may prove ideal if your goal is to refine existing products or procedures. On the other hand, seeking disruption and market creation requires a conqueror thinking style.
– Consider the company’s resources: When it comes to innovation insight, the resources needed may vary depending on your model. For instance, problem-solving models require thorough research and in-depth analysis, which can be quite a resource-intensive endeavor. On the other hand, if you go for a lean startup approach that focuses mainly on rapid prototyping and testing, it will prove more cost-effective with its efficient use of resources.
– Consider the industry and market: Different industries and markets possess various features that can help or hinder the successful application of various innovation models. For instance, if an industry is heavily regulated, it might pose more obstacles to entry, making a conqueror model far trickier to execute.
– Tailor the model to the company’s culture and capabilities: When deciding on the best innovation model for your business, it is essential to assess the company’s culture and capabilities. Selecting a model that corresponds with your corporate values and capitalizes on existing strengths while addressing any weaknesses will ensure success in achieving innovative goals.
– Be open to experimentation: To ensure that your company’s innovation models are genuinely effective, it is critical to be able to adjust and customize them based on the organization’s specific needs. Experimenting with different approaches will help you determine which model works best for you; by closely monitoring results and evaluating performance regularly, you can find the ideal solution for sustaining success over time.
The company must select an innovation model that synchronizes with its vision, purpose, target market, and culture while being flexible enough to be tailored to its own needs.
How do You Implement an Innovation Strategy?
Companies must take a calculated and comprehensive approach to growth strategy to introduce an innovation model. To help, here are some steps for successful integration:
– Communicate the model to the organization: Thoroughly explain the chosen innovation model and its objectives to all partners, employees, and stakeholders in the innovation system. Lay out what is expected from each participant to succeed ultimately.
– Assign ownership and responsibilities: Allocate authority and tasks for executing the innovation model to particular people or teams inside the business.
– Create a roadmap: Strategize a pathway to execute the innovation model effectively and efficiently, including critical milestones along the way.
– Establish metrics and KPIs: Identify and measure success using metrics and key performance indicators (KPIs).
– Develop a culture of Innovation: Nurture a climate of Innovation throughout the organization by fostering creativity, taking risks, and testing new ideas.
– Provide training and resources: Equip employees with the proper training and resources to execute the innovation model effectively.
– Continuously monitor and evaluate: To ensure the innovation model is performing optimally, consistently assess its performance and make necessary adjustments.
– Reward and recognize: Show your gratitude and appreciation to staff members who have contributed significantly to the success of this revolutionary approach.
To ensure the success of any innovation model, it’s essential to foster a workplace culture that encourages all staff members to invest proactively in its development. It’s also crucial to evaluate and continually adjust the growth strategy according to an organization’s specific cultural attributes and resources.
Develop a Successful Innovation Strategy and Model with THRIVE.
At THRIVE, our team helps executives, leaders, and their companies develop innovative products and services while also creating cultures of innovation-driven leadership and confidence.
If you are interested in working with THRIVE to determine the proper innovation strategy and innovation model for your company, contact us HERE.
Frequently Asked Questions (FAQ)
What is Innovation Strategy?
An Innovation strategy is a company’s plan to achieve its business objectives—such as increasing market share and profits or entering new markets—through the incremental and disruptive Innovation of new products and services to achieve the business’s overall purpose. It sets a strategic direction for the activities and decisions the organization must make to accomplish its goals and objectives.
What are the benefits of having an Innovation Strategy?
An effective innovation strategy helps to get teams on the same page for new value creation by establishing a shared understanding of the target audience leading to superior innovation performance.
Who should set Innovation Strategy?
Senior leaders are typically responsible for setting an Innovation Strategy because they understand the company’s overall purpose and objectives. Once the innovation strategy is in place, stakeholders can work together to develop and implement innovation initiatives aligned with the company’s overall goals.