Introducing Innovation Strategies (It's Story time!)
Once upon a time, there were three brothers, Sam, Jack, and Tom, who were all entrepreneurs. They were each passionate about creating products that would change the world, but they faced different challenges in their businesses. Each brother turned to a different innovation strategy to solve their problems and drive growth and value creation.
Sam had developed a product that he thought would be a game-changer in the market, but he was struggling to get traction. Realizing he needed to focus more on his customers’ needs and preferences, he resorted to customer-driven innovation. He gathered customer feedback directly through surveys and focus groups. Then he used that feedback to refine his product and messaging.
Jack had developed a cutting-edge product that leveraged the latest technology, but he was struggling to bring it to market. He used technology-driven innovation. He invested in research and development and formed strategic partnerships with technology companies to stay up-to-date with the latest technological advancements and bring his product to the next level.
Finally, Tom had developed a product that he thought would be affordable and accessible to customers in emerging markets, but he was struggling to keep costs low while maintaining quality. He practiced frugal innovation to create an affordable product for emerging markets by finding ways to innovate with limited resources and collaborate with local partners. He repurposed existing technologies and resources and tapped into new markets to create value for customers who were price-sensitive.
As the brothers continued to grow their businesses, they also explored other types of innovation strategies. They realized that each strategy had its own unique benefits and challenges. And that they needed to evaluate their goals, resources, and market position to determine which strategy was most appropriate for their needs. They explored:
– Market-driven innovation: analyzing market data and trends to identify new opportunities and areas for growth, producing products that catered to the specific requirements of particular market segments.
– Disruptive innovation: by creating new products or services that offer a cheaper or more efficient alternative to existing ones, accessing new markets, and establishing fresh prospects for expansion and value generation.
– Blue ocean innovation: through the creation of a new market space with no competitors or limited competition by developing products or services that are fundamentally different from existing ones. This enabled them to find new opportunities for growth and value creation.
– Lean innovation: by developing products or services quickly and inexpensively using iterative design and rapid prototyping. This reduced the risk of failure and accelerated time to market.
– Open innovation: they collaborated with external partners, such as customers, suppliers, or academic institutions. They co-created new solutions and improved existing ones, accelerated their innovation efforts and brought new products and services to market faster.
By adopting a comprehensive approach to innovation and considering various strategies, the three brothers were able to remain competitive and satisfy the changing demands of their customers and stakeholders.
The End (but not of the entire article, wait!)
Innovation Strategies in Action
Now that we’ve gotten the basics out of the way, it’s time to dive a little deeper into each type of innovation strategy and learn what they are like in action. By understanding these different approaches to innovation, you can start to think about how you might apply them to your own business or organization to drive growth and success.
1. Customer-Driven Innovation
It is a powerful strategy that puts the customer at the center of product development. Examples:
- Customers can submit their own designs for Lego sets on Lego Ideas, which are then voted on by other customers. If a design receives enough votes, Lego may produce it as an official Lego set, allowing the company to create sets that are tailored to their customers’ interests.
- Tesla has a program called Tesla Ideas, where customers can submit suggestions for new features and improvements to existing products. Tesla reviews these suggestions and may implement them if they align with the company’s vision for sustainable energy and transportation.
- Nike uses customer feedback to develop new products and improve existing ones. They have a program called Nike By You, where customers can customize their own shoes and provide feedback on the design and the customization process.
2. Technology-Driven Innovation
It involves leveraging technology to drive innovation and create new products and services. Examples:
- Google’s innovative use of technology in products like Google Search and Google Maps, as well as its investment in R&D for emerging technologies like self-driving cars and AI, make it a leader in technology-driven innovation.
- Apple’s focus on creating innovative and user-friendly products, such as the iPhone, and its investment in emerging technologies like augmented and virtual reality, make it a major player in technology-driven innovation.
- Amazon’s use of machine learning and data analytics to optimize its supply chain and provide personalized product recommendations, as well as its development of innovative products like the Amazon Echo, make it a leader in technology-driven innovation that improves the customer experience.
3. Market-Driven Innovation
It often involves methods such as market research, segmentation, and targeting. Examples:
- When Coca-Cola noticed a growing trend towards low-sugar and zero-calorie drinks, they introduced new products like Coca-Cola Zero Sugar and Diet Coke with new flavor options, which were designed to appeal to health-conscious consumers.
- Netflix uses market-driven innovation to stay ahead of the competition in the rapidly changing streaming industry. They analyze market data and trends to identify new opportunities and areas for growth and use that information to create original content and personalized recommendations that keep users engaged and coming back for more.
- Procter & Gamble analyzes market trends and consumer behavior to identify emerging needs and preferences and uses that information to create products that better meet those needs. For example, the development of Tide Pods, which simplifies the laundry process, was driven by market research that showed consumers wanted a more convenient and easy-to-use laundry detergent option.
4. Disruptive Innovation
It involves producing a new product or service that is simpler, more convenient, or more affordable than existing alternatives. Examples:
- Uber disrupted the traditional taxi industry by offering a more convenient and affordable transportation service through a mobile app, allowing customers to easily book rides and track their driver’s location.
- Airbnb disrupted the hotel industry by offering an alternative to traditional hotels, allowing homeowners to rent out their homes or apartments to travelers at a lower cost and with more personalized experiences.
- Dollar Shave Club disrupted the razor industry by offering a subscription-based service for high-quality razors at a lower cost than traditional brands, bypassing the need for customers to purchase expensive razors in stores.
5. Blue Ocean Innovation
It involves creating new market spaces by identifying unmet or underserved customer needs and developing products or services that address those needs in a unique and differentiated way. Examples:
- Cirque du Soleil created a new market space by blending elements of circus and theater to create a new form of entertainment that appealed to adults and families, rather than just children.
- Nintendo created a new market space by developing a gaming console that appealed to casual gamers and families, rather than just hardcore gamers, by introducing motion controls and intuitive gameplay.
- When Apple introduced the iPod, it created a new market space for digital music players with no existing competitors. Apple’s innovation was blue ocean because they developed a completely new product that was fundamentally different from existing music players, such as CD players or cassette players.
6. Frugal Innovation
It is a process of creating affordable products and services for customers with limited resources or income, often by finding ways to simplify the product or service while maintaining quality. Examples:
- GE Healthcare developed a low-cost electrocardiogram (ECG) machine that is 80% cheaper than existing machines. The machine is portable and can be powered by a car battery, making it ideal for use in rural areas and small clinics.
- Grameen Bank provides microfinance services to low-income individuals and communities, enabling them to start small businesses and improve their livelihoods with minimal capital investment.
- IKEA offers affordable furniture and home goods by using cost-saving measures such as flat-packaging, self-assembly, and designing products that use less material.
7. Lean Innovation
It involves developing new products or services quickly and efficiently by using iterative design and rapid prototyping, in order to reduce the risk of failure and accelerate time to market. Examples:
- Dropbox used lean innovation to develop its cloud-based file-sharing service, by starting with a simple prototype and gathering user feedback to improve the product over time, resulting in a successful product with millions of users.
- Zara uses lean innovation to develop and produce its fast-fashion clothing line, by continuously monitoring customer demand and using rapid prototyping and small-batch manufacturing to quickly produce and distribute new products.
- Toyota uses lean innovation to improve its manufacturing processes and develop new products, by continuously identifying and eliminating waste in its operations and using collaborative problem-solving to improve quality and efficiency.
8. Open Innovation
It is a process of collaborating with external partners, such as customers, suppliers, or academic institutions, to co-create new solutions or improve existing ones. Examples:
- Procter & Gamble’s Connect+Develop program uses open innovation to develop new products, by collaborating with external partners to develop new products and technologies. In Egypt, P&G recently used Untap to power its Unbox Innovation Challenge. Startups were invited to pitch gamified solutions for small retailers and solutions for improving flexible employee experience.
- Samsung uses open innovation to expand its product offerings and access new markets. By collaborating with startups and other external partners, it develops new technologies and products. This results in a more diverse product portfolio and increased competitiveness.
- NASA uses open innovation to solve complex technical challenges related to space exploration. By collaborating with external partners such as academic institutions, research organizations, and private companies, they share knowledge, expertise, and resources. This leads to breakthroughs in space technology and exploration.
Can We Combine Innovation Strategies?
Innovation is a critical driver of growth and competitiveness for companies across industries. However, there is no one-size-fits-all approach to innovation. Different companies have different goals, resources, and market positions that influence their innovation strategies. Therefore, it is essential to evaluate these factors to determine which innovation approach is most appropriate for their needs.
One way to approach innovation is to use a specific strategy. However, companies can also combine different innovation strategies to create a customized approach that fits their specific needs and goals. For example, a company could use frugal innovation to develop affordable products for emerging markets while also collaborating with external partners through open innovation to gain access to new technologies or markets. Similarly, a company could use blue ocean innovation to create new market spaces while also using lean innovation to develop products quickly and inexpensively.
By integrating diverse innovation strategies, companies can develop a more comprehensive approach to innovation that addresses multiple challenges and opportunities. This approach can help companies stay competitive, adapt to changing market conditions, and meet the evolving needs and expectations of their customers. Nonetheless, it’s crucial to note that the success of any innovation strategy depends on the company’s ability to execute it effectively and efficiently while aligning with its overall business strategy.
So, the next time you’re facing a business challenge or looking to drive growth and success, remember the story of Sam, Jack, and Tom, and the different types of innovation strategies that they used to overcome their obstacles and achieve their goals. And remember, innovation is not just about coming up with new ideas, it’s about turning those ideas into reality and creating value for your customers and stakeholders. Book a free demo with our team at Untap today and we will be happy to offer you a free consultation and take you through a tour that shows you how to seamlessly build innovation challenges, competitions, hackathons, etc.