Throughout time, it has been noted that many companies have lost the innovation war. Although it was believed to be because of a failure to execute a series of standard procedures, it is instead caused by the lack of an innovation strategy.
The total innovation capacity for an organization stems from its innovation system. This is an interdependent set of rules that structures and dictates certain tasks within the company in order to produce positive outcomes in the future. For instance, it allows for organizations to determine how they will solve problems and determine actionable solutions, synthesize ideas into business concepts, and deal with funding of experiments and concrete projects.
There is no one size fits all innovation strategy that works effectively for all companies. These systems are made to target specific competitive needs, resource constraints, and market realities. An innovation strategy has to be defined to articulate and proceed with precise goals like, creating a long term competitive advantage.
A vigorous innovation strategy should answer the following questions in order to assure success:
How will the company’s innovation create value for the potential consumers? A product can become more reliable, more durable, cheaper, easier to use etc… However, the value of the innovation initiative must be the main focus for the strategy to succeed. The value for the innovation is critical and must be singled out due to the fact that the execution process is lengthy and difficult.
How will the company capture a share of the value its innovation generates? Innovation that creates value attracts rivals just as much as it attracts new customers. With competition on the offering and price, how can a company assure its success by providing the consumer with compelling products, capabilities and services.
What types of innovations will allow the company to create and capture value, and what resources should each innovation type receive? Six leading scholars suggest that innovation is characterized by the degree to which it stimulates a change in technology and the degree to which is stimulates a change in the business model. Out of the following types of innovation; routine, disruptive, radical and architectural, there isn’t one preferred over the other. In fact, executives often wonder what proportion should be focused to each type of innovation. Although, there is no formula or standard recipe to calculate such a thing. The answer is that these proportions are specific to the company and its goals.
Crowdsourcing has proved to be a fast and efficient way to creatively solve problems or at least identify focus areas related to innovation. In addition, some believe that co-creation is an appropriate way to gather insight and work on exactly what the consumer is looking for. However, just like anything else, both concepts have positive and negative attributes.