You Need a Product Innovation Strategy: What is it and how to develop one?
Depending on the context, your innovation strategy defines how you will approach developing the product itself. It also lays down a time-table by which you can announce new innovations and changes to the offer. These need to be made in consideration of the speed of technology development in your industry as well as the rate of competitor adoption. If you are in close touch with the manufacturing aspect of these changes you will also need to consider your expense vs gain in that innovation in your individual business cycle. Any product strategy more specific than “identify customer problems and solve them” is highly contextual. Short product cycles and a high degree of competition can indicate a mature market, where most new product innovation is not really connected to customer value and competitors are adding features only to differentiate, but not to solve customer problems.
If that’s the case, you have an opportunity to innovate and differentiate by focussing on underserved areas of the product experience. If everyone is adding features, remove features and reduce the price. If everyone is making the product cheaper, make the product easier to buy. If everyone is making the product easier to buy, make it easier to use. If everyone is making it easier to use, make the product disappear or embed it as a feature in a different product. In the end, it boils down to serving your customers better than anyone else. This requires an understanding of the customer and seeing your customer’s problems outside of the perspective of your product. Your product is a means to an end, and means can be changed if they don’t serve the end.
Innovation Strategy is an integral part of a company and without an innovation strategy, innovation improvement efforts can easily become a grab bag of much-touted best practices. To name a few Innovation strategy specifics Dividing R&D into decentralized autonomous teams, spawning internal entrepreneurial ventures, setting up corporate venture-capital arms, pursuing external alliances, embracing open innovation and crowdsourcing, collaborating with customers, and implementing rapid prototyping, to name just a few. There is nothing wrong with any of those practices per se. The problem is that an organization’s capacity for innovation stems from an innovation system: a coherent set of interdependent processes and structures that dictates how the company searches for novel problems and solutions synthesizes ideas into a business concept and product designs and selects which projects get funded. Individual best practices involve trade-offs. And adopting a specific practice generally requires a host of complementary changes to the rest of the organization’s innovation system. A company without an innovation strategy won’t be able to make trade-off decisions and choose all the elements of the innovation system.
Align innovation strategy with your business goals
Aligning innovation strategy with your overall business goals is one of the most difficult tasks when it comes to succeeding in innovation. So much so that 54% of innovating companies struggle to bridge the gap between innovation strategy and business objectives. According to Deloitte 2016 Global Board Survey, one of the reasons for this might be that the overall understanding seems to be weak with regard to talent management and innovation/R&D strategy. Other common issues are uncertainty and the unusual time horizon of innovation results. To succeed with strategy alignment, aim for communicating the role of innovation within the entire portfolio to drive innovation across all units in your organization. Ensuring that innovation is fully embedded into an overall business strategy is the only way to allow your organization to innovate in the long term.
Innovation strategy is about making the best-educated choice between a number of feasible options. To succeed in developing the best possible innovation strategy for you, you need to identify and map your best possible strategic choices required to win. However, making those choices is only half the battle as it’s equally important to test and validate your approach. For your innovation strategy to work, strategic alignment and seamless integration to the ways of working is the key. By clear communication as well as supporting metrics on the company and individual level will help you make innovation a continuous practice. When you have the right innovation strategy in place, the next step is to build a systematic process for generating, developing, evaluating and implementing new ideas.
