Getting Beyond the Hype:
A Framework for Sustaining Innovation Excellence
The disruptions caused by digital-natives like Uber, Amazon, and Airbnb have forced incumbents to rethink their own approaches to innovation as the shape of competition today has shifted. Legacy firms–those that grew up before the digital age–are now scrambling to keep up with the pace of changing consumer demands and challenges from digital disruptors. Longstanding advantages based on cost, quality, or efficiency are no longer enough to sustain competitiveness.
For most, this is hardly a revelation. Headlines like “Innovate or Die!” can be found just about anywhere you look. The C-suite finally seems to be listening, often passing along orders to “be more innovative.” Despite all the talk about innovation, many firms still struggle to align on a coherent approach. Different teams interpret the innovation mandate in different ways in the absence of a clear strategy or cohesive management framework. The result? Wasted resources, limited strategic value creation, and increasingly combative internal turf wars.
Fortunately, lessons from the experience of some of today’s leading firms can be applied to organizations striving to develop sustainable innovation capabilities for the digital age. The most successful firms have two things in common: 1) they have a clear strategy and framework for driving innovation; and 2) they focus on the customer experience. These businesses take deliberate action to drive customer focused innovation on multiple fronts. They understand that just talking about innovation isn’t enough to make it happen. Rather, industry leaders rely on carefully calibrated frameworks designed to fit their business.
Here we look at six keys to customer-centric innovation that can be used to inform your own approach.
01: Define your innovation strategy
It can be tempting to start doing something, anything, to show your innovativeness: throwing ideas against the wall to see what sticks, organizing a “hackathon,” creating an innovation team, or maybe launching an innovation “incubator.” But many businesses fail to promote the right kind of innovation in the absence of a clear strategy that articulates why they want to innovate in the first place. Defining an innovation strategy means identifying strategic innovation priorities that align with the broader corporate strategy and, critically, correspond to clear, measurable goals and objectives.
Articulating exactly what the company wants to achieve through its innovation efforts enables leaders to communicate with employees consistently and effectively at every level of the organization. Regardless of industry, establishing clear and consistent terminology eliminates ambiguity around what innovation really means for the business.
A strong innovation strategy therefore sets the firm’s “true north” that can be used to coordinate efforts across various disciplines. This helps align activities to outcomes serving broader innovation objectives. So if your innovation strategy aims to drive customer loyalty, your next hackathon might focus on digital services or partnerships that make existing products more attractive or enhance the value proposition of connected offerings.
Some of the most innovative tech companies in the world have pursued this kind of deliberate innovation strategy, often designed to magnify customer value through the growth of self-reinforcing ecosystems of connected products and services. Google, for instance, built an ecosystem around a trusted search engine with a fiercely loyal user base. The internet giant then leveraged its captive audience and digital prowess by building out a series of integrated offerings including Gmail, Android OS, Chrome, YouTube, and many more, which multiplied the value it could provide to customers while diversifying its revenue streams.
It’s easy to see a similarly intentional strategy at Amazon, which diversified its ventures to generate synergies through connected offerings; originally a B2C marketplace, Amazon has now established itself as a leader in cloud services (AWS) and entertainment (Prime Video). Moreover, it is leveraging digital capabilities to compete in more traditional industries, using transactional data, for example, to provide financial services to businesses using its platform. Small businesses get attractive terms on working capital loans, promoting business investment and enabling consumer spending with competitive prices. And with the acquisition of Whole Foods, Amazon can now leverage its delivery network and logistics prowess to bring groceries right to your doorstep. Both Amazon and Google followed clear innovation strategies to develop complementary offerings that created greater overall value for their customers and contributed to their rise as two of today’s titans of the tech industry.
To keep reading and learn more about our framework, download the full whitepaper here.
