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5 Effective Steps to Creating a Powerful Innovation Strategy

Updated on: 1 March 2023

Innovation is an organization’s path to survival. In a world of rapid change and increasing competition, innovation has become essential to maintaining business growth, competitiveness, and productivity.  

Innovation is one of the key activities in a company’s operations. Innovation is a long and complex process that takes an abstract idea and converts it into a successful product or service. A proper strategy in place to execute it ensures that you do it well. 

In this post, we are exploring 5 effective steps for developing a powerful innovation strategy.

What is an Innovation Strategy

“Innovation transforms insight and technology into novel products, processes and services that create new value for stakeholders, drive economic growth and improve standards of living.”

In the simplest of terms, innovation is the process of bringing new, unique, and creative ideas into reality. An organization following an innovation strategy uses innovation to execute its business strategy. In other words, an innovation strategy guides the process of resource allocation, enabling the organization to achieve its long-term goals through the use of innovation.  

“An innovation strategy guides decisions on how resources are to be used to meet a firm’s objectives for innovation and thereby deliver value and build competitive advantage.” – Mark Dodgson, David Gann, Ammon Salter (The Management of Technological Innovation: Strategy and Practice)

A company’s innovation strategy should specify how the different types of innovation fit into the business strategy and the resources that should be allocated to implement these innovations.

An innovation strategy paves the way to 

• Improve the ability to retain customers 
• Reduce competitive intensity
• Improve product or service performance  
• Increase the chances of becoming a market leader 
• Preserve bargaining power in an ecosystem and blunt imitators

Types of innovation

• Gradual/ incremental innovation (continuous innovation) is based on abilities that can be easily learned and developed in an organization and has a low-risk low return. 
• Radical innovation (discontinuous innovation) on the other hand may change the structure of an industry dramatically and has a high-risk high return. 

Innovation Matrix

The innovation matrix as introduced by VIIMA helps categorize innovation based on two dimensions; the technology it uses and the market it operates in. It, thus, visualizes the most common types of innovation.

Based on these categories, three major types of innovation an innovation strategy can be based on can be identified, 

• Product innovation; occurs in the development of new products, modifications in established products, or in the usage of new materials or components in the manufacture of established products
• Process innovation; refers to the development of and implementation of significantly improved organizational processes through the integration of new technologies
• Business model innovation; refers to the improvements done to an existing business model or the creation of a new one to better meet the needs of customers

The Innovation Value Chain 

The innovation value chain provides a framework to identify which innovation approach makes the most sense for a company to adopt. It enables managers to find the company’s weaknesses and become more aware of an apt approach to implement for success. 

The framework includes three phases 

• Idea generation ; creating and sourcing new ideas from internal and external environments to achieve a competitive advantage in the marketplace.
• Conversion ; selecting and screening the best idea and implementing them. While this involves transforming knowledge into innovations in the form of new products, processes, or organizational forms, special focus should be placed on the company budget and strict funding criteria to avoid shutting down the development of the idea. 
• Diffusion ; spreading the idea across the organization. Find the relevant communities in the organization to support and spread the new product or service, process, and practices across geographic location, consumer groups, and channels. 

How to Develop an Innovation Strategy 

Determine the innovation strategy objective .

Developing an innovation strategy should start with understanding the reason behind developing one in the first place or the objectives you want to achieve by implementing it. 

To identify your innovation strategy objectives, examine the overall business objectives that help the company achieve sustainable competitive advantage. This will clear the path for your innovation strategy as it should eventually support the overarching goals of the organization.

Get the executive team onboard 

Engage the leadership team in dialogue and ensure that they are aware of the innovation objectives established and what it means for them as well as the future of the organization. During the discussions also identify, 

• External changes that could be occurring at present and in the future as a result of innovation 
• The implication of such changes on the company 
• Scope of innovation; identifying opportunities for innovation, whether to improve existing products or services or introduce brand new products to new markets
• Business outcomes; financial results, social impact, new economic models, market leadership,  etc. 
• The gaps that must be closed to deliver the chosen innovation scope, especially in terms of processes, skills, and resources needed and company culture
• Barriers to and enablers of the innovation strategy.  Barriers can come in the form of embedded beliefs on how the business should operate and enablers can show up as core capabilities or resources.  

Their involvement is necessary to create a shared vision of success with innovation at the core.

Gather customer insight 

Understanding customer needs will inform the direction of the development of the innovation idea. It will also enable you to formulate a strategy that works and create value-creating innovations that will ultimately generate a good return on investment.

In order to create value for potential customers with your innovation strategy, you need a thorough understanding of your market and the customer segment you are catering to. 

(Utilize a customer persona to gather insight on customers’ demographic characteristics, needs, challenges, and ambitions and apply that knowledge to generate a solution.)

Allocate resources 

When allocating resources for new areas for growth and renewal, reserving resources for the core business growth should also be taken into consideration. By conducting a comprehensive audit on the current innovation landscape of the organization you can determine and understand how much time, effort, and money are allocated to different innovation initiatives. 

The Harvard Business Review has introduced the Innovation Ambition Matrix to determine how to allocate resources based on the type of innovation initiative.

The matrix describes 3 types of innovation and how resources should be split among them,  

• Core initiatives – refer to efforts to make incremental changes to existing products and incremental inroads into new markets. For example, through new packaging or added service convenience. Such efforts can draw on resources the company already has. 
• Transformational initiatives – refer to creating new offers to serve new markets and customer needs. This may require assets the company is unfamiliar with. 
• Adjacent innovations – involves leveraging something the company does well into a new space. This type of innovation allows a company to draw on existing capabilities but necessitates putting those capabilities to new uses.

Research conducted by HBR shows that companies that allocated about 70% of resources to core initiatives, 20% to adjacent ones, and 10% to transformational ones outperformed their peers.

However, the right balance will vary from company to company and according to factors such as industry, competitive position, and the company’s stage of development.

To learn more about striking and maintaining the right balance between the allocation of resources and the innovation initiative, refer to this article here.

Develop an innovation system 

Not all organizations are likely to possess the capabilities to execute successfully at all three levels of innovation ambitions identified above.

However, HBR emphasizes that the companies that have got it right, have usually focused on five key areas of management that help them excel at the three levels of innovation ambition, and hence enable them to maintain a sustainable innovation system with the organization. 

• Talent : includes the skills needed to execute core, adjacent, and transformational innovation initiatives. 
• Integration : refers to organizing and managing the skills in the right way, with the right mandate, and under the conditions that will help them succeed.
• Funding: refers to determining how to fund the innovation initiatives. Core and adjacent innovations can be funded by the relevant business unit’s P&L through annual budget cycles. Transformational innovations, on the other hand, require a sustained investment that comes from an entity (i.e. executive suite and the CEO).  
• Pipeline management : mechanisms to track and monitor ongoing initiatives and ensure that they are progressing according to plan.
• Metrics : what measurements should inform management. While traditional financial metrics are appropriate for measuring core and adjacent initiatives, a combination of noneconomic and internal metrics should be used to evaluate transformational efforts.

Developing an Innovation Strategy 

The innovation strategy of a competitor or an industry leader may not work for you. While you can learn from their best practices, an explicit innovation strategy to match your own competitive needs will be effective in the long run. 

Follow the innovation strategy steps explained above to formulate a robust strategy and better coordinate your innovation process. 

Got anything to add to our guide? Let us know in the comments below.

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Five Steps to Implementing Innovation

We’re all familiar with stories about breakthrough products, services, and processes—the disruptors that grab the headlines and garner eye-popping valuations. And then there are the entrepreneurs who end up on the cover of Bloomberg Businessweek and write best-selling books about the keys to their success. The message seems to be that, through good timing or genius, innovation is the purview of a select few.

But at its core, innovation is simply a way to solve problems and create value in new ways. Overhauling an inefficient process, using customer feedback to breathe new life into a stale product—innovations don’t have to be splashy or game-changing to lead to sustained organizational success. These small but mighty initiatives seldom come from top management or an “idea lab,” but rather from individual contributors and frontline leaders who are closest to the customer and best positioned to understand their needs.

When employees from throughout the ranks learn to see themselves as innovators and take steps to make their ideas a reality, the results can be powerful. In addition to furthering a company’s purpose and bolstering its bottom line, employee-driven innovation engages people in ways that carrying out top-down directives never will.

Tips to get you started

Given the growing interest in innovation, it’s no surprise that organizations are looking for clear guidelines on how to implement it. Every innovation is unique. Even so, certain strategies and skills are useful across a range of projects and at all levels of an organization:

• Spot opportunities for innovation. As innovation expert Greg Satell puts it, “No matter what form innovation takes—short, agile sprints or long-term, grand-challenge investments—innovation is fundamentally about solving problems.” As you think about your organization, what problems need solving? Where do opportunities lie? Once you land on some promising ideas, continue to explore them from different angles. By doing so, you may discover even more exciting possibilities.
• Prioritize opportunities. You don’t have infinite time and resources, so prioritize potential innovations depending on where you think you’ll get the most bang for your buck. Narrow in on the two or three ideas you think are most worth digging into, testing, and refining. Then express them as hypotheses you can test through targeted experiments.
• Test your potential innovations. Keep your experiments modest in scope, especially when you’re starting out. You may want to begin with “paper prototypes,” or simple drawings of the new product or process that your end users can interact with to see what works and what doesn’t. They are quick and inexpensive, and they help you figure out where you need to tweak your concept. With each round of testing, move to progressively more complex experiments involving more users.
• Build support for your innovations. Don’t be shy. Make sure the time is right and tell your story to all your stakeholders, including those whose resource backing you need and those who’ll directly benefit from your innovation. You’ll want to tailor your approach based on what’s important to each person and what you need from them.
• Learn from your innovation efforts. You’ve probably heard the mantra “fail fast, learn fast.” After each innovation, list what you would do again and what you wouldn’t. And don’t overthink failure; the key is learn from it and apply those lessons to your next innovation.

We’ve seen these steps work at all levels in an organization. In fact, we even followed them when redesigning our Harvard ManageMentor® innovation-related topics. What process do you follow when implementing innovation in your organization?

Janice Molloy is senior manager, online learning at Harvard Business Publishing. Email her at [email protected] .

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Innovation in business: Importance, benefits, & examples

For companies willing to embrace innovation during uncertain times, the rewards can be transformative , both during a crisis and in its aftermath.

In this article, we demystify the concept of business innovation , offering actionable steps and tangible examples to help ignite a culture of innovation within your organization. We delve into the many benefits of embracing business innovation and draw inspiration from real-world examples where innovation has been a game changer.

Whether you’re an entrepreneur kickstarting your business, a small business owner seeking growth, or a business leader in a larger corporation eyeing enhanced competitiveness, we believe this guide will provide valuable insights. The aim? To help you shape a robust innovation strategy that can propel your business to new heights in any environment.

What is the definition of innovation?

What benefits does business innovation bring for you, what are the different types of innovation, real-world examples of successful innovation, 10 tips for business innovation.

• How to drive strategic innovation with IMD?

In short, innovation is doing something different to create value . Business innovation refers to the process of introducing new ideas, methods, products, or services that result in significant improvements or advancements within an organization. 

Innovation often involves transforming creative ideas into new solutions that drive business growth, improve efficiency, and meet customers’ changing needs while improving decision-making and problem-solving across the organization. 

Think about Tesla’s commitment to putting the first electric vehicle on the road in 2008, or Google’s introduction of a search engine in 1998. Each innovation was unheard of at the time and represented a major paradigm shift. 

Even if modern businesses don’t innovate at this same level, innovation is still crucial in today’s world. Not only does it offer the potential for increased profit, but it can also create new jobs and increase customer trust. Your brand may develop better public recognition, and current workers may discover increased efficiency or productivity. 

In an era characterized by rapid technological advancements and a constantly shifting economic landscape, business innovation is more than just a buzzword—it’s a critical path to success.

While this isn’t an exhaustive list, we wanted to give you a better idea of how innovation can impact your organization. A few benefits of innovation for both old and new business models include:

• Gain a competitive advantage. Innovation can help you develop unique products and services that set you apart from competitors. Over 80% of digitally mature companies cite innovation as one of their core strengths .
• Meet customer demands. Sixty-five percent of fast-growing companies say they collaborate with their customers on potential innovations. Businesses that try to better understand and respond to customer needs through ongoing innovation do a better job attracting new customers and retaining existing clients.
• Drive business growth. You’ll position your company to better identify and seize new opportunities. You may also create opportunities to diversify revenue streams or expand into new markets.
• Increase efficiency and productivity. Innovation can result in increased productivity as you find ways to improve existing processes, streamline operations, and implement new forms of technology. 
• Better equipped to deal with changes. Rather than reacting to changes that catch you off guard, you’ll be better prepared to identify emerging trends and anticipate shifts in the market in advance. 
• Attract and retain talent. You can create an environment that engages your workers and results in higher levels of job satisfaction and employee retention. Many top companies give their employees a designated amount of time each week to work on product innovations .
• Promote resilience and sustainability. Your business will be equipped to navigate economic downturns and changing consumer behavior. 

Even if your innovation doesn’t produce each of these potential effects, even two or three outcomes can provide a boost to your business. As we continue, we’ll discuss different types of innovation and their specific benefits.

Not all innovation processes are identical. Innovation can take on different forms, and we dive into a few of the most common examples.

• Incremental innovation : Incremental innovation involves making small, incremental improvements to existing products, services, or processes. While it may not result in the creation of a new product or fresh concept, it can enhance value creation and produce a positive impact.  The shaving company Gillette understands the importance of incremental improvement . While major product overhauls are uncommon, the company is always looking for ways to improve its razors. When the company finds ways to make incremental product improvements that produce slightly better razors, it becomes slightly more profitable at the same time.  A great example is when the company switched from the Mach3 razor to the Fusion razor by proposing the new product as a better shaving solution.
• Radical innovation : Radical innovation usually involves making a major breakthrough or invention that creates a new market or significantly changes an existing market. These innovations are more noticeable and represent a higher-risk, higher-return pursuit.  Apple’s decision to bring the iPhone to the market in 2007 is a great example of radical innovation. At the time, the iPhone represented the combination of three unique products: a mobile phone, a touch-screen iPod, and a portable connective device enabling users to access email, web browsing, and navigation while on the go.  Fast-forward to today, when over 120 million Americans own an iPhone .
• Disruptive innovation : Disruptive innovation creates a new market or value network that displaces an existing market or value network. Rather than introducing a new product to serve an existing market, disruptive innovation represents the creation of an entirely new market that disrupts the status quo.  Netflix introduced a disruptive innovation when it decided to take its DVD-by-mail business to the next level by providing online streaming . At the time, people received DVDs by mail or picked them up from a local service.  Everything changed when Netflix decided to pivot to online streaming. Now, the video streaming market is projected to grow to over $100 billion within the next five years. 
• Architectural innovation : Architectural innovations make major changes to a product or service’s architecture to attract new markets and consumers. In other words, it repackages an existing product, service, or idea to fill a new need or attract a fresh clientele.  Although smartwatches existed in different forms prior to the Apple Watch, September 2014 represented a major development in the industry as Apple brought its first wearable technology to the market.  Since its inception, the Apple Watch has surpassed giants like Rolex in the watch industry. The Apple Watch represents an architectural innovation because it incorporates existing smartphone technology into a different form. 

“Innovation is anything, but business as usual.” – Anonymous

We’ve discussed a few examples of successful innovation in the business world, but here are a few more noteworthy examples of innovation:

• WhatsApp : Expensive SMS services once dominated electronic communication. WhatsApp changed the game by introducing a secure messaging platform for anyone with a smartphone and an internet connection. This is a great example of radical innovation.
• Gavi : Exists to save children’s lives through broader access to essential immunizations. By targeting product innovations and a single improved framework , Gavi drove its incremental innovation efforts forward and achieved a deeper level of impact. 
• Mercedes-Benz : Made the decision to prioritize digital product development in its manufacturing efforts. The incremental innovation resulted in a significantly shorter innovation cycle and a rise in the company’s overall efficiency rate.
• Discovery Group : This international insurance company made the decision to offer incentives to company leaders. The organization used a semiannual divisional scorecard to incorporate multiple forms of innovation into its culture and heartbeat and mobilize the entire company around the same goal.
• Salesforce : came to market in 1999 as an internet customer relationship management (CRM) service. The company foresaw the future by establishing a cloud-based system that could operate at a minimal cost with businesses of all sizes. Salesforce’s radical innovation continues to produce a positive impact to this day.

You now understand the importance of business innovation, but you may still have questions about how to make innovation a reality within your organization. We offer some tips that can help make your innovation more effective and beneficial.

1. Create a culture of innovation

Businesses should create a culture where employees feel empowered to share ideas, experiment, and take calculated risks. Team leaders should talk openly and regularly about the value of continual improvement.  It may help to shift conversations about new ideas away from potential roadblocks and financial sacrifices. Instead, innovative conversations should focus on potential possibilities and the impact of innovative ideas on the organization.

2. Understand customer needs

Better understanding your customers’ needs (and desires) can equip you to serve them better and longer. You can best understand customer needs by making a habit of collecting regular feedback, conducting market research, and engaging with customers to uncover insights and identify innovation opportunities. 

Consider crafting a customer needs statement that concisely defines your ideal client’s exact needs.

3. Encourage cross-functional collaboration

Encourage diverse perspectives and interdisciplinary collaboration to promote fresh ideas. Take steps to break down silos and create channels for cross-functional knowledge. 

As you do this, establish a centralized communication method or standard and encourage regular dialogue so all team members are on the same page.

4. Allocate resources for innovation

In addition to money, time is a great resource to invest. Along with research and development budgets, set a predetermined amount of time for employees to pursue new ideas and methodologies. You must also decide which tools and technologies are necessary for your team to reach the next level. 

5. Embrace continuous learning

Employees who continue to grow and stretch are better positioned to contribute to the company’s ongoing innovation and development. Provide opportunities for employees to gain new skills, attend training programs, and participate in workshops or conferences. 

Encourage employees to stay updated on industry trends and best practices. Consider setting aside time to ask employees what they’re learning and how it might benefit the organization as a whole. 

6. Promote risk-taking and accept failure

Innovation often doesn’t happen without risk. Major innovations like the iPhone and Netflix’s streaming service could have easily failed, but these organizations didn’t let the potential danger keep them from moving forward. 

Foster an environment where employees feel safe to take risks without the fear of harsh consequences. Celebrate successes and failures, and consider what you can learn from each event. 

7. Seek external perspectives

If you never take time to listen to outside voices and perspectives, you’ll miss out on a wealth of helpful information. Collaborate with external stakeholders, industry experts, consultants, or startups to gain new perspectives. 

Explore partnerships, joint ventures, or acquisitions. Adopt a humble posture in conversations, and be willing to challenge your preexisting beliefs. 

8. Set clear innovation goals

Align goals and objectives with the overall business strategy and communicate them throughout the organization. Consider using the SMART goal framework to create measurable and actionable goals. 

Another best practice is to choose key performance indicators (KPIs) or specific metrics that reflect the type of progress you hope to make.  

9. Encourage idea generation and evaluation

If you want your employees to develop new ideas, give them the time and space necessary to cultivate new thoughts. Promote idea generation by holding brainstorming sessions, innovation workshops, or suggestion boxes. 

Have a platform for employees to submit and collaborate on ideas, and ensure each team member feels comfortable and safe when it’s time to share their perspectives or thoughts. 

10. Celebrate and recognize innovation

Reward innovative achievements, highlight the individuals and teams behind them, and showcase their impact on the organization. This will encourage future collaboration and participation among your team and allow your organization to mark progress and reflect on the company’s growth and development.

How to drive strategic innovation with IMD ?

Innovation in business can sometimes feel like a complex puzzle, but when the pieces fall into place, it can propel your company to new heights. It helps redefine your product and service value, strengthen customer relationships, and create a distinctive space for you in the market.

The benefits of innovation extend to all business models, enabling companies to stand out with unique offerings. By understanding customer needs and fostering a culture of continuous innovation, companies can attract new customers and deepen relationships with existing ones. Innovation, in turn, drives growth by opening new opportunities and diversifying revenue streams.

In today’s dynamic and competitive business landscape, embracing innovation is not just an option, but a necessity.

If you’re looking to further embrace innovation, IMD’s innovation programs are here to guide you. Our programs are tailored to strengthen your leadership skills, enhance your ability to innovate strategically, and provide you with practical knowledge to drive successful innovation.

With IMD, you get more than just access to world-class faculty and personal coaching. We believe in real-world learning, ensuring that all of our participants can apply their newly acquired knowledge from day one. We are here to give you the tools you need to lead your business into an innovative future.

Discover more about IMD’s Innovation programs here!

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Are you curious how certain new businesses can completely reshape industries and leave established companies struggling to keep up? In the ever-changing business world, staying ahead of the competition requires constant innovation. While there have been many ideas and strategies over time, few have been as impactful and enduring as disruptive innovation. This article will […]

Picture this — you have a new startup or large business operating in a highly competitive market. A constant shift in trends makes it hard to keep up with your competitors and offer products people want. How will your organization keep up with those changes, thrive in the market, and set the pace for the […]

For companies willing to embrace innovation during uncertain times, the rewards can be transformative, both during a crisis and in its aftermath. In this article, we demystify the concept of business innovation, offering actionable steps and tangible examples to help ignite a culture of innovation within your organization. We delve into the many benefits of […]

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Innovation Strategy: Developing Innovative Strategies in Business

Published: 27 February, 2024

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Table of Contents

Innovation has become an imperative for organizations worldwide, yet the multitude of methods and frameworks available often lead to confusion rather than clarity. While various approaches focus on specific aspects such as user experience or design thinking , they often fail to provide a cohesive strategy for innovation from start to finish. An innovation strategy is key to capturing and  sustaining innovation , it serves as a detailed roadmap, comprising a series of strategic steps that propel an organization toward its future objectives. Beyond being a mere guide for business success, this roadmap is essential for ensuring a company remains competitive in its industry by continually devising new and innovative approaches to address challenges.

At Digital Leadership, our core belief is that by harnessing emerging technologies and innovative business models , we can revolutionize customer experiences. Crafting an innovation strategy is crucial for a company’s success. It entails fostering collaboration within the organization to stimulate new ideas and establishing a well-thought-out framework for future growth. It’s crucial to understand that no two innovation strategy plans are identical. 

What is Innovation Strategy?

An innovation strategy is a planned and organized way of using new technologies and creative ideas to bring about significant changes in a company. It involves creating a detailed plan that closely matches the company’s main goals, encouraging a culture of constant improvement. Think of an innovation strategy as a commitment to a shared goal of innovation, including a structured set of activities designed to drive the future growth of the organization. 

Each innovation strategy is unique. This innovation strategy plan is more than just a guide for business success; it functions as a compass, steering the organization through new and creative approaches to address challenges. Developing a company innovation strategy includes clearly defining an innovation mission, aligning activities with long-term business goals , and promoting a culture that welcomes change and creativity. Following such a strategy ensures that organizations stay ahead in their industries, always adjusting and evolving to meet emerging needs.

Business Innovation Strategy: What is Innovation Strategy In Business

In the business environment, remaining competitive necessitates ongoing evolution to address evolving customer demands. Establishing an innovation strategy becomes imperative for organizations aiming to excel in this dynamic setting. One prevalent initial step in crafting such a strategy involves gaining a comprehensive grasp of the organization’s innovation initiatives and overarching business goals . This encompasses identifying the market landscape, comprehending customer requirements, and discerning the most effective strategies to optimize customer satisfaction while utilizing resources efficiently.

Once you have a grasp of your organization’s innovation landscape, the next step is to define a common innovation mission. This mission should align with your overall business strategy and focus your innovation efforts on creating value for your customers. An effective innovation strategy must also include setting specific innovation goals and metrics to measure success. By establishing clear objectives, businesses can better track their progress and adapt their innovation programs as needed.

So, Why are Innovation Strategies Important in Business

• Generating and capitalizing on returns from innovations serves as a primary source of competitive advantage.
• Complex and resource-intensive activities like R&D, product design, and collaboration can impact a firm’s competitive standing. Without strategic guidance, these efforts may yield fragmented and short-term outcomes.
• With globalization, firms face a multitude of opportunities and threats across various markets. A strategic approach to innovation helps navigate this landscape effectively.
• Organizational structures and innovation processes must align with the overall corporate strategy. For instance, R&D efforts may differ depending on whether the firm aims to lead or follow in innovation.
• Articulating long-term strategic objectives for innovation is crucial for engaging with public-sector policies, fostering collaborations, and attracting patient investors.
• A firm that prioritizes innovation strategically is more likely to attract talented individuals seeking opportunities for creative engagement.

The “UNITE Innovation Approach” Model acts as a guide for entrepreneurs to build a strong innovation strategy framework. This model smoothly combines market insights, aligns with business goals, and offers a structured way of generating and implementing ideas. By employing the UNITE model, entrepreneurs gain a strategic advantage, ensuring that their innovation efforts are intentional steps toward lasting success, not haphazard. 

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The UNITE Innovation Approach | Overview

Steps of developing innovation strategy framework.

Innovation is crucial not only for large corporations but also for small and medium-sized enterprises (SMEs). It serves as a vital competitive advantage and is often considered a core capability of firms. For SMEs, innovation is particularly important due to resource constraints, making it an effective means to enhance productivity and performance. However, research findings on Heineken Beverage Industry reveal that the organization’s innovative strategies, particularly in process, market, and product innovation, are weak and fail to significantly contribute to its performance and productivity levels. To strengthen their innovation efforts, SMEs can follow several steps in developing an effective innovation strategy.

Step 1: Innovation Strategy Setup

In the crucial first step of Setup within the innovation strategy , organizations lay the groundwork for success. This involves defining the business intentions and direction, outlining high-level Search Fields, and identifying detailed Opportunity Spaces. By articulating the Business Intention, organizations clarify the problem they aim to solve or the legacy they aspire to leave behind, ensuring alignment with organizational goals.

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The UNITE Business Intentions

Utilizing tools like the Search Field Matrix aids in analyzing dimensions like trends and market segments, guiding prioritization of areas for innovation within the overarching innovation strategy. Opportunity Spaces then pinpoint specific intervention sites, outlining Jobs to be Done and target customers in alignment with the innovation strategy’s objectives. Building the core team, led by an experienced entrepreneur, is essential for executing the innovation initiative effectively. Operating in a protected environment, clear goals are set for each stage, with regular updates provided to stakeholders, ensuring smooth organizational setup and progression through subsequent stages.

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THE UNITE Definition Of Search Fields & Opportunity Spaces

Step 2: problem/solution fit.

In step 2 of developing an innovation strategy, the focus is on achieving Problem/Solution Fit , and aligning customer needs with viable solutions. This involves three key streams of work: Stream A delves into understanding Jobs to be Done, Stream B crafts a Value Proposition, and Stream C defines the Business Model. Bringing the team up to speed is essential, involving active briefings with stakeholders and thorough research to refine objectives. Properly framing the broader objective, clarifying the JTBD, and conducting initial market research are vital steps before proceeding further, ensuring a solid foundation for subsequent actions.

You can now access the complete UNITE PROBLEM / SOLUTION FIT, including a full presentation, related models and instructions for use.

The UNITE Business Model Innovation Patterns

The Jobs-to-be-Done (JTBD) framework is a powerful tool for understanding customer needs and driving innovation. By focusing on tasks rather than demographics, businesses gain deep insights into their target market. Through qualitative interviews and quantitative surveys , companies validate insights and identify growth opportunities. This approach helps in creating solutions that precisely match customer needs, reducing the risk of failure and increasing market success. Continuous iteration based on customer feedback ensures a competitive edge in today’s customer-centric landscape. Embracing JTBD is essential for fostering innovation and delivering value to customers.

You can now access the complete JTBD Customer’s Job Statement Package, including a full presentation, related models and instructions for use.

The UNITE Jobs-To-Be-Done Statement & Map

It offers a systematic approach to understanding customer needs and shaping innovative solutions. By focusing on the tasks or objectives customers are trying to accomplish, rather than just their demographic or psychographic profiles, businesses can uncover deep insights into unmet customer needs and opportunities for improvement.

To effectively outline the tasks and activities customers undertake to fulfill their job using the UNITE Jobs-to-be-Done Universal Job Map, convene your team and set up a whiteboard or wall with eight columns representing the eight steps in the Job Map. From defining and planning to concluding, each step provides insight into the customer’s journey. For example, when purchasing a bottle of wine, steps may include defining preferences, locating a store, preparing by comparing options, confirming the choice, executing the purchase, monitoring the taste, modifying preferences based on satisfaction, and concluding the purchase experience. Understanding these steps is vital for developing solutions that precisely meet the customer’s needs.

You can now access the complete Jobs to be Done Universal Map Package, including a full presentation, related models and instructions for use.

At this stage, having gone through the Jobs-to-be-Done process and developed initial Customer Promises, we find ourselves within a relatively narrow solution space ripe for exploration using methodologies like Design Thinking. The next step involves translating these initial promises into robust solutions by treating each promise as a mini-opportunity Space. Ideation is the key here. We encourage exploring a plethora of ideas, ranging from ambitious “moonshots” to targeted solutions addressing specific but unsolved problems. It’s about being smart in approach, knowing when to think big and when to focus narrowly, all while keeping the original customer needs at the forefront.

To navigate this process effectively, we recommend leveraging frameworks such as the Value Proposition Canvas . This tool provides a structured approach to deep dive into the value proposition, ensuring alignment with customer needs and market demands. Crafting a robust value proposition isn’t just about generating ideas; it’s about understanding the core essence of what your offering brings to the table. By embracing ideation, divergence, and strategic frameworks, businesses can unlock innovation potential and create value propositions that resonate deeply with their target audience.

You can now access the complete Business Model Canvas Package, including a full presentation, related models and instructions for use.

The UNITE Business Model Canvas

(3) solution/market fit (mvp).

In step 2, we’ve pinpointed our customers’ needs, tested potential solutions, and outlined a solid business model. However, jumping straight into execution is risky. While we may have a good grasp of what our customers want, our concept hasn’t been fully validated yet. Step 3 of developing an innovation strategy, where customers actually buy and use our product, is crucial for true validation. Rushing into scaling before perfecting our concept can lead to wasted resources and the need for costly adjustments later on. It’s essential to ensure our business concept is finely tuned before expanding.

Innovation strategy hinges on the meticulous execution of a Minimum Viable Product (MVP) , a streamlined version of your offering that validates key business assumptions while conserving resources. The MVP approach, epitomized by Zappos’ early success, emphasizes real-world validation over elaborate prototypes, focusing on tangible customer experiences. Yet, challenges like imitation and reputational risk loom large, necessitating strategic differentiation and brand management. Moreover, maintaining quality is paramount, ensuring that the MVP not only functions but delights users, fostering genuine feedback. Executing an MVP entails two phases: development and launch, followed by rigorous testing and iteration. This iterative process drives continuous improvement , steering your innovation strategy towards tangible value creation .

You can now access the complete Unite Solution/Market Fit (MVP) Scorecard, including a full presentation, related models and instructions for use.

The UNITE Problem-Solution Fit & Minimum Viable Product (MVP) Scorecards

In the initial phase of MVP development and launch, four key work streams drive the process: Marketing focuses on brand development and campaign planning, while the Business stream refines models and tests pricing strategies. Product & UX teams develop and test the MVP, while Technology sets up technical infrastructure. Phase B shifts focus to live testing and tweaking, with Marketing launching test campaigns and Business refining operating models.

Step 4: Build & Scale Your Innovation Strategy

After countless tests and a number of pivots and iterations, you have quantitatively proven with real customers that you have achieved a Solution/Market Fit. In other words, your product works and customers have actually bought it! In Stage 4 of developing an innovation strategy, you will be shifting gears and moving from incubation (concerned with finding a working Business Model) to acceleration (building and scaling the identified Business Model). With your business concept now proven and well-defined, the next challenge is getting it to scale. That is the core purpose of this stage: to build and scale the business concept that you have been working on thus far and now get it out into the market to scale as quickly as possible. But moving from your business concept (the strategy) to an actual business (the execution) is inherently difficult. Many organizations fail to bridge the Strategy-Execution Gap , meaning they fail to implement the strategy, or business concept, they originally designed. According to the available statistics, up to 70% of organizations struggle with moving from strategy to execution.

One key ingredient we propose to overcome the Strategy-Execution challenge is to establish how you are going to execute using a well-defined and communicated Operating Model. The Operating Model Canvas emerges as a potent solution, offering a blueprint for execution. Establishing a well-defined and communicated Operating Model is pivotal in overcoming the Strategy-Execution challenge.

You can now access the complete GROWTH-HACKING PROCESS, including a full presentation, related models and instructions for use.

The Growth-Hacking Process

To ensure the effectiveness of the innovation strategy , it is imperative to embed innovation within the organization’s processes and overall strategic framework. This necessitates the allocation of resources, including time, finances, and skilled personnel, to innovation initiatives, while fostering a culture that champions and rewards innovative thinking.

By adhering to these guidelines for formulating an innovation strategy , businesses can position themselves for sustained success and growth amidst a rapidly evolving market landscape. Through a steadfast commitment to customer value creation and adaptability to uncertainty, organizations can pave the path to industry leadership through innovation.

Types of Innovation Strategies

Elaboration on innovation strategy typologies has been provided by various scholars (Freeman and Soete 1997; Goodman and Lawless 1994). These typologies encompass proactive strategies, characterized by technological and market leadership with a strong research focus, often associated with firms embracing first-mover advantages and taking significant risks. Active strategies involve defending existing technologies and markets while remaining agile to respond swiftly to emerging opportunities. Reactive strategies, on the other hand, are adopted by firms with a slower response to innovation, often prioritizing cost-cutting measures over technological advancements. Finally, passive strategies entail engaging in innovation only in response to customer demands, typically involving low-risk initiatives.

Examples of passive strategies can be observed among supplier firms in industries like automotive manufacturing, where lower-tier suppliers often rely on fulfilling specifications rather than driving innovation themselves.

1) Proactive Innovation Strategy

Being ahead in innovation defines successful companies that stand out in the ever-changing business world. These forward-looking organizations don’t just react to changes; they actively search for new opportunities and predict future trends. This proactive approach allows them to take control of the market by introducing fresh and distinctive products or services that capture consumer attention.

Within proactive innovation strategies, several paths contribute to an organization’s overall success:

• Product Innovation: At the core of being proactive in innovation is making new and groundbreaking products. Companies that do well put money into research and development, always trying to do things that haven’t been done before to meet new needs and go beyond what customers expect. Whether it’s using the latest technology or coming up with creative designs, creating innovative products is a big reason why these companies lead the market.
• Process Innovation : To ensure internal efficiency and stay ahead of the competition, organizations with a proactive innovation strategy focus on optimizing their internal operations. Process innovation becomes crucial, streamlining workflows, improving productivity, and fostering a culture of continuous improvement.
• Business Model Innovation : Recognizing that how value is provided and money is made is as crucial as the products themselves, organizations embracing proactive innovation strategies engage in business model innovation. This involves reimagining the fundamental structure of the business, exploring new revenue streams, and adapting to changing market dynamics.
• Open Innovation : Proactive innovators often collaborate with external partners, startups, or research institutions through open innovation practices. By tapping into a broader pool of ideas, expertise, and resources, these organizations enrich their innovation ecosystem and stay at the forefront of industry advancements.
• Sustainability Innovation: Forward-thinking companies, under a proactive innovation strategy, increasingly incorporate sustainability into their product development and business practices. This aligns with societal and environmental expectations, positioning them as responsible and future-ready entities.

Essentially, a proactive innovation strategy goes beyond mere adaptation; it positions organizations as catalysts of change, architects of the future, and leaders in industries where innovation is the key currency.

For instance, proactive innovators like DuPont and Apple exemplify a commitment to technological leadership through continuous innovation. Microsoft, employing an active strategy, strategically leverages existing technologies while adapting swiftly to market shifts. In contrast, firms like Dell may adopt a more reactive approach to technology adoption but remain proactive in their production and distribution models.

2) Active Innovation Strategy

Active innovation represents a dynamic approach for organizations to swiftly respond to market changes and evolving customer preferences. Embracing flexibility and agility, companies adopting this strategy proactively lead rather than merely follow in the ever-changing business landscape. Key aspects of the active innovation framework include:

• Proactivity : Organizations take the lead in meeting the needs of the continually evolving market.
• Incremental Innovation : Constant, small improvements to existing products or processes keep offerings up-to-date and aligned with customer preferences.
• Service Innovation: Beyond product creation, organizations focus on enhancing the overall customer experience by listening to customer feedback and adapting services accordingly.
• Adaptability : Rapid response to new demands, including staying abreast of technological changes.
• Technology Innovation: A pivotal component, organizations prioritize staying updated on technological advancements to provide modern solutions in the digital era.

Active innovation places a premium on a proactive mindset, swift actions, and a deep understanding of the market. This strategy positions organizations not only to navigate changes effectively but also to capitalize on new opportunities, establishing them as leaders in their respective industries.

3) Reactive Innovation Strategy

In the Reactive Innovation Strategy , businesses respond to market changes as needed. While not always the first to introduce groundbreaking products, these companies prioritize adaptability in the competitive environment. Cautious in their responses, organizations employing this strategy carefully evaluate market shifts before making changes. Though the pace of innovation may be slower compared to proactive approaches, this strategy holds advantages, especially in industries where stability and a deep understanding of market dynamics are paramount.

Strengths of Reactive Innovation:

• Adaptive Innovation: Enables precise adjustments in response to changes, maximizing resource utilization.
• Cost Innovation: Focuses on finding cost-effective solutions and operational efficiencies.

For organizations embracing Reactive Innovation , balancing responsiveness with forward-looking anticipation is key. While not always the first movers, strategic and well-timed responses to market shifts make them resilient players in the ever-changing business landscape. This approach proves particularly relevant in industries experiencing gradual changes, where staying attuned to market demands remains the primary focus.

4) Passive Innovation Strategy

In passive innovation , organizations show limited involvement in the innovation process , often missing opportunities and potential advancements. This cautious approach relies on established practices, avoiding proactive exploration. However, this passivity, while providing stability, can be a double-edged sword, risking stagnation in a quickly changing landscape.

• Imitative Innovation: Organizations that embrace passive innovation may tend to copy successful ideas from competitors or industry leaders, finding security in proven models but sacrificing the agility and originality of more proactive strategies.
• Stability vs. Stagnation: While passive innovation gives a sense of stability, organizations must be aware of potential downsides, including the risk of falling behind in industries where rapid advancements are the norm.
• Open Innovation Bursts : To counteract potential stagnation, passive innovation strategies may benefit from occasional bursts of open innovation. Drawing on external ideas and collaborations brings in fresh perspectives and helps maintain relevance in dynamic industries.

Developing an effective innovation strategy requires a comprehensive approach, incorporating key elements and following a systematic framework. By understanding the market, aligning strategies with business goals , and fostering a culture of innovation , organizations can stay ahead in the ever-evolving business landscape. The examples of successful innovation strategies from industry leaders further highlight the importance of innovation in achieving sustained business growth and competitiveness.

This nuanced understanding of innovation strategy underscores the dynamic interplay between technological advancements, market dynamics, and organizational capabilities, shaping firms’ strategic orientations towards innovation.

Innovation strategies vary widely, each tailored to specific organizational contexts and objectives. Also, there are five styles of Innovation Strategies

• Leadership ignites entrepreneurial energy within teams.
• Culture of rapid innovation and creation of new business models.
• Suitable for industries facing rapid changes.
• Management involves sharing the vision, establishing internal markets for ideas, and encouraging intrapreneurship.
• Managers innovate within existing business structures.
• Transformation of business structures over time.
• Ideal for companies seeking significant yet sustainable change.
• Management practices include experimentation, empowering teams, and customer-centricity.
• Exploration of new directions beyond existing strategic assets.
• Pursuit of radical change in response to limited growth opportunities.
• Management involves identifying crucial assets, encouraging cross-pollination of ideas, and seizing opportunities beyond core areas.
• Conducting low-cost experiments to overcome obstacles hindering major innovations.
• Cautious yet progressive approach to innovation.
• Suitable when significant opportunities are sensed, but details remain unclear.
• Management practices include goal-focused research, patience, and continuous exploration.
• Outsourcing creativity and investing in startups.
• Acquisition of promising startups.
• Feasible with available resources to leverage discoveries from smaller players.
• Management involves maintaining internal R&D capacity, scouting for acquisition prospects, and efficient integration processes.

Innovation Strategy of the Four main Types of Innovation

Four primary types of innovation —radical, architectural, disruptive, and incremental—provide a comprehensive innovation strategy framework for organizations to navigate the complexities of innovation and achieve their strategic objectives. Each type offers unique opportunities and challenges, catering to different levels of risk tolerance and resource availability. Understanding these distinct approaches to innovation is essential for organizations seeking to adapt, evolve, and thrive in an ever-changing marketplace. Let’s explore each type of innovation strategy in detail to gain insights into their applications and implications for organizational success.

• Radical Innovation : Radical innovation involves the development of entirely new technologies, products, or services that often disrupt existing markets or create entirely new ones. It represents a significant departure from current offerings and requires a high level of investment and risk.
• Architectural Innovation : Architectural innovation focuses on reconfiguring or redesigning existing systems, processes, or components within an organization to create new value. It involves changing the underlying structure or design of a product or service while keeping its core functionality intact.
• Disruptive Innovation : Disruptive innovation refers to the introduction of a product, service, or business model that fundamentally changes the way an industry operates, typically by targeting underserved or overlooked segments of the market. It often starts at the low end of the market and gradually improves to challenge established competitors.
• Incremental Innovation : Incremental innovation involves making small, gradual improvements to existing products, processes, or services over time. It focuses on optimizing and refining existing offerings rather than introducing radical changes, making it a lower-risk approach to innovation.

Innovation Strategy Examples

(1) apple innovation strategy.

Apple’s innovation strategy revolves around creating groundbreaking products that seamlessly integrate hardware, software, and services. Their focus on user experience and design sets them apart in the technology industry. This dedication matches the core of t he marketing innovation strategy – putting user happiness first by creating new and exciting solutions.

(2) Amazon Innovation Strategy

Amazon’s innovation strategy centres around customer-centric approaches, such as one-click purchasing, Prime membership benefits, and advanced supply chain management. Their focus on enhancing customer experience sets the standard for e-commerce.

(3) Tesla Innovation Strategy

Tesla’s innovation strategy includes advancements in electric vehicles, renewable energy solutions, and autonomous driving technology. Constantly pushing boundaries, Tesla exemplifies the essence of value innovation strategy, delivering cutting-edge solutions that reshape the automotive industry.

(4) Netflix Innovation Strategy

Netflix’s innovation strategy lies in content creation, personalized recommendations, and streaming technology. They continually invest in original content and technological advancements to stay ahead in the entertainment industry.

(5) Microsoft Innovation Strategy

Microsoft’s innovation strategy encompasses a diverse range of products and services, from operating systems to cloud computing. Their commitment to empowering individuals and organizations through technology fuels continuous innovation.

(6) Google Innovation Strategy

Google’s innovation strategy revolves around search algorithms, online advertising, and a wide array of digital services. Their commitment to organizing the world’s information and making it universally accessible drives innovation in various sectors.

(7) Nike Innovation Strategy

Nike’s innovation strategy focuses on product design, materials, and technological advancements in sportswear. They continuously introduce new technologies, such as Nike Adapt, to enhance athletic performance and customer experience.

Types of Innovation Strategies Examples

Innovation strategies can vary significantly depending on the industry, organizational goals, and market dynamics. Here are several types of innovation strategies along with examples:

• Example: Apple’s continuous development of the iPhone, introducing new features and designs with each iteration.
• Example: Toyota’s implementation of lean manufacturing principles, led to streamlined production processes and reduced waste.
• Example: Netflix transitioning from a DVD rental service to a subscription-based streaming platform, revolutionizing the entertainment industry.
• Example: Airbnb’s platform, enables individuals to rent out their properties to travellers, disrupting the traditional hospitality industry.
• Example: Procter & Gamble’s Connect + Develop program, which sources innovation ideas from outside the company to fuel new product development.
• Example: Tesla’s electric vehicles disrupt the automotive industry by challenging traditional gasoline-powered vehicles with innovative technology.
• Example: Coca-Cola introduces new flavours or packaging variations of its beverages to maintain consumer interest and market relevance.
• Example: SpaceX’s development of reusable rocket technology, aims to revolutionize space travel and exploration.

Elements of a Great Innovation Strategy

Crafting an innovation strategy plan entails navigating a dynamic landscape, demanding a flexible and multifaceted approach.

• Nurturing an Innovation culture : Establishing an environment that fosters creativity and embraces change is crucial for fostering innovation.
• Embracing Digital Transformation strategy : Incorporating technology to enhance processes and business models is a key aspect of digital transformation.
• Top-Level Endorsement: Securing commitment and support from senior leaders is essential for successful innovation initiatives.
• Strategic Resource Allocation : Wisely allocating resources to support novel and imaginative ideas is paramount.
• Customer-Centric Focus : Prioritizing and comprehending customer needs throughout the innovation process is indispensable.
• Agile Adaptation : Remaining receptive to agile methodologies facilitates swift adjustments to evolving circumstances.
• Performance Measurement: Implementing metrics to assess the success and impact of innovation efforts is vital.
• Investment in Research and Development: Devoting funds to research and development endeavors represents a valuable investment.
• Learning from Risks and Setbacks: Cultivating a culture that embraces risk-taking and views failures as learning opportunities is critical.
• Innovative Business Models : Continuously reimagining and innovating fundamental aspects of the business model adds a layer of dynamism to the innovation strategy.

In essence, innovation is the cornerstone of organizational longevity and competitive advantage. By embracing diverse innovation strategies such as technological advancements, architectural refinements, disruptive shifts, and incremental enhancements, businesses can unlock fresh opportunities and deliver unique value propositions. Whether through revolutionary changes or gradual refinements to existing offerings, innovation is pivotal for adapting to market fluctuations and seizing value.

Central to these pursuits is the evolution or reinvention of the business model. By aligning with customer preferences, organizations can develop innovative solutions that resonate with consumers, thereby bolstering market presence and fostering growth. Ultimately, a well-crafted innovation strategy empowers organizations to stand out from the competition, achieve objectives, and ensure sustained success in today’s fiercely competitive business arena.

Frequently Asked Questions

(1) what role do senior leaders play in achieving innovation strategy.

Senior executives wield significant influence in propelling innovation strategy forward. Their unwavering commitment, backing, and visionary guidance establish the organizational ethos. They allocate resources judiciously and foster an atmosphere conducive to experimentation and bold risk-taking.

(2) How is product innovation strategy delineated in business?

Product innovation strategy in business encompasses the formulation and introduction of novel or refined products to satisfy consumer demands and attain a competitive edge. It revolves around the conception of pioneering features, designs, or functionalities that distinguish the product within the market milieu.

(3) What delineates the trifecta of Innovation Strategies?

The trinity of innovation strategies comprises proactive, active, and reactive approaches. Proactive strategies entail a proactive quest for novel opportunities, active strategies pivot swiftly in response to market dynamics, while reactive strategies are triggered only by exigencies.

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How to Create an Innovation Plan that Provides a Competitive Advantage

Steve Sponseller

ILLUMINATION

Your innovation plan is the first step to igniting a creative fire within your organization that produces innovative ideas which are vital to your success. In another article ( A Proven System for Successful Innovation ), I summarized the eight steps in my Innovation Success Blueprint system. The first step is to create a unique innovation plan for your company.

A Fortune Magazine article states, “According to PwC (Pricewaterhouse Coopers LLP), almost 80% of the world’s most innovative companies have a well-defined and thought-through innovation strategy.”

You can start developing your unique innovation plan by starting with a specific goal for innovation in your business. Example goals include:

1. Identify new products or product features to maintain business growth and stay on the leading edge of your industry.

2. Develop new products or services that allow your company to enter a new market segment.

3. In preparation for an upcoming round of financing, create innovative ideas and protect those ideas to exhibit a strong intellectual property portfolio to potential investors.

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I help tech companies protect their proprietary technology to create a competitive advantage and increase valuation. https://stevesponseller.com/book

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What Your Innovation Process Should Look Like

• Steve Blank
• Pete Newell

Whether you’re a company or a government agency.

For innovation to contribute to a company or government agency, it needs to be designed as a process from start to deployment. When organizations lack a formal innovation pipeline process, project approvals tend to be based on who has the best demo or slides, or who lobbies the hardest. A canonical Lean Innovation process inside a company or government agency would include sourcing, curation, prioritization, hypothesis testing and exploration, incubation, and integration.

Companies and government agencies often make the mistake of viewing innovation as a set of unconstrained activities with no discipline. In reality, for innovation to contribute to a company or government agency, it needs to be designed as a process from start to deployment.

• SB Steve Blank is an adjunct professor at Stanford University, a senior fellow at Columbia University, and a lecturer at the University of California, Berkeley. He has been either a cofounder or an early employee at eight high-tech start-ups, and he helped start the National Science Foundation Innovation Corps and the Hacking for Defense and Hacking for Diplomacy programs. He blogs at www.steveblank.com .
• PN Pete Newell , Colonel (Retired), ran the U.S. Army’s Rapid Equipping Force and now runs BMNT, providing battlefield tested solutions to corporate and government problems.

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Develop an innovation strategy

On this page

1. Review your market research

2. understand your opportunities, 3. decide on open or closed innovation, 4. find support and guidance, 5. update your business plan.

When you start to develop your innovation strategy it’s a good idea to review your market research to help you identify:

• key gaps in the market which are opportunities for you to be innovative
• how other organisations are being innovative.

You may also like to:

• ask your customers for feedback to gain insights to improve your processes, products or services
• ask your employees for ideas based on their experience with customers.

If you haven’t already researched your market as part of business planning, check out our market research information.

Opportunities for innovation occur in 2 ways:

• internal business opportunities through changes to processes
• external business opportunities through collaborations and product or service offerings.

Identify innovation opportunities for your business

Consider the ideas below and make notes on how each one could support your business:

• export or import products or services
• invent a new product or service
• streamline your operations to reduce cost
• seek out tenders and contracts
• collaborate with others
• expand your business online
• social media to extend your customer reach.

Once you understand your opportunities for innovation, you must decide if you will use an open or closed innovation model.

Open innovation means that you:

• actively seek collaboration with external partners
• recognise that no business has all the expertise nor owns all the best ideas
• understand that solutions may already exist in other industries.

Closed innovation allows you to:

• control all intellectual property and profit within your organisation
• maintain strong boundaries of a project.

Connect with a business adviser  or find a grant or program  to help drive innovation in your business.

Learn how to write your business plan.

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Innovation Strategies: Explained with examples and framework

Innovation strategies refer to a plan or an approach that an organization develops and implements to encourage and facilitate the creation, development, and introduction of new products, services, processes, or business models. An innovation strategy outlines the steps, resources, and goals necessary to achieve success in innovation.

An innovation strategy typically involves:

• Identifying potential areas for innovation.
• Establishing processes for generating and evaluating new ideas.
• Allocating resources to support research and development.
• Creating a culture that encourages experimentation and risk-taking.

The strategy may also involve partnerships with other organizations or stakeholders, such as universities, research institutes, or customers.

Innovation strategies can help organizations to stay competitive, create new revenue streams, and address emerging market needs. They can also help organizations to differentiate themselves from competitors and enhance their brand value. Ultimately, an effective innovation strategy can help organizations to create sustainable long-term growth and success.

How can an organization implement innovation strategies?

• Open Innovation: Encouraging collaboration and idea-sharing across various stakeholders, including employees, customers, partners, and competitors.
• Disruptive Innovation: Developing new products or services that disrupt existing markets, often targeting underserved or overlooked customer segments.
• Incremental Innovation: Making minor improvements to existing products or services to enhance performance, reduce costs, or improve customer experience.
• Blue Ocean Strategy: Identifying new and untapped markets and creating products or services that satisfy unmet customer needs rather than competing in crowded, saturated markets. Blue Ocean Strategy: Meaning | Types | Examples | Challenges
• Platform Innovation: Develop platforms that enable others to build on top of them, such as app stores or APIs, to promote innovation and collaboration.
• Design Thinking: Using a human-centered approach to innovation, companies seek to deeply understand customer needs and develop solutions that meet those needs.
• Lean Innovation: Focusing on rapid experimentation, prototyping, and iteration to quickly develop and refine products and services.
• Frugal Innovation: Develop innovative solutions with limited resources, often by repurposing existing materials, leveraging local knowledge, and simplifying processes.

These are just a few examples of innovation strategies that companies might use, and companies may also use a combination of strategies to achieve their innovation goals.

Gillette Marketing Strategy of product innovation

Examples of Innovation Strateg ies

• Apple: Apple is known for its innovation in design and technology. Its success can be attributed to its focus on user experience, simplicity, and attention to detail. The company invests heavily in research and development to create new and innovative products such as the iPhone, iPad, and Apple Watch.
• Google: Google’s innovative culture is embedded in its DNA. The company encourages employees to spend 20% of their time working on personal projects, which has led to the development of some of Google’s most successful products, including Gmail and Google Maps. The company also strongly focuses on artificial intelligence and machine learning, which has led to the development of innovative products such as Google Assistant and Google Home.
• Amazon: Amazon’s innovative strategy is based on customer obsession. The company is constantly looking for ways to improve the customer experience, which has led to the development of innovative products such as Amazon Prime, Alexa, and Amazon Go. Amazon also invests heavily in research and development, which has allowed the company to stay ahead of its competitors.
• Tesla: Tesla is known for its innovative approach to electric vehicles. The company’s focus on sustainability and renewable energy has led to innovative products such as the Tesla Roadster, Model S, and Model X. Tesla is also developing autonomous driving technology, which could revolutionize the automotive industry.

Overall, the companies mentioned above have successful innovation strategies because they invest heavily in research and development, focus on the user experience, and have a culture that encourages creativity and risk-taking.

The strategy that makes 3M an innovation powerhouse

However, it’s worth noting that the success of an innovation strategy can depend on various factors, including the industry, market conditions, and the company’s specific goals and resources.

Innovation Strategy Framework

An innovation strategy framework is a set of guidelines and principles an organization uses to develop and implement its innovation strategy. Here are some key components of an innovation strategy framework:

• Vision and Mission: Define the organization’s vision and mission for innovation, including its goals, values, and purpose.
• Environmental Analysis: Conduct a thorough analysis of the organization’s external and internal environment to identify opportunities and challenges that may affect innovation.
• Innovation Portfolio: Create a portfolio of innovation projects and initiatives that align with the organization’s overall strategy and objectives.
• Resource Allocation: Allocate resources, including funding, personnel, and technology, to support the innovation portfolio.
• Innovation Processes: Develop and implement processes and systems that support the innovation portfolio, including idea generation, evaluation, selection, and implementation.
• Innovation Metrics: Define metrics that measure the success of the organization’s innovation efforts, including financial and non-financial indicators.
• Organizational Culture: Foster a culture of innovation by promoting risk-taking, creativity, and experimentation.
• Collaboration and Partnerships: Develop partnerships and collaborate with external stakeholders, such as customers, suppliers, and research institutions, to enhance the organization’s innovation capabilities.
• Continuous Improvement: Continuously evaluate and improve the innovation strategy framework to ensure it remains effective and relevant.

By following these key components of an innovation strategy framework, organizations can develop and implement a comprehensive and effective innovation strategy that enables them to remain competitive and achieve their long-term objectives.

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How innovation can accelerate industry momentum

People often speak of industry momentum as if it were a force of nature independent of individual companies’ actions—like the mysterious “ether” scientists once believed filled the universe and allowed light to travel. While demographics and macroeconomic factors outside organizations’ control do contribute to momentum, the trajectory and pace of industry growth very much rely on the innovation efforts of a sector’s constituent businesses. By harnessing technology and creating new offerings or business models, companies can forge new markets and propel new consumption.

Our past analyses have shown that roughly 80 percent of a typical company’s growth comes from its core business . 1 “ Courageous growth: Six strategies for continuous growth outperformance ,” McKinsey, October 23, 2023. This is often interpreted to mean that if a business happens to be in a high-momentum industry, simply riding that wave will yield significant growth. However, even within high-momentum industries, there is a distribution of winners and losers . Companies that rebalance their business portfolios toward high-momentum segments can boost those portfolios’ performance and thus their chances of being among the winners.

But that’s not the whole story.

What are sometimes missed in that narrative are the factors behind this momentum and the role that industry members play in accelerating it. Momentum stems partly from the amount of growth headroom that remains in an industry. Just as companies or products follow an S-curve wherein a period of investment is succeeded by a stretch of steep growth that eventually tapers off, so do industry value pools. A new market experiences a period of rapid growth until it becomes saturated, causing its growth to slow. In an industry made up of mature markets, growth momentum declines to the rate determined by macroeconomic factors. Beyond this point, the growth of a company within that industry will tend to come at the expense of other companies’ market share or consumers’ wallets.

This is where innovation comes in—and those who make the boldest moves often gain the biggest benefits. Our analysis of the most successful global companies demonstrates that the degree to which an organization proactively shapes its industry’s growth momentum can significantly boost its performance and longevity.

How breakout innovations feed growth momentum

The pace of an industry’s growth is partly propelled by broad trends such as the rate of population growth, the purchasing power of that population, the rate of inflation, and GDP growth. While some industries, such as utilities and healthcare, are less affected by macroeconomic factors, they are exceptions rather than the rule.

However, there is another set of factors that relates to actions individual companies take to spur the growth and expansion of their industries. Notably, sectors with high proportions of companies that develop new categories of products, services, and experiences or invent new business models outperform other industries on economic profit, 2 Total profit after subtracting the cost of capital. ROIC (Exhibit 1), and revenue growth (Exhibit 2). That’s because these types of innovations—breakout, instead of incremental—create entirely new markets rather than merely new versions of existing products or experiences, thereby expanding the industry’s economic pie rather than just increasing one company’s slice of it.

While industries such as biotechnology and software have the highest rates of such breakout growth because of the rapid proliferation of new technologies and their applications, slower-growing sectors can experience similar innovation-based bursts. Consider men’s grooming: a sluggish segment that long relied on basics such as bar soap, shaving cream, and aftershave. It became a high-growth category, thanks to a multitude of new skincare and grooming products. 3 Liam Killingstad, “Consumer spotlight: Cosmetics, men’s grooming and a shift to personal care,” Front Office Sports , July 26, 2023. Similarly, innovations to jet engines reduced the cost of planes and, eventually, of tickets, making plane travel more affordable to many more consumers.

Industries with many such innovation pockets typically outperform others in part because breakout innovations can create entirely new markets rather than just increase the revenues from existing ones. The development of the HPV vaccine, for example, which prevents a viral infection correlated with several types of cancer, did not replace or cannibalize tetanus vaccines or even broad sections of oncology product portfolios. Instead, it created an additional revenue category that expanded the overall industry’s size.

This pattern doesn’t apply solely to patent-heavy industries. In the early 2000s, telecommunications was considered a mature industry, yet it experienced a surge of growth when innovations in wireless technology created a new value pool. These advances launched the industry—and the companies in it—on a new growth curve since most customers, at least initially, added wireless service to their landlines instead of replacing them.

Breakout innovations can involve business models and processes instead of offerings. The introduction of endcap shelving units, for instance, at the entrances to supermarket aisles dramatically increased companies’ use of in-store displays by reducing the time it took to set up in-store promotions from weeks to days.

Just as breakout innovations expand industries’ overall pies rather than merely shifting market share from one company to another, so do they boost companies’ growth momentum through the acceleration of companies’ constituent businesses. That’s because each business that makes a big innovation advancement gives the parent company more headroom to grow.

Shapers of industry momentum gain advantages

Breakout innovations are great for industry momentum, but do you need to be the one to carry them out or can you just ride the wave of another industry member’s successful big bet? It turns out that those who take the risks gain significant advantages in the markets they create. Our review of the top 20 global companies found that 14 of them shaped new markets (Exhibit 3). 4 Twenty largest companies based on five-year average economic profit from 2018 to 2022. In some cases, they created entire subindustries.

This strategic move is so powerful because creating a market without competitors, or one in which only indirect substitutes exist, enables the innovator to generate much faster growth than it could in a crowded segment, assuming the new offering satisfies sizable unmet demand. Companies that do this essentially create their own high-momentum markets.

However, like most high-reward moves, this type of innovation also entails high risks, because creating something truly new is more difficult than making incremental improvements. The companies that do this successfully select opportunities where they have clear strategic advantages, looking for natural business extensions to which they can adapt or “stretch” a proven winning play. They also ensure that they have the capabilities to capture value, instead of just defining an opportunity that better-positioned competitors can seize. Tencent, for example, started as a messaging software company but was able to build on its strategic advantages of a broad customer base and experience building “sticky” applications to expand into numerous industries, from e-commerce to video games. It leveraged its more than one billion active monthly users to innovate new offerings across a broad, device-agnostic platform and has spent over $20 billion on R&D in the past three years and filed more than 62,000 patents. 5 See “Best automotive innovations of 2019,” TrendWatching, May 2019; and “#TencentInnovates: 8 ways Tencent is innovating to make a difference for people,” Tencent, July 26, 2023.

Breakout innovations need not invent entire categories. Telehealth—fed by the rapid advance of healthcare apps, AI-enabled medical imagery for remote diagnosis, and wearable biosensors—was more of a tactical expansion than a new market. Incremental innovations, such as the semiconductor industry’s steady stream of novel chips that have revolutionized numerous devices, can also create new markets but at a regular, repeatable pace rather than with a big bang. Sometimes, innovation requires minimal R&D. Take bottled water: this format that became a convenient alternative to tap water expanded the beverage industry without all its growth coming from the cannibalization of other offerings.

How to build a new market

Creating innovation-led momentum takes time. Most of the top 20 companies we studied that did so built their growth trajectories over years or even decades. Some were incumbents that could use their balance sheets and capabilities to move into new areas. Others began as start-ups with groundbreaking ideas that they were able to rapidly scale, then applied that expertise to other segments.

While their paths differ, the leading market builders do share some common characteristics. Critically, their CEOs and boards had strong convictions in the moves’ potential, giving management the ability to act boldly and bring the full organization along. For example, early in his tenure as Microsoft CEO, Satya Nadella committed to launching a new growth phase through big investments in cloud computing , a success the company is now trying to reproduce with investments in AI. 6 “ Microsoft’s next act ,” McKinsey Quarterly , April 3, 2018. Another commonality is these companies’ reliance on strategic advantage to choose their innovation bets. Semiconductor manufacturer TSMC, for example, uses its foundry capabilities to out-innovate and outcompete potential rivals in the new markets it creates.

To reduce the risks involved in pursuing breakout innovations, companies can consider the four following strategies:

• Identify a ‘two-fer.’ This involves finding an opportunity that can offer an immediate benefit while also making a new offering available to customers. Amazon Web Services, for instance, originated as a way for the online retailer to meet user demand on high-traffic days, but the company found it could rent out the extra capacity at other times. This business model innovation became an entirely new market that now accounts for the majority of Amazon’s profitable growth. Similarly, Ozempic was originally designed as a medication to treat type 2 diabetes, but its appetite suppression properties inspired the company to conduct clinical studies on its use for weight loss. That resulted in a new brand based on the same molecule. This new market has ended up creating significant additional sales.
• Look for a structural opening. Factors such as excess capacity (which companies like eBay have used), government subsidies, and other incentives can also reduce the risk of the innovation investment. Today, many companies are tapping green-technology incentives to fund attempts at breakout innovations. 7 Renewable energy market update - June 2023 , IEA, June 2023. Energy company NextEra, for example, built one of the world’s leading renewable businesses by combining government subsidies with commercial discipline. 8 Kari Huus and Jim Gold, “How NextEra is gearing up to be the energy giant of tomorrow,” GreenBiz, January 27, 2022. In the semiconductor space, TSMC is using subsidies for nearshore chip production from countries such as the United States to bolster both its scale advantage and innovation resources. 9 Natalie Sherman, “TSMC wins subsidies to expand US chip manufacturing in Arizona,” BBC, April 8, 2024.
• Strike a partnership. Big companies often watch start-up activity to gauge new market trends and are increasingly partnering with or acquiring smaller companies to fuel their own breakout growth. The incumbents combine the start-ups’ innovative ideas with resources, customer relationships, and other competitive advantages the smaller companies lack. Pharmaceutical firms, for instance, are using their expertise at navigating highly regulated development processes, as well as their branding and sales reach, to rapidly turn innovative drugs into new product lines. Pfizer’s partnership with BioNTech on the COVID-19 vaccine is a famous example, a success the company built on by making four acquisitions in 2022 to further strengthen its innovation pipeline. 10 “Pfizer top the 2023 Innovation Index,” Idea Pharma, May 2, 2023. The company saw 60 percent of its 2022 revenue come from products it had developed during the previous three years.
• Provide tools to enable others’ growth. Some companies, rather than trying to be gold miners, are embracing the concept of selling picks and shovels instead. As was the case with endcap supermarket displays, with this strategy, the innovator can spread its risk across numerous industry participants striving to outsell each other. John Deere, for example, has successfully developed a platform for apps, sensors, and other products that help agricultural businesses be more productive. 11 Simon Blackburn, Jeff Galvin, Laura LaBerge, and Evan Williams, “ Strategy for a digital world ,” McKinsey Quarterly , October 8, 2021.

Industry momentum—and, by extension, business portfolio momentum—is a function of both broad external factors and individual companies’ actions. By investing in bold innovations that create new customers and markets and thus spark new waves of industry growth, innovative business leaders can not only expand their companies’ headroom for growth but also change the trajectories of their industries.

Matt Banholzer is a partner in McKinsey’s Chicago office, Tim Koller is a partner in the Denver office, and Laura LaBerge is a client capabilities director in the Stamford, Connecticut, office.

The authors wish to thank Andy West, Linda Z. Li, Marc de Jong, and Marc Goedhart for their contributions to this article.

This article was edited by Joanna Pachner, an executive editor in the Toronto office.

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Start » strategy, how to write a business plan for inventions.

Attract investors and formalize processes by developing a roadmap for commercializing your innovation.

An inventor’s business plan is a framework for bringing a concept to market and achieving profitability. It’s similar to a regular business plan but adds details about intellectual property protection and prototypes. Ideally, a business plan for inventions builds upon a feasibility study. It should highlight your findings from a comprehensive competitive analysis and be tailored to its intended audience, such as investors.

An invention business plan is crucial for getting funding and securing strategic alliances. But you can also use it internally to guide operations, from marketing to hiring. Here’s how to craft an effective report.

Determine your audience and purpose

Although most business plans for a new invention follow a basic outline, you can tailor your approach to appeal to specific readers. Suppose you want to pitch your idea to investors or accelerator programs. In this case, it’s essential to mention funding requirements. But you should also emphasize the skills and experience your team brings to the table. According to Heer Law , “Often, investors and other stakeholders care as much or more about who the people are behind an invention than the potential of the invention on its own.”

However, if you’re looking for co-founders and employees, modify your document to clarify the skills required and long-term benefits for early joiners. Once you understand what drives your intended audience, you can write a business plan that excites them while answering their questions.

[ Read more: How These Innovation-Driven Startups Reached an Elusive Milestone: Profitability ]

Outline your invention business plan sections

The Small Business Association (SBA) said, “There’s no right or wrong way to write a business plan. What’s important is that your plan meets your needs.” You can use a basic template , take a free course , or start from scratch. Begin your process by outlining commonly used sections, then modify your document to include invention-specific content.

Often, investors and other stakeholders care as much or more about who the people are behind an invention than the potential of the invention on its own.

Christopher Heer, Annette Latoszewska, and Daryna Kutsyna, Heer Law

Consider adding the following components:

• Executive summary: Keep it concise but touch on each aspect of your plan. Remember to pique interest and compel your audience to read more.
• Company overview: Discuss your industry and niche, including what makes your invention and business stand out. Explain how you will commercialize your design (selling to consumers, wholesale, or retail).
• Organizational structure: This is where you describe your legal business structure (sole proprietorship, partnership, limited liability company (LLC), or corporation). Provide details about inventors, executive team, and current or prospective employees.
• Market and competitive analysis: Share insights from your feasibility study, including an analysis of your industry, competitors, and market. Add statistics about market size and growth. Plus, offer a customer profile and explain what differentiates your invention from others.
• Invention: Tell readers about your design (features and functions) and how it benefits customers. Mention your product research, prototypes, and intellectual property registrations .
• Marketing and sales: Explain how you will apply competitive and market insights to earn a return. Topics may include sales, pricing, promotional strategies, positioning statements, and marketing campaigns.
• Financial information: Show how your invention will be profitable and use spreadsheets, charts, and graphs. Include projected revenue , profit and loss, cash flow, and a balance sheet. Also, detail any funding needs, how you’ll get the money, and what you’ll do with it.
• Appendix: Add all supporting evidence for your invention business plan. For instance, Chron.com said, “Investors respond well to business plans that include endorsements of the product from potential customers.

Add sections for your new invention

In addition to these regular sections, you can expand your business plan to include research and development, intellectual property protection , and owned or future IP assets. According to Heer Law, the research and development component helps readers understand “future products that can be commercially exploited.” Likewise, details about your intellectual property protection ensure investors that you’ve taken action to defend your innovation from unwanted duplication.

Provide information about any assets going through the application process and how various trademarks, patents , and copyrights will impact profitability. Also, discuss if you plan on developing new inventions or have prototypes available.

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From idea to innovation: a step-by-step journey.

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Michael Schultz is the founder and chairman of Infuse Hospitality .

Transforming a brilliant idea into a thriving business demands more than just inspiration—it requires a steadfast commitment to a well-crafted plan. The journey from concept to nationwide success hinges on channeling creative energy into a strategic roadmap.

I’ve seen many aspiring entrepreneurs falter by overcomplicating their ideas. This often leads to confusion as sub-ideas emerge and obscure the intention of their original plan. To unlock the full potential of your idea, you must stay focused on a clear, coherent strategy. In my experience as a serial entrepreneur, this approach is key to realizing long-term success.

So how do you overcome the common fear that “someone must have thought of this already” and start bringing your idea to life? It’s vital to ensure that your innovation stands out as truly unique, and I recommend taking these six steps to verify its originality.

1. Cultivate Your Idea

Nurturing a great idea is a balancing act of individual imagination and outside input. Start by developing and fine-tuning your idea on your own, then talk to your target audience to get valuable feedback. Does this product or service resonate with them? Would it resolve a problem they are grappling with or fulfill a need or desire? Would they be willing to pay for your solution?

Use your audience’s responses to refine your idea and create a vision document that includes an overview of your idea, a detailed business plan and a marketing strategy. Be conservative in your financial projections. It’s easier to adjust your budget when you’re crushing it, rather than having to navigate out of difficult financial situations when you’re just getting started. Financial stress can cause you to make decisions that are a penny short and a pound foolish. We entrepreneurs are optimists, but I believe we must be more cautiously optimistic when charting our financial plans.

2. Do Your Research

Do your due diligence to identify any concepts resembling your idea already in the market. Conduct thorough online research and explore patent databases, using search terms with various combinations of keywords, buzzwords and related phrases. If you do encounter similar existing ideas, dig deeper into what makes your proposal unique. What distinguishing factors set your idea apart from others? Does it have enough originality and buzzworthiness to succeed? In other words, will the reward justify the risk?

3. Trademark Or Patent Your Idea

If you decide your product or service is innovative enough to pursue, take action to protect your intellectual property, patenting or trademarking the idea and name before going any further. There is nothing like gaining momentum and really getting into the stride of building your business, then having a planet dropped in the middle of your world when you receive a cease and desist notice because you skipped this step.

4. Acquire Legal Support

Investing in legal support early on is essential for laying a strong foundation for your business. Don’t wait until you encounter difficulties to start working with a lawyer. Lean on their expertise for important tasks such as conducting intellectual property research and creating a robust operating agreement.

Develop this agreement with your long-term business goals in mind. For example, if you plan to seek additional investment, how will future funding rounds affect the agreement, as well as your current investors and partners? Choose your investors and partners wisely; who you decide to work with is a major factor in your business success. Accepting a check from the wrong person can be a mistake that changes the direction of the business forever.

5. Stay The Course

I’ve learned a lot on my entrepreneurial journey; however, I wish I’d realized earlier that not everyone will understand or celebrate your wins. Navigating your path to business success can often mean dealing with criticism and negativity from others. People who aren't entrepreneurial or who are struggling to achieve their own goals might not be the best cheerleaders for you. Be intentional about surrounding yourself with supporters who believe in you and your vision.

Entrepreneurship can be a lonely endeavor. Make it a priority to build relationships with other entrepreneurs and business leaders who understand what you’re going through. You don’t have to feel isolated; there are others out there who share similar experiences and perspectives. Joining networks or finding a support group of peers who face the same challenges can provide you with much-needed camaraderie and guidance.

6. Leave A Legacy

My role as a father has significantly shaped my priorities as an entrepreneur. I am a strong proponent of impactful entrepreneurship—focusing not only on making money but making a positive difference in the world with my businesses. I want to leave my four children with a legacy that transcends the traditional concept of success. I define success as having a meaningful, lasting impact on people and communities.

Find your own “why” as an entrepreneur. What overarching mission drives your actions? What do you want your legacy to be? Create your own definition of success, and continue to look for opportunities to be a force for good.

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9 Examples of Innovative Products

• 23 Mar 2022

One of the biggest misconceptions of innovation is that it’s a modern concept. Past discoveries tell us otherwise. For centuries, innovators have built upon standard products and practices to create something new and exciting. Yet, novelty is only one characteristic of successful innovation. The other piece that’s often overlooked is usefulness.

In simpler terms, innovation must be new and useful. It needs to be original but won’t be successful unless people use it. Keeping these two characteristics in mind is essential to a design’s success.

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Types of Innovation

Innovation isn’t limited to products. There’s no denying Apple’s transformative products have made them an industry giant. Still, it’s important to remember that innovation has several applications in business. Here are three types of innovation your company can design and implement.

• Product or service innovation : This focuses on creating a new product, service, or product feature. Examples range from the internet to the pivoting head of Gillette razor blades.
• Process innovation : This refers to changes made to make a process more efficient. For example, assembly lines were a breakthrough in manufacturing.
• Business model innovation : This is when you transform business operations. Ride-sharing platforms, such as Uber or Lyft, are an example of this. They took the taxi and car service companies’ business model and altered it to a peer-to-peer, digitized model.

Although product innovation is only one type, much can be gleaned from analyzing past product innovations. This requires an understanding of what makes products innovative.

What Makes a Product Innovative?

In the business world, innovation is an original idea that’s useful to consumers. But what does that mean, and how can you ensure your idea has these two essential ingredients?

One way is by identifying and addressing the pain points your consumers are experiencing. There are two types of pain points innovation should address: explicit and latent.

• Explicit pain points : Customers are aware of, and can easily define, these pain points.
• Latent pain points : These pain points are more difficult to define because most customers aren’t aware of them.

Innovative ideas that focus on users’ challenges have a better chance of success and longevity. Understanding your innovation’s viability can be harder than identifying pain points, but it’s another crucial factor in this process.

Remember, innovations aren’t inherently modern. Netflix’s streaming service is a successful innovative product but grounded in the modern world. Much older innovations, like the creation of language, are equally insightful examples of how prospective innovators should approach the creative process. Keep this in mind when you’re looking for inspiration and guidance in your own innovation process.

9 Innovative Products

Recency bias—limiting your understanding of innovation to modern products and services—can be detrimental to the innovation process. Don’t let a narrowed perspective of what successful innovation is negatively affect your creativity.

Here are nine incredibly successful innovations that have stood the test of time.

1. The Wheel

Invented around 4000 BCE, the wheel is one of the earliest recorded innovations. While it’s often forgotten as an innovative product, it continues to have an impact. Its inventive design addressed a common pain point around moving multiple heavy objects at once. The result was a circular frame that allows users to transport many heavy items in a short time. Its significance is still felt today and has led to additional breakthroughs, such as carriages and today’s more modern transportation methods.

2. The Printing Press

Your favorite book or magazine wouldn’t exist without the printing press. This breakthrough in technology was novel and useful in that it allowed for the mass production of written documents. It solved an explicit pain point in document production: time consumption and tediousness. Creating a product that eliminated the handwriting element transformed the publishing world by making the process easier and quicker.

3. The Lightbulb

Although there’s some debate on who invented the lightbulb, no one denies its significance. It’s a great example of an innovative product that solved both explicit and latent pain points. Before lightbulbs, products like lanterns and oil lamps produced light but made houses more susceptible to fires. At the time, these accidents were accepted as a necessary risk until innovation showed people otherwise.

4. Automobiles

Tesla founder and CEO Elon Musk wouldn’t be the business mogul he is today without the initial innovation of motorized automobiles. The automobile’s invention in 1886 kickstarted a major evolution in technology by focusing on the transportation landscape’s challenges, such as fatigue from walking or bicycling and caring for horses that pulled carriages. Today, horse-drawn carriages are nearly obsolete beyond tourist attractions and services.

5. Computers

Computers have completely changed everyday life. Since their humble beginnings of automating mathematical equations, computers have progressed and evolved according to users’ ever-changing pain points. For example, computers were originally enormous, spanning nearly 50 feet long and weighing almost five tons. Over time, their size and portability have reduced from desktop computers to laptops and smartphones.

6. Cellular Phones

While cellular phones also evolved, they initially solved a specific problem for phone users: landlines weren’t portable. People were tethered to house phones, beepers, and phone booths if they wanted to receive a call. Cellular phones allowed users to take calls from anywhere. As more consumers bought cellular phones, this product began to solve latent pain points about safety outside the house and emergency contacting.

7. The Internet

The internet is such a widely used product, it’s hard to imagine a world without it. In this way, it may be the most successful modern innovation. It was originally based on the expression “information at your fingertips.” Although limited information was accessible to those with a library card, basic cable, and a newspaper subscription, there was still the inconvenience of waiting for information. The internet solved this latent pain point by becoming a vast hub of instantaneous knowledge and information.

8. Bagless Vacuum Cleaner

Bagless vacuums may seem like an odd addition to this list, but it’s a great example of how simple updates to a product can impact an industry. James Dyson , an industrial designer, was frustrated with the process of emptying his vacuum cleaner bags. They sometimes caused clogs and buildup that affected the vacuum’s performance. With these pain points in mind, he built the first bagless vacuum cleaner. Since then, Dyson has revolutionized cleaning technology and continues to innovate with its users' key pain points in mind.

It’s no surprise that Apple products are almost always mentioned in any discussion about innovation. The iPhone is a modern innovation that revolutionized cellular phone technology. While computers and cell phones were constantly evolving, Steve Jobs understood that consumers’ latent need for portability and speed couldn’t be solved with a computer or phone alone. This is what led to the iPhone.

How To Be Innovative in the Modern World

Innovation isn’t just for inventors and entrepreneurs. It isn’t just for the workplace either. In fact, an excellent way to foster innovation as a regular practice is to adopt a design thinking mentality.

Design thinking is a user-centric, solutions-based approach to innovation. In the online course Design Thinking and Innovation , Harvard Business School Dean Srikant Datar touches on design thinking’s principles using the four phases of innovation framework :

• Clarify : Conduct research to clarify a problem and empathize with your target audience. The goal is to identify key pain points, ensuring solutions are useful.
• Ideate : Focus on idea generation to solve problems identified during research.
• Develop : Explore potential solutions generated during ideation. Create prototypes to validate their effectiveness.
• Implement : Advocate for your innovation to key stakeholders and encourage its adoption into the organization.

This approach provides structure to aid your innovation process but doesn’t require rigid adherence. Creative problem-solving methods, like design thinking, aren’t one-size-fits-all. Rather, they’re roadmaps to creating innovative products and services.

How You Can Create an Innovative Product

Classifying products as “innovative” isn’t just applicable to products like an iPhone or electric car, and it doesn’t require teams of experts. Innovation can be accomplished by anyone with an original and useful idea.

The design thinking process is a wonderful resource for innovation on any scale. Each stage is conducive to all forms of innovation and can guide you through your new product, service, process, or business model’s creation. With the right tools, you can create something that’ll change the world for the better.

Eager to learn more about how design thinking can help you innovate? Try our online course Design Thinking and Innovation , which will teach you how to apply the design thinking framework to the innovation process. Interested in our other entrepreneurship and innovation courses ? Download our free course flowchart to determine which best aligns with your goals.

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Entrepreneurship Course Series Prepares Future Innovators

By Scott Jackson

A series of three entrepreneurship classes offered at WSU Tri-Cities is pairing students with industry professionals to develop and launch new ventures in clean energy.

Paul Carlisle (’06 Busi. Admin., ’07 MBA), an adjunct professor who runs the program within the Carson College, says the classes are meant to be taken in succession. Students team up with a researcher who holds a freshly patented technology, often from nearby Pacific Northwest National Laboratories (PNNL), to help create a business plan and secure venture financing to create a viable business.

“The goal is that regardless of what the technology is, if the student was to take all three classes, they would have the preparation and access to launch a new business,” Carlisle says.

Classes integrate business with innovation

The first class is new venture planning, followed by launching new ventures, and concluding with entrepreneurial management. Carlisle, who has been teaching entrepreneurial management since 2011, says these classes have been offered at WSU for many years, but were adapted at Tri-Cities to include participation within industry. They were offered as a series for the first time in the fall of 2023.

The first few weeks of each class are largely instructional, ensuring students are familiar with the process and certain business fundamentals. Then students meet with researchers and participate in an “innovation lab,” sharing and applying the business skills they gained in those first weeks.

“The innovation lab is a noncredit workshop we run where PNNL researchers, and community members learn about commercialization,” Carlisle says. “Then we create this entrepreneurship course load in which students within the three classes can participate in these workshops as part of their learning venture.”

The final weeks are spent developing the business further and putting together a final plan for how the business will be commercialized. While similar in format, Carlisle says the classes build on one another as they progress—though he says there’s plenty of benefit from taking a single class of the series.

Carlisle says PNNL has committed to hiring students who complete all three classes as interns. The national laboratory will then send them through the US Department of Energy’s Energy I-Corps program, a two-month, immersive entrepreneurial training initiative meant to teach researchers to develop and sustain industry engagement and market awareness in US labs.

Series offers practical skills for all

As WSU Tri-Cities does not offer an entrepreneurship degree, Carlisle says the class series is part of an “innovation track” meant to compliment a business degree—though the classes are open to all majors.

“The reason we’re calling it ‘innovation’ is the goal here is not necessarily that everyone who takes this will start a business or be involved in a startup,” Carlisle says. “They very much could be an intrapreneur trying to launch a new product within an existing business.”

Participating students say the knowledge and expertise gained in these classes are valuable to all manner of professions. While he has plans to become a middle school history teacher, Brandon Gale (’24 Soc. Sci.) says the opportunity to work directly with a subject matter expert was too good to pass up. However, Gale says he found the entrepreneurship training offers benefits that go beyond the world of business.

“Even if you’re not interested in entrepreneurship, things like people skills, critical thinking, problem solving, and autonomy, no matter your discipline, will be valuable in your life,” Gale says. “You’re going to learn things that you will use for the rest of your life; that’s just the reality.”

Student Mychal Fry (’26 Busi. Admin.) says while he’s unsure if he wants to take on the risk inherent in starting a new venture, the class series was a major highlight of his college career. Fry says the skills he learned will benefit his career, but the opportunity to network with industry professionals is almost as valuable as the degree itself.

“This kind of forces you out of your comfort zone and to adapt, improvise, and solve problems on the fly, which is a huge growth opportunity,” Fry says. “So just even in a general sense, this class series could benefit any student.

How SAP Business AI Will Bring Significant Value to Utility Organizations

The utilities industry is undergoing a profound transformation driven by the integration of artificial intelligence (AI).

As organizations strive to optimize energy usage, enhance customer experiences, and streamline operations, AI emerges as a pivotal technology. SAP Business AI can revolutionize the utilities sector through reliable, relevant, and responsible solutions.  

To learn more, read this article or this blog for an in-depth look at recent SAP Business AI innovations. 

Strategic Impacts of AI on Utilities

SAP Business AI can impact several strategic priorities within the utilities industry: 

• Customer intimacy : Customers often face long wait times and generic responses, leading to frustration and decreased satisfaction. AI-enabled tools like guided conversations, intelligent Q&A, and response generation can significantly enhance customer service by providing personalized interactions based on a 360° customer view. This helps optimize service, improve the classification and processing of service requests, and boost cross-selling and upselling opportunities through intelligent product recommendations. 
• Marketing and sales simplification : Sales cycles are prolonged due to the manual processing of unstructured data, causing inefficiencies and delayed order creation. AI can analyze marketing data using natural language processing to create sales orders from unstructured data and automate back-office processes. This automation helps reduce manual effort, accelerate sales cycles, and ensure more accurate order processing. 
• Operational excellence : Unplanned equipment downtime and inefficient field service management lead to increased operational costs and reduced asset reliability. AI helps optimize asset management through predictive maintenance, dispatch planning, and field service management. By predicting equipment failures and planning maintenance activities proactively, AI can reduce downtime, enhance labor utilization, and lower operational costs, working to ensure smoother operations and higher asset reliability. 

How AI Will Transform Utilities

SAP Business AI offers a range of scenarios across various business functions: 

• Customer experience : AI capabilities in SAP Emarsys Customer Engagement and the SAP Service Cloud solution can enhance customer engagement through intelligent content recommendations, case categorization, and automated response generation. 
• Metering and markets : AI solutions for utilities, such as implausible meter reading validation and energy forecasting, can improve data accuracy and operational efficiency. Joint offerings with industry cloud partners help to further enhance these capabilities. 
• Bill-to-cash and finance : Intelligent collections, invoice matching, and automated processing of out-sorted billing documents can streamline financial operations, helping to improve cash flow and reducing manual intervention. 
• Service and asset management : AI-driven predictive maintenance, anomaly detection, and asset health monitoring can ensure optimal asset performance and reduced downtime. 

AI in Action  

AI holds vast potential across sectors, particularly in utilities. From innovations in grid management to optimizing distribution operations and energy management, AI is revolutionizing how utilities operate and secure their infrastructure. 

To tackle current industry challenges and evolving market conditions, many utility companies are exploring AI solutions. These solutions span production, supply chain management, and maintenance operations, offering significant improvements in operational performance and quality metrics. In today’s challenging environment, AI is increasingly seen as an essential tool for achieving efficiency and resilience. 

To illustrate the transformative potential of SAP Business AI, various organizations worldwide have leveraged its capabilities to realize substantial advancements: 

• IWB utilizes machine learning to accurately predict solar power production in Basel, Switzerland, thereby enhancing the city’s energy planning and management. 
• Avangrid employs automated AI-driven solutions for overhead network inspections, which streamline maintenance processes and improve operational efficiency. 
• Energie Südbayern optimizes the incident creation process with SAP’s support assistant, enhancing the responsiveness and effectiveness of its customer service operations. 

These examples underscore the ability of SAP Business AI to drive innovation and efficiency across different sectors, offering a blueprint for other organizations aiming to harness AI for similar improvements. 

On the Horizon   

As utility organizations continue to explore AI applications, the future holds immense potential. Future scenarios that customers envision may include: 

• Visual inspection and condition-based maintenance : AI-enabled visual inspection for asset condition monitoring can transform maintenance strategies, reducing out-of-service times and improving efficiency. 
• Next-generation customer interaction : A conversational self-service agent for utilities could provide personalized customer experiences, proactive bill-shock prevention, and tailored tariff recommendations. 

Implementing Business AI: Moving Toward a Resilient Digital Future  

By integrating SAP Business AI, companies can leverage SAP’s established industry data models, which have been refined through collaborations with thousands of customers over the years. This AI can be trained to understand and analyze your enterprise’s unique data structures, helping to ensure compliance with data protection, ethical standards, and privacy regulations. 

SAP Business AI is poised to transform the utilities industry by delivering real-world business results through relevant, reliable, and responsible AI solutions. By integrating AI into core business processes, utilities can achieve operational excellence, enhance customer experiences, and drive sustainable growth. Embracing SAP Business AI can enable utilities to navigate the challenges of the future and unlock new opportunities for innovation and efficiency. 

Innovation in AI is always evolving. The sources below provide up-to-date guidance in determining how AI can be used in your organizations:

• SAP AI road map with a focus on utilities  
• Partner solutions for the utilities industry, powered with AI, on SAP Store
• Explore SAP for Utilities  
• More information on the SAP AI Global Ethics policy  

For more insights into SAP’s AI innovations and their application in the utilities sector, join us in Miami, Florida, September 9-11 at SAP for Utilities, presented by ASUG. Register here .

Matthew London is vice president of North America Central Renewable Energy & Utilities at SAP.

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