Innovation Strategy is the essential link between new product development efforts and your overall Business Strategy. A company’s Business Strategy defines: key objectives, overall direction, priority initiatives, and the expected pace of growth.
The Innovation Strategy is what enables companies that rely on innovative new products, technologies, and platforms to advance their Business Strategies to:
- create customer value
- grow market share
- enter new markets
- increase profitability
- alter market and competitive landscapes.
The 6 Elements of an Effective Innovation Strategy
Top performing companies consistently approach the following 6 elements of an effective Innovation Strategy as the ideal flow, or thought process, to guide leadership teams in developing an insightful Innovation Strategy:
- Objectives and Role
Specify the objectives of the new product development effort and the role product innovation will play in helping the company achieve its business objectives.
- Arenas and Strategic Thrust
Focus is key to an effective Innovation Strategy. Specify where you will and will not attack. The concept of strategic arenas is at the heart of Innovation Strategy – the markets, industry sectors, applications, product types, or technologies where your business will focus its efforts. Specifying these arenas is fundamental to defining the strategic thrust of the new product development effort. It is the result of identifying and assessing new product innovation opportunities at the strategic level.
- Attack Strategy and Entry Strategy
How do you plan to attack each strategic arena? You may choose to be aggressive and be the industry innovator (first to market); or a fast follower, waiting and watching, and rapidly copying and improving upon competitive entries. Other strategies focus on being low-cost versus a differentiator versus a niche player. The global dimension is also part of the attack plan: whether to adopt a global, glocal, or regional strategic approach to product development.
- Deployment – Spending Commitments, Priorities and Strategic Buckets
Strategy becomes real when you start spending money! How much you spend on new product development and the emphasis you place on each strategic arena naturally leads to the next key decision to bucket resources for each arena. Assigning buckets of resources helps to ensure new product development is strategically aligned with your overall business goals.
- The Strategic Product Roadmap – Major Initiatives and Platform Developments
A strategic product roadmap is an effective way to communicate a series of major initiatives in your attack plan. Your strategy should map out your planned major new product development initiatives (and their timing) required to succeed in a certain market or sector. It may also specify platform developments required for these new products.
- Tactical Portfolio Management Decisions – Project Selection
Using a method to monitor Innovation Strategy execution improves the odds that you will successfully implement it. However, due to the unique and risky nature of innovation, monitoring progress via a master project implementation schedule is simply not sufficient. Not every project that is initiated will be worth completing. As new ideas make their way through the Stage-Gate process, their initial attractiveness can improve or wane as new information becomes available. The Stage-Gate® Model is specifically designed to enable several Go/Kill decision points throughout a project’s journey. Additionally, when you provide executives with visibility to the entire portfolio of projects, their individual project selection decisions could further optimize the portfolio and even maximize its value.