What is an innovation strategy?

What advantages does it offer? And how do companies develop innovation strategies? The most important topics for the sustainable development of your innovation strategy are listed here.

In an innovation strategy, companies and organizations determine which new products, services and processes they want to develop within the next few years. An innovation strategy aligns the development of innovative products and services with future corporate goals.

An innovation strategy defines strategic innovation fields. Challenges and the resulting need for change within the company are also defined. The innovation strategy is a part of the corporate strategy. All measures and goals for the future are defined with which a company wants to develop long-term innovative products, new business areas and optimal processes. The necessary steps to achieve the goals of the innovations strategy are defined in a concept.

A sound basis for the development of your innovation strategy can be found in our academic paper “Strengthening Innovation Capacity through Different Types of Innovation Cultures”. In the paper, you will learn how to develop holistic innovation strategies based on your innovation culture. You will learn how to develop a sustainable innovation strategy and how to establish a professional idea management and innovation management.

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How to develop an innovation strategy

Companies developing an innovation strategy should answer key strategic questions, analyze future trends relevant to their business, watch out for hidden customer needs and prepare a list of the competencies they need to develop innovation successfully. Especially in times of digital change and digital disruption it is important to regularly develop and modify an innovation strategy.

The development of an innovation strategy is significantly influenced by future trends. Analyzing these trends, observing them and evaluating the effects on one’s own business model are essential to develop an innovation strategy. Typical sources for trends are:

  • Regularly published studies by trend research institutes and futurologists,
  • reports on long-term trends within an industry, often published by specialized consulting firms,
  • articles in the daily and trade press,
  • regular exchanges with suppliers, visiting trade fairs or discussions in Internet forums,
  • observations of start-ups operating in your industry.

Keep track of social and technical developments in your industry. In the process of developing your individual innovation strategy it is important to evaluate trends. The Innolytics® Innovation Management Software helps you to collect, discuss and the trend evaluation process.

The analysis of your competencies shows you what your company could achieve on the basis of existing knowledge in the various areas (product development, production, sales, logistics, etc.). It’s an important aspect when developing an innovation strategy because your competencies will be key to successful innovation. One of the key questions to ask is this: “Which opportunities arise from what we are currently doing?”

The analysis of your competencies show which solutions you can develop based on your current state of knowledge and how you can transfer these into new fields or markets. The analysis of your competencies is more than just a list: It is a new consideration and evaluation of your knowledge. Only if you redefine your know-how can you derive opportunities for your innovation strategy from it.

To do this, ask yourself the following questions:

  • What are we doing today? List all the activities and sub-activities you carry out today.
  • What know-how is behind these activities? Make a note of what enables you to carry out these activities.
  • What are the general benefits of this know-how? Evaluate the potential of transferring your know-how to other business areas.
  • What concrete innovation opportunities can be derived from your competencies? Think about which new products or offers you can develop on the basis of your know-how.

To develop your innovation strategy, consider how you can transfer your expertise to other market segments or industries and use it profitably. Or how you can generate a market based on your know-how.

A successful innovation strategy is based on identifying hidden customer needs and developing offerings to meet those needs. However, the advice “Find out what your customers need” is easier said than done. Often it is not that easy. You must drill deeper.

Innovation is often based on hidden needs that even customers do not yet know.

  • Did you miss the opportunity to send a text message on your mobile phone 20 years ago?
  • Did you feel that your life was virtually impossible without navigation devices?
  • How many times have you called your favorite coffee maker before the invention of Nespresso and said, “I would like to have a coffee capsule system where I can no longer buy my coffee in the store, but only over the Internet.”
  • How often did you knock on the door of your local furniture retailer when you were young, shouting, “Let your customers assemble the furniture themselves!”

In developing an innovation strategy based primarily on incremental innovation, ask customers: “What would you like to improve about our product?” Or, “How much time does it take?” Radical innovation often goes one step further. Customer needs exist, but they are articulated through the interviewer’s observations and theses. The following questions will help you identify hidden customer needs as the foundation of your innovation strategy.

Questions Underlying Incremental InnovationQuestions Underlying Radical Innovation
What do customers want?What will customers want tomorrow?
What are customers complaining about?What is difficult for customers without their being aware of it?
What can we ask customers?What can we observe with customers?
Why do my customers like me?Why are my non-customers rejecting me?
Which new target groups can we address?Which new target groups can we create?
What does market research tell us about our customers?What does market research NOT tell us about our customers?

Another way to identify hidden customer needs is to develop innovation through collaboration with your customers. In innovation management, this is referred to as “co-creation”. Thus, customer needs flow directly into your innovation strategy.

Tips for developing a successful innovation strategy

  • Include employees at different levels: They all shape the process of building up the innovation strategy together.
  • Form cross-departmental teams: This allows the creative potential from the various departments to be used optimally.
  • Motivate your teams: With enthusiasm and a positive attitude, everyone works actively on the implementation of the new innovation strategy.

Through Innolytics® Innovation Management Software and Idea Management Software, you can turn strategy development into an interactive, lively process – a big plus when developing an innovation strategy.

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