Innovation strategy in any business or industry involves aligning your product life cycles in the company with your various research and development activities. This article takes a look at the three critical pillars of innovation strategies.
These are fundamental to making sure that your innovation, research & development and new product development teams are all working in harmony.
1: Research and development ideation
The first pillar of innovation strategy involves the nurturing of idea creation within the company. The majority of innovative business ideas often come from within a research and development department as a means to centralize the creation of new ideas for products/services.
Note: An innovation strategy can be used for both physical products or services. This article, and website, makes no distinction between whether it is a physical item or service, except where explicitly stated.
However, new ideas can (and should) come from all departments and should feed back into the research and development group whether directly or indirectly using whatever type of idea tracking software or content management/knowledge management systems the company uses. Many business management degree courses fail to point out this fact that inter-department communication is key to ideation.
Business growth strategies can also inform idea creation by focusing staff upon certain areas of particular interest. For example, a business growth strategy for a software development house could involve outsourcing some elements of their product’s development.
As a result, new ideas could be created to look into ways of architecting new software solutions that incorporate the ability to outsource developing sub-components of the application (i.e. coding by contract). You effectively combine strategy and innovation by doing this.
2: Life cycles and product innovation strategy
The second pillar for innovation strategies is to align your companies focus on innovation to match up with the companies product life cycles. Product life cycles can vary from company to company and industry to industry.
Some more traditional companies/industries (e.g. mining) have long life cycles where the product’s architecture design is reused for several years, and perhaps even decades. As a result, innovative new ideas can only be incrementally added as a way to gradually improve products/services.
By contrast, companies with short life cycles (e.g. software development) are constantly upgrading products and looking for new ways to outdo competitors. With a shorter life cycle, the research and development group can incorporate cutting edge technologies at a much faster rate into their lines of products and come up with entirely new architectures and product platforms on a monthly basis.
For example, Googles marketing strategy for products and online services can incorporate quick turnaround times and the concept of the ‘eternal beta‘ in order to be constantly innovate their product line.
3: Information/idea transference and customer feedback
The third and final pillar of innovation strategy requires that there should be a constant stream of information and ideas between the research and development element of the company and the actual product creation departments. To add to this, there should additionally be an information channel from customers (i.e. customer feedback) which feeds back into improvements and ideation.
This constant cycle of information and idea transfers should be included as part of business growth strategies to assess what type of innovative marketing strategies can be used to target customer needs.
There is no point coming up with a groundbreaking product innovation strategy that is not at least partly based upon some form of market research or customer feedback. After all, this shows that there is a genuine need for these features. Many smaller-scale business ideas need good research to pinpoint the truly commercial opportunities.
Likewise, innovative marketing strategies that are solely looking at what existing customer needs are will often miss out on considering new technologies that are entering the market place (use online/web-based marketing tools and keyword research to assess current trends). These new technologies can then be used to target customers with groundbreaking new products that fulfill customer needs which were previously not identified.
For a company to have effective innovation strategies which work correctly within their business, they really need to establish these three pillars of innovation in order for the new ideas to make the best use of new technology while still being informed by business growth strategies and market research.