If you want to achieve breakthrough change to grow revenue and profits, why not try innovation? However, Innovation has become an overused buzz word, and there are many assumptions made when the term is used.
Before undertaking any strategic planning with innovation in mind, it is critical to be clear on your organisation’s innovation appetite. At a minimum the innovation appetite must be agreed between the board and CEO.
The Innovation Spectrum
At one end of the spectrum innovation simply means doing what we currently do better or differently. In many industries incremental improvement can be enough to keep current customers satisfied, and maintain an edge over competitors. This approach is very low risk, easy to implement but has lower upside potential.
The other end of the innovation spectrum is developing new products and services that solve unmet needs of the marketplace, for example; products such as the iPhone/iTunes/App Store or low cost airlines. New products for unmet needs are typically much higher risk and higher return if they meet the needs of the market, but equally pose the risk of being abject failures.
So your organisation’s innovation appetites and risk appetites are closely correlated. It is almost impossible to introduce a more risky kind of innovation into a traditional, risk averse organisation, without some burning platform for change (and by then it is usually too late).
Understanding what innovation means to your organisation and your industry is essential. Being clear on this makes the process for developing strategy far smoother, as the boundaries can be set at the outset providing a framework for developing strategy.
For example, before undertaking strategy work we ask organisations to consider these questions:
- Will our focus be limited to existing products and services, or are you open to identifying new products and services?
- Are you focusing on the currently geographies served, or potential new geographies, even global?
- If new products and services are to be scoped what it the minimum potential market for them to be worth pursuing?
- What funding is available to fully evaluate and commercialise a new product or service?
Answering these questions up front provides clear boundaries for the strategy development team, and prevents wasted investment in time and money pursuing strategies that ultimately don’t get past the first hurdle.
Whether working with a customer on a Blue Ocean Strategy or change that is more incremental, we apply our expertise to set the foundations for developing strategy successfully. Contact us on +61 2 9450 1040 to discuss how adopting a different approach can help your company achieve a breakthrough change to grow revenues and profit.