How Should You Think About Your Organisation's Innovation Strategy?

The importance of innovation and creativity in organisations is an area we have been exploring over the past few months as part of my MBA. It is essential for organisations to consider their innovation strategy and what structures are in place for innovation, especially given the times we are living in. As we have seen with several organisations over the past two months, business models will need to evolve to survive. This is important in the current environment, but equally important for life after COVID-19.

Several SMMEs want to innovate, but do not have a structure for how to think through their innovation strategy. This article provides a brief overview of the characteristics and dimensions of innovation for organisations to consider when thinking through their innovation strategy.

Characteristics of Innovation

An established approach to classifying innovation is to distinguish between incremental and radical innovation. Incremental innovation is a series of small improvements or upgrades made to a company's existing products, services, processes or methods. The changes implemented through incremental innovation are usually focused on improving an existing product's development efficiency, productivity and competitive differentiation. For example, making minor improvements to an app can be categorized as incremental innovation.

On the other end of the spectrum, radical innovation refers to major transformations of existing products or completely new developments that fundamentally change the existing products, services, etc. For example, the introduction of electric vehicles can be categorized as radical innovation.

In your organisation, you may already have been applying incremental or radical innovation (or somewhere in between). To develop an innovation strategy, it is useful to think through where your organisations currently sits on this spectrum and where you would like to be. In terms of strategy, are you playing to win (PTW) or playing not to lose (PNTL)? These will require different innovation approaches. PTW generally requires a radical innovation approach while incremental innovation is suited to a PNTL strategy.

Dimensions of Innovation

Tidd and Bessant (2013) present a general framework for understanding different dimensions of innovation, known as the 4Ps framework. Below are the 4P dimensions and a description for each.

These are not completely different types of innovation. Instead, these should be viewed as dimensions. For example, an innovation can have a product and position dimension. It is useful to consider these areas of your business as you think through where and how to innovate.

In conclusion, an effective innovation strategy requires structure and an understanding of how the organisation innovates. To build this understanding and structure, it is useful to consider the characteristics and dimensions of innovation described above.

References

Tidd, J. and Bessant, J. (2013) Managing innovation: Integrating technological, market and organizational change (5th edn) London, UK: Wiley

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