Your guide to building a game-changing innovation strategy

Dr Sam MacAulay

Many organisations eagerly identify innovation as a core value in their work practices and culture yet struggle to put it into practice. According to UQ Business School innovation expert and MBA teacher Dr Sam MacAulay, the key to being an innovative organisation and maintaining innovative practices is to develop a clear innovation strategy. In this article, Sam MacAulay shares 5 reasons why your business needs an innovation strategy and how to create one to help your business move forward.  

The difference between inventions and innovation

Before you can successfully build a game-changing innovation strategy, it’s important to understand what innovation is and what it is not. It is not the invention of new configurations of ideas, knowledge, and resources. Innovation creates and captures value through new ideas in the form of products, processes, services, or business models. The key difference between invention and innovation is the process of creating and capturing value. Without innovation, you will go out of business.

An example of an invention might be that one-page plan you see in your organisation that says, ‘this is our innovation strategy’ but doesn’t actually have any value creation or capture part of it. Innovation can be anything from an iPhone to a new maintenance service set up and developed in the marketplace.

5 reasons why your business needs an innovation strategy  

Most businesses don’t have an innovation strategy, so implementing one for your business can create an immediate advantage over your competitors.

Without a comprehensive innovation strategy, you are inadvertently setting your business up to fail. As ongoing disruption in a global economy requires businesses to evolve, here are 5 reasons why you should establish your own innovation strategy:
 

1.  The world is full of people with ideas

Before you get started, it’s important to remember you’re not the only one innovating. It is highly common for two people to produce the same idea, often simultaneously. When people around the world are constantly generating ideas and bringing them to market, it’s effective to have an innovation strategy to combat the competition.

2.  Innovation can challenge your identity

Radical innovations are known to put the identity of leaders and organisations to the test. To achieve your goals, you might need to re-shape the internal and external perception of your business to align with the direction of your innovation. An effective innovation strategy can help with this.

3.  Navigating uncertainty

Innovation can quickly lead to uncertainties around scalability, technicality, functionality, and affordability. A great prototype can often be worthless without a strategy to reinforce its growth potential. An innovation strategy should aim to identify questions and explore novel solutions to assist in managing market uncertainty.

4.  Uncertainty creating new opportunities for competitors

Uncertainty makes it difficult to plan long term but postponing your innovation too long can create opportunities for competitors to seize. That’s why it’s important for industry leaders to move forward, adapt, and seek growth opportunities beyond traditional approaches. When tackling potential risks in a new venture, an innovation strategy can help you consider how to:

  • visualise and predict the performance of your prototype or business model
  • determine what assets need to be controlled
  • establish the best route to market
  • decide on suitable partnerships
  • evaluate the market capacity and what consumers would pay
  • identify what the return on investment will be.

5.  Prepare for imitation

While you’re already competing with like-minded creators who can stumble on a similar idea, there are also plenty of copycats eager to capitalise directly from your hard work and planning. Many innovators fail to gain returns on their innovation because imitators quickly enter the market once the playing field has already been defined.

Imitation can come in the form of copycat manufacturers with greater production capacities or conglomerates seizing start-up partnerships. Even if you have secured your initial funding and built prototypes, it is important to play your cards close to your chest and strategise accordingly to avoid being undercut by competitors. 

How to develop an effective innovation strategy  

In the chance that a business does have an innovation strategy, it often lacks key elements that connect ideas and actions with the organisation's goals. To build a game-changing innovation strategy, there needs to be a clear understanding of what innovation means within your organisation and industry, and why it matters.

According to expert strategist Richard Rumelt, the kernel of any effective strategy will include these 3 components:

1.  A diagnosis

An innovation strategy should immediately seek to explain the nature of the challenge. A quality diagnosis simplifies complex details by recognising the critical parts of a particular situation. If an organisation doesn’t understand the fundamental problem their strategy aims to address, solving it is an impossible feat.

2.  A guiding policy

Upon making the diagnosis, an organisation should commit to an approach. The guiding policy clarifies the primary objectives and priorities to help focus efforts and resolve the problem. This policy needs to address the obstacles first identified in the diagnosis and determine how the organisation can effectively overcome these challenges.

3.  Coherent actions

The innovation strategy should clearly communicate the necessary steps to develop the policy into a coordinated plan. These steps will help structure the coordination and implementation of all future actions. Each step should have a distinct purpose to ensure the strategy’s success.

And always remember: a game-changing innovation strategy will avoid empty expressions and instead speak to how your organisation will navigate varying levels of uncertainty.

Learn how to create your own game-changing innovation strategies to drive outcomes by broadening your critical thinking, creativity, and agility with the UQ MBA.

Find out more 

 

Learn how to create your own game-changing innovation strategies to drive outcomes by broadening your critical thinking, creativity, and agility with the UQ MBA.

Find out more