In: Categories » Business » Business development » Business Strategy Innovation and Product Innovation
|
It is interesting to note how many companies in recent years have adopted ‘‘innovation’’ as a core value or as part of their mission statements. If we as a society have moved from the Information Age to the Knowledge Age, then this relatively new emphasis on innovation is quite logical. When information is ubiquitous and is no longer a source of competitive advantage, it is the innovative use of that information (via knowledge) that differentiates people, companies, and nations. Innovation may become the basis of all competition in the future. Innovation is the new competitive arena where present-day gladiators, equipped with similar information and access to similar resources, try to outsmart one another to victory. As we work with and read about corporations today, we see the focus of innovation being placed primarily on the products that they are creating. Go to a company’s Web site. If they talk about innovation or have an Office of Innovation, it is frequently related to the work done in their Research & Development labs. Innovation is usually thought of as invention. Innovation is usually new technology being turned into something unique and tangible that the company can sell. For those companies with strong R&D departments, this focus on the invention of innovative products is probably a key element of their corporate strategy. There are, however, other elements of a corporate strategy beyond innovative products that can help companies compete in their markets. Besides having a product to sell, companies have to make that product and then get it into the hands of customers (and meet their customers’ needs). To do this, companies create specific functions such as manufacturing, sales, distribution, and marketing. These functions and how they interrelate make up the company’s business model. The effectiveness and efficiency of the business model is a critical element of a company’s strategy. Michael Porter, the corporate strategy guru at Harvard Business School, highlighted the importance of ‘‘fit’’ of the functional activities that make up a company’s strategy when he wrote, ‘‘Strategic fit among many activities is fundamental not only to competitive advantage but also to the sustainability of that advantage. . . . Positions built on systems of activities are far more sustainable than those built on individual activities.’’ The implication here is that the most innovative product on the market may not be able to compete against a less advanced product that has a unique or superior business model. Dell Computer is a successful company because of its innovative business model (selling customized computers via the Internet and use of a very strong supply chain management), not because of its superior computers. Therefore, companies that do not have a world-class R&D capability may still be able to compete effectively in markets if they focus their efforts on building a superior business model. Given the strategic importance of a company’s business model in its ability to compete in the marketplace, it is logical that efforts put into improving the business model could provide real value to a company. If that is true, then companies should place at least as much ‘‘innovation’’ focus on the other elements of the business model (and how they interact) as they currently do on the product side. Strategy innovation is a process of applying innovative thinking to the entire business model of a company, not just to its products or inventions.
|
legal disclaimer
1) Our website is not responsible for the information contained by this article as well for any and all copyright infringements by authors and writers. E-articles is a free information resource. If you suspect this article for any copyright infringements, please read the Terms of service and contact us to investigate the problem.
2) The E-articles directory team is not responsible for inaccuracies, falsehoods, or any other types of misinformation this tutorial may contain and will not be liable for any loss or damage suffered by a user through the user's reliance on the information gained here. Please read the Terms of service
Useful tools and features
If you like this article (tutorial), please link to it from your web page using the information above. Linking to this page, this is the only way to help us improve our service, the same time providing your visitors with a way to improve their online experience.
related articles
There is very little at risk with a strategy innovation initiative, other than the time and money invested by the team. The internal team sets the overall budget so that costs (primarily in the Exploring Phase) can be controlled to whatever level represents a reasonable investment in the company’s future. We have never encountered an initiative where discussions with customers and industry experts did not lead to valuable insights for the company. The only question is whether the impact of those insi...
2. Strategy Innovation as a Source of Corporate Renewal
Strategy innovation is often considered the calling card of startup companies looking to enter already-existing markets. However, established companies also use strategy innovation to their advantage, if they have the instinct for it. We recognize this instinct as a strong, internal emphasis on corporate ‘‘renewal.’’ The instinct for renewal is something beyond a cultural norm; it seems to be embedded in the organization’s DNA, what it sees when it looks in the mirror. These companies...
3. The Corporate Dilemma of the Current Business vs. the Future Business
It is not easy for the senior management team of an existing company to navigate the white water conditions of a dynamic marketplace. Everything seems to be constantly changing—products, technologies, competitors, customer needs, distribution channels, and so on. How should the company respond? Is it better to take action or wait for the market to settle down? Should the company stick with their current strategy or move to a new one? On the one hand, the company must manage its current business, whic...
4. Developing Applications with the User in Mind
The corporate scenario described in this article is an example of a common problem in the development of management support systems: in both systems design and implementation, too little attention is given to the needs and perspectives of the end user. Inadequate attention to ease of use in system design and lack of appropriate training and conversion preparedness affect applications aimed at salespeople, production people, administrators, middle managers, and senio r management. These shortcomings can be observed in companies across ...
5. Milestones in Venture Development
Despite the vast differences between one startup and another, we will attempt to describe the main stages in the development of ventures, which are common to all startups. An understanding of these stages is vital for planning the capital-raising process, since they are intimately tied to the startup's cash burn rate, its ability to raise capital, its value, and the amount of capital it needs to raise. The development of a startup may be tracked along four principal development dimensions. Its combined progress on all fou...
6. Stages in Raising Venture Capital
There are several customary stages in venture capital investments, which will be discussed in this section. All of the stages are affected by several characteristics that change from one investment round to the next: the condition of the company, the sources of financing, the company's value, the amount of capital raised, the designation of the capital raised, and problems related to the specific stage of financing. Obviously, these are general characteristics that change from one company to another and also depend on the condi...
7. The Structure of a Business Plan
The business plan is the document in which the company's business planning is summarized. Usually, the purpose of the plan is to describe the company and its products, while specifying the company's strategy and vision, as well as its operating, financing, and marketing plans. An additional purpose of the business plan is to serve as a tool for presenting the company to investors. This objective of the business plan attracted much attention for many years, but has lost favor during the "Internet bubble" years. However, it is hi...
8. The Myths and Realities of IT Steering Committees
The ITSC performs a critical function in supporting the implementation of the corporate information technology strategic plan (ITSP). Further, the committee ensures that it minimizes the risks associated with implementing the IT strategies and receives a return on its investment. Too often organizations do not monitor the activities and decisions of their IS department. Rather, they rely on the IS department to provide the IT solutions because executive management does not understand technology. However, this attitude...
9. How to develop an IT alliance strategy
When IT is supporting a strategic alliance, it must take the time to plan. The time spent up front will be well worth it, ensuring that all parties are clear on the needs and desired results. A thorough project management methodology is critical to success and to compress the overall timeline. In particular, IT should: - Understand the business area’s strategy and objectives for the alliance: This includes reading the strategic alliance contract, charter, and other documentation. It is also important to meet...