How to Develop Strong Business Innovation Strategies
October 09, 2020
Case categories include: Founder’s Insights Leadership Strategy & Planning
By Paul Witkay, Founder & CEO, Alliance of Chief Executives
As business leaders, we often talk about companies that have changed the world through their products. Figures like Steve Jobs, Bill Gates, and Jeff Bezos are legendary for how their visions have transformed our day-to-day lives and, for many of us, are trailblazers worthy of emulation. But innovation is not an easy undertaking.
Each year, countless companies invest significant time and money in search of innovations that don’t bear fruit. What’s the reason for this lack of results? More often than not, it stems from poorly formed business strategies.
From my 24 years of working with CEOs from a wide range of industries, it’s become clear that well-informed business innovation strategies lie at the heart of cutting-edge companies. Developing these strategies, however, is an art in and of itself. It requires close observation, creative analysis, and out-of-the-box thinking.
3 Ways to Develop Business Innovation Strategies
While entire books have been dedicated to this topic, I see strong business innovation strategies largely arising from three actions. These can be applied to virtually any business, regardless of industry.
1. Start From a Basic Product Idea
At its core, a business strategy is an action plan that aims to achieve one overarching goal. While the initial brainstorming stages can spur a thousand ideas about potential product innovations, it’s important to have one central mission to hone in on. With this foundation, your R&D teams, sales & marketing departments, and others involved in the strategy implementation can stay grounded as they develop the best product possible.
One of the best examples of this is the iPod. When the iPod came out, it didn’t have the most features or even the most RAM on the market. But having the most features wasn’t the goal of Apple—and the iPod didn’t need them to be successful. Instead, Jobs set out to make an exceptionally intuitive device that anyone could use without even opening a user manual. This basic guiding principle ultimately led to a product that dominated the market for a decade.
The iPod story shows us that successful business innovation strategy begins with a specific objective, like creating the most intuitive music player in the world, and builds from there. The next steps can take different routes.
2. Develop a Deep Understanding of Your Customer Base
Innovation is rarely successful if pursued for its own sake. Rather, innovation should be pursued to add value to the customers who rely on and benefit from your product and services. This can take different forms in different industries, whether it’s making products faster, more reliable, more affordable—or something else entirely. So, developing a successful path to innovation means having an understanding of what will most benefit your customers. This insight can be gained through several methods, including:
For companies that already have products on the market, consumer feedback can be a great indicator of which innovations would be most valuable. Online surveys are a simple way to collect this information and can often be disseminated via email marketing campaigns. Product reviews can also help you discover potential improvement opportunities. Additionally, qualitative measurements, like Net Promoter Scores and other internal feedback metrics, let you gauge customer satisfaction on an individual-to-individual scale.
Examining Customer Behaviors
As you develop your business innovation strategy, it’s important to move past your existing customer base and look toward the market at-large. Examining consumer habits, as well as how and where money is currently being spent, can give you invaluable insights. For example, people are moving away from cable television towards streaming options, and in-person shopping is increasingly less popular compared to on-line shopping, particularly in the age of COVID-19. Those are significant changes that open the door to new products and services.
By revealing current trends, this type of market research may inspire meaningful, marketable innovations. It can help you identify key demographics that may turn into potential business prospects. For companies that don’t have existing products, market research is especially crucial, as it can guide your entry into the market.
3. Brainstorm Innovative Solutions and Learn From Mistakes
Once you’ve completed sufficient research and feel that you’ve developed a realistic idea of your customer base, it’s time to focus on the product. While every company will approach product brainstorming in their own unique way, this is one of the most successful methods I’ve seen in my businesses and Alliance meetings.
Identify the Pain Points, Formulate Solutions, and Make Your Prototype
By collecting feedback and examining market trends, you and your team should be able to identify elements that are currently lacking in your customers’ experiences. A prime example of this is Uber.
Uber’s business innovation strategy began by identifying the pain points inherent to the traditional taxicab system:
- Uncertainty of Driver: The rider didn’t know who their driver would be.
- Uncertainty of Time: The rider didn’t know when the taxi would arrive.
- Uncertainty of Driver Knowledge: The rider didn’t know if they had to give directions to their driver.
- Uncertainty of Pay System: The rider didn’t know if the driver would have change on hand or if a credit card payment would be possible.
- Uncertainty of Cost: The rider didn’t know what the cost of the taxi ride would be.
Once the pain points are identified, it is time to consider what the most ideal solutions could be. For Uber, this meant offering:
- Certainty of Driver: The rider is provided with personalized driver information and review history with every ride.
- Certainty of Time: The rider knows where their driver is in real-time as they wait for the car’s arrival.
- Certainty of Driver Knowledge: The rider knows that the driver will follow a reliable, computer-provided route.
- Certainty of Pay System: The rider pays through a standardized in-app process, eliminating transaction issues.
- Certainty of Cost: The cost of the ride is confirmed before the rider steps into the car.
After you’ve formulated how your product will provide value to your customer, you can create your first prototype and make your way to a full market introduction.
At each stage of development, ongoing feedback can alert you to product improvement opportunities. As you record customer reactions and act on these responses, your product will become continually refined and adapt to changing consumer needs.
The Strongest Business Innovation Strategies Can Come From Outside Perspectives
Throughout my career, I’ve seen that diversity in thought and perspective is the root of true innovation, which is why I’ve repeatedly turned toward Alliance of CEO members for their valuable input. In every Alliance discussion, I've found myself engaging with leaders from around the globe, each specializing in industries different from my own. Through these interactions, I’ve learned about new approaches to developing product ideas and features that I had never before considered.
By integrating the practice of viewing problems from an outside perspective into your enterprise, you can take your innovation strategies to the next level and turn your visions into reality.
For more thoughts on how to form strong business innovation strategies, contact the Alliance of CEOs today.