Business strategy innovation

Question

There are various ‘types’ of innovation – radical vs incremental, disruptive vs sustaining, modular vs interdependent, competency enhancing vs competency destroying, etc. Why does the ‘type’ of innovation that is occurring matter to a business strategist?

Answer 1

The type of innovation occurring is critical for a business strategist for several reasons:

1. **Alignment with Business Goals**: Different types of innovation align with different business objectives. For example, incremental innovation might support steady growth, while radical innovation could be key for a company aiming to redefine its market.

2. **Resource Allocation**: Each innovation type requires different resources. Disruptive innovation might need significant investment and risk tolerance, while sustaining innovation could be more about improving existing processes with fewer resources.

3. **Market Positioning**: Understanding the innovation type helps in positioning the company in the market. Disruptive or radical innovations can position a company as a market leader, while modular or incremental innovations might help in maintaining competitiveness.

4. **Risk Management**: Different innovations carry different risks. Competency-destroying innovation could make existing skills obsolete, requiring new talent acquisition and training.

5. **Long-Term Planning**: Innovation types influence long-term business strategies. For example, competency-enhancing innovation aligns with gradual growth and leveraging existing strengths, whereas competency-destroying innovation might be part of a strategy to pivot the business in a new direction.

6. **Competitive Strategy**: Understanding the innovation landscape helps in formulating competitive strategies. If competitors are engaging in radical or disruptive innovation, a business might need to respond similarly to stay relevant.

7. **Organizational Culture**: The type of innovation can dictate the kind of culture a business fosters—openness to change, risk tolerance, and creativity levels.

In essence, the type of innovation shapes how a strategist plans, allocates resources, manages risks, and positions the company in the market, making it a fundamental aspect of business strategy.