An innovation strategy should inform
An innovation strategy is a plan to grow market share or profits through product and service innovation. When looking at innovation strategy through a jobs-to-be-done lens, we see that an effective strategy must correctly inform which job executor, job, and segment to target to achieve the most growth, and which unmet needs to target to help customers get the job done better. When it comes to creating the solution, an innovation strategy must also indicate whether a product improvement, or a disruptive or breakthrough innovation approach is best. Unfortunately, most innovation strategies fail in these regards, which is why innovation success rates are anemic.
Myths that mislead
Innovation strategy is not about selecting activities to pursue that are different from those of competitors. This is the myth that misleads. Selecting activities is not strategy. An innovation strategy is about creating winning products, which means products that are in an attractive market, target a profitable customer segment, address the right unmet needs, and help customers get a job done better than any competing solution. Only after a company produces a winning product or service should it consider what activities are needed to deliver that product or service.
Why focus on activities?
To formulate an effective innovation strategy, a company must know all its customers’ needs, which needs are unmet, and what segments of customers exist with different unmet needs. But in most companies, managers can’t agree on what a customer need even is, so of course they don’t know what all those needs are, let alone which are unmet or what needs-based segments exist. Given this situation, there is no way they can successfully formulate an innovation strategy that will help customers get a job done better. And this is why companies focus on activities instead. Activities are something tangible that companies can control. Unfortunately, activities merely enable competitive advantage, they’re not the reason for it.
Formulating an innovation strategy
The truth is, competitive advantage and differentiation are derived from choosing the right unmet customer needs to target. To do this, all the customers’ needs must be known. Our approach to formulating an innovation strategy works because it is built around a solid definition of what a customer need is, and our approach reveals all the customers’ needs. It is the only process to do so. We have discovered that customers consider between 50 and 150 metrics when assessing how well a product or service enables them to successfully execute any job. These metrics (or desired outcomes) are the customer’s needs, and the power behind our innovation process, Outcome-Driven Innovation (ODI).
The qualitative, quantitative, and analytical methods that comprise our ODI process provide the insights we need to formulate a robust and reliable innovation strategy. ODI-based strategies work because they reveal what needs-based segments exist, if those segments are under- or overserved, how big they are, and what unmet needs are unique to each segment. They also reveal if a new platform is needed to drive growth.
Most companies have never had customer insights like this before, nor the decision-making advantages that come along with them. Using ODI, we determine which strategy is best, allowing us to make the winning move. Learn more about our growth strategy consulting services.