Innovation is not just about new product development. Most of the innovation literature focuses on the companies that excel in developing new game-changing products and services, but this is only one aspect of innovation.
I have written elsewhere that there are five generic business strategies, which are, in summary:
- Product Leader. These companies want to have the latest and best products for their target customers. Examples include Apple, Sony, Singapore Airlines, Ferrari.
- Cost Leader. These companies offer amazing prices to their customers. Examples include Tata Cars, Aldi, Primark.
- Convenience Leader. These companies offer clear standards of performance and value, deliver against them every time and are essentially hassle-free. Examples include McDonalds, Toyota, Dell, Amazon.
- Service Leader. These organisations attract clients as a result of their expert advice and support. Examples include John Lewis, Nordstroms, Home Depot, Lexus.
- Solutions Leader. These businesses tailor their offer to individual customers, creating bespoke solutions. Examples include McKinsey, IBM, Harley Davidson.
An organisation that aspires to leadership must, as a result, be innovation-led. Only then can it create clear blue water with its competitors.
But, as set out in the table below, the nature of the innovation is different. McDonalds, for example, as a Convenience Leader, doesn’t spend all of its time re-inventing the Big Mac. Instead, it finds new, more efficient and reliable ways to manage its supply chain, and improve the convenience for its customers (e.g. drive-thru’s, 24-hour restaurants).
Conversely, a product leader, such as Nike, will be relentlessly introducing new products and technologies, managing their life cycle and, as demand declines, withdrawing and replacing that particular model.
What is your strategic focus, and what does that mean for your innovation priorities?
© Stuart Cross 2010. All rights reserved.