Metaphors of strategy: Strategy as innovation

“To turn really interesting ideas and fledgling technologies into a company that can continue to innovate for years, it requires a lot of discipline” – Steve Jobs

Innovation is a practical reality that propels human activity and progress. Without innovation, the history of mankind would have a totally different script. Deadly diseases would have multiplied, transportation systems would be slow, telephones will not exist and babies born prematurely would not survive. The limitations of human existence would be considerably increased. Yet, the significance of innovation is less appreciated as science and technology generates an increasing number of products and services.

Strategy as innovation can be more conspicuous with organizations that adopt a deliberate approach to it. In the presence of major innovators, there will still be the slower innovators. Innovation is an important component of strategy – for some companies more important, for others less so. This article identifies four perspectives on strategy as innovation: revolutionary, evolutionary, focused and remodelled.

Revolutionary Innovation

Revolutions in products and services have been taking place since the aptly labelled Industrial Revolution in the 18th and 19th centuries. During this era, predominantly rural and agrarian societies were transformed to urban and industrial ones. New machines such as the spinning jenny and power loom for textiles paved way for increased productivity. Mass production of steel began in the 1850s transforming many aspects of the domestic and industrial settings.

In contemporary times, revolutions have multiplied through companies like LinkedIn, Facebook and always notably Apple. Revolutionary innovation is typically led by new entrants into the market and those who bring new products or services that create new markets. Some writers refer to revolutionary innovation as disruptive or radical innovation. It is not so long ago in Nigeria that customers had experiences of waiting for hours to complete transactions in banking halls. Then institutions such as Guaranty Trust Bank introduced innovative service models which altered the customer experience to rapidly gain market share. Revolutionary innovation mostly emerges from businesses that are intentionally innovation-driven.

Evolutionary innovation

Outside the territory of the revolutionary innovators can be found the evolutionary. Evolutions are linked to existing products for which organisations create extensions or channels for repeated use. As new entrants activate revolutionary strategies, existing players (especially market leaders) develop evolutionary strategies to retain their leadership. Companies reinvent themselves in evolutionary fashion without necessarily altering their entire mode of operation. In practice, market leaders sustain revenues through evolutionary innovation not being nimble enough to radically alter their business operations. Corporations such as General Electric apply evolutionary innovation across multiple sectors in which they compete.

Although larger organisations have the capability to engage in revolutionary innovation, it might jeopardize long-term stability or even existence. For instance, it proved disastrous for some leading American financial institutions when they started to engage in totally new and hardly understood transactions. Evolutionary innovation is the model for maintaining stability because it limits the risks associated with innovation.

Focused innovation

Not every organization has the capacity or desire to be revolutionary. Some businesses prefer to innovate within smaller but intensely focused sections of the market. Focused innovation may be designed around markets, product categories or services. Bang & Olufsen (B & O), the Danish manufacturer of highly distinctive and exclusive electronics is a focused innovator. B & O maintains outlets in selected locations for a niche customer base willing to pay price premiums for their products.

Boutique institutions exist in financial services, fashion, professional services and hospitality offering forms of focused innovation. The Hotel Seven in Paris is a boutique hotel with uniquely themed rooms, levitating beds, bathtubs suspended in the air and starlit skies. Guests are allowed to customize their experience by giving specifications such as check in times and the items they would like to see in the room upon arrival. Of course, all customizations attract additional rates. Only guests who truly want to pay for such service add-ons patronize such hotels. Indeed, the hotels are not looking to meet every need. Focused innovation in strategy at its best caters to the needs of a small group of customers seeking encounters different from the norm.

Remodelled Innovation

There is space in the field of innovation for various types of entities including market followers. Remodelled innovation entails taking up an existing concept and enlarging or redesigning it for profitable benefit. This space is occupied by the imitators but it is not necessarily a disadvantageous strategy. In fact, if the strategy is deliberately designed to remain in the followers’ category, remodelled innovation would be appropriate.

Similar to focused innovators, imitators have no strategic intentions to lead the whole market. They want to stay among the runners, meet the needs of customers within their reach and give a decent return on investment to shareholders. Such companies are most unlikely to be first movers and lack the risk appetite of new entrants or revolutionary innovators. They would rather be second or third movers watching the flow of the market and going with the flow.

Closing note

Strategy as innovation could be revolutionary, evolutionary, focused or remodelled. Organizations should identify which form suits them best.

Weyinmi Jemide

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