Part two of a two-part blog.
In my last post, I discussed how to manage innovation strategically. I also introduced the global landscape in which companies are competing and how aspirations for innovation is vital, but often confusing for companies looking to stay relevant in a changing, dynamic world.
We introduced the article, “Managing Your Innovation Portfolio” in the Harvard Business Review, as means to show companies a path to Innovation, whether your appetite be low- or high-risk. And lastly we introduced the idea of the Ambition Matrix (see chart). The axes are ‘Where to Play’ and 'How to Win', which when mapped out, showcase three initiatives relating to innovation relative to a company. Those are: CORE, ADJACENT and TRANSFORMATIONAL.
What does CORE, ADJACENT and TRANSFORMATIONAL really mean to you, as a company seeking to innovate?
Core innovations are those that are closest to your current products and services and your current customers. There may be a minor change in a product to give it new life and thus, it is lower on the risk scale, but the potential for reward is not as profound. You also should consider that your company may already be well known within this space so the trust and brand equity that you have built in this area can easily transfer to your new innovation. The chart classifies Core as “Optimizing existing products for existing customers”.
Adjacent Innovations are those innovations that leverage products and services that you already do well, but move into new markets. The risk is a bit higher, but so is the potential for reward. And, you may be well known and have equity with the products that you produce, but this is not known within the new market which you are approaching so there is extra work to be done to raise awareness. The chart classifies Adjacent as “Expanding from existing business into ‘new to the company’ business.”’
Lastly, Transformational Innovations that are new products/services/ideas that you have never thought of or done before, for a brand new market – a market that is not new to you, but new to the world. Take the iPhone as example and the new market it created when it first launched with a product no one had come close to thinking of before. This is a high risk area, but with high risk comes a potential for high reward. You may not be known in this arena, but then again, no one else is either so you have to start with creating awareness and building a whole new world. The chart classifies Transformational as “Developing breakthrough and inventing things for markets that don’t yet exist”.
Once you have the process, goals and path to innovation mapped out, you need to communicate the ideas to your employees and to your customers. This is where marketing can support and in some cases, accelerate the move toward a more innovative foundation.
Consider internal communications tactics and tools in order to educate your employees as they are often times at the front lines and interface with your customers so you want to ensure that all employees are being consistent in the ways that they are communicating your innovation strategy.
Externally, consistent marketing messaging to customers strengthens the perception of innovation which in turn shifts the way the world looks at your company. How drastic that shift needs to be is based on your innovation goals and appetite for risk, which also helps to formulate the intensity and messaging of the marketing.
If you have a high-risk, broad shift from being a non-innovative company (in perception) to an innovation leader, you will need stronger, more disruptive marketing messages and materials with high frequency and broad reaching order to begin to change the mind of your audience. They won’t just one day wake up and decide that you are innovative, you need to prove it to them. Similarly, if you have a low-risk and a small shift, that messaging and materials can be more contained as you don’t have as large of a gap to close.
The true key to managing innovation within your own company is to agree to your own appetite for risk, define a clear innovation goal and path to get there, and balance that path with the appropriate weighting of Core, Adjacent and Transformational Innovations. Then building a marketing plan for your internal and external audiences that fuels the change that you seek as a company.
If innovation is on your mind or if you've conquered innovation, we want to know. Drop a comment below and let us know how you approached innovation for your company.
Source: Harvard Business Review, “Managing Your Innovation Portfolio”, by Bansi Nagji and Geoff Tuff, 5/4/12
Image courtesy of fotopedia.com
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