The Innovation Strategy is meant to help create a product according to the future needs of a customer. An effective strategy must indicate those needs and how to achieve the most significant growth in response to them. It is focused on creating a better product that would be attractive on the market, adapting the product, and getting the most profit out of it. The strategy formulates and indicates certain and uncertain needs of the market.
To effectively use the Innovation Strategy, one must find a source of innovation opportunity and integrate it with personal ideas by broadening the company’s vision of the product. It is essential to analyze the market, learn customers’ needs, and find the most profitable niche that would help to achieve goals. Moreover, the Innovative Strategy indicates essential questions, such as when, where, and how to compete to make a higher profit.
There are four innovation strategies described by Merle C. Crawford: Inventive, Adaptive, Economic, and Innovative Applications. Innovations that are used in Inventive Innovation Strategy are first to the market; they change the direction of existing products and services. Therefore, the competition is small, but the risk is relatively high because the product is new to the customer. The Adaptive Strategy is focused on improving and defending the existing product, making it the best among others.
The risk involved in this type is smaller, due to customers’ familiarity with the offer. A different kind of Innovative Strategy is Economic Strategy, which is used by producers who do not intend to lower the cost of production. They wait for opportunities that would include low risk and less money and usually use successfully implement ideas developed by others. The strategy of Innovative Applications is mostly focused on giving a new life to existing technology.
The hierarchy of strategies describes the logical framework of the organization. On top is the Corporate Strategy, which is oriented the innovation by following the customers’ needs to guarantee a competitive advantage in the market. The next one is the Business Strategy, which is formulated according to the focus or cost of the business and is meant to help achieve sustainable competitive advantage in the market. Business Strategy mainly indicates how to compete in long-term success. The last one in the hierarchy is the Functional Strategy. It is focused on which technology to use, including its development, human resources, legal, supply chain, information, and management functions.
The hierarchy of strategies helps to indicate corporate values, goals, culture, and tasks, which is vital in the long-run success. Different levels of hierarchy address different goals and issues, therefore, create guidance to which decisions to be made at which level of strategy. However, the three-level hierarchy model mostly works for massive corporations that have multiple units and sub-organizations. However, for sole proprietors, corporate and business strategies would be aggregated to one level. As for small businesses, there would be only one level, with all three levels overlapped together.
Assessing the Innovation strategy of the business is the key to creating a successful plan, which would be profitable in the long run. An innovative leader who indicates the company’s direction is also a crucial factor for success since no matter how well the strategy is built, it cannot guarantee success without a leadership aim. Therefore, companies that lack leadership and only depend on developing strategies would inevitably fail.