The practices of 100 innovative companies were reviewed in this paper, which looks at how innovation has become a major differentiator.
Innovation Strategies for Creating Competitive Advantage – Bowonder, Dambal, Kumar, Shirodkar
Enormous strategic opportunities for companies have arisen as a result of increasing globalisation, rapid technology changes and changing lifestyles. Innovation has become the major differentiator in the competitive race and innovative companies have learned to sustain themselves over long periods of time.
The objective of this study was to identify innovation processes and practices in 100 innovative companies.
The authors selected 100 firms from various sectors considered innovative by combining the Boston Consulting Group’s list of top 100 innovative companies and the UK Department of Trade and Industry 2007 global R&D scorecard.
The authors used three criteria for identifying the innovativeness of a firm:
- It created an innovative product, service or business model
- The innovation impacted the business in a positive manner
- Patents had been granted for the innovation.
The study looked at four major aspects:
- Leadership support for innovation
- Fostering an innovative culture
- Creating innovative processes
- Implementing innovation.
The authors identified 12 powerful strategies to visualise innovation strategies:
- Platform offering;
- Cycle time reduction
- Brand value enhancement
- Technology leveraging
- Future proofing
- Lean development
- Innovation mutation
- Creative destruction
- Market segmentation
The paper concludes that innovation can become a major competitive differentiator delivering benefits in three distinct dimensions:
- Exciting customers through new features, offerings, experiences and services;
- Leading competitors with innovative responses, including proprietary technologies;
- Expanding, enriching and diversifying the product portfolio to achieve different growth strategies.
With globalisation, brands have become the messaging tools of global companies, which are using innovation to create and strengthen brand differentiation. Leading companies have begun to adopt external technologies for innovation.
The 12 innovation strategies identified in the report provide a way to catalyse open innovation processes so that innovation moves out of the confines of R&D labs and becomes an intrinsic part of the way companies plan their futures and implement those plans.
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Reviewed by R&D Today editor