Networking conversations for Innovation

The word “Innovation” is used when describing a wide range of new outcomes that didn’t exist before. “Innovation” is used to describe the invention of a new ice cream flavor or the creation of an entirely new industry. Often the same word can be used within a conversation but with different intentions. The result is frustrating discussions that do not produce the desired outcomes. The solution lies in the intention of the conversation. Some might say the ambition of the conversation. So, what are the different types of innovation conversations and how could they be classified?

Bansi Nagji and Geoff Tuff are the creators of the “Innovation Ambition Matrix“. This matrix groups innovation into 1 of 3 categories based on an intersection between the company’s strategic plan to create a market-leading edge and the markets they are playing in.

The 3 categories are:

Core

Innovators in this space take market trends, competition analysis results from customer engagement survey’s to produce innovations. These conversations are targeted at optimizing products/services for existing customers.

Adjacent

Adjacent innovation builds on top of the foundation of the company’s existing products/services. Conversations in this space seek to result in the creation of brand new products/services offered to an entirely new customer segment.

Transformational

Conversations that describe transformational innovations seek to produce entirely new innovations for markets that don’t exist yet. The results of innovations in this category are famously known as disruptive when successful.

By classifying the goal of the innovation conversation teams can align more accurately around the generation, refinement, and implementation of ideas to produce more effective outcomes.

Gaming and opportunities

Gene Klein, a Holocaust survivor, reflects on the life lessons he has extracted from his trials in a German concentration camp.

2 strategies he utilized to survive his life-threatening circumstances are:

Accelerated opportunity taking

Gene explains how he had to seize opportunities at the moment they were presented. Assessing the outcome of the status quo enabled Gene to construct a strategy that would enable him reach the goal of survival. The establishment of a predefined strategy enabled Gene to assess opportunities faster than others which ultimately saved his life.

Gamificaiton

Gene implemented a simple incentive model: If he survived the day he would consider his goal successfully accomplished for the day. Every morning the “game” would initiate and every night if he was able to make it back to his bed he would define that day as a victorious day for himself. Gene made it through the harshest environments through finding an internal motivational model which allowed him to achieve his ultimate goal.

Selecting a business strategy

The essence of strategy is choosing what not to do


– Michael Porter

One of the many challenges facing young businesses is the effective decision making around pursuing freshly discovered opportunities given the company’s founding vision. In an attempt to diversify away from risk, aggressive opportunity grabbing often times leads to a distraction from founding objectives. What is needed is the formulation of a business strategy leaders can use to set direction and prevent distraction from valid but unsuited opportunities at hand.

A strategy is the mechanism and framing tool through which a company can use to outline a plan to achieve the decided objectives. A defined strategy makes it efficient to communicate to the wider company and shareholders. Put plainly, a defined strategy helps decision makers turn down opportunities that would distract the business and pursue matching opportunities with precision.

One framework that can be utilized to find an appropriate strategy is the “Grand Strategy Matrix”. This tool maps a company’s position on the intersection of market growth and competitive positioning and proposes a number of strategies that best suit that position. The first step is to gain consensus on the company’s position within the market. Many tools exist however SWOT analysis when responsibly engaged, provide a solid basis for the entry into a strategy finding activity.

1. SWOT

The most efficient mechanism to gain qualified information as an input into the Grand Strategy Matrix is to perform an internal and external audit. The internal audit will reveal the top 5 key internal strengths and weaknesses that rest under the control of the company. Equally, the external will should reveal a top 5 opportunities and strengths within the market the company operates in. The underlying outcome is a good understanding of the market, its growth, and the businesses position within that market.

2. Map the company position on the matrix

Once a context is created through the SWOT analysis the Grand Strategy Matrix provides the framework to plot the business across the axis of Market Growth and Competitive position. The result will put the business in one of four quadrants representing a set of strategies most appropriate for the company positioning.

In a previous post I outline each strategy more detail

Quad 1: Intensive set of strategies

Businesses positioned in a strong competitive position and strong market growth quadrant are positioned to further maximize gains by intensifying their market position in the growing market. As the pie grows these businesses seek a bigger portion of it. The following strategies are best suited such an objective:

  • Market development;
  • Product development or;
  • Market penetration.

Quad 2: Diversification set of strategies

Driven by weak market growth but strong competitive position these set of strategies seek to increase overall market share through expanded product/service offerings
The strategies involved in reaching the growth objectives are:

  • Concentric diversification;
  • Horizontal diversification or;
  • Conglomerate diversification.

Quad 3: Defensive set of strategies

Cost cutting and competition repelling strategies are needed when the business is situated within the defensive quadrant. The following strategies apply:

  • Defensive;
  • Retrenchment or;
  • Liquidation.

Quad 4: Integration set of strategies

Integration strategies seek to increase margin within a growing market by reducing the transaction cost in delivering a product/service to the customer. The following strategies apply:

  • Forward integration;
  • Backward integration or;
  • Horizontal integration.

Summary

The framework allows companies to filter opportunities through an accurate business strategy. When using the Grand Strategy Matrix company leaders are able to select a strategy based on company position within a dynamic market. The result is a reduced waste, increased efficiency, and tighter company alignment.