But while most companies have a strategy behind their marketing, operations, or human resources, far fewer have an innovation strategy. Why?
BusinessBecause spoke with Mikkel Draebye, a professor of entrepreneurship and innovation who teaches on the Copenhagen Business School EMBA, to find out more about innovation strategies and how to implement one.
The need for an innovation strategy
All companies begin with innovation: entering the market with a new solution or an improvement on what’s currently available. Typically the companies most closely associated with innovation are the youngest.
But as companies grow, paradoxically it’s often the case that their innovative power begins to decline. That’s largely because growth means new processes and internal structures are put in place. Whether it’s a different hierarchy or even just new office space, these changes can provide a barrier to innovation.
“They become a little bit complacent, a little bit more focused on themselves and maybe milking what they already have. Looking at efficiency and optimizing their internal processes rather than looking at what we’d call innovation or creative destruction,” Mikkel explains.
This can impact the future of a company. The results can be drastic: Kodak, Blackberry, General Motors—history is littered with companies who once dominated their respective industries only to fall when they became too slow to keep up with more agile competitors.
For Nokia, which held 49.4% of the market share for mobile phones in 2007, the advent of the smartphone spelled downfall. The company failed to move into the rapidly emerging space while competitors capitalized on new opportunities. Nokia was bought out by Microsoft in 2013.
Such examples show it’s important to have a clear innovation strategy. Mikkel feels it’s as important as any other part of the business.
“Companies are much more mature when it comes to marketing strategies, sales strategies, operation strategies, or manufacturing strategies. But it’s also important to future proof the company by having an innovation strategy.”
What does an innovation strategy involve?
When considering your own innovation strategy, your approach should be dictated by the nature of your company, what it offers, and where changes are possible.
The most common form of innovation is known as ‘product innovation’. This refers to the creation of new products and services within your company’s portfolio.
Developing new products doesn’t mean you have to create the next iPhone—product innovation can be as simple as a drinks company offering a new flavour—but by adding a new product to your portfolio you can expand your reach within a market.
Processes are another key area within a company that are typically ripe for innovation. ‘Process innovation’ involves changing part of your company’s processes—administration or communication, for example—to improve performance.
Arguably the most famous example of process innovation is the assembly line. Developed in 1913 by Henry Ford, it enabled Ford to mass produce cars at a rate of one per 93 minutes where previously it took more than 12 hours.
A more tricky option is business model or ‘positioning innovation’. Altering your positioning—either through external partnerships or by changing your target audience—can open up opportunities to access new markets.
Airbnb, for example, was once a platform designed to help conference attendees find accommodation. It later repositioned itself as a player in the holiday and travel industry.
Perhaps the most obscure form is ‘paradigm innovation’—changing your company’s purpose or mission. Thinking about your company within a new paradigm can open a range of further innovation opportunities.
For example, IBM was once known as a product-maker, mainly computers, but by the mid-2000s the company had pivoted to become a leading consultancy and services provider, with hardware sales accounting for just 10% of its revenue.
Any of these innovation types can provide the foundation of your innovation strategy, opening up access to new markets and new revenue opportunities.
How to implement your innovation strategy
So how do you implement your strategy? Whether your company is more suited to product or paradigm innovation, it’s important to be considered in how you strategize.
You could choose to implement a radical innovation plan, with a strategy based on creating something entirely new and groundbreaking.
Alternatively you could build your innovation strategy incrementally, looking to develop smaller improvements in your products, processes, or services that can have an impact over a longer period of time.
Radical innovation has the enormous benefit of creating an entirely new market, but it also comes at a large cost—developing a groundbreaking innovation isn’t easy.
Mikkel advises a mixture: looking at your innovation strategy like a portfolio of investments where you spread the risk across both radical and incremental projects.
“If you want to create a portfolio or strategy of innovation in your company, it probably makes sense not to put all of your money in radical innovation because the risk of failure is much, much higher,” he explains.
It’s also important to approach it like any other strategy, with clearly defined targets and a person within your company who is responsible for overseeing your innovation goals.
As a costly, high-risk enterprise, you also need individuals at all levels of your company to buy into your innovation plans, he says. “This probably would require some kind of top-management support, I don’t think this can be done on an individual business unit level.
“As a business unit director who is only measured on your bottom line or cash flow for the quarter, you are never going to invest in innovation.”
If successful, developing a new innovation strategy could change the path of your company. That’s why it’s a key learning focus for executives in the CBS EMBA, who learn about it over a week of lectures dedicated to innovation planning.
The lectures are designed to show EMBA students that innovation is just as important as any other part of a company’s strategy, and effective planning can protect a company from changes that are yet to come.
Copenhagen Business School (CBS)
CBS: efficient international network
CBS has always been ranked among the best universities in Europe and this means that it has become a sign of professionalism and success. The academic level is great thanks to the good teachers and the atmosphere is proactive and challenging. Lots of events are planned every week and this helps you to find your own way. CBS is not only a business school, it is a great and efficient international network.
Good academic career
I did my Bachelors at CBS and their academic excellence and career opportunities led me to pursue my Masters in Accounting, Strategy and Control. I was very lucky to go on an exchange in Singapore for one semester it boosted me to get a career in a global firm. I like that it is super modern and has all the facilities for the business student in 2019. Especially, I liked the library and Bitlab where I spent most of my time studying. However, note that it is very demanding and studying here is no joke. Everything is very competitive and you are among the most excellent business students in the country. The interaction with international students helped me to see different perspectives in business and culturally and I was lucky to make friends from any part of the world. CBS is like a brand in Denmark. Every serious business company prioritizes us over any other Danish university and also it is free for European citizens. Overall, I have a very satisfying experience at CBS and I'm looking to continue my academical career even further.
CBS is one of the best!
All I have to say regarding my experience at CBS is that it is AMAZING. Having been tutored by world-class academic staff, I can definitely support that I am receiving the best of quality regarding my studies in Digital Marketing. Staff is very friendly and easy to approach. In addition, the facilities we enjoy are top class and meet any demands. Keep in mind that, EU citizens do not pay any fees. Student life might be non-existent here, but the location of the University in The very center of Copenhagen has a huge variety of choices to offer to students regarding their entertainment. Accommodation might be a problem, but early research of the market can be very useful. In addition, the University promotes diversity. In CBS University you can meet people from the whole world which is quite interesting. I definitely suggest CBS for any student who he's interested in pursuing a career in marketing or business.
The ideal business school
I have been enrolled in this university for 2 semesters. What I took from this experience is that there is nothing better out there for those looking for professional growth while being guided by some of the top-notch professors in Scandinavia. They have a really strong focus in technology and digital transformation and they are up to date to guarantee you land a job in the modern fast-evolving world. They also embrace diversity which means many students come from any part of the world and it takes the entire learning experience to another level. You simply learn from every other student cause everyone has different experiences and background which makes you open your mind and see the world from a different angle. In Denmark, even businesses prioritize people who graduate from CBS as it's commonly perceived as the most prestigious university for business graduates.
A Place of Personal Growth
In CBS you can expect an environment of proactive thinking and growth. The university staff is always open to help and to debate. The teaching methods balance theoretical knowledge and practical skills enabling the student with capacity and confidence to enter the job market successfully. The existence of students from all over the world stimulates discussion and promotion of different cultures, ideas and perspectives. I highly recommend this university for students in business-related areas.
The environment here is really great. Despite the well organized buildings and libraries, there are also places for students to just stay and relax also even study in the corners of each campus. The professors are mostly really nice and try to interact with students a lot. So, to sum up, the environment is really nice for studying here.
Quality education where it emphazises the importance of academic. No finger to put on this aspect of the school. However, sometimes the administration and IT can be lacking a bit, but in general a really good choice for education!
Classes are challenging and conducted in a professional manner. CBS offers a wide range of possibilities to develop outside of the classes! Libraries and other facilities on the campus are very well adjusted to the student needs.
A heavily theory-based curriculum combined with an ever-stimulating environment
I am currently a Master student at CBS, but I have also completed a Bachelor's Degree in this university. I am quite satisfied with my studies and the teaching level. However, when compared to other business schools, it becomes apparent that most courses at CBS strive to find a good balance between theoretical insight and real-life examples. Compared to my exchange university, the projects that I have found myself writing at CBS have a far less practical application and also leave little room for creativity. If the teaching is heavily theoretical, on the bright side, the university arranges a number of events throughout the year to encourage students to apply their knowledge, in the form of career fairs, case competitions, and other events organized by student associations. In my experience, teachers are very easily approachable and happy to answer your questions. A foreign student like me will find a more international environment at Master level, since the number of international (or at least non-Scandinavian) students enrolled in the Bachelor programs is quite low. However, all communication (both oral and written) from teachers and the university offices is always in English. Administrative offices, student guidance services, the career center, and the international office are definitely worth a mention. All of the requests that I have had throughout the years have always been met with kindness, promptness and efficiency.