Crafting an innovation strategy

I'm Joe Tidd. I'm a Professor of Technology and Innovation Management at the Science Policy Research Unit at the University of Sussex, UK. This session is about how we craft and develop an innovation strategy.

There are three aspects that we need to manage in an innovation strategy to be very different from conventional strategy. The first is how we deal with complexity and uncertainty. The second is how these influence the type, degree, and direction of innovation. Finally, how we develop or acquire the resources and capabilities to actually implement the strategy that we've developed.

The first of these is to deal with uncertainty. This is the biggest difference between conventional strategy and innovation strategy.

In conventional strategy, we simply have an idea of rational planning, where we tend to focus on competitors. Who are our competitors? How do we beat them? What are they doing? How we copy them in terms of products and services? However, in terms of innovation strategy, we focus much more on the opportunities presented, rather than simply looking at emulating our competitors. We don't try to define ourselves in terms of broad things like information management or energy. Rather we try to understand what our capabilities are. What we try to do is match our strategic objectives with what our internal capabilities are. Finally, we need to build in complexity uncertainty, rather than assume these away, as we do in rational planning.

By focusing on opportunities, we realize that we can actually overcome many of the conventional constraints of strategy. For example, you may be familiar with Michael Porter's Five Forces framework. This has several aspects, it looks at competition, new entrants, substitutes, customers and suppliers. There's lots of nice diagrams that present that, but what we're arguing is, in terms of innovation strategy, that each of these five so-called forces can be overwhelmed. For example, when competitors, we may have new entrants, we may have industry definitions might change. In terms of new entrants, there might be regulatory changes which would change the barriers to entry. We saw that recently, for example, with the definition of employment with Uber. In terms of substitutes, we tend to look only at similar products and services in which we compete in existing markets, but if we think about innovation strategy, we have a much broader range of potential products and services. We need to have a much broader view of innovation strategy, who our competitors are, who our rivals are, who the new entrants might be, and therefore who our customers and suppliers are. All five of these forces are challenged when we think in terms of innovation strategy.