Combining Strategy With Innovation Can Create a Competitive Advantage

Manufacturers exploring service complementors (Apple and their retail stores) or service providers exploring product complementors (Amazon.com and the Kindle) can reignite a company’s growth. In the automobile industry, increased pricing transparency and hungry competitors have whittled away at profits. A number of auto manufacturers have worked to build on their platforms with services such as financing, insurance, warranties, maintenance, repair, Wi-Fi, navigation, and satellite radio. Their ability to enhance the service experience of an automobile may hold the key to growing profits in the long run.

“Innovation is the continual hunt for new value; strategy is ensuring we configure our resources in the best way possible to deliver it.”

HOW TO MERGE STRATEGY AND INNOVATION
The following five questions will help you begin to consider how you might merge your strategy and innovation efforts:

1.  How can we develop offerings that are simpler, more convenient, and less expensive than established offerings to attract new or less demanding customers?

2.  How can we modify one or more dimensions of our current offering to create a new subcategory that expands the market by bringing in new customers?

3. What one dimension of our offering can we improve to increase share of wallet with existing customers?

4. How can we make the current offering more competitive by leveraging other elements of the marketing mix (promotion, place, price)?

5. How can we use our capabilities to develop new markets for our existing offerings and what untapped uses can they fill?

The intent of both business strategy and innovation is to create value for customers. Too often, in the day-to-day business, we lose sight of the fact that competitive advantage is nothing more than “creating superior value for customers.” Innovation is the continual hunt for new value; strategy is ensuring we configure our resources in the best way possible to deliver it.

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Rich Horwath is a New York Times, Wall Street Journal and USA Today bestselling author on strategy, most recently of STRATEGYMAN VS. THE ANTI-STRATEGY SQUAD. As the CEO of Strategic Thinking Institute, Horwath leads executive teams through the strategy process and has helped more than 100,000 managers around the world develop their strategic thinking skillsets