Types of Innovation Strategies

Innovation strategies are different from many business strategies, because of the difficulty of predicting the steps, time and impact of the innovation. An innovative strategy guides decisions on how resources are to be used to meet a business’s objectives for innovation, deliver value while building a competitive advantage.

These strategies should include:

• an analysis of a business’s competitive and technological environment
• its external challenges and opportunities
• also its distinctive advantages.

Innovation strategies can be classed as proactive, active, reactive and passive.

Proactive

Companies with proactive innovation strategies tend to have strong research orientation and first-mover advantage, and be a technology market leader. They access knowledge from a broad range of sources and take high risks. Proactive innovators use technological innovations that are;

• radical: causing breakthroughs that change the nature of products and services.
• incremental: harnessing constant technological or process changes that lead to improved performance of products and services.

Active

Active innovation strategies involve defending existing technologies and markets while being prepared to respond quickly once markets and technologies are proven. Hence, companies using this approach also have broad sources of knowledge and medium-to-low risk exposure; they tend to hedge their bets. These companies use mainly incremental innovation with in-house applied research and development.

Reactive

The reactive innovation strategy is used by companies that are followers; have a focus on operations; take a wait-and-see approach; who also look for low-risk opportunities. Hence, they copy proven innovation and use entirely incremental innovators.

Passive

Companies with passive innovation strategies wait until their customers demand a change in their products or services. Examples include automotive supply companies as they wait for their customers to demand changes to specification before implementing these.

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Culled from: Business Queensland