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How to develop a successful innovation strategy

A strong innovation strategy helps your business get the most out of its new ideas. With the right approach, you can boost resilience and create sustainable growth. Paul Cross is one of our Innovation Team Leaders. In this guide, he discusses the growing need for business innovation and offers five steps to help you succeed.

What is business innovation?

Businesses innovate when they introduce new products, services, processes or business models that bring value to the organisation or its customers.  

You can do this by improving your existing products, methods or practices, or by developing something entirely new. The goal is to create new products and services that boost profit and productivity. This will allow you to reinvest in your business and drive sustainable growth.

Five types of business innovation 

Our Innovation team provides support and guidance to Scottish businesses looking create or improve their innovation strategy. We typically focus on five key types of business innovation:

1. Incremental 

This is when businesses make small, steady improvements to their products, services or processes.  

One example is the way Gillette continually updates its shaving razors, adding new features like extra blades. 

2. Sustaining

This is when you refine your initial innovations by improving their performance and removing flaws.  

Sustaining innovation is more common for companies that make large, complex products like cars. 

3. Disruptive

Disruptive innovation is when companies launch a new product, service, or business model that opens a new market segment.  

A good example is Netflix, which created a huge trend towards on-demand video streaming services. 

4. Architectural 

This means taking approaches, technologies or methods from one industry and applying them to another.  

Uber focused on architectural innovation by bringing geolocation and freelance work apps to the taxi market. 

5. Radical

Radical innovation occurs when a company develops disruptive technology that destroys or replaces existing business models.  

Apple’s iPhone brought smartphones into the mainstream – effectively eliminating the demand for keypad-based WAP phones.

One-to-one support

The approach is up to you. You can either choose to focus on just one kind of innovation or a pre-determined blend of different kinds.  

Whichever approach you choose, our Innovation team will work on a one-to-one basis with your business to support its unique innovation needs and goals.

Why innovation matters today

Over the last few years, businesses have dealt with many serious changes, including: 

  • Changes to how they interact with customers
  • A large-scale move from office to home working models
  • Partnership challenges like supply chain shortages  

There’s no doubt that the pandemic was an incredibly difficult time for businesses – but it forced many to innovate at a rapid pace.  

Businesses have had to find new ways to engage with customers, like home delivery and online self-service. They’ve also had to focus on developing and providing products and services to meet new consumer needs. 

Despite the challenges, many businesses have taken the chance to embrace adaptability. This is because they understand that the way most companies do business has fundamentally changed.

How innovation drives business resilience

Innovation has traditionally been a low priority for most companies. It's often seen as taking valuable time and resources from important day-to-day operations. 

But, today, many businesses are looking at doing things differently. 

By focusing on new ideas, it’s much easier to adapt to a quickly changing marketplace. It will make your business more resilient and help it grow sustainably – even when dealing with a crisis.  

A recent McKinsey survey opens in a new window found that fewer than 30% of Chief Executives are confident they have the resources and expertise to handle the changes their businesses face.  

This highlights the likelihood that businesses will struggle to succeed if they continue exactly as they did before. That’s why – more than ever – a focus on innovation is so important.

Build a clear innovation strategy

Our Innovation team has helped more than 6000 businesses over the last five years. We’ve worked with companies that have all sorts of relationships with innovation.  

We provide support to businesses that: 

  • Innovate by nature
  • Are forced to innovate by changing circumstances
  • Only innovate occasionally
  • Have never innovated before

One thing we've learned is that, regardless of their initial attitude, the most successful innovators always start with a clear strategy.  

In our experience, most businesses have some aspects of an innovation strategy. But it’s the minority – those with a clearly defined plan – that most often achieve sustainable, long-term growth.

Create your Innovation Roadmap

Our Innovation Roadmap Development programme will help you define clear, short-term (three-to-five-year) innovation goals. This will make it easier for you to build a strategy, deliver on your goals and clearly communicate your plans.  

Businesses in this programme have used their Innovation Roadmaps to: 

  • Increase turnover from innovation
  • Reduce development costs  
  • Get more profitability from new innovations  
  • Achieve more sustainable business growth

The support we offer

Our Innovation team support businesses on a one-to-one basis, helping them shape an effective innovation approach while building solid innovation management practices.  

The support we offer is tailored to the needs of your business. You’ll have access to our Innovation Ecosystem – a bank of world-class thinking, approaches and tools that will help you shape your company’s culture, strategy, and processes. 

We’ll also coordinate our support with various specialist teams within Scottish Enterprise. Depending on your innovation needs and goals, we can connect you with specialists in many different areas.  

Whatever you’re looking to achieve, we’ll find the right people and resources to help you do it.

Five steps to successful business innovation

If you want to get the most out of an innovative business opportunity, we recommend the following five steps as a starting point. They’ll help you add an extra level of detail to your strategy – bringing peace of mind and improved success.

As a first step, look for growing opportunities in your potential market.  

We encourage companies to speak with a few select customers. The aim is to ensure that the idea is something that the customers would buy, and that it solves a specific problem that’s important to them.  

There are several ways you can do this, from face-to-face interviews to questionnaire services like SurveyMonkey. 

Whichever method you choose, it’s key to carefully choose questions that effectively test the idea with the group you believe will be your first customer.

As you begin to develop your idea, you can use digital tools to:  

  • Gauge and demonstrate the value of your new idea
  • Map out the details of how you’ll execute it
  • Help you track any changes that happen during the process  

There are a huge number of free resources you can find online that will help. You can find two great examples of templates you can use to build your strategy on the Strategyzer website: 

Business Model Canvas opens in a new window  

Value Proposition Canvas opens in a new window  

If you decide to change your idea during this phase, it’s important to speak with your customers again to make sure the changes work for them.

To prepare for the challenges you might encounter as you develop your idea, it’s worth looking at future trends that might affect your progress.  

A scenario planning exercise will help you get a better grasp of the potential issues you may encounter.  

There are many tools available to help you with these exercises. It’ll be helpful to find a quality PESTEL (Political, Economic, Social, Technological, Legal, and Environment) analysis tool as well as some detailed scenario planning templates.  

Visit the SWOT Analysis website for a useful PESTEL tool opens in a new window  

Next, you’ll need to identify the key activities, responsibilities, resources and partners required to develop your new idea.  

It’s worth being open to asking others for help when you innovate. This will reduce the time it takes to turn the idea into something you can share with customers.  

This is also a good time to look at possible funding opportunities to support development costs. The information generated in the previous steps will help you answer questions when you’re applying for financial support.

Finally, we recommend that you set out a three-to-five-year innovation plan. This will typically outline where your business is now and where you want it to go.

This can be adjusted as you go along, but it will help your organisation work towards a shared vision. It will also help you more clearly communicate your innovation approach with colleagues and stakeholders.

If you need help, you can take part in our Innovation Roadmap Development programme, which is designed to make the process easier and more understandable.

There are many other tools available beyond those mentioned here – these are just examples. The right resources depend on your business and its innovation strategy.  

Following these steps will help you define and develop your new business opportunity. It’s a great place to start. You can work out your next steps by speaking with our Innovation team.

Ready to get started?

Whether you’re starting a new innovation project or looking to refine your existing strategy, our experts can help.

Contact us