Urenio Watch Watch: Innovation

Three Innovation Strategies

The 2007 Booz Allen Hamilton report on Global Innovation 1000 argues that statistical analysis of a representative sample of global innovation 1000 companies divided them into three distinct categories of innovation strategy: Need Seekers, Market Readers, and Technology Drivers.

Need Seekers companies focus on being first to bring new products to markets and base their R&D efforts on getting direct, proactive input from customers. They engange actively current and potential customers to shape new products, services, and processes.

Market Readers distinguished themselves through their preferences for incremental change and being fast followers into markets. They watch markets carefully and maintain a more cautious approach focusing on creating values through incremental change.

Technology Drivers focus on a technology forward approach to innovation, while remaining less concerned with direct customer input into the process. They follow the direction suggested by their technological capabilities, leveraging their investment in research and technology to drive breakthrough innovation or incremental change.

There were significant performance differences between the three categories: R&D spending was 40% greater in the Need Seekers group. Each group showed a similar mean values for return on assets, but the standard deviation for Technology Drivers was 40% higher, indicating that this group pursue a riskier innovation strategy than the two other categories.

However, an important finding was that no one of these innovation strategies performed better than the other, and high-leverage innovators can be found in each of the strategy categories.

Source: The Customer Connection: Global Innovation 1000 (2007)