Strategic innovation is the lifeblood of companies. Growing businesses know from experience that innovation is vital to staying competitive and relevant. Even legacy companies are experiencing death by a thousand cuts as emerging entrepreneurs fight for market share.
Every company has competition. And threats can come from anywhere — Netflix (NASDAQ: NFLX), Amazon (NASDAQ: AMZN), and Airbnb have all upended multiple industries. Taxi companies aside, Uber (NYSE: UBER) even knocked the knees out from the rental car industry. To compete in the current marketplace, businesses need to be deliberate about innovation.
Key elements for strategic innovation
Unfortunately, you can’t buy your way into innovation. Acquisitions can be smart moves, but companies can only stay afloat by developing sustainable and organic strategic innovation. And if you don’t dedicate the proper resources — including time, talent, and money — innovation won’t happen. If you want to thrive in the current market, these three elements of strategic innovation are key:
A commitment from leadership
Successful strategic innovation hinges on creating a culture that embraces change — and that requires company leaders to advocate for innovation. When Sears went bankrupt in 2018, for example, some blamed the CEO for failing to innovate against digital and omnichannel competitors such as Amazon and Target (NYSE: TGT).
Innovation is a lengthy process that requires patience and a willingness to make mistakes. It’s not linear, and there’s no real playbook to guide the journey. That means CEOs must be willing to take risks and let the process play out.
If CEOs and other leaders don’t commit to strategic innovation, nothing will get off the ground; everyone will fear negative repercussions. CEOs can prove their dedication by outwardly prioritizing initiatives. Additionally, leadership needs to discuss strategic innovation with internal and external stakeholders and celebrate any wins or progress toward innovation goals.
Part of the reason why leadership buy-in is key to successful strategic innovation is that companies must commit resources to the effort. Without teams and budgets devoted to innovation, it won’t come together. Dedicating resources to strategic innovation must be a routine part of a company’s structure.
For instance, an innovation group created one of Anheuser-Busch InBev’s (NYSE: BUD) most successful product lines, the Lime-A-Rita. The group was tasked with creating a product to better match Millennial consumers’ tastes, which veered away from traditional beer flavors. This innovative product swept the market and became a lasting hit with consumers, resulting in $3.6 billion in U.S. sales as of 2018. Since then, the company has created several other “Rita” flavors and products. Clearly, the resources invested to create this innovation paid dividends.
Internal champion teams
Along with resource-dedicated groups, companies need internal champion teams to spearhead innovative solutions to ongoing problems. These champion teams should be voluntary and include employees from various backgrounds, roles, and departments. These teams are responsible for innovating solutions to specific problems on set timelines.
Champion teams work differently than resource-dedicated groups because they include people whose main roles are not focused on innovation. A champion team might be comprised of a customer service representative, a sales manager, an accountant, and a researcher, for example. These people bring valuable and unique perspectives to problems by providing insight into how problems affect their roles, departments, and customers.
Ameren Corporation (NYSE: AEE), a Midwestern utility company, uses champion teams to move the needle. For example, Ameren assigns champion teams to cohorts as part of its annual Accelerator program to serve as mentors, build ideas, and supplement resources. These teams learn from each other, resulting in a symbiotic relationship: The cohorts benefit from Ameren’s expertise, and Ameren employees explore new ideas.
Companies can no longer practice business as usual. Even legacy companies must commit to organic, sustainable innovation over the long term if they want to remain relevant. With leadership committed to innovation, resource-dedicated groups, and internal champion teams, companies can rise above the competition.
DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.
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