Chapter 04

 Innovation Strategy

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This Chapter will Discuss

 What is a strategy and how are innovation strategy and strategic business
management connected?
 Which areas do the innovation strategy encompass, how can this strategy be
characterized and what approaches to overcoming uncertainty are offered
within this context?
 How can we breath new life into innovation strategy in a systematic way?

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Innovation Strategy as Part of the Corporate Strategy

What does Strategy Mean?

 The classical understanding of strategy is a planned package of measures to
achieve long-term goals.

The main characteristics:

 high complexity
 long-term nature and continuity
 deliberate planning and shaping of objectives
 responsibility of the top-management
 strict orientation on objectives
 adaptibility with regard to possible changes within the business and its
environment.

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to Uncertainty Reduction, Springer 2015 5
Types of strategies

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to Uncertainty Reduction, Springer 2015 6
Innovation Strategy and Strategic Business
Management

The innovation strategy needs to be understood as an integral component of

long-term strategic business management.

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Innovation Strategy and Strategic Business
Management
The innovation strategy can be understood as a functional strategy that stands
alongside other functional strategies with distinct tasks and aims.

It is expedient to understand the innovation strategy as a meta strategy, which

serves to integrate all other functional areas of a business.

Gaubinger et. al.: Innovation and Project Management - A Holistic and Practical Approach
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Components of the Innovation Strategy

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to Uncertainty Reduction, Springer 2015 9
Characteristics of the Innovation Strategy

Activity type of the innovation strategy:

 Reactive and proactive characteristics of the innovation strategy

Trigger for the formulation of the innovation strategy:

 Originate either with newly developed technologies or processes (technology
push) or with the requirements of customers (market-pull)

Innovation timing:
 Refers to the moment when the product enters the market and is an integral
component of the innovation strategy
 pioneering strategy: first to introduce new developments into the market
 imitation strategy: the role of the early or the late follower

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Innovation Strategy and Uncertainty

Positioning of the organization

within a given environment
 Planning approach
(“deliberate strategy”)
 Adaptive approach
(“emergent strategy”)

Gaubinger et. al.: Innovation and Project Management - A Holistic and Practical Approach
to Uncertainty Reduction, Springer 2015 11
Bringing Innovation Strategy to Life –
a Process Oriented Approach

Gaubinger et. al.: Innovation and Project Management - A Holistic and Practical Approach
to Uncertainty Reduction, Springer 2015 12
Situation Analysis

Fields of information of the situation analysis

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to Uncertainty Reduction, Springer 2015 13
Structure of the situation analysis

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to Uncertainty Reduction, Springer 2015 14
Company Analysis -
value chain according to Porter

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Company Analysis - VRIO-scheme

 The value question  The imitability question

 The rarity question  The organization question

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Analysis of the Company Environment

 analysis of the industry environment

 covers factors external to the company
 Industry structure analysis
 five driving forces of industry competition
 threat of potential new entrants to an industry
 pressure from substitute products
 bargaining power of buyers
 bargaining power of suppliers
 rivalry among current competitors
 buyer analysis
 Which customer segments can be distinguished in the market?
 Which fundamental requirements do the (potential) customers have?
 In which direction will the fundamental customer requirements change?
 What changes in customer behaviour are to be expected?

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Analysis of the Company Environment

 competition analysis
 How strong is the market position of the respective competitors and how does this
position change?
 What are the strengths and weaknesses of the competitors?
 Which strategies are used by the competitors?

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Data Linking – SWOT analysis

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Strategy Implementation

Structure follows strategy

 each innovation strategy needs organizational structures
 open innovation approach

Culture follows strategy

 provide a framework for orientation and action that facilitates the smooth
development and realization of new ideas

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Evaluation and Control

An instrument for capturing strategy performance is the balanced scorecard

(BSC).
The BSC is based on a closed management cycle which consists of the following
four steps:
1. Formulation of vision and strategy
2. communication of the strategy in order to achieve commitment
3. planning and establishment of objectives, key figures and strategic measures
4. improvement of strategic feedback and learning

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Structure of the balanced scorecard

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