How to Create an Innovation Strategy in Business + Example

This article is an excerpt from the Shortform book guide to "Ten Types of Innovation" by Larry Keeley, Helen Walters, Ryan Pikkel, and Brian Quinn. Shortform has the world's best summaries and analyses of books you should be reading.

Like this article? Sign up for a free trial here.

Why do most innovation projects fail? How can you increase the chances of your innovation project succeeding??

According to Larry Keeley, the author of Ten Types of Innovation, most innovation projects often fail because they don’t have a well-defined scope or clear objectives. In Keeley’s experience, assigning a team to figure out an innovation strategy in business with well-defined goals generates beneficial innovations for your company.

Here’s how to create an innovation strategy with a clear direction and a high chance of success.

Visualize Your Industry to Identify Opportunities

Before you dive into an innovation project, you need an objective. You may not know how to achieve your goal yet—figuring that out is the purpose of the project—but you should know what you want to achieve and how it will benefit your company.

How do you come up with this initial vision? The authors say you need to analyze your industry to determine where the real opportunities are. Usually, there are industry trends that lead most firms to focus on a few specific types of innovation at any given time. But the greatest opportunities usually lie in innovating where nobody else is.

So ask yourself—or experts in your industry, for that matter—what the current trends are. What are the driving factors behind those trends? Who are the industry leaders that are currently exploiting them?

Once you’ve answered these questions, then ask yourself what you could do to change the driving factors in a way that gives you control. Are there types of innovation that nobody is applying? Are there problems or pain points that the industry currently ignores? Have there been transformations in other industries that nobody has implemented in your industry yet?

As you do your research, the authors recommend constructing a 3D graph showing the amount of each of the ten types of innovation that’s taken place in your industry over time. Such graphs can help you visualize industry trends in innovation and see at a glance what types of innovation are absent.

Choosing Your Direction With Blue Ocean Strategy

Blue Ocean Strategy prescribes a similar approach that provides additional perspective and tools you can use to implement Keeley’s advice as you formulate your goals and overall innovation strategy in business. Much like Keeley, the authors of Blue Ocean Strategy recommend focusing on the areas where there are opportunities to create value for the user that no one else is taking advantage of. This creates a greater opportunity for profitable growth than competing head-to-head with other companies in areas where they’re already active.

One particularly useful graphical tool that the authors of Blue Ocean Strategy introduce for identifying areas of opportunity is the “strategy chart” or “strategy canvas.” This tool helps you see what areas other products or companies are focusing on and what areas they’re neglecting. It’s similar to Keeley’s recommended 3D graph but arguably clearer. Here’s an example of a strategy chart:

To create a strategy chart, list the defining characteristics of products in your industry at regular intervals on the horizontal axis and record how well each one is currently addressed in each competing option by marking a dot on the graph. Then connect all the dots that represent the same option, creating a profile curve for that option. The shape of the curves shows you at a glance how similar or differentiated different products are. For example, on the strategy canvas, Product X and Product Y are clearly very similar offerings.

If you’re analyzing products against the ten types of innovation, you could make a strategy chart using the ten types of innovation as the factors listed on the graph. Or you could just determine what types of innovation influence each of the factors and group factors affected by the same type next to each other. Either way, the shape of the curves would then show which types of innovation each product focuses on.

How to Create an Innovation Strategy in Business + Example