INNOVATION IS A TOPIC THAT INTRIGUES MANAGERS FROM ALL INDUSTRIES, and many companies tout innovation as part of their mission and vision. It should be noted that doing things differently does not necessarily mean innovation theories are being employed. Goals to boost productivity, increase sales revenue, reduce expenses or expand market share can be achieved by using new approaches, but “new approach” is not synonymous with innovative thinking. Following are some tools that can help in developing an innovation focused strategy.

​INNOVATION STRATEGIES

Usually an innovation-based strategy uses insights into the structure of a market and how competitors, collaborators and customers interact. Two of the more recent, powerful lenses to use when developing an innovation-based strategy are disruptive innovation and blue ocean strategies.

Disruptive innovation

Harvard Professor Clayton Christensen did the seminal work on these theories, which say that over time, market leaders’ continued focus on better, more profitable products for their most profitable customers creates a pool of customers that don’t want or need the market leaders’ products. This allows market entrants the ability to offer “good enough products” at a lower cost. These market entrants can then move up the chain of customers and ultimately displace the market leaders.

An example is steel mini mills taking the rebar business from the vertically integrated steel mills. After profitably gaining this market which was unprofitable for the vertical mills mini mills began serving the vertical mills’ least profitable customers. Mini mills continued to migrate upstream, taking more market share. Globally, mini mills now provide as much as 25% of all steel produced. Intel’s ability to thrive for years in the semiconductor chip market was attributed to developing disruptive innovation strategies that served the upper and lower end of the market. With new challenges from renewable energy and within the oil and gas sector, understanding how a market can be disrupted and how to blunt strategies of market entrants will be important.

Blue ocean strategy

The seminal research for these theories was conducted by Chan Kim and Renée Mauborgne, professors at INSEAD. These theories posit that there are “blue waters” in every market that make competitors irrelevant. By creating canvases of the competitors’ business structure, blue ocean strategists can chart a course to serve the market while avoiding the “red waters” of intense competition. Southwest Airlines is an example of a strategy that was based on implementing programs that could not easily be adopted by the competition but delighted the consumers (not paying for checked luggage, no food service, frequent departures and a low ticket price). Having the ability to create a blue ocean canvas to set a strategy can be very useful in developing an innovation-focused strategy.

​INNOVATION TACTICS

After developing an innovation strategy, training and tools to identify the tactics that will produce the best results will be necessary. Skills needed to plan and execute strategies also may require training. Business disciplines that may be useful include:

Data analytics

More than ever, from supply chain to marketing, data analytics is helping decision-makers understand information can be used to design and deploy superior strategies that produce superior results. Managers and leaders from all levels of the organization need to understand how to define the challenges they face and how to employ analytics to address those challenges.

Supply chain and operations
management

Decisions made regarding SC/OM are at the heart of an executive’s (and their management team’s) strategic plan and success to varying degrees whether they are large corporations or small businesses. Successful innovation strategies will require careful coordination of all aspects of the supply chain.

From management to
leadership

Every company needs leaders those who inspire others, create change in the company, elevate profitability and expand market share. But many managers do not understand the unique strengths needed to become such a leader. Implementing innovation based strategies will require adoption of new approaches and creating new cultures.

​Leading high-performance teams

​Managers will need to be familiar with key concepts and knowledge that will help them to not only understand the nature of high-performance teams, but also develop and sustain them in practice when implementing innovation based strategies.

Financial statement analysis

The ability to set goals and measure success in financial terms may require new sets of key performance indicators. Financial reporting systems may require new approaches to capturing and analyzing financial performance.

SOURCES OF TRAINING

Developing the workforce that can understand and implement innovation based strategies can include hiring recent college graduates with bachelor’s and higher level degrees. While they are critical components of the workforce, recent grads may take a year or more to become familiar with company methods, processes and culture and may not be able to deliver short-term execution of new programs.

Many companies focus on training that complements the skills current managers and leaders have developed over time as key contributors to the organization’s success an approach that ensures their workforce is operating with the latest knowledge and techniques. Most business schools at major universities offer executive education programs to fill these training needs. Typically, programs offered are in two categories: open enrollment and custom programs.

Open enrollment programs

Executive education open enrollment programs typically provide short-term programs ranging from one day to several weeks on a wide range of business disciplines, including those mentioned in this article.

Open enrollment classes allow organizations to send one or more individuals to classes on specific topics such as data analytics or leadership. Participants receive certificates upon completing the class and may receive microcredentials for the more complex classes.

Custom programs

Executive education custom programs are designed to provide customized training and development programs for organizations. These programs can range from a focused one-time class to more fully developed programs that provide an ongoing schedule of classes for executives, managers or staff. For each custom program, an executive education faculty coordinator meets with the leaders of the requesting organization to understand the specific organizational needs and to develop a customized program to fit those needs.

Some organizations start with choosing a set of open enrollment programs that are customized
to reflect an organization’s goals, culture and values. Other organizations identify their specific needs and ask that a class or set of classes be developed. For example, Sinopec, a Chinese-based oil and gas company, asked that the C.T. Bauer College of Business at the University of Houston develop a program on innovation for their most senior executives. Faculty worked with Sinopec to identify which aspects of innovation to include and how those tenets might be applied to energy companies. The faculty presented a one week class to several groups of senior managers.

In summary, all organizations are operating within a constantly changing environment. Training key managers and staff to understand the nature of innovation and equip them with the tools needed for success is essential. Universities are usually on the leading edge of the research in these fields and well equipped to develop programs to assist with continuing education efforts for large and small organizations.

ABOUT THE AUTHOR

Gary W. Randazzo is a senior professor of practice and director of Bauer Executive Education at the University of Houston’s C.T Bauer College of Business. He is also the founder of GWR Research, which he launched after a successful career as a senior business executive.Randazzo has developed and implemented financial, marketing and management programs for major businesses throughout the United States. A former CEO, COO and CFO, he has led small and large businesses as well as several new business ventures in the U.S. and China. Additionally, he served as a senior executive at two of the largest newspapers in the U.S.: the Houston Chronicle and San Francisco Chronicle. He can be reached at gwrandazzo@bauer.uh.edu.