Three Innovation Strategies

Technology Driver, Need Seeker, Market Reader

Innovation Strategies

• BCG has stipulated that firms follow at least one of three innovation strategies:– Need Seeker– Market Reader– Technology Driver

• Selecting the appropriate strategy or strategies and implementing them appropriately can greatly impact the success of innovation in your business

Three Focus Strategies

Technology Driver

Need Seeker

Market Reader

Increasing Customer Focus

Increasing Technology FocusIncreasing Market Focus

Technology Driver• Based on the concept that the firm can create

interesting, relevant technologies that solve customer needs– Firms that pursue this strategy must also be the

technology leader in their field– “Inside-out” innovation. Company creates innovations

that find or create markets– Driven by technology, not needs– Limited breadth of innovations. Typically limited to new

products. Few services, business models or experiences– R&D focused. Typically much of this innovation happens

in the lab. Less innovation outside of R&D.

Need Seekers• Strategy to seek out customers and understand

unmet or unarticulated needs. Deliver products and services that meet those needs.– Company needs to have an active engagement with

customers or consumers– “Outside-in” innovation. Discovering needs in the

customer and prospect base– Identifying needs, then linking to capabilities– Great breadth in innovation outcomes – products,

services, business models, experiences– Innovation is driven from marketing and

product/service development

Market Readers• Strategy is to evaluate current competitive landscape

and forecast trends to spot emerging opportunities or threats– Company has an active forecasting, trend spotting and

competitive intelligence program– “Outside-in” innovation. Rather than discovering needs,

discovering opportunities– Once opportunities are identified, generate ideas to

address them– Great breadth in innovation outcomes – products,

services, business models, experiences– Innovation is driven from strategic teams at enterprise and

business line or product teams

Risks• Technology Drivers

– Solve a problem for early adopters but miss the late adopters and majority

– Assume all innovation is based on technology– Miss signals from the market or based on customer needs– Innovation output is only physical products

• Need Seekers– Place too much emphasis on a subset of customers– Misread the needs of the marketplace– Solve short term needs but miss longer term needs

• Market Readers– Chase interesting but irrelevant trends– Build scenarios aligned to current strategies– Identify needs but can’t react in time to benefit

Conclusion

• Using any one of these strategies in isolation is dangerous– Each perspective is too narrow– Either ignores the internal capabilities or the

external demands and changing markets• Should use one dominant and at least one

subordinate strategy

Recommendation

• Start with Market Reading– Identify longer term trends and emerging

opportunities• Next, apply Need Seeking

– Within the scenarios identify customer wants and needs

• Then apply Technology Development– What capabilities or technologies can we bring to

bear on those needs within the scenario