The third one is what we call Technology Drivers, companies that do not necessarily ignore customers, but have a greater focus on breakthrough technologies. They look to address unarticulated needs of customers, swinging for the fences more than taking an incremental approach to innovation. All three models employ customer insight, and it’s important to note that the three produced comparable financial performance. No model was inherently superior financially. The one thing that cut across both industries and models is that the more a company relied on direct customer insight, the better it did.
S+B: Did you also find three corresponding business strategies?
JARUZELSKI: Clearly there has to be a relationship, and some of it is implicit in the innovation strategy. For example, both Need Seekers and Technology Drivers must figure out how to make an innovation a market success. So they have to focus their resources on channel and market development and education as much as on technology (or whatever the source of the actual innovation). Need Seekers have to be first to market in order to capture maximum value, so the strategy should account for speedily ramping the entire institution, including product development, obviously, but also suppliers and channel partners. They need to remember that Market Readers are out there gauging how successful the innovation is and how soon they can imitate it.
S+B: Did you pick up on innovation capabilities that every company ought to have?
JARUZELSKI: It’s all a matter of degree, but every company should have a robust portfolio management process and a process for gathering customer insight. They should also have a way to manage and provide visibility into the end-to-end product development process. The level of breadth and depth for each of these capabilities will vary according to the nature of the industry and the innovation strategy.
Amy Bernstein (bernstein_amy@bah.com) is executive editor of strategy+business.
