Evaluating different approaches to innovation

 

With technological advancements bringing a rapid pace of change, most businesses need to look for new ways to drive revenue. But with an almost endless amount of choice, deciding what to do can be tough. And once you’ve overcome that hurdle, the next challenge is figuring out how to do it.

Last year, we explored some of the different approaches organisations have been taking to innovation.

Here, we summarise the pros and cons of four key approaches.

The Fast Follower Approach

The Fast Follower approach allows organisations to avoid the mistakes of others before them - the First Movers - and then adopt best practice for a customer community already familiar with the innovative changes.

Pros	Cons
Low risk - avoid the “trip hazards” that the First Mover experiences	No room for error - Fast Followers need to deliver a more complete solution as consumers will be less forgiving of errors
Take advantage of the First Mover’s learnings and mistakes	Need to take into account a constantly changing market
Don’t need to spend time educating customers on the product	If you are not ready to act quickly, it’s likely someone else will and you will lose out on the opportunity
The demand is already there	If the Fast Mover succeeds, once consumers are on board with a new product, getting them to switch can be challenging
Take advantage of the market opportunity created by the First Mover

Start-up Incubator Approach

Start-up incubators are designed specifically to help companies in their very early infancy. They serve as a great platform for helping entrepreneurs to build the foundations of their business; from idea and product development to finding follow-on investors.

Pros	Cons
Helps get start-up businesses off the ground	Not all incubators offer the same benefits - finding one that will deliver advice and guidance is important
Offers benefits such as seed funding, legal guidance and accounting assistance	Some incubators are a business, meaning they will have their own interests which may not be aligned with yours
Frees up start-ups to focus more on the core business	If there is no clearly defined structure or expectations, programmes have the potential to drift or stagnate
Offers work space at a lower-than-market rate for members	An incubator acts as a boss of sorts - meaning you have someone to answer to or provide information as required
Often provide mentoring and training schemes	The application process can be tough
Can join for an indefinite amount of time, allowing access to support for as long as needed
Offers a collaborative environment where start-ups can learn from other's successes and mistakes
Opportunity to tap into a large network of potential business partners

Innovation Hubs

The term ‘Innovation Hub’ is used quite loosely, but broadly refers to a fluid space where an organisation can experiment with new, even radical ideas in the hope of inspiring change or new opportunities that could enhance their business.

Pros	Cons
Helps jump-start innovations	Not a long-term solution
Offers a safe environment where taking risks and pushing boundaries is encouraged	Needs to be led by someone with the ability to drive focus on creativity, priorities, and outcomes
Gives momentum and a structure for nurturing an initial idea into a tangible and robust solution	Can be challenging to get all people in the right place at the right time
Brings together multiple cross-functional teams who are able to create potentially disruptive solutions that may have otherwise not evolved	Requires high levels of engagement from employees once the innovation is introduced into the organisation

Outsourcing to a Third-Party Consultancy

Some organisations choose to hire a third-party consultancy for innovation projects. The consultancy builds a methodology and applies it to the organisation.

Pros	Cons
Offers crucial subject matter expertise that doesn’t exist within the organisation, e.g. AI	Often come with a ‘one-size-fits-all’ approach which may not be suitable
Offers a fresh perspective as an independent party	Senior experts may be involved at the start, but often consulting firms will deploy recent graduates with little practical experience into delivery roles
Provides economy of scale	Knowledge enters and leaves with the consultancy - it doesn’t become embedded within the organisation

Which is the best approach? 

Often, the best approach for a business will depend on what it is they want to do. For a company looking to invest in AI, a third-party consultancy may be the most appropriate solution so they can take advantage of the consultancy’s extensive subject matter and economy of scale.

If a company is looking to bring a product to market in a new area, they could benefit from an innovation hub that will allow them to experiment with different ideas in a safe and controlled environment. Or for start-up companies, an incubator that provides valuable support and advice could be a better option. But if a company is looking to take advantage of a market where there is already some demand, then they could find success as a Fast Follower.

Have you considered how innovative your organisation currently is? Take our Innovation Healthcheck to find out.