Choosing the right innovation model for your company is all about context.
This article from Boston Consulting Group well articulates the need to evaluate industry context, your culture and core competencies as they relate to innovation.
Industry context matters because only a subset of models can succeed in most industries. Some models are better suited to—and increase shareholder value in—certain industries and sectors than others. For example, four models drive TSR premiums in consumer retail:
- Creators take on more risk but can achieve dramatic success. Lululemon Athletica, for example, capitalized on the growing yoga movement by offering a distinctive life style brand that encompasses everything from the actual products to the in-store customer experience to corporate philanthropy.
- Solution builders create loyalty by understanding specific shopper segments and meeting their needs. For instance, Target delivers a “cheap but chic” set of offerings that meet the needs of its young, often trendy customers.
- Leveragers create a superior business model and then capitalize on it to sustain a position of industry leadership. Costco, for example, combines everyday low prices, a lean supplier network, and a members-only approach to stand out from the retail pack.
- Expanders achieve rapid share growth by moving into adjacent markets. For instance, Amazon brings its consumer data analytics, logistics capabilities, and exceptional customer service to an ever-expanding number of retail sectors, including fashion, luxury apparel, and—with the company’s recent purchase of Whole Foods—brick-and-mortar grocery.
Read the BCG article, Which Innovation Model is Right for You?