Entrepreneur's Handbook
INNOVATION STRATEGIES
Businesses and, accordingly, entrepreneurial individuals have to constantly deal with innovation activities in order to increase their competitive power and maintain their competitive advantage. This necessity makes it necessary to have a specific innovation strategy. Moreover, it may not be enough for entrepreneurs to determine and follow up strategies related to innovation processes. As a matter of fact, it is necessary to have a strategy for the new product / service or process that emerges at the end of the innovation management process. Because the strategic decision on how innovation activities should be carried out and the decision on how to market the output presented to the market at the end of the process is different. Considering that innovations generally have problems in the marketing stage, it is understood that the new product strategy is at least as important as the innovation process strategies.
The strategies to be followed in the innovation management process can be examined under three headings. These are capture, sustain and progress strategies. Businesses have to follow one of the strategies stated below depending on their business culture, production capacity, financial situation, competences and skills, their competitors in the market and the developments in the sector they operate in.
- Catching Strategy: In order for the business to adopt and imitate products / services and processes that were previously developed by others, it must first have the necessary problem-solving ability to develop the said innovation. For this, first of all, one should be prone to learning. In fact, businesses that learn to learn can be successful at this point. Businesses or entrepreneurs with learning ability can obtain information about engineering, marketing and management skills more easily and can go beyond the level they have with new knowledge. In the capture strategy, transferring technology rather than developing it is on the agenda. This strategy is suitable for situations where the market is clear, technology is suitable for incremental innovation, and the skills and skills required for innovation are identifiable and available.
- Sustaining Strategy: It is a strategy that aims to maintain competitive advantage by taking into account the current situation more than the capture strategy. Therefore, its application is more difficult. Because the market is more uncertain for entrepreneurs who follow the sustainability strategy. It is more realistic to follow a sustaining strategy in situations where technology is changing more rapidly and consequently it is more difficult to combine the skills and skills required for innovation. As a matter of fact, since the sustaining strategy requires stronger scientific and technological infrastructure, it can be considered as a more difficult strategy. However, despite the infrastructure requirements and uncertain market conditions, innovations that are highly competitive and difficult to imitate can be revealed in a short time by following a sustaining strategy. R&D studies are very important in the sustaining strategy in order to have quality and low cost innovations.
Progress Strategy: Progress strategy can be considered as the most difficult innovation strategy compared to the previous two strategies. It stands out as a strategy followed by businesses that are pioneers in innovation. The first source of new products or services introduced to the market are generally businesses that follow this strategy. In cases where the market is not yet mature, the costs are high and their innovations are more difficult to adopt, entrepreneurs who take risks by following the progress strategy can achieve significant success. In order to overcome these risks, it is necessary to have a high technological infrastructure. In addition, a dynamic R&D unit and other functions of the enterprise need to work in harmony. The other two strategies can see the right and wrong things made by the businesses that follow the progress strategy and continue their innovation activities in an environment with less uncertainty.
In addition to the strategies for the innovation process, it is also important for businesses to determine new product / service strategies. It is possible to examine these strategies under four headings. These are leader, follower, cost minimization and market segmentation strategies. These strategies should not be considered as completely independent of each other or as fully integrated with each other. In fact, innovative businesses generally follow a common innovation strategy consisting of several of these strategies. (Trott, 2002).
- Leader / Offensive Strategy: Based on the strength of the business in the market, the focus is on the advantage of skimming the market. The main purpose of this strategy is to launch new products without competitive advantage. Thus, a high market share will be obtained by penetrating the market. This will provide the business with a significant competitive advantage in the medium and long term. Companies that will follow this strategy should give more importance to R&D units than their competitors.
- Follower / Defensive Strategy: It is a strategy that requires the ability to respond immediately to competitors by developing other new products against new products that are first on the market. Therefore, businesses implementing this strategy must have a technological infrastructure that can respond to another product that can be an alternative to new products in the market. Quickly launching similar products to the market requires a focus on products and alternative features.
- Cost Minimization Strategy: What is important for businesses following this strategy is to be able to offer similar products to the market with lower costs. This significantly requires businesses to perform production techniques and process engineering with a high level of competence. It is also necessary to follow the economies of scale. Unlike the defense strategy, it does not need a very advanced technological infrastructure and the need to react very quickly to the movements in the market. The technology required can be transferred.
- Market Segmentation Strategy: According to this strategy, which is also called the traditional strategy, a path based on meeting the needs of a particular market segment can be followed. In this strategy, businesses focus on meeting the needs of consumers, especially in small or niche markets, by making some changes in their existing products.
- Innovation strategies, on the one hand, are related to the management of innovation and the introduction of the innovation created at the end of the process with appropriate marketing strategies, on the other hand, they must be integrated with the long-term strategies of the enterprise. Considering the characteristics of innovation such as complexity and uncertainty, it can be said that a strategy that attaches importance to understanding environmental uncertainties and tells that the business should take a direction in line with the information obtained from the environment would be a more appropriate strategy for an innovative business. The general strategy of the company in this direction will make it more prone to innovation oriented. The business may not fully understand the complexity and change in its environment. Therefore, it will never be possible for businesses to identify their strengths and weaknesses in obtaining information about their environment. Then the strategy to be followed by the enterprise should be shaped in the light of new information and gains. For this, it is necessary to change the goals in line with new information, to constantly evaluate the effects of these changes, and to take steps for the next change after the changes are adopted. (Tidd vd., 2005: 112-116).