Definition of strategic innovation

Innovative strategies alone - without changes to either the underlying technologies or the products and services sold to customers - drive the success of many companies, such as Ikea.  Strategic innovation is about innovating the strategy itself.

Strategy involves answers to three basic questions that define a business:

1) Who are our customers?
2) What value do we provide?
3) How do we deliver that value?

As such, strategic innovation involves one or more of the following:

• Dramatic redefinition of the customer base - that is, how do we dramatically expand the size of the market? For example, Apple made personal computers for individuals at a time when computers were used by corporations, scientific establishments, educational institutes and governments.

• Dramatic reinvention of the concept of customer value - that is, how do we dramatically change the value customers receive?  For example, as well as selling hardware, IBM moved into supplying total business solutions.

• Dramatic redesign of the end-to-end value chain architecture - that is, how do we dramatically improve the efficiency of the end-to-end value chain from suppliers to customers.  For example, Ikea uses standardisation (meaning making one type of a product) as a route to become the world’s largest furniture retailer.  For suppliers and customers, Ikea's standard flat pack furniture enables efficient transportation of these items.
In a world that is changing rapidly and in unpredictable ways, strategic innovation becomes vital to adapt to change. [1]

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