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What is your innovation arena?

Wichtigkeit des Innovationsmanagement

Entering the same innovation arena as competitors using readily available resources also means being easily vulnerable

To truly succeed in innovation, companies must further define their business fields and think beyond the traditional boundaries. This article describes the reasons why it is necessary to explore new paths of innovation to gain competitive advantages.

The role of employees and their mindset

Employees are the backbone of every company, but often they are similarly trained, leading to similar mindsets. This results in innovative ideas being channeled into similar directions from the start. Even more problematic is that due to internal biases, obvious and low-risk options are often chosen. To foster new and groundbreaking ideas, companies must create a culture that supports the diversity of perspectives and backgrounds of their employees. At the same time, quick and cost-effective experiments with a variety of innovation approaches should be enabled in the early stages. Failing to do so, an external perspective in the form of co-innovations can help reduce this bias.

The limits of organizational and process innovation

While organizational and process innovations can bring about efficiency gains and cost savings, they are rarely long-term differentiating factors in competition. Other companies can quickly adopt similar structures, processes, and software, thus quickly nullifying the competitive advantage. Even more problematic is when after the initial provider has already made significant efforts to implement these innovations, they are simply copied and offered at lower costs. Therefore, companies must go beyond these limited technological innovation approaches and diversify their innovation strategies.

Your view on competition

Today's market is highly saturated, and companies often have similar access to talent, technologies, and resources as their competitors. To retain customers, companies must continuously add value to their products and services on one hand. On the other hand, they must also respond to new competitors entering the market with simpler products at lower prices, targeting customers with lower needs.

Your customer's view on competition

But what if customers perceive competition differently, and a product is not simply replaced by a competing product, but even by a product from a different industry? For example, software companies with matchmaking platforms have greatly impacted the taxi industry or the hotel sector. This requires a "different kind of innovation" compared to competitors, as competition is experienced only from the customers' perspective. It should be noted that technological innovations alone are not sufficient, as they are also available to other companies and easily replicable, often not patentable, or difficult to protect. True innovation thus lies in business model innovation.

The importance of "stop-doing"

Innovation not only means developing new ideas but also consciously deciding which activities should no longer be carried out to free up resources for important matters. Companies must focus on where they can achieve the best results, rather than getting lost in unprofitable or non-differentiating areas.

The focus on "becoming the best"

It is crucial for companies to define clear goals for their innovation efforts. The question "What can we become the best at?" focuses on the strengths and competitive advantages of a company. This enables a more targeted development and alignment of the innovation strategy with the important arenas.

Conclusion - innovation arena

Innovation is the key to success but requires broader thinking than just introducing new technologies or optimizing processes. By expanding their innovation arena and going beyond their traditional company or industry boundaries, companies can gain a sustainable competitive advantage. The combination of diversity of perspectives, clear goals, and customer focus enables companies to ask the right questions: "What can we become the best at, and what should we therefore no longer do?" This leads to innovative solutions that ensure success and resilience in an ever-changing business world.

Yetvart Artinyan

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