Types of innovation strategies
Innovation strategies can be classed as proactive, active, reactive and passive (Dodgson et al. 2008).
Companies with proactive innovation strategies tend to have strong research orientation and first-mover advantage, and be a technology market leader. They access knowledge from a broad range of sources and take big bets/high risks. Examples include: Dupont, Apple and Singapore Airlines.
The types of technological innovation used in a proactive innovation strategy are:
- radical – breakthroughs that change the nature of products and services
- incremental – the constant technological or process changes that lead to improved performance of products and services.
Active innovation strategies involve defending existing technologies and markets while being prepared to respond quickly once markets and technologies are proven. Companies using this approach also have broad sources of knowledge and medium-to-low risk exposure; they tend to hedge their bets. Examples include Microsoft, Dell and British Airways.
These companies use mainly incremental innovation with in-house applied research and development.
The reactive innovation strategy is used by companies:
- which are followers
- have a focus on operations
- take a wait-and-see approach
- look for low-risk opportunities.
They copy proven innovation and use entirely incremental innovators. An example is Ryanair, a budget airline which has successfully copied the no-frills service model of Southwest Airlines.
Companies with passive innovation strategies wait until their customers demand a change in their products or services. Examples include automotive supply companies as they wait for their customers to demand changes to specification before implementing these.
Dodgson, Mark, Gann, David and Salter, Ammon. 2008. The Management of Technological Innovation: Strategy and Practice. Completely rev. and updated. Oxford: Oxford University Press.