Strategy and Innovation
Strategy and innovation are often shown to be two primary contributors to sustained financial excellence and competitive advantage. The common denominator for both strategy and innovation is insight. An insight is described as the joining together of two or more pieces of information or data in a unique way to come up with a new approach, new product, new service, or new solution that delivers value. Insights come from the ability to wade through the waves of input we receive each day and mentally connect the dots in new and creative ways. As Apple founder Steve Jobs remarked, “Creativity is just connecting things.”42
Prolific inventor James Dyson built his billion-dollar business through insights on what frustrated people. His first significant inven- tion—the Ballbarrow—was a wheelbarrow that used a ball instead of a wheel. This insight came from the frustration people had with the wheels getting stuck in the mud and rendered useless. Dyson recounted how insight also fueled the birth of his famous vacuum:
Sometimes you see a bit of technology working in one application and
you wonder whether that might solve the problem that’s been gnawing at your brain. That’s how the vacuum cleaner worked. I went to a lumberyard one day to buy some tinder and saw these massive 30-foot high cyclones collecting the sawdust on top of the roof. So I rushed home and started building small cyclones.43
Innovation, defined most simply as creating new value for customers, begins with an insight. The insight often centers on a solution to a problem or way to fulfill an unmet need of a customer. To create new value, you need this insight. Business strategy is defined as the intelligent allocation of limited resources through a unique system of activity to outperform the competition in serving customers. The only way to truly intelligently allocate resources is to have strong insight into how your product or service provides value to customers in ways that are different than competitive offerings. Doing the same things in the same way as the competition is a common formula for bankruptcy.
If the value is new, then it’s likely to be different from current offerings. As James Dyson said when he seized leadership of the upright vacuum market from Hoover with his cyclone technology, “And so I have sought originality for its own sake, and modified it into a philosophy which demands difference from what exists if only to redefine a stale market.”44 The intent then of both business strategy and innovation is to create value for customers. Too often, in the day-to-day competitive battles and the weeds of the business, we lose sight of the fact that competitive advantage is nothing more than “creating superior value for customers.” Innovation is the continual hunt for new value; strategy is ensuring that we configure our resources in the best way possible to deliver that value.