Strategic innovation Evolving innovative thinking by focusing on future users Jon Sundbo Roskilde University Denmark

2 Basis for the comments Case studies of service and experience firms Experiments in service and experience firms (project ”When the customer encounters the employee”) General reflections and case-examples

3 Why strategic innovation Innovation is a risky business The idea phase not the most difficult – that is the commercialisation phase Firms want to introduce innovations that the market wants Service firms have very little R&D and need to be pull-oriented They have the advantage of meeting the customers Their innovation process becomes customer oriented

4 What is strategic innovation ? Innovation is about what people may want in the future That is difficult to predict Firms can not rely on actual user-demands on the market – they can not find lead users Firms are forced to choose a strategy: – Defensive: Try to guess what future users will want – Offensive: Try to determine what the future users will want (influencing life style)

5 How is strategic innovation practiced? It is difficult to practice directly user-based innovation: Customers often have no ideas, particularly not for radical innovations Strategic innovation is the indirect way to find what users may want in the future Several methods

6 User analyses Market analyses Examples: Surveys (how do people use web sites) Trend spotters (new food habits) Focus groups (social home service) Anthropological approach Examples: Living in youth groups (music, clothes, everything) – acting as a tourist Critical incidences Example: Interviews with victims of fire

7 User involvement User communities Examples: Web-blogs (software firms, library) Help desk and complaints (travel agency) User involvement in the innovation process Examples: Co-creation (NewInsight) – The idea and test phases (New services for mobile phones) Value chain innovation (company-users as experts) Examples: Diary – wholesale – cafe Hotel - attraction – tour operator – press

8 Employee-based user-knowledge Idea boxes Examples: Library, IBM, Venture Cup Empathic innovation Examples: Waiters in a cafe Insurance agents Employees as innovators Example: TrygVesta (insurance company) Volunteers Example: Roskilde festival

9 Offensive strategy Creating behavioral trajectory Example: Discount airlines discount airport terminals Experience added (influencing life style) Examples: Cars – web pages – Levis jeans Entrepreneurship – create the movement oneself Examples: Body Shop – Windmill industry

10 Reflexive strategy The strategy must be regularly assessed (the innovations may be wrong - the world is changing) Employees are involved (encounter ther customers) New push-based innovations may come up (technology, R&D, intrapreneurship)

11 Sum up Market or user based strategic innovation is about incremental innovation Strategic innovation is constant hard work It is about business development and solving problems/creating a better life – call it innovation or not The methods must be developed and people trained in using them. Management must be committed and focused on innovation – and educated e.g. Project ”When the customer encounters the employee”