Defining an Innovation Targeting Strategy

In the innovation process, companies must define two unique targeting strategies. The first targeting strategy is required up front when deciding what initiatives to pursue and the second is required when targeting opportunities (underserved jobs and outcomes) that have been discovered in the market of interest.

Before embarking on any innovation initiative, companies must first decide whether to pursue a strategy of product, service, operational, or business model innovation. If they choose product or service innovation, they must then decide whether to pursue core market growth, related market growth, new market creation, or growth through disruption.

It is common for a company to pursue multiple growth paths, and each path requires careful study and a well-thought-out targeting strategy. For each initiative, a company must decide, for example, who in the value chain should be the target of value creation (e.g., end users, purchasers, distributors, OEMs, etc.), what internal company constraints exist, and which competitors to consider for analysis and benchmarking.

Many innovation initiatives fail because companies do not take the time to consider all the factors that impact the innovation process. A solid targeting strategy is needed here in order to ensure the desired business results can be achieved.

Next – solid outcome-driven research typically results in the discovery of underserved jobs and desired outcomes. These are the once hidden opportunities for value creation. A second targeting strategy is needed here to determine which of the opportunities – often totaling between 15 and 50 – to pursue. This may sound like a simple activity, but it is not. Several considerations must be made when defining this targeting strategy. For example, companies must ask:

Does the firm have the skills and capabilities needed to address the high priority opportunities?

Will a new technology be required to address the top opportunities?

Can a solution be developed within the desired timeframe?

Are some opportunities synergistic with others?

One preferred innovation targeting strategy looks for underserved desired outcomes that are synergistic across customer sets. For example, related outcomes that are considered important and unsatisfied by a doctor and a nurse, or a veterinarian and a dog owner. In these situations it is possible – with one action – to deliver value to more than one constituent in the value chain. This is an efficient approach to innovation – and can only result from a clever targeting strategy.

A third innovation targeting strategy may be needed to decide what segment of the population to pursue. For example, a company may want to target only males or females or a segment of customers with a unique set of underserved outcomes. This is necessary when opportunities for value creation are not found across the entire customer population.