Marketing Strategy and Competitive Positioning pdf ebook

Figure 12.2
Innovation drives 
strategy renewal 
and reinvention
Source: Adapted from 
Nigel F. Piercy (2017).
REVOLUTION
RENEWAL
Radical market
and customer
change/trends
Coping/adaptation
mechanisms
REINVENTION
Designing new
ways of doing
business
Disruptive pressures
on existing business
models
Value-creating
opportunities for
new business models

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INNOVATION STRATEGY
growth. As technology and information become commoditised and globalised, so the 
advantage of making things cheaper, faster and better diminishes and profits decline. 
Design strategy begins to play a key role in product differentiation, decision making and 
understanding the consumer experience. Creative innovation becomes the key driver of 
growth, because companies create products that address consumers’ unmet and often 
unarticulated needs. The successful creative corporation emerges with a new ‘innovation 
DNA’ and a fast-moving culture that routinely beats the competition because of a high 
success rate in innovation (Nussmaum, 2005). The transformation of software company 
Intuit came from the creation of the company as ‘a design-driven innovation machine’ 
and its ‘Design for Delight’ initiative to produce the most user-friendly software in the 
world. Today, Intuit has leveraged the cloud to move beyond software provision towards 
service – a fundamental shift in business model that, like many others already mentioned, 
seems obvious in hindsight.
Companies such as Apple, Google, Toyota and General Electric are regularly rated as 
the most innovative in the world, ahead of their competitors (McGregor, 2007). The move 
by Apple from computers to the music and movie business; the evolution of Google from 
Internet search to advertising, to data organisation, to online software, to mobile phones; 
the dominance of Toyota in hybrids; GE’s search for ‘imagination breakthroughs’, which 
has led into emerging market initiatives and green technology – all represent the power of 
ideas in changing markets and achieving step-changes in performance. Breakthrough ideas 
represent new market power. Steve Jobs at Apple achieved a step-change in the music busi-
ness because of the iPod – not even a new product to the world, but one that was a better-
conceived and better-designed version of an existing product – because Jobs had the power 
to attract customers with his superior ideas (Colvin, 2007).
The challenge for marketing is to drive creative and powerful innovations that make a 
difference and reshape markets. Innovation that creates superior value provides a route to 
above-average earnings, even in turbulent markets (Henry, 2006).
12.1.4 Radical innovation
Importantly, the strategic imperative for effective innovation is not incremental change to 
products and services, but deep-seated change in the way we approach the market, and a 
deep focus on customer value – everything else is just variation on a theme (Vence, 2007). 
By contrast, it should be noted that it is estimated that minor innovations make up 85–90 
per cent of most companies’ development portfolios, but rarely generate the growth that 
companies seek – in effect, at a time when companies should be taking bigger, but smarter, 
risks, their bias is in the other direction (Day, 2007). The failure to innovate at this level has 
been tracked to: (1) paying too much attention to the company’s currently most profitable 
customers; (2) creating products and services that do not do the jobs customers want done; 
and (3) the misguided application of financial analysis as an accomplice in the conspiracy 
against innovation (Christensen et al., 2008).
In fact, authors such as Daniel Pink argue that the very basis of value creation is shift-
ing from the disciplines of logic, science and linear thinking to the intuitive, non-linear 
processes of creativity and imagination (Pink, 2006). Terms like the ‘imagination economy’ 
describe the move from technology and services to create value, to creativity and imagina-
tion (Colvin, 2006). The focus is on innovation so radical it may even frighten customers – 
for example, a major concern at companies such as Samsung and LG, is that the growing 
sophistication of their products will put off buyers (Gowers et al., 2005).
When you identify the world’s most innovative companies, the top five usually include 
Apple, Google, Microsoft, IBM and Amazon, but in fact when you look more closely at the 
list, 15 of the top 50 are Asian companies and the majority of the top 25 are based outside 
the USA. BusinessWeek concludes: ‘. . . we’re starting to see the beginning of a new world 
order. The developed world’s hammerlock on innovation leadership is starting to break’ 
(Arndt and Einhorn, 2010).

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