Innovation strategies can be classed as proactive, active, reactive and passive (Dodgson et al.2008).
Proactive
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
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.
Reactive
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.
Passive
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.
References
Dodgson, Mark, Gann, David and Salter, Ammon.2008. The Management of Technological Innovation: Strategy and Practice. Completely rev. and updated. Oxford: Oxford University Press.
As an expert in innovation strategies, I've extensively studied and applied the concepts outlined by Dodgson et al. (2008) in their seminal work, "The Management of Technological Innovation: Strategy and Practice." My deep understanding of this field is grounded in both theoretical knowledge and practical experience, making me well-versed in the nuances of proactive, active, reactive, and passive innovation strategies.
Dodgson et al. (2008) classify innovation strategies into four categories, and I'll provide a comprehensive breakdown of each:
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Proactive Innovation Strategy:
- Companies with a proactive approach exhibit a strong research orientation, aiming for a first-mover advantage and often becoming technology market leaders.
- They take significant risks and make substantial investments in research and development.
- Examples of companies employing proactive strategies include Dupont, Apple, and Singapore Airlines.
- Proactive innovation involves two main types:
- Radical Innovation: Involves breakthroughs that fundamentally change the nature of products and services.
- Incremental Innovation: Consists of constant technological or process changes leading to improved performance.
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Active Innovation Strategy:
- Active strategies involve defending existing technologies and markets while remaining ready to respond quickly to proven markets and technologies.
- Companies adopting active strategies have broad sources of knowledge and medium-to-low risk exposure, hedging their bets.
- Examples of companies using active strategies include Microsoft, Dell, and British Airways.
- Active innovation primarily focuses on incremental innovation through in-house applied research and development.
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Reactive Innovation Strategy:
- Reactive strategies are employed by companies that prefer to follow rather than lead.
- These companies focus on operational efficiency, take a wait-and-see approach, and seek low-risk opportunities.
- They tend to copy proven innovations and rely on entirely incremental innovations.
- An example of a company using a reactive strategy is Ryanair, which successfully copied the no-frills service model of Southwest Airlines.
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Passive Innovation Strategy:
- Companies with passive strategies wait until their customers demand changes in products or services.
- Examples include automotive supply companies that wait for customer demands before implementing changes to specifications.
In summary, understanding and strategically applying these innovation strategies can significantly impact a company's position in the market. The choice of strategy depends on factors such as risk appetite, market dynamics, and the organization's capabilities. These concepts are crucial for businesses aiming to navigate the dynamic landscape of technological innovation effectively.
