Anthony W. Ulwick

FORMULATE THE INNOVATION STRATEGY

Is there a way to choose an innovation strategy that relies on something other than gut feelings and hunches? The answer is yes: there is a highly reliable way to pick a winning innovation strategy. An innovation strategy, as we define it,
is a plan that details which outcome-based segments and which underserved outcomes a company is going to target and how it is going to target them (either with existing offerings, improved products and services, or altogether new offerings). The innovation strategy also outlines the order in which the segments will be targeted and provides a timeline for implementation.

It’s easiest to understand the process when you see it in action. Consider the work we did with the Bosch circular- saw product team. One segment we discovered through Outcome-Based Segmentation was comprised of tradesmen that mostly cut 2x4s. Customers in that segment were overserved because they were getting more benefits than they needed or wanted from the saws they were using. They made short cuts where precision did not matter and all their needs were satisfied. On the other extreme, we found a underserved segment of tradesmen who routinely made long, finish cuts that required precision, and who often had to make angle cuts that required them to adjust the blade height and angle. That segment had 14 unsatisfied outcomes.

With knowledge of these segments, we were able to formulate the innovation strategy. Success in any market comes by helping customers get a job done better and/or more cheaply, and Bosch had a number of options to consider. One option was to target the overserved segment with a circular saw that got the job done more cheaply (a disruptive strategy). While a viable option, it did not align

with Bosch’s desire to create a premium-brand circular saw for the North American market. Another option was to introduce new laser-based technology to the market. While this sounded exciting, that technology would have had little impact on getting the job done better and would have added to the cost, a sure recipe for failure.


The option that Bosch pursued was to stick with existing technology and to add features to the platform that would address the 14 underserved outcomes in the one underserved segment, yet cost less than competing solutions (a dominant strategy). This was their innovation strategy. They knew precisely what segment and unmet outcomes to target and what technology platform to use to achieve their goals.
Bosch engineers addressed the unmet needs with the CS20 circular saw, which was the company’s best-selling circular saw in North America for over 10 years.

When building an effective innovation strategy there is no room for hunches or guesswork: the qualitative, quantitative, and analytical methods that comprise our ODI process provide the insights needed to formulate a robust and reliable innovation strategy.

8.