Strategic issues and technological innovations
Addressing such statement is relating corporate strategy with the notion of innovation, notably technological innovation.
Opting for a strategy orientation amounts to deciding to set the company into motion in a certain environment, in order to reach a spot or a positioning where it will be easier to compete with other companies. Such decision is no less than a dramatic action in the etymological sense, given how serious consequences may be for the company. Indeed, strategy decisions may have severe irreversible effects on the business. Additionally, strategy decisions are taken in a context of great uncertainty, the environment evolution and competitor reactions being hard to predict. Nevertheless, changing corporate positioning is a question of survival of the company; with no change in corporate positioning, the company would be passively exposed to situation and competition induced downturns and hazards. Moving forward, in other words attacking, remains the best defense.
The sole purpose of moving a business forward, is to safeguard it from predators, allowing it to have a competitive advantage. This notion is vital for business, having an advantage over competitors allows it to capture the market value, and consequently, to generate the profit required for development. Now, if building up a competitive advantage is paramount for the company’s survival, it also requires to have solved an equation prior to it.
The first term of this equation corresponds to the “Key Factors of Success” (KFS). KFS are the essential conditions to be met if you want to capture market value. They represent the whole range of concrete effects which when controlled, allow a company to be successful marketwise.
KFS are in fact customers’ PURCHASING BEHAVIOR, and can be identified by observing PRACTICES as the force of the main ACTORS on a market. Purchasing behaviors may be proven or on the contrary, latent. They must be deciphered meticulously, with an end purpose, having a clear vision of what are the users’ requirements for one utilization. Such requirements may evolve with time, in number and in their level of satisfaction.
Once the KFS are identified on a market, the company can now take to providing a better satisfaction than competing companies. This satisfaction is met through the mobilization of all resources and technological expertise of the company, in order to create a product or to upgrade the characteristics of an existing product, in order to reach the best adequacy between the product and the customers’ requirements. Such works do require investments, try outs, errors but in the end, if the company manages to provide a better suited answer to the market expectations, it will have found a way to differentiate itself from the rest of the competing companies, therefore, a way to capture the market value. At this point, the company will have developed what is called, a distinctive competence, the capacity for a company to act at a superior level as that of their competitors, or to use this capacity competitors do not have.
This notion corresponds to the second term of our equation.
When a KFS meets a distinctive competence, it is the only way for a company to create a single COMPETITIVE ADVANTAGE which will allow the company to capture the market value. Consequently, the sole purpose of a strategy decision is to provide the company with one or several distinctive competences (investment with a view to acquire or develop competences and new resources, allowing it to better satisfy one of the KFS, on order to have one or several competitive advantages.
Based on these elements, if we were to relate the notion of competitive advantage and the concept of product technical innovation, we would obviously notice extremely strong bonds between the two. The technical innovation of a product aims at:
- upgrading the technical characteristics of an existing product
- creating a new product.
Such evolution or creation are born from the production of a new and unique combination of resources and technological competences available within the company. Additionally, we know that the creation of a competitive advantage relies on whether or not one or several market specific KFS and one or several distinctive competences do meet within the company.
Henceforth, if the company skillfully combines its technological resources, and if it can identify a unique combination allowing to create or to upgrade a product to improve customers’ satisfaction, it will acquire a distinctive competence. Implementing such distinctive competence will allow it to generate a product technological innovation. In turn, this innovation will be a means for the company to differentiate itself from competitive companies, and consequently to better capture the market value thanks to the competitive advantage it will have created.
Product technical innovation is therefore, by essence, a means for the company to create one or several competitive advantages. Generating product technical innovation is therefore a strategic issue for companies.
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AUTHOR: Philippe RIVET
Philippe RIVET is a Consulting & Transition Management expert. He has a core competence focused on Transition Management and teaching in Strategy, Innovation and Change Management.