About innovation pioneers, fast followers and defenders
Updated: Mar 29
Innovation can be a key driver of growth for businesses and organizations. It can help organizations introduce new products or services, improve existing ones, and find new ways of operating that increase efficiency and competitiveness. Innovation can also help organizations adapt to changing market conditions and customer needs, which can be especially important in times of economic uncertainty or disruption.
Even though there are forces other than innovation that can drive growth, these come at a cost. These non-innovation growth drivers tend to come with a price tag and don't significantly change the cost-to-customer value ratio, except in cases of economies of scale. Some growth strategies, like acquiring other companies and subsidizing customer acquisition costs, can even result in losses for startups.
While the importance of innovation in driving growth may vary depending on the specific industry, market conditions, and other factors, it is a sustainable way to grow. It creates growth through new offerings, that may be a result of different types of innovation (business model, alliances, process, structure, product, platform, services, channel or customer experience).
However, with innovation comes risk. Innovation can bring many benefits, but it also carries risks that can impact an organization or society. Some of the risks associated with innovation include:
Financial risk: Innovative projects can be expensive, and there is always a risk that they may not generate the expected return on investment.
Market risk: It can be difficult to predict how a new product or service will be received by the market, and there is always a risk that it will not be successful.
Technological risk: There is always a risk that the technology underlying an innovative project may not work as expected or may be surpassed by newer technologies.
Legal risk: Innovation can sometimes involve the use of intellectual property or patents, which can lead to legal disputes.
Reputational risk: If an innovative project is not successful, it can damage an organization's reputation and credibility.
Ethical risk: Innovation can sometimes raise ethical concerns, such as the potential for negative impacts on society or the environment.
The approach to innovation adopted by companies can be directly attributed to their risk appetite
Pioneers: Organizations that invest in exploratory research and are the first movers with an innovative offering.
Fast Followers: Organizations that leverage pioneering technologies to quickly develop innovative solutions similar to pioneers, using their well-established capabilities
Defenders: Organizations that are set on defending their positions through incremental sustaining innovations and continuous improvement efforts.
Pioneer approach to innovation
Pioneers innovate by exploring unchartered territories of new concepts. These tend to be technology led and through exploring and understanding how future customer needs may merge using a yet immature technology. An example of such thinking is electric vehicles and hydrogen vehicles. Some of their efforts are focused on core research. Their work borders on "crazy ideas", but make future disruptions feasible.
Pioneer innovators work with novel and new ideas, often building on existing components that are already industrialized. They are good at open innovation and successfully integrate internal and external innovation teams to create a thriving innovation ecosystem.
Pioneer innovators have multiple operating models for their horizon 1, horizon 2 and horizon 3 innovations. They have a robust approach to scaling up innovations, including investment in startups, integrating them within their business, a spin-off of innovations, etc.
Not every effort of pioneers succeeds. For this reason, pioneers have a great many experiments running on Horizons 2 and 3. Failures tend to generate knowledge and fuel further innovation. They have robust ideation and open innovation systems that enable them to generate a vast number of ideas focused on future scenarios.
Fast follower approach to innovation
Fast followers are good at leveraging their technical and market capabilities to convert early prototypes, concepts and even half-baked ideas into viable innovations.
The technology depth and maturity of such organizations enable them to quickly solve challenges with pioneering technologies, especially in developing unique design solutions to overcome reliability problems as well as solving manufacturing and supply chain challenges.
Fast followers also tend to be successful businesses that have managers capable of launching new business models. Once a pioneering opportunity is identified, these resource-rich organizations are very good at growing the innovation at scale, using their very skilled market capabilities and infrastructure.
Very large players have chosen to be fast followers. Apple wasn't the digital music player pioneer that credit goes to an obscure Korean company SaeHan and Diamond multimedia with their Rio PMP300 player. Samsung has been a fast follower in most of its product categories but used its technology and market capabilities to become a top player. You could also add Google to the fast follower category.
A very unique capability of fast followers is to watch the market for emerging technology trends, and consumer needs and identify pioneers for investments. Many of them are also very good at mergers and acquisitions and constantly acquire early-stage innovators.
Defender's approach to innovation
Quite often we are seeing slow-moving market giants defend their positions, even if it looked like they are being overrun by disruptive start-ups. Microsoft Teams is an extremely good example of this defender approaches. Despite the acquisition of Skype, Microsoft was not the leading innovator in the online collaboration space. The COVID pandemic saw Zoom as the clear pioneer. Teams wasn't even a fast follower effort, it was slow to take off.
However, like all successful defenders, Microsoft innovated with a focus on industrialization. They found ways to leverage their existing technologies to make things faster, better, smaller, and more efficient, combine other features and create a platform. As a video conferencing tool Zoom might be still better, but Microsoft Teams is now a platform that offers comprehensive solutions to customers which has made it the preferred platform for organizations.
Defenders complete the industrialization task that pioneering startups are just not designed for. They may move slower than their competitors, but their ability to build scale and operations excellence orientation combined with incremental innovation built on pioneer efforts allows them to successfully defend their leadership position.
Top defender capabilities include strong technology skills, operations excellence, large scale and an ability to combine multiple offerings with pioneering innovations to create a superior business model and value proposition. All of this is aided by the fact that defenders enjoy the trust of their large, loyal customer base, who continue to buy many of their other products as well.
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Krishnan is a leading innovation consultant and focuses on helping people and organizations innovate and build capabilities for innovation. He brings over 25 years of experience in the industry and consulting. You can reach him by phone / WhatsApp: +919791033967 or email: email@example.com
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