Most product companies begin their entire direction towards a new product investment with a strategy document. It’s the most important piece of document that cements the vision and direction at one place. It acts as a guiding light for the entire product team.

However, the most important dependency on product strategy is its budgetary limits. Most often there is a misalignment between a declared strategy and actual budget allocation. The strategy document often is an ambitious extrapolation  of the future. Problems often extend to budgets for marketing, sales and other necessary functions, such as customer support.

With this misalignment, there is higher chance for a product to fail.

SiriusDecisions offers an Innovation Strategy Framework, a decision support tool that organizations can use to ensure their investment support their growth strategy. The framework also verifies that investments in enhancing existing products and creating new offerings are aligned with the necessary budgets.

Let’s review the Strategy Framework by SeriousDecisions:

sirius

The framework contains four investment approaches:

  • Core innovation
  • New market extension
  • Existing market expansion
  • Breakthrough innovation

Core Innovation

The first quadrant includes investments in existing offerings —or add-on or adjacent offerings — for current markets and buyers. Current markets include segments, industries, geographies or organization types/sizes that the organization is actively targeting with tailored offerings, marketing campaigns, and sales or channel focus. Current buyers include lines of business, buying centers and personas that the organization is actively targeting

• Example: a company providing customized training courses to human resources professionals in the brokerage industry creates a new training course focused on recruiting. It will be sold into the same buying center and market as its current offerings.

New Market Extension

This quadrant includes investments in new or existing offerings to meet the needs of the same type of buyer that the organization currently serves, but within market segments, geographies, industries or organization types that the organization is not currently targeting.

Example: an accounting software provider has traditionally designed its product based on the needs of retailers, and has devoted its marketing and sales efforts to address these needs. It decides to now target accounting departments within the hospitality industry, where it has managed to sell to a handful of customers.

Existing Market Expansion

This quadrant includes investments in new or existing offerings to meet the needs of new buying centers or personas in markets that the company is already serving.

Example: a provider of software that helps educators identify plagiarism in student essays has traditionally sold to individual professors or departments within universities. It is now targetingadministrators in an attempt to sell access to the software across the entire university.

Breakthrough Innovation

This quadrant includes investments in new offerings to meet the needs of new buying centers or buying personas in markets that the company has never targeted.

Example: a company that produces software to help engineering  teams manage large development projects traditionally sells into IT departments within large enterprises. The company has determined that, with some modifications, the software can be sold into marketing and advertising agencies to help them manage marketing projects. The new buying centers include agency leadership and creative directors.

As part of annual planning and budgeting, and on an ongoing basis, organizations should use the framework to determine what percentage of their resources should be allocated to each type of innovation strategy; this
allocation should align with corporate objectives to grow revenue, market share and wallet share within specific markets and buying centers.

It also lists 5 ways how Innovation Strategy could go wrong for companies.

SERIOUS