Types of Innovation Strategy

Companies rarely comply with ideal types of innovation strategy. However, the ideal types of innovation strategies can provide a starting point for the development of your innovation strategy. The ideal types of innovation strategy can be classed as proactive, active, reactive and passive1. Each is described in greater detail below.

Proactive - Companies with proactive innovation strategies tend to have strong research orientation; they will often have first mover advantage and be a technology market leader. These companies access knowledge from a broad range of sources and take big bets/high risks.  Companies like Dupont, Apple and Singapore Airlines have proactive innovation strategies.

The types of technological innovation used in a proactive innovation strategy are radical and incremental. Radical innovations (as described in Why Innovate) are breakthroughs that change the nature of products and services. Incremental innovation is the constant technological or process changes that lead to improved performance of products and services.

Active - An active innovation strategy involves defending existing technologies and markets but with the preparedness to respond quickly once markets and technologies are proven. These companies have mainly incremental innovation with in-house applied R & D.  Companies with active innovation strategies also have broad sources of knowledge and have medium to low risk exposure. They tend to hedge their bets and include companies such as Microsoft, Dell and British Airways.

Reactive - The reactive innovation strategy is used by companies that are followers and have a focus on operations, have a wait and see approach and look for low risk opportunities. They will copy proven innovation. Companies with reactive innovation strategies use entirely incremental innovators and include budget airlines such as Ryanair 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. Many of the companies that supply to automotive companies have passive innovation strategies as they wait for the automotive companies to demand changes to specification before implementing these changes.

1 Dodgson M., Gann D., Salter A., The Management of Technological Innovation: Strategy and Practice. Oxford University Press 2008

Links to subsections of this topic

Developing an innovation strategy
Types of Innovation Strategy
Integrating your business strategy
Prototyping
Driving Innovation
Summary