Daniel Huber · Heiner Kaufmann ·

Martin Steinmann

Innovation
Strategy
The Bridge to the Company’s Future
Innovation Strategy
Daniel Huber · Heiner Kaufmann ·
Martin Steinmann

Innovation Strategy
The Bridge to the Company’s Future
Daniel Huber Heiner Kaufmann
Mühlethurnen, Switzerland Hilterfingen, Switzerland

Martin Steinmann
Firmament AG
Bern, Switzerland

ISBN 978-3-662-69831-0 ISBN 978-3-662-69832-7 (eBook)

https://doi.org/10.1007/978-3-662-69832-7

Translation from the German language edition: “Innovationsstrategie” by Daniel Huber et al., © Der/die
Herausgeber bzw. der/die Autor(en), exklusiv lizenziert an Springer-Verlag GmbH, DE, ein Teil von Springer
Nature 2023. Published by Springer Berlin Heidelberg. All Rights Reserved.

This book is a translation of the original German edition “Innovationsstrategie” by Daniel Huber, published
by Springer-Verlag GmbH, DE in 2023. The translation was done with the help of an artificial intelligence
machine translation tool. A subsequent human revision was done primarily in terms of content, so that the book
will read stylistically differently from a conventional translation. Springer Nature works continuously to further
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Dedicated to the much too early deceased
Harvard
Business School Professor Clayton M.
Christensen.
His theory of disruptive innovation has shown us
the way to further unravel the
mysteries of innovation
Introduction and Structure of the Book

This book emerged from the surprising realization of the three authors that the term
innovation strategy is often encountered in the literature, but that there is hardly any
in-depth literature on this topic. The literature is not clear about what the term innovation
strategy actually means, nor how an innovation strategy should be developed and what it
exactly should contain. We want to close this gap with this book.
The three authors Daniel Huber, Heiner Kaufmann and Martin Steinmann have
already written the book Bridging the Innovation Gap—Blueprint of the Innovative
Company1 as an author team. In this book, they explain why innovation, based on the
current knowledge, must fail in a systematic way and what can be done to rectify this
regrettable state of affairs. The authors propose the Bern Innovation Model,2 which cor-
rects the innovation process recognized as incomplete and shows the organizational pre-
requisites required for systematic innovation activity.
In this book, the three authors now take a step further. Based on the Bern Innova-
tion Model, they explain how a company can increase its innovation capability with an
innovation strategy. It is the path to the Innovative Company, which is outlined in the
innovation strategy for the company. Companies thus receive the basics on how they can
systematically build and develop their innovation capability further. For the first time, a
book is available, which comprehensively deals in-depth with the topic of the innovation
strategy. Through the steps outlined in this book, the innovation capability of companies
can be systematically increased.
The book is divided into three parts according to Fig. 1:
Part I: Innovation Strategy deals with the benefits and structure of an innovation
strategy. It is designed in such a way that the interested reader already finds everything
necessary for the development and application of an innovation strategy here. In return,
Part I does not provide the reasoning and derivation of the insights used. For practical
application, it is therefore sufficient to know this first part.

1[Huber, Kaufmann, Steinmann, 2017]

2[Huber, Kaufmann, Steinmann, 2017]

vii
viii Introduction and Structure of the Book

Practice Part I
Innovation Strategy

Part II
Derivation

Theory Part III

Context

Innovation Strategy

Strategy

Business Administration

Fig. 1 Book Structure. © Huber, Kaufmann, Steinmann 2024. All Rights Reserved

In Part II: Derivation the derivation is then caught up. It is shown how one arrives
at the instructions for action described in Part I and explains why these are sensible. Part
II Derivation thus develops the overall concept and presents it in a comprehensible way.
This part is more aimed at a reader also interested in theory.
The Part III: Context puts the insights presented in the book into a larger context.
Part III includes summaries of essential contributions to innovation research and relates
these to each other and with the contents of this book. The aim is to show the contribu-
tion of this book within the overall context of innovation research and thus make its new
insights more connectable to the existing knowedge.
Acknowledgements

Like many specialist book authors, we are proverbially “standing on the shoulders of
giants”. This is even more true as the topic of innovation strategy requires that the exist-
ing findings on all aspects of innovation and strategy formation must be integrated into
an overall picture. Our first thanks therefore go to all those well-known and less well-
known authors who have contributed insights and findings to these two areas.
Of course, there are countless of them and it is completely impossible to list them all
here. We can only mention a small selection here. Some of these authors’ insights we
have used in our book directly. For example, we have used methods and concepts from
Clayton Christensen, Geoffrey Moore, Gary Pisano or Robert Cooper. Other contribu-
tions and methods served us more as inspiration and supplement. Here we would like to
mention in particular Alexander Osterwalder, Mark Johnson, Pero Micic, Derek Abell or
Jean-Philippe Deschamps. Many other contributors are mentioned in the source refer-
ences. And many more, some of them unknown to us, have contributed results on which
we were indirectly dependent. We would like to express our heartfelt thanks to all of
them, those mentioned and those not explicitly mentioned. Without their contribution,
this book could never have been written.
In addition to all the innovation researchers, our thanks also go to all the alert students
who, in our lectures, made us clarify and clearly formulate our thoughts on the subject.
We also thank our consulting clients who bravely tried out our ideas and concepts and
thus provided valuable confirmation from practice for our insights and concepts. And of
course, we hope that our readers will apply the contents of this book. We are grateful for
any experience reports and feedback.
Apart from all these content contributions, our thanks also go to those who made the
book technically and commercially possible. Our thanks go to our publisher, Springer
Gabler, and the contact persons directly involved with our book, Ann-Kirstin Wiegmann
and Monika Mülhausen.
And last but not least, and probably most importantly, our thanks go to our partners.
Not only did they have to forego some shared time in favor of our work on the book.
They supported us at all times and showed a lot of understanding for the fact that we
were sometimes lost in thought or hiding behind the computer or behind some specialist

ix
x Acknowledgements

books. Without this understanding, none of us could have made his contribution to the
book now at hand.
The present English edition of our book “Innovation Strategy—The Bridge to the
Company’s Future” is the translation of a prior edition in German published in 2023. The
book was translated using a translation program based on artificial intelligence and was
lighly edited thereafter manually. This procedure can result in certain cases in wordings
that may appear uncommon to some readers.
Contents

1 Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Part I Innovation Strategy

2 Benefits of an Innovation Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.1 What is the Benefit of an Innovation Strategy?. . . . . . . . . . . . . . . . . . . 11
2.2 What is an Innovation Strategy? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.3 Why is the Lack of an Innovation Strategy a Problem?. . . . . . . . . . . . . 13
2.4 What Does an Innovation Strategy Include?. . . . . . . . . . . . . . . . . . . . . 15
2.5 Conclusion, Thesis, and Research Question . . . . . . . . . . . . . . . . . . . . . 16
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3 The Innovation Framework. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.1 Contents of an Innovation Strategy. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.2 Basics of an Innovation Strategy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.2.1 Field 1: Present—The Current Company,
Our Starting Point . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.2.2 Field 2: Future—The Future Company, the Ambition. . . . . . . 22
3.3 The Actual Innovation Strategy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.3.1 Field 3: Gap—The Strategic Gap, the Why. . . . . . . . . . . . . . . 23
3.3.2 Field 4: Need—The Innovation Need, the How Much . . . . . . 23
3.3.3 Field 5: Focus—The Search Fields, the What. . . . . . . . . . . . . 25
3.3.4 Field 6: System—The Innovation System, the How. . . . . . . . 25
3.4 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4 Development of the Innovation Strategy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.1 Two Strategies Are Required. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.2 The Strategy for Excellence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.3 The Strategy for Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.4 The Present, Field 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.5 The Future, Field 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

xi
xii Contents

4.6 The Gap, Field 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

4.6.1 The Quantitative Financial Strategic Gap . . . . . . . . . . . . . . . . 36
4.6.2 The Qualitative Content-Related Strategic Gap. . . . . . . . . . . . 38
4.7 The Need for Innovation, Field 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.8 The Focus, Field 5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.9 The System, Field 6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.10 Deepening Field 2: Future Blueprint. . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.11 Deepening Field 6 System. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
4.11.1 The Innovation Process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
4.11.2 The Innovation Organization. . . . . . . . . . . . . . . . . . . . . . . . . . 53
4.11.3 Human Resources and Finances . . . . . . . . . . . . . . . . . . . . . . . 55
4.11.4 Suitable Rules of the Game. . . . . . . . . . . . . . . . . . . . . . . . . . . 56
4.11.5 Leadership Aspects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
4.11.6 Wage and Incentive Systems. . . . . . . . . . . . . . . . . . . . . . . . . . 59
4.12 Innovation Strategy for SMEs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
4.13 Maturation and Release of the Innovation Strategy. . . . . . . . . . . . . . . . 61
4.14 Merging the Innovation Needs of the Strategy
for Excellence and Strategy for Change . . . . . . . . . . . . . . . . . . . . . . . . 61
4.15 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
5 The Application of the Innovation Strategy. . . . . . . . . . . . . . . . . . . . . . . . . . 65
5.1 General Aspects of the Application of the Innovation Strategy. . . . . . . 66
5.2 Implementation of the Innovation Process. . . . . . . . . . . . . . . . . . . . . . . 70
5.2.1 Content Topics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
5.2.2 Interaction Between the Innovation Process and the
Innovation Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
5.2.3 Implementation of the Early Warning System Phase. . . . . . . . 73
5.2.4 Implementation of the Exploration Phase. . . . . . . . . . . . . . . . 75
5.2.5 Implementation of the Phase Transfer. . . . . . . . . . . . . . . . . . . 77
5.3 Application Aspects Regarding Organization and Leadership . . . . . . . 78
5.4 Communication and Anchoring of the Innovation Strategy . . . . . . . . . 79
5.4.1 Communication Within the Company. . . . . . . . . . . . . . . . . . . 79
5.4.2 Anchoring in the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . 80
5.5 Application of the Innovation Strategy in Daily Business. . . . . . . . . . . 81
5.6 Prototyping in the Innovation Process. . . . . . . . . . . . . . . . . . . . . . . . . . 82
5.7 Maintenance of the Innovation Portfolio. . . . . . . . . . . . . . . . . . . . . . . . 83
5.8 Conflicts and Blockades. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
5.9 Securing Success. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
5.9.1 Observe and Monitor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
5.9.2 Corrective Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Contents xiii

5.10 Special Aspects in the Application. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

5.10.1 Application Aspects Depending on the Different
Initial Situation of Companies. . . . . . . . . . . . . . . . . . . . . . . . . 92
5.10.2 Application in SMEs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
5.10.3 Application in Scale-Ups. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
5.11 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
6 Updating the Innovation Strategy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
6.1 General Aspects of the Update Mechanism. . . . . . . . . . . . . . . . . . . . . . 99
6.2 The Process of Updating. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
6.3 Phase 1: Preparing the Update. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
6.3.1 A Dynamic Warehouse for Strategic Components . . . . . . . . . 105
6.3.2 Recognizing Deviations in Development. . . . . . . . . . . . . . . . . 108
6.3.3 Collecting and Preparing for the Next Regular
Strategy Review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
6.4 Phase 2: Four Typical Cases of Updates . . . . . . . . . . . . . . . . . . . . . . . . 110
6.4.1 Case 1: Revision of the Innovation Strategy
to Version 2.0 (Normal Case). . . . . . . . . . . . . . . . . . . . . . . . . . 111
6.4.2 Case 2: An Event Requires an Immediate Revision
with a Large Need for Change (Emergency). . . . . . . . . . . . . . 113
6.4.3 Case 3: Accumulated Minor Events Only Require
a Small but Immediate Revision (Minor Emergency). . . . . . . 114
6.4.4 Case 4: Proactive Trial Balloons for an
Alternative Strategy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
6.5 Phase 3: Creating the Updated Strategy. . . . . . . . . . . . . . . . . . . . . . . . . 119
6.6 Learning Loop. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
6.7 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120

Part II Derivation
7 Classic Strategy Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
7.1 What is a Strategy? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
7.2 Classic Strategy Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
7.3 Strategy Deficiencies in Practice—What is Missing?. . . . . . . . . . . . . . 129
7.4 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
8 Future-Oriented Strategy Formation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
8.1 Introduction to the Future-Oriented Strategy. . . . . . . . . . . . . . . . . . . . . 133
8.2 Method for Systematically Determining an Attractive
Position for a Company in the Future . . . . . . . . . . . . . . . . . . . . . . . . . . 135
8.3 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
xiv Contents

9 The Two Stars Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139

9.1 Impacts of Future-Orientation on Strategy Formation. . . . . . . . . . . . . . 139
9.2 Characteristics of the Two Stars Strategy . . . . . . . . . . . . . . . . . . . . . . . 141
9.3 Development of the Two Stars Strategy. . . . . . . . . . . . . . . . . . . . . . . . . 142
9.4 The Strategic Gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
9.4.1 The Financial Strategic Gap. . . . . . . . . . . . . . . . . . . . . . . . . . . 144
9.4.2 The Content-Related Strategic Gap. . . . . . . . . . . . . . . . . . . . . 144
9.4.3 Conclusions for the Strategy for Change. . . . . . . . . . . . . . . . . 145
9.5 The Two Stars Strategy and the Innovation Strategy. . . . . . . . . . . . . . . 145
9.5.1 Components and Scope of an Innovation Strategy . . . . . . . . . 145
9.5.2 Need for an Innovation Strategy . . . . . . . . . . . . . . . . . . . . . . . 146
9.5.3 Conclusions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
9.6 The Two Stars Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
9.7 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
10 The Innovation Strategy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
10.1 Need for Innovation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152
10.1.1 Need for Innovation of the Strategy for Excellence. . . . . . . . . 153
10.1.2 Strategy for Change. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
10.1.3 Provide Sufficient Resources. . . . . . . . . . . . . . . . . . . . . . . . . . 156
10.2 Search Fields and Guiding Questions . . . . . . . . . . . . . . . . . . . . . . . . . . 157
10.3 The Innovation Strategy in the Innovation System
of the Bern Innovation Model. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
10.4 Creating the Prerequisites for Innovation . . . . . . . . . . . . . . . . . . . . . . . 159
10.4.1 Innovation Process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
10.4.2 Innovation Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
10.4.3 Human and Financial Resources Required for Innovation . . . 161
10.4.4 Leading Innovators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
10.5 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
11 Innovation Strategy for SMEs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167
11.1 Definition and Distinction of SME Types. . . . . . . . . . . . . . . . . . . . . . . 167
11.2 The Innovation Needs of SMEs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169
11.3 Key Characteristics of SMEs with Regard to Innovation . . . . . . . . . . . 170
11.4 Innovation in the Existing Business in Principle. . . . . . . . . . . . . . . . . . 171
11.5 Innovation in the Existing Business According to Maturity Phases . . . 174
11.6 Leadership Responsibility for Innovation. . . . . . . . . . . . . . . . . . . . . . . 175
11.7 Innovation Through the Establishment of a New Business. . . . . . . . . . 176
11.8 Innovation Strategy for SMEs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178
11.8.1 Fields 1–4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178
11.8.2 Field 5, Focus: Guiding Questions and Search Fields. . . . . . . 179
Contents xv

11.8.3 Field 6, System: The Innovation Process. . . . . . . . . . . . . . . . . 179

11.8.4 Field 6, System: The Innovation Organization . . . . . . . . . . . . 180
11.8.5 Field 6, System: Human Resources and Finances. . . . . . . . . . 180
11.8.6 Field, 6 System: Leadership Aspects. . . . . . . . . . . . . . . . . . . . 181
11.8.7 Field 6, System: Wage and Incentive Systems. . . . . . . . . . . . . 181
11.9 Exploration Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182
11.9.1 Overall Responsibility for Innovation and Exploration
at the Executive Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183
11.9.2 Exploration Workshops. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183
11.9.3 Implementation of the Innovation Strategy. . . . . . . . . . . . . . . 184
11.10 Spinning-Off into a Start-Up. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185
11.11 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187
12 Start-Ups, Incubators and Accelerators. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189
12.1 Accelerators. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190
12.2 Strategic Alignment of Start-Ups. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
12.3 Building an Independent Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . 192
12.3.1 Conscious Replacement of the Leadership During the
Transition to Operational Business . . . . . . . . . . . . . . . . . . . . . 193
12.3.2 Capital Requirements Lead to the Influence
of the Capital Provider on the Management . . . . . . . . . . . . . . 193
12.3.3 A Sale Causes the Restructuring of the Management. . . . . . . 194
12.4 Dividing the Start-Up into an Explorative Part and
an Operational Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194
12.4.1 The Founding Team Already Consists of NT
and SJ Types. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196
12.4.2 The Founders Are “Bilingual”, Both in NT
and SJ Mode. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196
12.5 A Start-Up as a Vehicle in the Corporate Environment. . . . . . . . . . . . . 197
12.5.1 A New Business Unit in the Corporation. . . . . . . . . . . . . . . . . 197
12.5.2 Acquisition of a Start-Up. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197
12.6 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198

Part III Context

13 Contributions of Other Authors, Which We Have Relied on . . . . . . . . . . . . 203
13.1 Types of Innovation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203
13.2 Strategic (Resource) Buckets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204
13.3 The “Traditional” Innovation Research. . . . . . . . . . . . . . . . . . . . . . . . . 204
13.4 The Boston Matrix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204
xvi Contents

13.5 Stages of Innovation in a Business Unit . . . . . . . . . . . . . . . . . . . . . . . . 207

13.5.1 Innovation Journey According to Christensen. . . . . . . . . . . . . 208
13.5.2 Innovation Strategy of a Business Unit. . . . . . . . . . . . . . . . . . 209
13.5.3 Our Conclusions on the Innovation Journey
According to Christensen. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212
13.6 Rules for Innovating in Large Companies. . . . . . . . . . . . . . . . . . . . . . . 213
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
14 Further Well Known Contributions of Other Authors and
Their Relation to Our Results. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
14.1 The Stage-Gate Innovation Process. . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
14.2 The Life Cycle Diagram . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216
14.3 Innovation in the Existing Business in the Optimization Phase . . . . . . 218
14.4 Effectuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221
14.5 Ambidextrous Organisation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222
14.5.1 Ambidextrous Management. . . . . . . . . . . . . . . . . . . . . . . . . . . 222
14.5.2 Principles of Ambidextrous Management. . . . . . . . . . . . . . . . 224
14.5.3 Our Conclusions on Ambidexterity. . . . . . . . . . . . . . . . . . . . . 225
14.6 Developing New Business Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . 226
14.7 The Disruptive Transformation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227
14.8 Design Thinking and Other Innovation Methods and Tools . . . . . . . . . 230
14.9 The Invincible Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232
15 Comparison of Innovation Models and Business Development Models . . . 233
15.1 Innovation Models. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233
15.2 Business Development Models. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236
15.2.1 Boston Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237
15.2.2 Life Cycle Diagram According to Geoffrey Moore. . . . . . . . . 238
15.2.3 Innovation Journey According to Christensen et al. . . . . . . . . 238
15.2.4 Innovation Horizons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240
15.2.5 Organizational Evolution According to O’Reilly
and Tushman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241
15.3 Conclusion to Chaps. 13, 14 and 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . 242
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243
16 Final Remarks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245
16.1 The Innovation Strategy and the Two Stars Strategy. . . . . . . . . . . . . . . 245
16.2 Some Important Insights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246
16.3 Answering the Research Questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 249
16.4 Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249

Afterword: The Story of the Origin of this Book. . . . . . . . . . . . . . . . . . . . . . . . . . 251

Glossary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253
About the Authors

Daniel Huber Until his retirement in 2018, Daniel Huber

worked as a professor of innovation management and head of
the Management Center of the Bern University of Applied
Sciences. He shaped in particular the Executive MBA in
Innovation Management and CAS Digital Transformation
programs. Until 2023, Daniel Huber was still active as a lec-
turer at the Bern University of Applied Sciences and at ETH
Zurich (MAS ETH Mobility of the Future). Until 2021, Dan-
iel Huber was also co-president of swissfuture, the associa-
tion of the futurists in Switzerland and was a lecturer at the
University of Applied Sciences Northwestern Switzerland,
FHNW (MAS Digital Marketing). Daniel Huber is a partner
of the innovation consulting company inobooster.com.
Daniel Huber completed his basic training as a dipl. Ing.
at ETH in Zurich and has a management education from
IMD in Lausanne. Before his activity at the Bern Univer-
sity of Applied Sciences, Daniel Huber worked for more
than 20 years at Swisscom or at their predecessor organiza-
tions, always in the field of innovation. During this time, he
held positions at all levels and learned the innovation busi-
ness from scratch. Together with two colleagues, he built up
Swisscom Innovations, an innovation unit with about 180
employees. During this time, Daniel Huber was able to gain
extensive practical experience under optimal conditions.
Based on these experiences, Daniel Huber developed a
new and for the first time complete innovation system, the
“Bern Innovation Model”, which he published together with
the two co-authors Heiner Kaufmann and Martin Steinmann

xvii
xviii About the Authors

in the book “Bridging the Innovation Gap—Blueprint of the

Innovative Company” (in German, Springer, 2014; in Eng-
lish, Springer 2017).
ORCID identifier: 0000-0002-1686-2305
(https://orcid.org/0000-0002-1686-2305)

Heiner Kaufmann studied Mechanical Engineering at the

Swiss Federal Institute of Technology (ETH) Lausanne and at
the Massachusetts Institute of Technology (MIT) in Boston.
In the early years of his professional career, he worked as
a manager and project leader in various high-tech companies
in research and development. After successfully complet-
ing an Executive MBA program in Innovation Management,
he founded his own software start-up and later a consulting
company.
Heiner Kaufmann was also a professor of innovation
management and head of the Executive MBA in Innovative
Business Creation program at the Bern University of Applied
Sciences’ management center for over ten years, in parallel
to his work in the business world. In 2012, he integrated his
consulting firm into Creaholic SA and became a partner of
the Biel innovation factory. Since 2017, Heiner Kaufmann
has been working as an expert in innovation management
in the corporate development of the Swiss Federal Railways
(SBB).
Heiner Kaufmann is a co-author of the book “Bridging the
Innovation Gap—Blueprint of the Innovative Company” (in
German, Springer, 2014; in English, Springer 2017).
ORCID identifier: 0000-0002-0800-5370
(https://orcid.org/0000-0002-0800-5370)

Martin Steinmann has been successfully operating as a

navigator and encourager for ambitious future shapers from
business and society for over 25 years. He positions himself
as a translator at the interface between technology and busi-
ness, making structures and connections visible. Since 2002,
Martin Steinmann has been an independent business consult-
ant in the field of strategy and innovation management. His
clients include well-known large companies, but also many
ambitious medium-sized businesses. Previously, he held vari-
ous responsible positions internationally.
About the Authors xix

Martin Steinmann is a business economist HWV and

holds an EMBA degree from the University of Fribourg at
the International Institute of Management in Telecommunica-
tion, IIMT.
With his rich experience, he is highly valued as a consult-
ant, solution designer, and coach by his clients, especially in
start-up situations. He also works as a lecturer and expert in
strategy, innovation management, and entrepreneurship at
universities of applied sciences.
Martin Steinmann is a co-author of the book “Bridging
the Innovation Gap—Blueprint of the Innovative Company”
(in German, Springer, 2014; in English, Springer 2017).
ORCID identifier: 0000-0002-4627-3683
(https://orcid.org/0000-0002-4627-3683)
Abbreviations

BCG Boston Consulting Group (a consulting company)

CAS Certificate of Advanced Studies
CEO Chief Executive Officer
CH Switzerland, literally (in latin) Confederatio Helveticae
COO Chief Operating Officer
CTO Chief Technology Officer
EFQM European Foundation for Quality Management
e.g. for example
EMBA Executive Master of Business Administration
et al. et alii (latin, meaning: and others)
etc. et cetera
ETH Eidgenössisch Technische Hochschule, i.e. Federal Institute of Technology
EU European Union
FHNW Fachhochschule Nordwestschweiz, i.e. University of Applied Sciences and
Arts Northwestern Switzerland
HP Hewlett Packhard (an enterprise)
HQ Headquarter
HWV Higher School of Economics and Administration (Bern)
ICT Information and Communication Technology
i.e. that is
IIMT International Institute of Management in Technology (Fribourg)
IMD Institute for Management Development (Lausanne)
IPR Intellectual Property Rights
ISO International Standards Organisation
KPI Key Performance Indicators
MAS Master of Advanced Studies
MBA Master of Business Administration
MBTI Myers-Briggs Type Indicator
MIT Massachusettes Institute of Technology (Boston)
MVP Minimal Viable Product

xxi
xxii Abbreviations

NT Intuitive, Thinking (Personality type based on the MBTI)

ORCID Open Researcher and Contributor ID
PEST Political, Economical, Social, Technological => Environment Analysis
PM Productmanager or Productmanagement
R&D Research and Development
RoI Return on Investment
SA Société Anonyme
SBB Schweizerische Bundesbahnen, i.e. Swiss Federal Railways
SBF Strategic Business Field
SBU Strategic Business Unit
SJ Sensing, Judging (Personality type based on the MBTI)
SME Small and Medium-sized Enterprises
SWOT Strength, Weaknesses, Opprtunities and Threats
TQM Total Quality Management
VC Venture Capitalist
V1 Version 1
V2 Version 2
List of Figures3

Fig. 1.1 Present-oriented strategy process.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Fig. 1.2 Rate of change. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Fig. 1.3 Future-oriented strategy process.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Fig. 1.4 Two strategies.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Fig. 1.5 Two Stars process.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Fig. 1.6 Future Blueprint process.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Fig. 1.7 Innovation Framework.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Fig. 1.8 Development, application, and update.. . . . . . . . . . . . . . . . . . . . . . . . . . 6
Fig. I.1 Part I in the book structure.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Fig. I.2 Chapters Part I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Fig. 2.1 Thinking and action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Fig. 2.2 Business life cycles.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Fig. 2.3 Innovation capability.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Fig. 2.4 Main components of an innovation strategy.. . . . . . . . . . . . . . . . . . . . . . 15
Fig. 3.1 Innovation Framework.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Fig. 3.2 Understand, decide, design.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Fig. 3.3 Why, how much, what and how. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Fig. 3.4 Field 1—Present.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Fig. 3.5 Field 2—Future.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Fig. 3.6 Bridge to the Future. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Fig. 3.7 Field 3—Gap.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Fig. 3.8 Position Field 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Fig. 3.9 Field 4—Need.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Fig. 3.10 Magnitudes of renewal need.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Fig. 3.11 Field 5—Focus.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Fig. 3.12 Field 6—System.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

3Allfigures in this book are used with kind permission from © Daniel Huber, Heiner Kaufmann,
Martin Steinmann 2024. All rights reserved.

xxiii
xxiv List of Figures

Fig. 4.1 Chapter Development.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Fig. 4.2 Procedure model.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Fig. 4.3 Two Stars Strategy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Fig. 4.4 Two different thinking spaces.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Fig. 4.5 Final strategy for innovation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Fig. 4.6 Field 1—Present.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Fig. 4.7 Starting situations.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Fig. 4.8 Field 2—Future.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Fig. 4.9 Future Blueprint process.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Fig. 4.10 Field 3—Gap.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Fig. 4.11 Strategic Gap.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Fig. 4.12 Financial Strategic Gap.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Fig. 4.13 Field 4—Need.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Fig. 4.14 Field 5—Focus.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Fig. 4.15 Field 6—System.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Fig. 4.16 Field 2—Future.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Fig. 4.17 Future Blueprint process in detail.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Fig. 4.18 Collecting information.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Fig. 4.19 Gaining orientation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Fig. 4.20 Gaining security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Fig. 4.21 Recognizing opportunities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Fig. 4.22 Formulate vision.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Fig. 4.23 Field 6—System.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Fig. 4.24 Innovation process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Fig. 4.25 Innovation organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Fig. 4.26 Myers-Briggs typology.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Fig. 4.27 Merging.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Fig. 4.28 Extended Innovation Framework.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Fig. 5.1 Chapter Application. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Fig. 5.2 Effect of the innovation strategy.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Fig. 5.3 Action planning.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Fig. 5.4 The application in the procedural model. . . . . . . . . . . . . . . . . . . . . . . . . 69
Fig. 5.5 Four activities.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Fig. 5.6 The effects of the application.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Fig. 5.7 Apply.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Fig. 5.8 Interaction.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Fig. 5.9 Innovation process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Fig. 5.10 Early Warning System. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Fig. 5.11 Exploration process.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Fig. 5.12 Communicate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Fig. 5.13 Apply.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Fig. 5.14 Impact quadrants.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
List of Figures xxv

Fig. 5.15 Communicate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

Fig. 5.16 Check. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Fig. 5.17 Interaction.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Fig. 5.18 Applcation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Fig. 5.19 Design ambition.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Fig. 6.1 Chapter Update.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Fig. 6.2 Triggers and effects.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Fig. 6.3 Update in the procedural model.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Fig. 6.4 The update process.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Fig. 6.5 Interaction.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Fig. 6.6 Warehouse.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Fig. 6.7 Objects from the warehouse.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Fig. 6.8 Four cases of updates.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Fig. 6.9 Normal case in the procedural model.. . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Fig. 6.10 Dependencies in the Innovation Framework. . . . . . . . . . . . . . . . . . . . . . 113
Fig. 6.11 Emergency.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Fig. 6.12 Version 1.1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
Fig. 6.13 Strategic trial balloons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Fig. 6.14 Fluid Innovation Strategy.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
Fig. II.1 Part II. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Fig. II.2 Chapters Part II.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
Fig. 7.1 Comparison strategic and operational thinking. . . . . . . . . . . . . . . . . . . . 125
Fig. 7.2 Classic strategy process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
Fig. 7.3 SWOT.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
Fig. 7.4 Extended SWOT.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
Fig. 8.1 Different perspectives and ways of thinking.. . . . . . . . . . . . . . . . . . . . . . 134
Fig. 8.2 Future Blueprint.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
Fig. 8.3 Future Blueprint in detail.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
Fig. 9.1 Two Stars Strategy process.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
Fig. 9.2 Strategic Gap.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Fig. 9.3 Operational Gap.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Fig. 9.4 Financial Strategic Gap.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Fig. 9.5 Partition.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
Fig. 9.6 Two Stars Strategy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
Fig. 9.7 Chess symbols.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
Fig. 10.1 Innovation Journey.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
Fig. 10.2 Closing the Content-Related Gap.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156
Fig. 10.3 Bern Innovation Model.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
Fig. 10.4 Innovation process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
Fig. 10.5 Innovation organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
Fig. 10.6 Types of innovation according to Pisano. . . . . . . . . . . . . . . . . . . . . . . . . 162
Fig. 11.1 Types of SMEs.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
xxvi List of Figures

Fig. 11.2 Development stages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172

Fig. 11.3 Leadership responsibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
Fig. 11.4 Cases for exploration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176
Fig. 11.5 Innovation process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179
Fig. III.1 Part III.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201
Fig. III.2 Chapters Part III. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202
Fig. 13.1 Boston Matrix.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205
Fig. 13.2 Cash flows.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206
Fig. 13.3 Refinancing.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207
Fig. 13.4 Innovation Journey.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208
Fig. 14.1 Life Cycle Diagram. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217
Fig. 14.2 Stages of innovation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219
Fig. 14.3 Example pharmaceutical industry.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220
Fig. 14.4 Organizational development.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223
Fig. 14.5 Ambidexterity.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224
Fig. 14.6 Dual Transformation according to Anthony et al.. . . . . . . . . . . . . . . . . . 228
Fig. 14.7 Portfolio Map according to Osterwalder et al.. . . . . . . . . . . . . . . . . . . . . 231
Fig. 15.1 Innovation models.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234
Fig. 15.2 Boston Matrix.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237
Fig. 15.3 Cash flows and refinancing.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238
Fig. 15.4 Life Cycle Diagram. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239
Fig. 15.5 Refinancing.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239
Fig. 15.6 Innovation Journey.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240
Fig. 15.7 Innovation Journey with Boston Matrix.. . . . . . . . . . . . . . . . . . . . . . . . . 240
Fig. 15.8 Innovation Horizons.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241
Fig. 15.9 Organizational development.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242
Summary
1

Abstract

For the time-constrained reader, we summarize the most important content of this
book. This summary focuses solely on the key insights, which are accompanied by a
selection of figures.

The Problem
Companies often lack sufficient strategic orientation toward the future and do not have a
robust foundation for innovation. Alarmingly, this often leads to economic failure.

The Solution
Companies can address this by developing a dual-focused corporate strategy: one that is
grounded in the present and another that is geared towards the requirements of the future.
This innovative approach allows the company to be led holistically into the future while
simultaneously ensuring the necessary strategic underpinnings for innovation.

The Derivation
Most companies craft their corporate strategy using a process well-known in manage-
ment literature, which bases the future vision on both corporate and environmental
analysis, such as SWOT. However, this vision is typically conceived from the present
perspective, rendering the strategy present-oriented rather than future-oriented. Fig-
ure 1.1 demonstrates the limited strategic thinking space that results from a present-ori-
ented strategy process.
In recent years, there has been a marked acceleration in the rate of change within
global markets (Fig. 1.2).

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer- 1
Verlag GmbH, DE, part of Springer Nature 2024
D. Huber et al., Innovation Strategy, https://doi.org/10.1007/978-3-662-69832-7_1
2 1 Summary

Fig. 1.1 Present-oriented

strategy process. © Huber,
Kaufmann, Steinmann 2024.
All rights reserved

Today Future

Fig. 1.2 Rate of change. © Changes

Huber, Kaufmann, Steinmann
2024. All rights reserved

Time

Increased market volatility implies that a strategy focused solely on the present leaves
the company ill prepared for future challenges. A robust future-oriented approach to
corporate strategy, supported by a novel strategic process, is essential to navigate these
changes. This innovative process formulates the company’s vision with a direct focus
on future possibilities and trends. Figure 1.3 illustrates the expansive scope of strategic
thinking enabled by this approach.
One might conclude that the new future-oriented strategy process ought to supplant
the present-oriented one. However, such an approach is not advisable, as a company
focused solely on future opportunities may insufficiently sustain its existing operations.

The Recommendation
The optimal approach requires the development of two distinct strategies: a present-ori-
ented Strategy for Excellence to ensure the optimal continuation of existing operations,
1 Summary 3

Fig. 1.3 Future-oriented

strategy process. © Huber,
Kaufmann, Steinmann 2024.
Future
All rights reserved

Today

and a future-oriented Strategy for Change to prepare the company for future changes.
Figure 1.4 illustrates these two necessary strategies.
The company aligns with two visions of the future: one derived from the current per-
spective and another from a prospective future outlook.
To successfully implement the dual strategies, it is necessary to reassemble the stra-
tegic elements. Operational aspects of the strategy coalesce into an operational Strategy
for Exploitation, while innovative aspects culminate in a Strategy for Innovation. A
corporate strategy synthesized from these components is termed the Two Stars Strat-
egy, signifying the company’s concurrent focus on two pivotal targets for the future. Fig-
ure 1.5 depicts the comprehensive Two Stars Strategy process.
The Strategy for Innovation integrates the full scope of the “Strategy for Change”
along with the innovative elements from the “Strategy for Excellence.” This comprehen-
sive strategy outlines the necessary organizational transformations to facilitate sys-
tematic and successful innovation.

The Approach
The Two Stars Strategy is initially developed through two distinct strategic processes.
The Strategy for Excellence employs a traditional, present-oriented strategy process,

Fig. 1.4 Two strategies. ©

Huber, Kaufmann, Steinmann
2024. All rights reserved
Future

Today Future
4 1 Summary

Strategy for Strategy for

Change Innovation
Two Stars
Strategy for Strategy
Strategy for
Excellence Exploitation

Fig. 1.5 Two Stars process. © Huber, Kaufmann, Steinmann 2024. All rights reserved

1. Leap into the future

2. Look back

Today 1 Future

3. Path to the future

Fig. 1.6 Future Blueprint process. © Huber, Kaufmann, Steinmann 2024. All rights reserved

while the Strategy for Change utilizes the Future Blueprint, a strategy process designed
for this purpose. The Future Blueprint process unfolds in three stages: envisioning the
future, retrospective analysis from this position in the future, and charting the course for-
ward. Figure 1.6 depicts these three stages.
The Strategy for Change development process is bolstered by an Innovation Frame-
work, a strategic tool comprising six essential fields for the systematic establishment of
strategic underpinnings crucial to successful innovation efforts. Figure 1.7 illustrates the
configuration and interrelationships of these six domains.
The Innovation Framework ensures an exhaustive approach to the innovation strategy
by addressing all critical aspects necessary for successful innovation. Field 1, Present,
1 Summary 5

Fig. 1.7 Innovation

1 2
Framework. © Huber,
Kaufmann, Steinmann 2024. PRESENT FUTURE
All rights reserved

GAP

NEED

5 6

FOCUS SYSTEM

delineates the company’s current state as the starting point. Field 2, Future, articulates
the envisioned future state. The gap identified between Field 1 and Field 2, designated
as Field 3, Gap, represents the strategic discrepancy that innovation aims to bridge.
Field 4, Need, identifies the innovation requirements to close this strategic gap, laying
the groundwork for Field 5, Focus, and Field 6, System. In Field 5, Focus, the strategic
Search Fields and Guiding Questions are established to direct the company’s innovation
activities. Field 6, System, outlines the innovation system for implementation, encom-
passing the innovation process, the organizational structure, the necessary human and
financial resources, and the rules of the game regarding the early-stage innovation.
Figure 1.8 presents a procedural model that illustrates the successful development,
application, and continual refinement of the Strategy for Innovation within the organiza-
tion.

The Conclusion
The strategic tools and procedural models introduced herein equip companies for the first
time to strategically position themselves for the future amidst escalating market dyna-
mism. Moreover, they establish a robust strategic foundation for innovation. These strate-
gies and models provide organizations with essential capabilities to navigate and succeed
in an evolving business landscape.
6 1 Summary

apply apply apply apply

strategy V1 V1.1 V2

approve
strategy approved collecting the approved approved collecting the
findings of the findings of the
the application the application

create develop update update

strategy

collect
raw Warehouse
material

Fig. 1.8 Development, application, and update. © Huber, Kaufmann, Steinmann 2024. All rights
reserved

Examples of a Two Stars Strategy

Automotive industry (manufacturer)

• Strategy for Excellence: Strategy for the production and distribution of vehicles
with combustion engines, including the transition to electric motors
• Strategy for Change: Strategy for the setup and operation of mobility platforms
(Mobility-as-a-Service)

Energy industry (producers and distributors)

• Strategy for Excellence: Strategy for connecting end consumers and supplying
energy, including the transition to their completely sustainable generation.
• Strategy for Change:
– Organization and management of photovoltaic prosumer networks in
neighborhoods and villages
– Strategy for a comprehensive service package for owners and tenants of pri-
vate living space. The service package includes the supply and operation of
all devices with energy and the necessary consumables (Living-as-a-Service)

Machine manufacturers
• Strategy for Excellence: Strategy for the sale of investment goods, possibly with
rental financing models. (Leasing). Use of digital twins.
• Strategy for Change: Strategy for providing and monitoring production lines
with availability guarantee.
1 Summary 7

Health insurance companies

• Strategy for Excellence: Strategy for risk management and optimal purchase of
health services.
• Strategy for Change: Strategy for building and operating a community of trust
as a preferred contact regarding health prevention as well as in all questions of
physical and mental well-being.
 Part I
Innovation Strategy

Introduction to Part I
In Part I of this book, we explain how an innovation strategy is developed and what we
have to pay attention to. Fig. I.1 shows Part I in the context of the entire book.
Part I is aimed at the practice-oriented reader. Reading just Part I, he should already
be able to develop his own innovation strategy. To do that, it is not required to already
know the derivation of the rules presented. Their derivation will be made up in Part II of
this book. Fig. I.2 shows an overview of the chapters in Part I.
In Chap. 2: Benefit we investigate why an innovation strategy is needed at all. Is the
topic relevant? What is an innovation strategy in the first place? What is the benefit of an
innovation strategy? Based on this, we formulate the topic of this book in the form of a
research question.

Practice Part I
Innovation Strategy

Part II
Derivation

Theory Part III

Context

Innovation Strategy

Strategy

Business Administration

Fig. I.1 Part I in the book structure. © Huber, Kaufmann, Steinmann 2024. All Rights Reserved
10 Part I Innovation Strategy

Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6

Benefit Innovation Development Application Update
Framework

Fig. I.2 Chapters Part I. © Huber, Kaufmann, Steinmann 2024. All Rights Reserved

In Chap. 3: Innovation Framework we introduce the Innovation Framework. This

gives us a map, which, in a maximally reduced form, allows us for the first time to gain
an overview of the innovation process. With the Innovation Framework, the innovation
activity can be presented, also for the first time, in a structured and fully integrated way.
In Chap. 4: Development we show, how a specific innovation strategy can actually
be developed. This chapter thus represents so to speak the recipe for developing an inno-
vation strategy. The chapter shows how the six fields of the Innovation Framework can
specifically be designed. Suitable methods are referenced and where necessary are also
directly described.
The Chap. 5: Application then, addresses aspects of the application of the innovation
strategy, highlights typical difficulties and gives recommendations for overcoming them.
This chapter also addresses the specific situation of small and medium-sized enterprises
(SMEs).
Chap. 6: Update finally, considers how to maintain an innovation strategy and what
points to consider specifically when updating it.
Benefits of an Innovation Strategy
2

Abstract

Innovation is vital for companies. This is primarily due to the increasingly accelerat-
ing rate of change in the markets. An innovation strategy creates the conditions neces-
sary for the company’s ability to innovate. It provides the innovative thinking, which
is a prerequisite for successful innovation execution. The innovation strategy is there-
fore a strategy that shows us what all needs to be prepared so that innovation can be
successful and as systematic as possible.

2.1 What is the Benefit of an Innovation Strategy?

First of all, the question of why an innovation strategy is needed at all. What is its
­benefit?
As the term innovation strategy suggests, it is apparently meant to help with innova-
tion. When we innovate, we do something new that is relevant for the company. What
we achieve is that we push our company a step into a future that is new for the company.
Therefore, when we innovate, we are building the future of the company.
However, it is fundamentally the case that it primarily depends on how we behave,
and less on what we have written down. Therefore, good innovation is primarily about
good innovation execution. The prerequisite for good innovation execution, however, is
correct innovation thinking. Only if we have suitable and correct conceptions and ways
of thinking, are we able to act effectively. It is even the case that, if we think in a suitable
way, we are automatically inclined to act in a suitable way.
The requirement for good innovation execution is therefore dependent on how we
arrive at suitable innovation thinking (Fig. 2.1). And it is exactly this goal that the devel-
opment of an innovation strategy achieves: The development of an innovation strategy

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer- 11
Verlag GmbH, DE, part of Springer Nature 2024
D. Huber et al., Innovation Strategy, https://doi.org/10.1007/978-3-662-69832-7_2
12 2 Benefits of an Innovation Strategy

develop innovation think act

strategy innovative innovative

Fig. 2.1 Thinking and action. © Huber, Kaufmann, Steinmann 2024. All rights reserved

forces us to clear innovation thinking. And it is the process of developing the innova-
tion strategy rather than the final result that has the highest impact. It is the process of
developing the innovation strategy, which influences the way of thinking on the future
most profoundly.
In addition, the development of an innovation strategy requires to depict what innova-
tion must strategically achieve for the company and what conditions regarding resources
and organization must be met in order for innovation to occur at all. Only the innova-
tion strategy provides the strategic basis for the development and control of an innova-
tion portfolio. This is the prerequisite to decide on investments in innovation projects
­strategically.
The most important benefit of an innovation strategy therefore is to generate suitable
and correct innovation thinking among decision-makers, as a prerequisite for successful
innovation execution. Or in short: The development of an innovation strategy creates
the prerequisite for successful innovation.

2.2 What is an Innovation Strategy?

As already mentioned in the introduction, the term “Innovation Strategy” is often used
in literature. Despite the frequent use of the term, it is never really clear, what the word
innovation strategy really means, what the term encompasses and where it fits in in the
overall context. Moreover, it is unclear how an innovation strategy can best be devel-
oped. With the present book, we fill this gap in the literature.
As experience shows, companies struggle strongly with innovation. However, there
are still some occasional innovation successes. A closer analysis of these success stories
shows that success typically did not occur because the companies did their innovation
activities particularly well, but rather, that the innovation successes came about despite
the companies having the greatest difficulty with their innovation activities. Thus, inno-
vation projects are often continued despite their formal termination and brought to suc-
cess later.1 And it is downright typical that innovation successes depend on a few key

1 For example, Howard Yu describes impressively in his book Leap the story of the detergent Tide
by Procter & Gamble, whose development was officially discontinued twice before its great suc-
cess [Yu, 2018] pages 80 ff.
2.3 Why is the Lack of an Innovation Strategy a Problem? 13

individuals in the company who can be identified.2 Usually no trace of a systematically

mastered innovation process can be found.
Innovating apparently is difficult. Henry Chesbrough summed up the problem with
innovating: “Most innovations fail. And companies that don’t innovate die”.3 The inno-
vation strategy is the answer to this dilemma. It describes how a company wants to inno-
vate. What we are looking for, is a strategy that shows us what needs to be done so
that innovation can be successful and as systematic as possible. That is the innovation
strategy.

2.3 Why is the Lack of an Innovation Strategy a Problem?

But why is the lack of such a clear innovation strategy a problem for a company? Could
it be that we have taken on a task that no one is interested in? To answer this, we need to
clarify in the first place why companies need to innovate at all.
The need to innovate arises from the fact that every business has a finite lifespan.
Once a profitable business is established, it makes sense for the company to manage this
to achieve the highest possible return and to continue to develop it further. It is “innova-
tion for an existing business” (see also Sect. 11.4) that allows to keep this profitable
business alive as long as possible.
All the same, the lifespan of every business still remains limited. Normally, the end
comes about because the business loses its differentiating character and becomes a com-
modity. As a result, the achievable margin gets more and more marginal. In this situa-
tion, a new, profitable business should already be established which could then take over
the further financing of the company. The establishment of such a new business is done
through “innovation by establishing a new business” (see Sect. 11.7).
Figure 2.2 visualizes the sequence of three such business life cycles and the change
from existing businesses to new businesses.
So if a company wants to be successful in the long term, it must innovate: For busi-
nesses that are not yet mature, this should be done by means of innovation for the exist-
ing business, in mature businesses through innovation by building a new business. The
need for innovation depends on the rate of change in the respective market. The higher
the rate of change, the faster a business matures and the faster a business becomes a
commodity (or even obsolete). So the higher the rate of change in a market, the more
important the ability to innovate becomes for the survival of the company (Fig. 2.3).
We must be aware however, that the rate of change is continuously increasing regard-
less of the industry. This is due to the steadily growing complexity of the economic

2 Inthe case of Tide by Proctor & Gamble, these were David Byerly and his boss Thomas Haber-
stadt and ultimately then also his boss Herb Coith.
3 Chesbrough, Open Innovation [Chesbrough, 2003].
14 2 Benefits of an Innovation Strategy

Life cycle 3
Innovation for Innovation for
building a new an existing
business business

Life cycle 2

Innovation for Innovation for

building a new an existing
business business

Life cycle 1
Innovation for Innovation for
building a new an existing
business business

Time

Fig. 2.2 Business life cycles. © Huber, Kaufmann, Steinmann 2024. All rights reserved

Importance of the
ability to innovate

High

Low

Speed of change
in the market
Low High

Fig. 2.3 Innovation capability. © Huber, Kaufmann, Steinmann 2024. All rights reserved
2.4 What Does an Innovation Strategy Include? 15

system.4 This increases the pressure to adapt for all companies. Companies are there-
fore forced to bring innovations to the market at an ever-increasing cadence. To remain
future-proof, companies must be able to innovate better and better. The ability to inno-
vate is therefore increasingly vital for the survival of a company.
For companies, it is becoming increasingly urgent to know what they need to do to
meet these rising demands. And it is exactly this problem that an innovation strategy
solves: The innovation strategy establishes and optimizes the company’s ability to inno-
vate. As described above, the analysis of real innovation successes shows that these have
typically occurred despite great management difficulties and wrong decisions. Com-
panies willing to innovate therefore eagerly desire assistance, so that their innovation
projects can proceed with less effort and with a greater probability of success, as most
companies are not satisfied with the yield of their innovation efforts.5 An innovation
strategy should therefore address all aspects that influence the innovation process and
especially its chances of success.

2.4 What Does an Innovation Strategy Include?

For the development of an innovation strategy and thus for the establishment of cor-
rect innovation thinking, as with any strategy, four points must be clarified in principle
(Fig. 2.4):

• Why: Why should we innovate at all?

• How much: How big is our need for innovation? Is a little enough or do we need a lot
of it?

Fig. 2.4 Main components

of an innovation strategy. © Why?
Huber, Kaufmann, Steinmann
2024. All rights reserved

How
much?

What? How?

4 Seealso Bridging the Innovation Gap [Huber, Kaufmann, Steinmann, 2017] page 78, or Sect. 5.4.
5 Jean-Philippe Deschamps, Innovation Governance [Deschamps, 2014] page 49 or implicitly also
on pages xviii, 8 ff or 312.
16 2 Benefits of an Innovation Strategy

• What: In which areas should we mainly innovate? Where does innovation seem most
important to us and where the most promising? Where should we look for innova-
tions?
• How: How do you do that? How do you innovate best? What precautions need to be
taken to be able to innovate as successfully as possible?

To deal with these four points is therefore a prerequisite for suitable innovation thinking
and thus also for suitable innovation execution. The main components of any innovation
strategy are therefore the Why, the How Much, the What, and the How.

2.5 Conclusion, Thesis, and Research Question

The innovation process is not yet sufficiently mastered by companies. It is particularly

noticeable that no working systematic innovation apporach can be identified yet and that
in many cases it is unclear, what the prerequisites are that need to be created for success-
ful innovation activity.
Thesis: The innovation strategy describes the prerequisites and the approach for suc-
cessful innovation activity.

Based on the previous statements that.

• a good innovation strategy answers the question of why we should innovate at all; the
“Why”
• an innovation strategy formulates the requirements that must be met by the company
to ensure that it can also have a healthy business in the longer term; the “How Much”
and the “What”
• an innovation strategy, in addition to requirements and goals, should also include a
concept that ensures the achievement of the innovation goals; the “How”

and the thesis that the innovation strategy describes the prerequisites and the approach
for successful innovation activity, we can now formulate our research questions:

Research Question 1:
What is an innovation strategy and how is it structured?
Moreover, we also want to know how an innovation strategy can be developed, or how
best to proceed. As a sub-question to our research question, we can therefore formulate:
Research Question 2:
How can an innovation strategy be developed systematically?
References 17

References

Chesbrough H (2003) Open Innovation. Harvard Business School Press, 2003 Boston, USA
Deschamps J-P (2014) Innovation Governance. Wiley, Chichester, UK
Huber D, Kaufmann H, Steinmann M (2017) Bridging the Innovation Gap—Blueprint for the
Innovative Enterprise. Springer Verlag, Berlin, Heidelberg, (translation, original 2014 in
­German)
Yu H (2018) Leap. PublicAffairs, Hachette Book Group, New York, USA
The Innovation Framework
3

Abstract

To develop a complete innovation strategy, we introduce the Innovation Framework.

This working tool describes 6 fields that are necessary for successful innovation activ-
ity. The innovation strategy is based on an analysis of the present and the future. This
results in the Strategic Gap, which answers the question of Why. From this, the How
Much (Need), the What (Focus), and the How (System) are derived.

3.1 Contents of an Innovation Strategy

To be able to create an innovation strategy, we first need to clarify what content such
an innovation strategy must actually include. In addition, the chronological order of the
individual steps is relevant, as certain content builds on other content, which therefore
needs to be developed beforehand.
To get a good overview, we introduce a kind of map for the innovation strategy here:
the Innovation Framework (Fig. 3.1).
The Innovation Framework comprises 6 fields: Present, Future, Gap, Need, Focus,
and System. Fields 1 and 2, Present and Future, help to understand our strategic situa-
tion. Fields 3 and 4 provide us with the basis for the decisions to be made and Fields 5
and 6 subsequently lead us to implementation, i.e., to action (Fig. 3.2).
Field 3, Gap, answers the question of Why, Field 4, Need, the question of How much.
Field 5, Focus, determines the What and Field 6, System, shows the How. Thus, the
Innovation Framework ensures that all aspects essential for the success of innovation are
addressed in the innovation strategy. Figure 3.3 graphically represents this perspective.

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer- 19
Verlag GmbH, DE, part of Springer Nature 2024
D. Huber et al., Innovation Strategy, https://doi.org/10.1007/978-3-662-69832-7_3
20 3 The Innovation Framework

Fig. 3.1 Innovation

1 2
Framework. © Huber,
Kaufmann, Steinmann 2024. PRESENT FUTURE
All rights reserved

GAP

NEED

5 6

FOCUS SYSTEM

Fig. 3.2 Understand, decide, 1 2

design. © Huber, Kaufmann, understand
Steinmann 2024. All rights
reserved 3

decide
4

5 6
design
3.2 Basics of an Innovation Strategy 21

Fig. 3.3 Why, how much, 1 2

what and how. © Huber,
Kaufmann, Steinmann 2024.
All rights reserved
3
Why

4
How
much
5 6
What How

The Innovation Framework thus helps us to be as complete as possible in developing

our innovation strategy. But of course, completeness does not yet guarantee quality. The
Innovation Framework merely helps to avoid unintentional gaps.

3.2 Basics of an Innovation Strategy

The top area of the Innovation Framework includes the two fields Present and Future.
These define the starting point for our innovation strategy. Here we study where we stand
today (Present) and what we can know today about our future (Future). It is therefore
about understanding our situation comprehensively. Based on this comprehensive under-
standing, we can then make correspondingly sound decisions.

3.2.1 Field 1: Present—The Current Company, Our Starting Point

In Field 1, Present, we analyze the present of our company (Fig. 3.4).

The aim here is to determine where the “shoe pinches” today. We need to know
how we stand. This is also an important part of classic strategy development (see also
Chap. 7). The required information can therefore be taken from there. How exactly to
proceed is covered in Sect. 4.4.

Fig. 3.4 Field 1—Present. ©

1
Huber, Kaufmann, Steinmann
2024. All rights reserved PRESENT
22 3 The Innovation Framework

Fig. 3.5 Field 2—Future.

2
© Huber, Kaufmann,
Steinmann 2024. All rights FUTURE
reserved

3.2.2 Field 2: Future—The Future Company, the Ambition

Now that we know where we stand as a company today, we must deal with what the
future brings and what we aim for the future. Field 2 deals with the future of the com-
pany (Fig. 3.5). We need to determine where we want to go, or should go.
In this field, we need to distinguish between two aspects of the future: On the one
hand, the future of our current business and on the other hand, our ambition for the
future.
To describe the future of our current business, we analyze what the environment of
our company will look like in the future, especially our markets. This analysis is only
weakly pronounced in classic strategy development. Usually, there is only a rough PEST
environment analysis. How a PEST analysis is created can be found in strategy textbooks
(see also Chap. 7).
On the other hand, we also want to work out what our ambition for the future is.
Where do we want to go? Who do we want to be? To develop this ambition, we use the
method of the Future Blueprints. We describe this in detail in Sect. 4.10.

3.3 The Actual Innovation Strategy

After we have become clear about the present of our company (Field 1) and also con-
sidered its future (Field 2), we must now deal with how we want to get from the current
state to the future state we are aiming for. And this is exactly the purpose of the inno-
vation strategy, it should build a strategic Bridge to the Future. Figure 3.6 visualizes
the innovation strategy as a strategic bridge between the current position of the company
(current position) and the desired position in the future (target position).

Fig. 3.6 Bridge to the

1 2
Future. © Huber, Kaufmann,
Steinmann 2024. All rights PRESENT FUTURE
reserved
3.3 The Actual Innovation Strategy 23

3.3.1 Field 3: Gap—The Strategic Gap, the Why

First, we need to be clear about what exactly the difference is, between the current posi-
tion of the company in the present and the desired target position of the company in the
future. We call this difference the Strategic Gap (Fig. 3.7). We need to know why we
need to innovate.
Field 3, Gap, is depicted analogously to the picture of the strategic bridge between the
field of the present (Field 1) and the field of the future (Field 2) (Fig. 3.8).
The Strategic Gap thus includes everything that is still missing between the current
and the desired state for the future, with the exception of what we can achieve through
purely operational measures and optimizations. The Strategic Gap can therefore only be
closed through innovation (see also Sect. 9.4). It is this Strategic Gap, which justifies
why we must make innovation efforts at all. The explicit representation of the Strategic
Gap thus provides us with the Why for our innovation efforts.

3.3.2 Field 4: Need—The Innovation Need, the How Much

We now understand why we must innovate. Now we must derive how much innovation
our company needs (Fig. 3.9).
And no, this is not about how much innovation we can afford. We must think strategi-
cally here, which means putting goals before means. This means, we must determine
how much effort is required to close the Strategic Gap. If the required innovation effort
exceeds our means, we must seek help from outside, e.g. through cooperations or acqui-

Fig. 3.7 Field 3—Gap.

3
© Huber, Kaufmann,
Steinmann 2024. All rights GAP
reserved

Fig. 3.8 Position Field 3

1 2
© Huber, Kaufmann,
Steinmann 2024. All rights PRESENT FUTURE
reserved

GAP
24 3 The Innovation Framework

Fig. 3.9 Field 4—Need.

4
© Huber, Kaufmann,
Steinmann 2024. All rights NEED
reserved

sitions. It may also be necessary to increase capital or even start a new company, possi-
bly together with other companies.
Alternatively, it is always possible to reduce our ambition and adjust our vision and
mission accordingly, i.e. to go back to Fields 2 and 3. Such setbacks and iterations are
quite typical in the development of an innovation strategy.

Estimation of the Magnitude of the Renewal Need for Existing Products and Services
When working out the innovation need in Field 4 of the Innovation Framework,
the question arises as to the required magnitude of the renewal need for existing
products and services. The magnitude of the renewal need is measured by how far
the existing products and services are from meeting new requirements. Figure 3.10
shows four memorable metaphors to describe the magnitude of the necessary
renewal.
If the renewal need is very small, the perception of existing products and ser-
vices can be changed by purely communicative measures, by means of a Mega-
phone Innovation. With a small renewal need existing products and services can
be improved and optimized, this means a Brush Innovation. If the renewal need
is large, a Hammer Innovation is required. A hammer innovation transforms
and changes existing products and services to make them marketable again. If the
renewal need is very large, an Excavator Innovation is to be aimed for. Here exist-
ing products and services are completely recreated and new products are created.
This simple classification provides additional indications regarding the design and
the requirements for the innovation system in Field 6 of the Innovation Framework.

Megaphone Brush Hammer Excavator

Innovation Innovation Innovation Innovation

tell, improve, change, create,

promote optimize transform recreate

Fig. 3.10 Magnitudes of renewal need. © Huber, Kaufmann, Steinmann 2024. All rights reserved
3.3 The Actual Innovation Strategy 25

Fig. 3.11 Field 5—Focus.

5
© Huber, Kaufmann,
Steinmann 2024. All rights FOCUS
reserved

3.3.3 Field 5: Focus—The Search Fields, the What

Having determined in Field 4 how much innovation our company needs to close its Stra-
tegic Gap, we now describe in Field 5 the substantive topics on which we want to focus
our innovation efforts (Fig. 3.11).
To this end, we formulate a number of questions that we need to answer in order to
achieve our goals for the desired future. These are the Guiding Questions.
Based on these Guiding Questions, we then identify those substantive fields, which
are the most promising with regard to finding answers to our Guiding Questions. The
innovation process is at its core the search process for answers to our Guiding Questions.
Our focus fields for this search we therefore call Search Fields.
We therefore focus our innovation efforts on these Search Fields. However, we must
be aware that, as with any search process, we sometimes find something other than what
we have been looking for. In such a case, we should not make the mistake of just ignor-
ing such unintended results. Often, upon closer inspection, such unintended findings are
of great value for the company and it can be worthwhile to expand the search process
accordingly. This will require adjustments to Guiding Questions and Search Fields. Even
changes to the ambition and vision in Field 2, Future, in the Innovation Framework may
become necessary!

3.3.4 Field 6: System—The Innovation System, the How

Now we know where we currently stand (Field 1), where we want to go, or should go
(Field 2), why we need to innovate (Field 3), how much innovation is required (Field 4)
and in Field 5, what are the most important innovation contents for us. But we are not yet
finished with our innovation strategy. Like any strategy, the innovation strategy must also
show how the required innovation performance can be achieved. The innovation strat-
egy must show what conditions need to be created in order to be able to innovate
successfully at all. In short: The How must be pointed out. And this How includes the
following five aspects:

1. The innovation process (process organization)

2. The associated innovation organization (structural organization)
3. The human resources and capabilities required
26 3 The Innovation Framework

Fig. 3.12 Field 6—System.

6
© Huber, Kaufmann,
Steinmann 2024. All rights SYSTEM
reserved

4. The required financial resources

5. And suitable rules of the game

These five aspects form an integrated system: the innovation system (Fig. 3.12).
This innovation system is crucial to success! If we do not have a functioning innova-
tion system, we are not in the position to innovate successfully.

3.4 Conclusion

An innovation strategy should provide answers in the following six fields:

1. It must capture the current status, the starting point.

2. It must answer questions about the future: What our future environment looks like and
what our ambition for this future is. These two points, present and future, are the basis
on which our innovation strategy is built.
3. From this, the strategic gap can be identified, which we need to close through innova-
tions, the Why.
4. From this gap, the need for innovation arises, the How Much.
5. As well as the content-related innovation fields, the Search Fields, the What.
6. All of this must ultimately be implemented by a high-performance innovation system,
the How.

To keep an overview here, we have introduced the Innovation Framework as a map.

This Innovation Framework thus presents for the first time the innovation activity in
a structured and fully integrated manner. The Innovation Framework creates, as well for
the first time, an overview of the innovation process in a maximally reduced form.
Development of the Innovation Strategy
4

Abstract

We show how an innovation strategy can be developed in concrete terms. To do this,

we need two strategies: a classic strategy, the Strategy for Excellence, which focuses
on the needs of the present, and a strategy that focuses entirely on the future, the
Strategy for Change. The Strategy for Change requires a new approach for its devel-
opment. We proceed step by step along the six fields of the Innovation Framework.
For reasons of feasibility, however, this double strategy must be divided in an alterna-
tive way into the Strategy for Exploitation and the Strategy for Innovation, the innova-
tion strategy. We refer to this double strategy, by analogy with a binary star system, as
the Two Stars Strategy. Chapter 4 thus provides the recipe for developing an innova-
tion strategy in a systematic way.

After having introduced the Innovation Framework in the last chapter, we now have the basic
structure of an innovation strategy. We describe below how we can proceed concretely and
how the various fields of the Innovation Framework can be worked out. Figure 4.1 shows the
overall process for the development, application, and updating of an innovation strategy.
Figure 4.2 visualizes the overall process on the timeline. At the top level, the inno-
vation strategy is applied in an initial version 1 (V1), and later in an updated version 2

Fig. 4.1 Chapter Chapter 4 Chapter 5 Chapter 6

Development. © Huber, Development Application Update
Kaufmann, Steinmann 2024.
All rights reserved
1

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer- 27
Verlag GmbH, DE, part of Springer Nature 2024
D. Huber et al., Innovation Strategy, https://doi.org/10.1007/978-3-662-69832-7_4
28 4 Development of the Innovation Strategy

apply apply apply

strategy V1 V2

approve
strategy approved approved

create develop update

strategy

collect
Warehouse
raw material

Fig. 4.2 Procedure model. © Huber, Kaufmann, Steinmann 2024. All rights reserved

(V2). One level lower shows the approval and release of the innovation strategy. On the
level below, the development and updating work of the innovation strategy takes place,
and at the lowest level, an idea and data warehouse serves as a foundation for efficient
knowledge management throughout the entire strategy process.
In this Chap. 4, Development, we deal with the process of development and approval
of the innovation strategy, which is highlighted in bold in the figure.

4.1 Two Strategies Are Required

In deriving the structure, approach, and content of an innovation strategy, described in

Part II of this book, we surprisingly find out that a company needs not just one, but two
strategies to be future-proof: The Strategy for Excellence and the Strategy for Change.
The Strategy for Excellence ensures that the company continues to be successful.
The goal in this case is less to secure the future of the company, but rather to behave
optimally in the current situation. The Strategy for Excellence thus focuses on making
the most of current opportunities and continuing to be successful in the existing busi-
ness. The Strategy for Excellence is a classic strategy; its development proceeds as we
know it from strategy textbooks (see Sect. 7.2). This present-oriented strategy ensures
that the company has sufficient resources to shape its path into the future and, if possible,
to finance it.
However, for the path into the future, we subsequently need a second strategy, the
Strategy for Change. This second strategy no longer focuses on the given opportunities,
4.1 Two Strategies Are Required 29

but is fully oriented towards the future. And since the future always brings something
new, this second, future-oriented strategy focuses on the necessary changes. However,
we need a new methodology for the development of the Strategy for Change, which we
will present in detail from Sect. 4.3 onwards.
The two strategies, the Strategy for Excellence and the Strategy for Change, form
together a strategic system. We call this “double strategy system” in analogy to the astro-
nomical binary star systems Two Stars Strategy (Fig. 4.3).
It is very important to note that the Strategy for Excellence is not simply the short-
and medium-term strategy and the Strategy for Change is not simply the long-term strat-
egy. Both strategies deal with short-, medium- as well as long-term aspects. The big
difference between the two strategies is not the temporal classification, but the very dif-
ferent strategic thinking behind them and the two very different strategy development
processes:
The Strategy for Excellence is based on present-oriented thinking and the Strategy
for Change is based on future-oriented thinking. Figure 4.4 illustrates the two strategic
thinking spaces. The thinking space for the Strategy for Excellence is linear and chan-
neled, whereas the thinking space for the Strategy for Change is expansive and divergent
(Fig. 4.4). Both strategies thus outline a path into the future, but from two different per-
spectives. And both strategies therefore deal with short-, medium- and long-term aspects.
The final innovation strategy includes the innovation aspects of both strategies, i.e.,
both the innovation aspects of the Strategy for Excellence as well as the innovation
aspects of the Strategy for Change. It turns out that the Strategy for Change deals exclu-
sively with innovation aspects. The Strategy for Change thus forms in in its entirety part
of the innovation strategy. Therefore, the corresponding arrow in Fig. 4.5 is bold. In con-
trast, the Strategy for Excellence mainly deals with the operational aspects of the exist-
ing business. Innovation aspects only make up a relatively small part of the Strategy for
Excellence. These however, also feed into the innovation strategy. To visualize this fact,
the corresponding arrow in Fig. 4.5 is drawn slim.

Fig. 4.3 Two Stars Strategy.

© Huber, Kaufmann,
Steinmann 2024. All rights Strategy for
reserved Change

Strategy for
Excellence
30 4 Development of the Innovation Strategy

Strategy for Strategy for

Excellence Change

Future

Today Future Today

Fig. 4.4 Two different thinking spaces. © Huber, Kaufmann, Steinmann 2024. All rights reserved

1 2

Strategy for 3
Change

Strategy for
Strategy for Innovation
4
Excellence

5 6

Fig. 4.5 Final strategy for innovation. © Huber, Kaufmann, Steinmann 2024. All rights reserved

4.2 The Strategy for Excellence

As a first step, as mentioned, the short to medium-term future of our current business
must be secured so that we have as solid a financial basis as possible for our prepara-
tion for the future. The Strategy for Excellence serves this purpose. The development of
this Strategy for Excellence is entirely based on the principles and methods of classic
strategy development. Such a corporate strategy is in many cases already present in the
company. If there is no fully developed corporate strategy, or if it is not in a usable and
updated state, we must develop or update it as a first step. We proceed as taught in strat-
egy textbooks. One approach is briefly described in Sect. 7.2. More details are provided
in the textbook by Lombriser and Abplanalp referenced in Sect. 7.2.1

1 [Lombriser, Abplanalp, 2005].

4.4 The Present, Field 1 31

 Recipe for the Strategy for Excellence:

• Obtain your company’s corporate strategy.

• Assess it for currency and completeness.
• Update it if necessary.
• If there is no written corporate strategy, develop it using the methods
described in the strategy textbooks2.

4.3 The Strategy for Change

The Strategy for Change, on the other hand, is entirely focused on the future. The clas-
sic method of strategy development presented in the strategy textbooks, however, takes
little account of the requirements of the future. We need to proceed differently here and
use a new, future-oriented strategy process and the Innovation Framework. The follow-
ing sections explain how concretely to work out the six fields of the Innovation Frame-
work.

4.4 The Present, Field 1

As a first step towards the innovation strategy, we need to be clear about where our com-
pany stands today, where we are already good and where we are less good, what chal-
lenges we face and generally, “where the shoe pinches”. We describe the present in Field
1 (Fig. 4.6). It is our starting point.
The question of the current state arises already during the development of the classic
corporate strategy, the Strategy for Excellence, and we can therefore directly extract the

Fig. 4.6 Field 1—Present. © 1 2

Huber, Kaufmann, Steinmann
2024. All rights reserved
3

5 6

2 E.g. [Lombriser, Abplanalp, 2005].

32 4 Development of the Innovation Strategy

information needed for this first step. For Field 1 of the Innovation Framework, we use
the following strategy parts:

• Strategic starting point

• Environment analysis
• Corporate analysis
• Strategic analysis

For a critical analysis of the starting position for Field 1, it can also be helpful to con-
sider the current situation of the company in terms of two dimensions, the company’s
performance and the company’s design ambition (see box). Depending on the expression
of these two dimensions, the company perceives the benefit of an innovation strategy in a
different way.

Six Different Starting Situations of Companies

Figure 4.7 shows six possible starting situations for a company regarding their
design ambition and their performance. We have deliberately named these different
starting situations pointedly.
The Fit: They are ambitious and have no time pressure. They systematically
move into the future and shape it proactively. They usually have an innovation
strategy, at least de facto. This systematization and the periodic review of their
innovation activities brings them further.
The Skimmers: A rather rare case. Often a quasi-monopoly situation or a pro-
nounced commodity business. The Skimmers experience little pressure and have
made themselves comfortable. They focus on the existing business and want to
make as much profit as possible from it. They behave proactively according the
rules of classic competition. Their innovation efforts focus on the existing business
and often occur ad hoc, driven by product management. They typically underesti-
mate the upcoming market changes and thus often become “Surprised”. A periodi-
cally updated innovation strategy could prevent this.
The Average: Companies without special features, the large mass, so to speak.
They usually have rather little ambition and often either a quasi-monopoly or a
commodity business. They usually know that innovation would be important, but
it appears too risky or too expensive for them. A periodically updated innovation
strategy could help here.
The Relaxed (or the Lethargic): They are usually spoiled by success and
therefore rather passive. They just react to the market pressures and and do not
have any pronounced ambition. They only move under pressure. The idea that
innovation might be necessary usually does not even occur to them. When mar-
ket changes happen, they get into a crisis and become “Surprised”. A periodically
updated innovation strategy could prevent this.
4.4 The Present, Field 1 33

The Surprised: They were surprised by the market changes and therefore fell
into a crisis. They are already sensitized for innovation and need both immediate
measures as well as an innovation strategy, to be able to shape their future them-
selves.
The Opportunists (or the Scroungers): They have so far hardly systematically
dealt with the design of their business and have so far scrounged opportunistically.
They typically have little knowledge in strategy and innovation. They are in a sell-
er’s market or have been successful as “omnivores”. When they are hit by mar-
ket changes, they fall into a crisis and become “surprised”. A periodically updated
innovation strategy could prevent this.
The six types mentioned rarely appear in a pure, but usually in a mixed form.
But most of the time one of the components is clearly identifiable as the dominant
part.

Looking at the strategic starting point, the current positioning of the company, its busi-
ness context, a success assessment (i.e. the maturity level, the growth opportunities and
all upcoming challenges) as well as an analysis of the strengths, weaknesses, opportuni-
ties and threats (SWOT) as we perceive them today, the current state of the company is
understood. The present of the company is thus captured.

Design ambition

5 1
high

Surprised Fit

6 3
moderate
Average
(profile-less)
2
Opportunists
(scroungers)
4
Skimmer
low Relaxed
(lethargic)
Corporate
perfomance
weak strong
medium
(crisis) (market leader)

Fig. 4.7 Starting situations. © Huber, Kaufmann, Steinmann 2024. All rights reserved
34 4 Development of the Innovation Strategy

 Recipe for Field 1:

• Take the following parts from the existing corporate strategy: strategic
starting point, environment analysis, corporate analysis and strategic anal-
ysis (SWOT).
• If there is no written corporate strategy, or if it is not sufficient or incom-
plete, then work out these four strategy parts with the methods as they are
described in the strategy textbooks.3

4.5 The Future, Field 2

After analyzing our current state, we work out as the second step a picture of our future.
In doing so, we need, on the one hand, to be clear about who we want to be in the future,
i.e. our ambition. On the other hand, we need to clarify, what our business environment
could look like in this future. The result of these investigations is the content of Field 2
of our innovation framework (Fig. 4.8).
As far as our ambition is concerned, the vision and the mission statement from our
corporate strategy give us a first answer. If such a thing does not exist, if it is no longer
current or if there is no usable corporate strategy in this respect, then we must work out
vision and mission for the company ourselves. We do this, by obtaining the perspec-
tive and ambition of the most important decision-makers in the company: For example,
from the owner, the chairperson of the board and the CEO. In practice, however, it is not
uncommon to find that the perspectives of the decision-makers regarding ambition and
future are far apart. In such a case, we have no choice but to propose our own perspective
and argue it well.

Fig. 4.8 Field 2—Future. 1 2

© Huber, Kaufmann,
Steinmann 2024. All rights
reserved 3

5 6

3 E.g. [Lombriser, Abplanalp, 2005].

4.5 The Future, Field 2 35

1. Leap into the future

2. Look back

Today 1 Future

3. Path to the future

Fig. 4.9 Future Blueprint process. © Huber, Kaufmann, Steinmann 2024. All rights reserved

For the analysis of the future aspects relevant to our company, usually hardly anything
relevant can be found in the classic corporate strategy, apart from the vision and mission
statement. This is the case, because the view of the future in classic strategy development
is only marginally considered. Therefore, we have to carry out the future analysis for the
innovation strategy ourselves. For this purpose, we present here the method of Future
Blueprint.4 This method, introduced in Sect. 4.10, also gives us insights into the formu-
lation of vision and mission. Using this procedure, however, we take a comprehensive
and long-term perspective, which can be more substantiated than the result of a survey of
decision-makers.
The method of Future Blueprints (Fig. 4.9) is based on the principle that we mentally
project ourselves into the future (Step 1). From this future standpoint, we look back at
the present (Step 2) and determine our path from the present to the future (Step 3).

 Recipe for Field 2:

• Create a picture of the future relevant to your company using the Future
Blueprint method (see Sect. 4.10).
• Deepen this future image, possibly using the method of the Future Jour-
ney (also described in Sect. 4.10).

4 The method is inspired by contributions from various futurists, and integrates and simplifies
these. Primarily worth mentioning are the futurists Pero Micic and Joseph Voros.
36 4 Development of the Innovation Strategy

Fig. 4.10 Field 3—Gap. 1 2

© Huber, Kaufmann,
Steinmann 2024. All rights
reserved 3

5 6

• Based on the future images developed, determine the desired future to be

pursued for your company (Ambition).

4.6 The Gap, Field 3

After having clarified the present (Field 1) and the future (Field 2), we are now able to
describe the gap between our current position and the one we want to strive for in the
future (Fig. 4.10). This gap corresponds to the Strategic Gap.
The Strategic Gap has two dimensions: a quantitative financial dimension, as well
as a purely content-related qualitative dimension. This second content-related dimension
is new. The classic strategy theory so far uses the term Strategic Gap only in the quantita-
tive financial dimension. The derivation of these two dimensions is described in detail in
Sect. 9.4. Figure 4.11 shows the two dimensions of the Strategic Gap.

4.6.1 The Quantitative Financial Strategic Gap

First, we look at the quantitative financial dimension, the Financial Strategic Gap. This
quantitative financial perspective is already part of the classic strategy development.
Figure 4.12 shows three revenue developments: a revenue development without meas-
ures, a revenue development that can be achieved by the optimization of the existing
business, and the targeted revenue development goal.
To determine this Financial Strategic Gap, we first estimate how our revenue will
develop over time if we do nothing specific, i.e., a forecast of revenue development with-
out any measures.
Then we estimate what optimizations we can make in our operational business. These
can be measures in marketing and sales or optimizations in our processes. Improve-
ments to our existing products in the way that product managers typically propose
them should also be considered here. Now we estimate what influence these anticipated
4.6 The Gap, Field 3 37

i­mprovements will have on our revenue development. This results in Fig. 4.12 showing
the revenue development through optimization of the existing business.
Finally, we plot the target for revenue development as desired by the board of direc-
tors in our graph. The missing revenues between this target curve and the optimization
curve correspond to the Financial Strategic Gap.
The Financial Strategic Gap is therefore expressed in the form of missing revenues
(i.e., money) at a certain future point in time. Since we have already exhausted all exist-
ing potentials of operational improvement, this revenue deficit can no longer be reme-
died by further optimizations of the existing business. It can only be reduced by new
business. We can therefore only achieve the missing revenues through innovations. Or to

Fig. 4.11 Strategic Gap. © Huber, Kaufmann, Steinmann 2024. All rights reserved

Sales, earnings

goal

Financial Strategic Gap

optimization

without
measures

Time
Planning date

Fig. 4.12 Financial Strategic Gap. © Huber, Kaufmann, Steinmann 2024. All rights reserved
38 4 Development of the Innovation Strategy

put it another way: The Financial Strategic Gap gives us a first indication of how large
our company’s need for innovation is.5

4.6.2 The Qualitative Content-Related Strategic Gap

As derived in Sect. 9.4, the Strategic Gap has a second dimension in addition to the
financial one. This second part of the Strategic Gap is not financial, but purely content-
related. We speak of the Content-Related Strategic Gap.
The Content-Related Strategic Gap results from the content difference between our
current position in the market (actual position) and the one we aim for in the future (tar-
get position) and not from missing revenues. And since the future practically always dif-
fers from the present, we must assume that content differences will arise in almost every
case.
How do we now determine this content difference? In Field 1 of the Innovation
Framework, we determined our company’s current position. And in Field 2, we analyzed
the future and determined our desired position for the future. And the difference between
them is our Content-Related Strategic Gap.
We can distinguish two parts here:

1. On the one hand, we need to identify how the future market for our current business
presents itself. We can assume that our market situation will change, as the future
always differs from the present. Depending on the identified changes, our need for
adjustment is strong or less strong. We can, or must, make part of the adjustments
with operational measures. For example, certain markets may become more competi-
tive or shrink. On the other hand, there are usually also new opportunities, which we
can seize with innovations in the existing business.
2. On the other hand, our future analysis usually also reveals new market opportunities.
Often driven by technological advances, new market opportunities arise. If these lie in
a business area in which we are already active, then the case presented above applies.
Often, however, these are in a business area where we have not been active up to now.
Recognizing such opportunities therefore requires us to enter a business, which is new
for us. For the company this is an innovation and requires the use of innovation man-
agement methods. It is particularly this type of opportunity, that determines the extent

5 It is recommended, to make these considerations in a first approach, in the way presented here,
i.e. based on the revenues. Occasionally, it may also make sense to subject the profits to a similar
consideration. However, one must be aware that the gap in profits is much more strongly influ-
enced by general improvements (such as process improvements) than the development of sales.
Moreover, profits can be easily manipulated by management decisions, unlike sales. The gap in
profits is therefore far less meaningful for determining a company’s need for innovation.
4.7 The Need for Innovation, Field 4 39

of the company’s need for innovation. And it is ususally such new business areas that
allow the company to close the identified quantitative, i.e., financial strategic gap.

 Recipe for Field 3:

• We determine turnover missing in the future and thus the Financial Strate-
gic Gap.
• We look at our existing business today and derive the operational
improvements that will become necessary from it.
• Based on the results of Field 1 and Field 2, we determine the Content-
Related Strategic Gap.
• We identify the new opportunities and chances arising in our existing
business.
• On the other hand, we show which opportunities outside of our current
business we want to seize.
• We estimate to what extent the Financial Strategic Gap can be closed by
the innovations we are considering. If this is not the case, we must pursue
further opportunities in new areas of activity.

4.7 The Need for Innovation, Field 4

In the preceding Sect. 4.6, we identified the components of the Strategic Gap. We found,
that there are differences in four areas that we need to close with innovations, as follows:

• We look at our existing business and derive the operational improvements that will
become necessary.
• Based on the results of Field 1 and Field 2, we determine the strategic gap.
• We identify the new opportunities and chances arising for our existing business.
• On the other hand, we show which opportunities outside of our current business we
want to seize.

For each of these four areas, we now qualitatively formulate the respective need for inno-
vation (Fig. 4.13).
We then compile all innovation needs and estimate the magnitude of the necessary
efforts. Various situations can arise:

• On the one hand, there are innovation needs for which we bring the best prerequisites
and which we can finance ourselves.
• Then there are innovation needs for which we do not bring good prerequisites. In
this case, we need to decide whether we want to build the necessary skills (or other
40 4 Development of the Innovation Strategy

Fig. 4.13 Field 4 — Need. 1 2

© Huber, Kaufmann,
Steinmann 2024. All rights
reserved 3

5 6

p­ rerequisites) ourselves, or whether it is more reasonable to get them from the mar-
ket. So, here is a make-or-buy decision to be done. It is also possible to make creative
combinations of make and buy and often such creative solutions are optimal (e.g. to
start new activities with external resources and to build up your own resources for
these in parallel).
• Furthermore, it is possible that the required innovation effort exceeds our possibilities.
In such a case, we can consider a capital increase or the entering of a strategic part-
nership. In the case of existing businesses, it may even be advisable to sell these to a
company that is in a better position to make the necessary adjustments.
• If we cannot find a solution acceptable to us, we have no choice but to reduce our
ambition (i.e. to make a jump back to Field 2).

 Recipe for Field 4:

• Based on the opportunities and chances identified in Field 3, we deter-

mine our need for innovation.
• We decide what proportion of this we want to tackle with our own
resources (make).
• We decide what proportion of this we want to tackle with external
resources (buy or partner) and which approach we choose for that.
• We determine in which cases both approaches should be combined.
• If we conclude that our need for innovation cannot be satisfied in a way
acceptable to us, we jump back to Field 2 and adjust our ambition.
4.8 The Focus, Field 5 41

4.8 The Focus, Field 5

After having determined the strategic gap in Field 3 and after having derived from that
the need for innovation for our company in Field 4, we now need to determine in Field 5
on which content areas we need to set the focus for our innovation activities (Fig. 4.14).
Based on our need for innovation, we do this in a first step by considering what the
decisive questions are, which our innovation activities should answer. These are the
Guiding Questions.
Based on these Guiding Questions, we identify in a second step which content areas
we want to focus our innovation work on. Since innovation is in essence a search pro-
cess, namely the search for answers to our Guiding Questions, we call these focus areas
Search Fields.
The identification of Guiding Questions and Search Fields is a creative process, which
cannot be tackled in a purely analytical way. Moreover, we must be aware that in such a
search we are always venturing into unknown territory and that we therefore also may
find interesting things, which do not explicitly lie in our Search Fields. Such unforeseen
findings can often be very valuable and may cause us to adjust our Search Fields, Guid-
ing Questions or even the entire innovation strategy accordingly. It is in particular our
Search Fields, which therefore must be challenged regularly and be adjusted if needed.

 Recipe for Field 5:

• We determine the Guiding Questions, to which we should find answers to

be able to cover our innovation needs.
• We determine meaningful content Search Fields for this purpose.

Fig. 4.14 Field 5—Focus. © 1 2

Huber, Kaufmann, Steinmann
2024. All rights reserved
3

5 6
42 4 Development of the Innovation Strategy

Fig. 4.15 Field 6—System. 1 2

© Huber, Kaufmann,
Steinmann 2024. All rights
reserved 3

5 6

4.9 The System, Field 6

After having identified our need for innovation in Field 4 and outlined our content focus
in Field 5 formulating Guiding Questions and identifying Search Fields, we need in the
first place to ensure that we are in a position innovate at all. We therefore need to create
the conditions that are the prerequisite to innovate, the Innovation System (Fig. 4.15).
As we have shown in our book Bridging the Innovation Gap,6 the conditions required
for successful innovation largely contradict the rules required for the operational busi-
ness. It is therefore not trivial at all to implement in the company the necessary condi-
tions for successful innovation.
In order to become capable to innovate, the company must:

• Implement a suitable innovation process

• Provide an organizational structure suitable for this process
• Provide the necessary human and financial resources
• Implement rules of the game suitable for innovation

Section 4.11 describes this innovation system in detail.

 Recipe for Field 6:

Field 6 consists of the areas described in detail in Sect. 4.11. The recipe for the
individual areas is formulated in the respective subchapters.

We would now like to discuss the two Fields 2 and 6 in some more detail. This is
because these two fields are particularly challenging and contain a lot of new knowledge,
which is crucial for successful application.7

6 Bridging the Innovation Gap [Huber, Kaufmann, Steinmann, 2017].

7 Thefact that we do not go into detail about the other four fields does not mean that they are less
important.
4.10 Deepening Field 2: Future Blueprint 43

Fig. 4.16 Field 2—Future. ©

2
Huber, Kaufmann, Steinmann
2024. All rights reserved FUTURE

4.10 Deepening Field 2: Future Blueprint

In this chapter, we show how the contents for Field 2, Future, of the innovation frame-
work can be worked out in a practical and efficient way (Fig. 4.16).
The Future Blueprint method presented here8 is effective, comprehensive, and so sim-
ple that it can be used in everyday business operations, even when there is little time
available.
Basically, we work in three phases. In the first phase, we need to collect as much pre-
existing knowledge about the future as possible. Based on this knowledge, we develop
different possible futures in a second phase. From these various futures, we then develop,
through selection and combination, the one image of the future that we use for our strate-
gic work. Figure 4.17 provides an overview of the three phases and the total of five steps
of the Future Blueprint.

First Phase: Building Future Knowledge

The first phase is to collect knowledge about the future. This is achieved in Step 1.

Step 1: Collecting Information

In the first step, we collect all the knowledge about our future that is already available
today (Fig. 4.18).
What is already visible today that will influence, change or shape the future? How
mature are these aspects today, and how much time is required for their maturation until
these points become effective? How relevant are these points for our project, our busi-
ness, our strategy? We compile the facts we consider as relevant for our future in a table
and try to represent them graphically.

Second Phase: Developing Different Futures

The second phase is about developing several possible images of the future with the aim
of illuminating the open possibility-space of the future to some extent. This complex task
requires a lot of creativity. We can structure this work a bit by moving through three

8 The method of Future Blueprints we present in this book is based, among other things, on the
findings of the futurists Joseph Voros [Voros, 2003], and Pero Micic and makes them usable for
everyday use, see also [Micic, 2007].
44 4 Development of the Innovation Strategy

create different
futures
(Step 2)
2
gain
orientation

build develop and define

future knowledge assumed future
(Step 1) (Step 3)

1 3 5
collect gain formulate
informations security vision

4
recognize
opportunities

Fig. 4.17 Future Blueprint process in detail. © Huber, Kaufmann, Steinmann 2024. All rights
reserved

Fig. 4.18 Collecting 1

information. © Huber,
Kaufmann, Steinmann 2024. collect
informations
All rights reserved

steps: First, we gain orientation in Step 2. Next, we try to gain a bit more certainty in
Step 3. Finally, we want to recognize where the future might hold opportunities for us
(Step 4).

Step 2: Gaining Orientation

We formulate the current view of our future. We consider what the future relevant to our
undertaking might look like (Fig. 4.19).
4.10 Deepening Field 2: Future Blueprint 45

Fig. 4.19 Gaining orientation. 2

© Huber, Kaufmann,
Steinmann 2024. All rights gain
orientation
reserved

It is all about our environment, the customers, the market, the technologies, and the
legal aspects. Here we look at what is probable. This can be the continued existence of
previous industry truths. However, it can also be the probable occurrence of potentially
revolutionary innovations and changes (e.g. new technologies). This also includes those
facts, which we can already know about the future today (e.g. the demographic develop-
ment). Here we look into the future with a critically distant view, logically and based on
experience.
We describe this vision of a probable future as a text and possibly supplement it with
drawings or graphic representations. It is what we intuitively do when someone asks us
“How do you see your future?” In this case, we intuitively paint exactly this type of a
picture of the future. However, since the future is open, it can make a lot of sense to
sketch several such probable future images.

Future Journey
It is one of the core needs of the company management to better understand the
future and its significance for their business. Long-term effects, however, are dif-
ficult to anticipate and do rarely correspond to the continunation of what is already
known. The only thing we know for sure about the future: It will be different from
the present. And although we wish to find our way in the infinite possibilities, this
cannot be achieved through a systematic and controlled approach. To find our way
requires a conscious engagement with novel and unexpected impressions. This
explains the typical difficulties with the conventional view into the future: It is not
clear at all how to act.
The methods used up to now for dealing with the future, such as extrapola-
tion or scenario technique, fall short. Although we are able to identify trends with
them, the task of relating such trends with today’s business and drawing the right
conclusions is hardly successful. The future remains somewhere far away and the
possible paths into the future are numerous and cannot be prioritized with classic
evaluation approaches. So, one would like to deal systematically with the future,
if one could, and do so as focused as possible with the goal to return to the opera-
tional challenges of the present quickly.
46 4 Development of the Innovation Strategy

But as we all know from our own experience, everything is getting clearer in
hindsight. It therefore would be practical to put oneself into a future world by
doing a future journey and to experience how this future world feels for the com-
pany, and also for its customers. Ideally in such a future journey, not only individ-
ual futuristic gadgets would be seen, but the everyday life of the future would be
captured as a whole. If we then came back to the present with such an experience
of the future, we could make decisions that would be more precise and could set
our accents more accurately.
To best understand the challenges of the future, we should therefore try not only
to estimate the future, but to put ourselves into the future as much as possible, i.e.,
to immerse ourselves directly into our future environment and to consciously aban-
don the observer role.
We call this approach Future Journey9: We “travel” into the future. The aim is
to create plausible images of the future in which we then “move around”, and to
try to experience these imagined futures emotionally, as far as this is possible at
all. This engagement goes much further than even the most concentrated attempt to
grasp a new situation purely intellectually as we also involve our emotions.
To create such powerful images of the future, we start from what we can already
know about the future today. As a starting value, it helps to first imagine a general
future way of life, without limiting oneself to a specific business or industry: How
do people live, what is important to them, what is self-evident, which aspects of
our current way of life are no longer relevant in this future, which current limita-
tions no longer exist? Future analysis can also be helpful here.10
Once we have developed such an image of the future, it is often useful to turn
its novel aspects even more to the extreme. This is important, because changes
in the long term are systematically underestimated. We may, and should, even
become somewhat utopian in this process. And of course, we should imagine
desired futures. Dystopias hardly help us in this context.
Once we have developed our vision of the future (often there are several), we
“walk” in it and “live” our life in this future vision. In doing so, we also encoun-
ter our company, or our industry, and interact with it from this future perspective.

9 The authors have successfully used such Future Journeys in practice and taught them in higher
education. Sometimes the Future Journey was even staged with actors.
10 The plausibility of such a future image can by the way be estimated based on suitable so-called

Weak Signals. Weak Signals are elements that do occur today and which can be seen as the first
instances of future developments, so they are harbingers of future developments. If many weak
signals matching a future image can be identified, such image is more plausible than if only a few
can be found. However, such a plausibility estimate does not allow any direct conclusion about the
actual development.
4.10 Deepening Field 2: Future Blueprint 47

Comparing with the status quo, it quickly becomes clear where action is needed.
And it may also be that our company or even the entire industry is no longer
needed at all in the future at all.
The main benefit of this method is that, in addition to the present, we find a new
and additional point of view from which we can assess our situation. Considering
from two points of observation enables us to get a much more detailed picture of
our path into the future.

Due to the fundamental openness of the future, we also should be prepared for surprises.
We do that in Step 3.

Step 3: Achieving Security

As a third step, we deal with possible surprises. What could happen that would make our
future look completely different from what we imagine today? With doing that, we gain
more security in our vision of the future (Fig. 4.20).
Typically, surprises are events with a low probability of occurrence. That is why they
are not part of our current view of the future. However, we must still take them into
account, especially when they lead to significant changes. Examples of such surprises,
also called “Wild Cards”, are the Fukushima nuclear disaster or the attack on the World
Trade Center in 2001. The perspective in this third step is therefore pessimistic and criti-
cal.
In relation to the surprises, it is also important that we are aware that due to its open-
ness, the future can also hold surprises about which we cannot know anything today.
David Rumsfield11 distinguishes in this regard between “Known Unknowns”, i.e., future
surprises that we can fundamentally know about today, and “Unknown Unknowns”,
i.e., surprises that we cannot know anything about today. We deal with the “Known
Unknowns” in this third step described here. For “Unknown Unknowns” we can only
prepare in a sense that we keep all our senses open and design our processes and organi-
zation in such a way that allows us to react flexibly.

Fig. 4.20 Gaining security. © 3

Huber, Kaufmann, Steinmann
2024. All rights reserved gain
security

11 Former US Secretary of Defense.

48 4 Development of the Innovation Strategy

We briefly describe the future surprises identified (“known unknowns”) in a table. We

identify for each one of them the consequences it may have on the future relevant to us
and note the precautions we can take in this regard. We also formulate in text how we
can prepare for “unknown unknowns”.
After we have become clear, about what surprises the future could hold for us, we
turn to the vision of the future that we desire.

Step 4: Recognizing Opportunities

In strategy work, we do not want to distinguish ourselves as general prognosticators
of the future, but we want to develop the best possible strategy for our company. This
requires that we think about what future vision seems desirable to us. We identify where
we see opportunities for ourselves in the future (Fig. 4.21).
We put ourselves in a creative and researching mode here. And we try not to limit our
thoughts. The method of the Future Journey (see box) can be of good service to us in this
step. And here too, it is typically useful to develop several such attractive future images,
i.e., variants of possible strategic objectives.
We present our desired futures in the same way as the initial future visions from
Step 2, i.e., as text, possibly supplemented with drawings or graphic representations.

Third Phase: Develop and Establish the Assumed Future

At this point we have worked out the most important aspects of our future and have in
particular identified our future opportunities. In the final third phase, we now have to
agree on a single picture of the future, which shall serve then as a basis to determine our
path into the future. Step 5 accomplishes this.

Step 5: Formulate a Company Vision

As the fifth step, we now choose the desired future, which should be guiding and thus be
normative for our innovation strategy and therefore be decisive for the further develop-
ment of our company (Fig. 4.22).
So here we dream of an attractive and positive future for us. Normally, this is a com-
bination of the desired futures from Step 4, taking into account the probable future from
Step 2 and the possible surprises from Step 3. We thus determine who we want to be

Fig. 4.21 Recognizing 4

opportunities. © Huber,
Kaufmann, Steinmann 2024. recognize
opportunities
All rights reserved
4.10 Deepening Field 2: Future Blueprint 49

Fig. 4.22 Formulate vision. © 5

Huber, Kaufmann, Steinmann
2024. All rights reserved formulate
vision

in the future. Based on that we formulate the vision for our company.12 Our attitude in
Step 5 is visionary and at the same time critical.
This vision again is formulated as a brief text, supplemented by a graphic or a (drawn)
picture. However, we now go one step further and condense this guiding future picture
into a brief vision statement. Such a Vision statement should ideally contain no more
than ten words. It should:

• describe our company in its future environment

• be specific to our company
• not refer to internal matters
• fascinate
• be vivid
• be concise

Formulating a good vision statement is an art and it typically takes several attempts.

Future Design
Even simpler than the Future Blueprint as an approach to future clarification, and
naturally somewhat related to this task, is the method of Future Design.13 Future
Design is about finding as quickly and easily as possible a way from a potentially
confusing present to future-oriented action. Future Design postulates the neces-
sity of proactive action, which can be achieved by developing a motivating desired
future vision. The procedure for (proactive) Future Design is as follows:

1. Record rational aspects:

• What do we know?
– What remains the same?
– What changes?

12 In the past, vision and mission were sometimes formulated in the context of strategic work as a
guiding principle (Leitbild). However, such guiding principles have proven to be ineffective in prac-
tice. Therefore, in newer strategic work, the formulation of guiding principles has been abandoned.
13 [Huber, 2020] page 34.
50 4 Development of the Innovation Strategy

• What do we not know?

• What can we estimate?
2. Record emotional aspects:
• What do we hope for?
• What do we fear?
3. Design the (desired) future (the synthesis):
• Create desired (future) visions, for various time horizons
4. Define fields of action:
• Derive fields of action for each vision
• Develop strategies from the fields of action
• Define associated action plans and plan their implementation
• Periodically revise the plans

4.11 Deepening Field 6 System

In this deepening chapter, we show how the contents for Field 6, System, of the Innova-
tion Framework can be worked out specifically and comprehensively (Fig. 4.23). Field 6
is about becoming innovative as a company in the first place, or maximizing your own
innovation capability.
To become capable of innovation, the company must:

• Implement a suitable innovation process

• Establish an organizational structure suitable for this process
• Provide the necessary personnel and financial resources
• Implement rules of the game suitable for innovation.

We will look at each of these aspects in detail in the following.14

Fig. 4.23 Field 6—System. ©

6
Huber, Kaufmann, Steinmann
2024. All rights reserved SYSTEM

14 Of these four points, the last one is the one that causes most problems.
4.11 Deepening Field 6 System 51

4.11.1 The Innovation Process

First, we need to determine the best approach on how to innovate as successfully as pos-
sible. Therefore, we define the innovation process. This process describes the innova-
tion activities directly and is, of course, crucial for the success of our innovation projects.
However, we must be aware that innovation projects are all inherently risky and failure is
part of all innovation efforts: As Henry Chesbrough aptly put it in his book Open Innova-
tion: “Most innovations fail. And companies that don’t innovate die”.15
In our previous book Bridging the Innovation Gap—Blueprint of the Innovative Com-
pany, we were able to show that the innovation process as presented in the literature, the
so-called Funnel Model,16 is incomplete and therefore cannot lead to success.17 Based
on this insight, the innovation process was supplemented and this supplemented process
has been applied in practice successfully in numerous cases. The innovation process is
divided into five phases: Early Warning System, Exploration, Transfer, Development,
and Market Introduction (Fig. 4.24).
Compared to the old Funnel Model, the last two phases, Development and Market Intro-
duction, remain unchanged. However, the early innovation phase, which has been little under-
stood so far and therefore has also been referred to as the “Fuzzy Frontend”, is supplemented.
This “Fuzzy Frontend” has so far been divided into two phases: Idea Generation and
Idea Selection. However, this understanding is incomplete. It has been shown in particu-
lar, that the idea of selecting the “best idea” is not realistic. This is because a commercial
evaluation of pure ideas is not possible at all, as the value of an idea is determined by its
associated business context.18
The new, supplemented innovation process divides the frontend into three phases:
Early Warning System, Exploration, and Transfer. The Early Warning System replaces
the previous phase Idea Generation. It still includes the generation of ideas, but supple-
ments this with systematic information gathering outside the company. This includes
in particular the search for Weak Signals,19 which are important for building future
perspectives. If you understand a company as an organism, the Early Warning System
corresponds to the sensory organs that connect the company with the external world. It
identifies new potentials for the future of the company.
While the Early Warning System replaces the previous phase of Idea Generation and
expands it, the Exploration Phase represents something completely new. This is neces-
sary because an evaluation of pure ideas is fundamentally not possible (see above). It has

15 [Chesbrough, 2003] page xvii.

16 The funnel model has four phases: idea generation, idea evaluation, development, market launch.
17 See also [Huber, Kaufmann, Steinmann, 2017] page 69 ff.
18 See [Chesbrough, 2003] pages 168 and 176.

19 Under the term Weak Signals, futurists understand today’s often still inconspicuous develop-

ments and trends, in which upcoming important changes are already emerging.
52 4 Development of the Innovation Strategy

prepare translate implement

Early
Market
Warning Exploration Transfer Development
Introduction
System

$
$ $
Raw Material Opportunities Specifications Products Sales

Fig. 4.24 Innovation process. © Huber, Kaufmann, Steinmann 2024. All rights reserved

also been shown that the potentials initially identified in the Early Warning System are
in most cases hardly of relevant value for a company when just taken alone. Interesting
commercial values can, however, be created by combining the company’s pre-existing
capabilities (including any partners) with the newly identified ideas in a novel way. The
value of such new combinations can be orders of magnitude higher than that of the origi-
nal idea alone. Such new combinations often enable new business models and can thus
lead to disruptive innovations.
It is only in the phase of Exploration that customer segments and customer needs
are brought together with innovative functional combinations. And it is only then that it
becomes possible to explicitly identify new business opportunities for the first time and
to present them in the form of clear business cases. The commercial value of an innova-
tion project can only be assessed when a business case is available,20 i.e. only after the
exploration phase has been completed.
The last two phases of the innovation process, Development and Market Introduc-
tion, remain unchanged compared to the previous Funnel Model. However, one point
still remains unresolved: A clear specification is the prerequisite for any successful
development phase. At the end of the Exploration Phase, however, we only have a busi-
ness case. This is too vague for developers. Therefore, based on this business case, first
a specification must be drawn up. This however often proves to be a complex task. We
therefore add an additional phase to the innovation process and call this process phase
“Transfer Phase”.

20 See [Chesbrough, 2003] page 174.

4.11 Deepening Field 6 System 53

Additional complexity arises from the fact that it has been shown that successful
work in the phases Early Warning System and Exploration requires completely differ-
ent (indeed almost opposite!) personality traits than in the Development and Market
Introduction phases. This leads to systematic communication problems at the transition
from Exploration to Development, the so-called Innovation Gap. The newly introduced
Transfer Phase is particularly intended to translate the required information from the
mindset of the explorers into the “language” of the developers. Specifically, with regard
to the innovation process, we proceed as follows:

 Recipe for Designing the Innovation Process

• We analyze our current innovation process and compare it with the model
process (see above).
• Based on this, we develop a target process for our company that is com-
patible with the model process. This target process must take into account
the specific characteristics of our company. It is therefore always com-
pany-specific.

4.11.2 The Innovation Organization

Like any process, the innovation process only works as well as it can be supported by
the organization. Therefore, in addition to the innovation process, we also need to find an
optimal innovation organization for its successful functioning.21
For the Early Warning System and Exploration Phases, as mentioned above person-
ality profiles are required that are contrary to those otherwise needed in the company.
This circumstance inevitably leads to misunderstandings and conflicts, which can have a
destructive effect if they are not managed appropriately. For this reason, suitable organi-
zational precautions must be taken as follows:
The two early innovation phases, Early Warning System and Exploration, must be
arranged centrally (Central Innovation) and should report directly to the CEO. They
should be in close contact with the strategy department. In addition, two new func-
tions in the headquarters (HQ) will be necessary: Venturing and IPR-Management.22
This results in the new model organization for an innovative company as shown in
Fig. 4.25.

21 See also [Huber, Kaufmann, Steinmann, 2017] page 82 ff.

22 IPR = Intellectual Property Rights.
54 4 Development of the Innovation Strategy

CEO

HQ

other
IPR Central
COO HQ Strategy Venturing
Mgmt. Innovation
functions

Reporting to

Business Business Business

Unit A Unit B Unit C

BUs

Innovation Innovation Innovation

Unit A Unit B Unit C

Fig. 4.25 Innovation organization. © Huber, Kaufmann, Steinmann 2024. All rights reserved

Regarding the innovation organization, we proceed as follows:

 Recipe for the Design of the Innovation Organization

• We analyze our current innovation organization and compare it with the

model (see above).
• It is important that there is a person responsible for all innovation activi-
ties of the company (a Chief Innovation Officer) and that this person
reports directly to the CEO. This is important, because there is a funda-
mental conflict between the interests of the operational business units
and the innovation activities that are required for the entire company.
This conflict of interest particularly affects the distribution of resources
and management attention. It is further exacerbated by the also generic
cultural conflict between operational and innovative activities (innovators
function differently and therefore need to be managed differently than
“normal” operational employees, see Sect. 4.11.5).
• Based on the considerations made above, we develop the target organi-
zation. Here too, what we have already said regarding the innovation
process applies: The target organization must take into account the pecu-
4.11 Deepening Field 6 System 55

liarities of the company, especially the people involved and the existing
power relations. The target organization is therefore company-specific.

4.11.3 Human Resources and Finances

The necessary financial and human resources are also essential for innovation success.
The aim is to define on the one hand how many resources the company can invest in
innovation efforts without suffering damage, i.e., how much innovation the company can
afford. On the other hand, we have to assess how much effort is required to achieve the
position aimed for in the future. If there are discrepancies that appear to be too great, it
must be considered to somehow activate external resources to ensure the achievement of
the innovation goals (e.g., through a capital increase or suitable partnerships). And we
should not forget that we are developing an (innovation) strategy here: The goals there-
fore precede the available means!
It also makes sense to allocate the budget positions for the four types of innovation,
routine innovation, radical, disruptive and architectural innovation (according to Pisano),
separately and not to shift the boundaries between these four separate areas during the
planning period, i.e., to form fixed budgets, so-called “Strategic Buckets” (according
to Cooper). The description and explanation of the four types of innovation mentioned
here, or the term “Strategic Bucket” and the justification for the above rule can be found
in Sect. 10.4.3.

 Recipe for Providing the Necessary Human and Financial Resources

• We analyze how much we currently spend on innovations (as a percentage

of sales as well as in absolute money terms) and we assess what the asso-
ciated decision-making process looks like.
• We work out how much the company should spend on innovation in the
future (as a percentage of sales as well as in absolute money terms) and
we design the targeted decision-making process associated with that.
We do this separately for all four types of innovation (i.e., a “Strategic
Bucket” for routine, radical, disruptive, and architectural innovation each).
• We analyze which human resources we currently use for innovations and
we assess what the associated decision-making process looks like.
• We work out how much staff the company should use for innovation in
the future and design the targeted decision-making process associated
with that.
• We determine a budget for Early Warning activities. We must ensure that
this budget remains stable in the long term. We therefore create a separate
“Strategic Bucket”, which remains the same, regardless of business per-
formance.
56 4 Development of the Innovation Strategy

• We determine a budget for Exploration activities. We must ensure in particu-

lar that this remains stable in the long term (So we create a separate “Strate-
gic Bucket”, which remains the same, regardless of business performance).
• We identify in which areas we need to activate external resources in order
to achieve our goals.

4.11.4 Suitable Rules of the Game

Finally, it is essential that suitable rules of the game for the early phases of innovation
efforts be implemented.23 This is a serious challenge for every company, as research
shows that the rules of the game, which are necessary for the success of innovation pro-
jects in their early phases,24 are downright toxic for the daily business and contradict
common management principles. We are therefore confronted with the challenge of cre-
ating areas within the company for innovation activities where rules apply that contradict
those in normal business. And this needs to be done without any negative effects on the
day-to-day business. This requires a suitable organizational structure and suitable leader-
ship rules. We have already described the necessary organization in Sect. 4.11.2. Sec-
tion 4.11.5 describes the necessary leadership rules.

4.11.5 Leadership Aspects25

As already mentioned in Sects. 4.11.1 and 4.11.2, the first two phases in the completed
innovation process, Early Warning System and Exploration, require personality profiles
that are opposite to those we need otherwise in the company. By using one of the common
personality typologies, we can represent this statement even more precisely. We are using
here the most well known personality typology scheme, the one of Isabel Myers-Briggs.26

23 The late innovation phases of Development and Production and Market Introduction can be
designed according to the usual operational rules, as here (in contrast to the early innovation
phases) clear goals can be formulated (as in the daily operational business).
24 Early Warning System, Exploration and Transfer

25 See also [Huber, Kaufmann, Steinmann, 2017] page 121 ff.

26 [Myers Briggs, 1980].

4.11 Deepening Field 6 System 57

The Personality Types of the Myers-Briggs Type Indicator ®, MBTI27

The Myers-Briggs Type Indicator ®, MBTI, is based on the theory of psychological
types by C.G. Jung. It categorizes a given personality into four dimensions:

• Where the mental focus lies: Either it lies on the outside world (E = Extraver-
sion) or on the inner world (I = Introversion).
• How the person deals with information: Either people focus on the received
data per se (S = Sensing) or they focus on its meaning i.e. on the interpretation
of the received data (N = Intuition).
• On what basis the person decides: Either people decide based on logical think-
ing (T = Thinking) or they tend to make their decisions more dependent on the
circumstances and the effects on others (F = Feeling).
• The needs regarding a person’s structures: Either people prefer clear decisions,
e.g. yes or no (J = Judging), or they prefer to keep all options open as long as
possible (P = Perceiving).

This can be represented graphically as in Fig. 4.26:

Based on this typology, we find that for successful corporate management, a leadership
culture is required, which corresponds to the personality type SJ.28 SJ types are all those
personality types that have the letters S and J in their type.
In contrast, for the first two phases in the innovation process, Early Warning System
and Exploration, NT types are required, to be successful i.e. those personality types that

E S F J
Extraversion Sensing Feeling Judging

I N T
Thinking
P
Introversion Intuition Perceiving

Fig. 4.26 Myers-Briggs typology. © Huber, Kaufmann, Steinmann 2024. All rights reserved

27 [MyersBriggs, 1980] or also [Keirsey, 2021].

28 The
exact derivation of these statements can be found in the book.
[Huber, Kaufmann, Steinmann, 2017] pages 29 ff.
58 4 Development of the Innovation Strategy

have the letters N and T in their type. As we can see easily from the typology, the charac-
teristics of NT types are largely opposite to those of the SJ types prevailing in the com-
pany. NT types must therefore be led in a completely different manner than what we are
commonly used to. To lead NT type employees successfully, leadership principles apply,
which often contradict the norm in the rest of the company. It is precisely because of this
fact, that we have separated the first two phases of the innovation process into its own
organizational unit and subordinated it directly to the CEO.

Leadership Principles and Leadership Values Required for Innovation Activities29

In the first two innovation phases, Early Warning System and Exploration, NT types
must be used (as mentioned). Since NT-oriented employees determine what they do on
their own, they are very difficult to control by target specifications. Also, the usual incen-
tive systems with bonuses and punishments do not really work with NT types. The lead-
ership work must therefore focus on considering the intrinsic goals and dreams of the
employee and looking at how these can be made useful optimally for the company. For
such NT-type employees the following leadership rules can be identified:

• Employees must be intrinsically motivated by the content of their work. This aspect
must be taken into account particularly when recruiting new employees.
• High goals with positive incentives, but no sanctions for non-achievement. It must be
prevented that the employees become risk-averse: “Enjoy the wind—instead of fear-
ing high waves” (H. O. Rohner30).
• Lack of performance must be met with “soft” development measures. Explorers must
be able to engage in unknown situations. In exploration, everyone is a beginner, at
least in some areas.
• Staff reduction measures are strictly to be avoided.31 Staff reduction measures creates
fear, which prevents innovative behavior.
• Good wages, but no top salaries (otherwise you recruit monetarily motivated individu-
als; however, these are usually not NT-oriented).
• It is advisable to avoid money incentives and bonuses.
• Instead, grant great independence and great freedoms in the choice of the subject of
work. NT types respond strongly to this.
• Provide opportunities for information gathering and personal development, e.g. con-
gress visits (also abroad) and continuing education.
• Provide opportunities to publish and present their own results.
• Grant freedoms regarding working hours and method.

29 More details can be found in the book [Huber, Kaufmann, Steinmann, 2017] pages 121 ff.
30 Hans O. Rohner, www.b4u.ch
31 This is about maintaining intrinsic motivation. For that, staff reduction measures are poison. A
very strong poison!
4.11 Deepening Field 6 System 59

• A fundamentally generous allocation of resources within the given the possibilities of

the company. If resources are allocated too sparingly, the company risks that it gets
only the obvious results, as there is not enough time left to develop original thoughts.
• Avoid administrative pressure and detailed rules.
• However, any misuse of the freedoms must be sanctioned in a clearly visible way.
• Transparency towards the inside: e.g. presentation of results to the colleagues, who
are allowed to comment on them.

In the specific case, we proceed as follows:

 Recipe for Designing the Leadership Principles Needed for Innovation

Activities

• We ensure that the innovation units can work independently according to

our model organization.
• We develop separate leadership guidelines for employees and supervisors
in the innovation units. We describe the supervisor function as a coaching
role with its focus on the further development of the employee.
• We develop for the innovation units a separate wage system with good
wages, but no top salaries, attractive non-monetary incentives, and great
freedoms, but no bonuses.
• We develop a type of work allocation in which the employees have to
apply for participation in a project and avoid the allocation of work by the
supervisor.

4.11.6 Wage and Incentive Systems

In addition to the revised leadership principles and leadership values for innovators, suit-
able wage and incentive systems must now be defined (which will deviate from the com-
pany norm!).
We proceed as follows:

 Recipe for Designing the Wage and Incentive Systems Needed for Innova-
tion Activities

• We look at what our incentive system looks like today.

• We propose innovation-oriented annual goals.
• We propose the necessary adjustments to the wage system for innovation
activities.
• We propose suitable adjustments to the incentive system for innovators.
• We propose suitable adjusted promotion criteria for innovation activities.
60 4 Development of the Innovation Strategy

• We propose suitable KPIs.32 We may create an “Innovation Score Card”.

• The following aspects can be useful to us as checkpoints in develop-
ing a wage and incentive system: company values, leadership guidelines
and goals, leadership tools (e.g., management by objectives, etc.), KPIs
for innovation (What is measured?), Innovation Score Card (how is the
success of innovation represented?), innovation-related annual goals for
employees, innovation-related annual goals for bosses, wage system,
incentives and fringe benefits, criteria regarding wage increase. Monetary
bonuses are rather to be avoided. With regard to innovation activities, they
usually lead to unsuitable employee selection and unintended effects.

4.12 Innovation Strategy for SMEs

The insights specifically applicable to SMEs regarding innovation strategy are derived
in Part II in Chap. 11. The same basic insights apply to SMEs that have been presented
in the preceding sections of Chap. 4 for all companies. However, we find that SMEs
have largely ignored the Strategy for Change to date. This is because they have so far
been able to focus primarily on growth and market penetration in their existing busi-
ness. However, with the growing frequency of market changes, increasingly of disruptive
nature, the existing business is getting more and more under pressure. For SMEs, it is
therefore becoming increasingly important to find new business. Thus, the Strategy for
Change is becoming important also for SMEs. The specific approach for SMEs is as fol-
lows:

 Recipe for SMEs:

• Appoint an innovation manager who reports directly to the CEO.

• Create a separate and fixed budget for innovation efforts (Strategic Buck-
ets, as for larger companies).
• No separate innovation department. At most, a few staff members.
• Develop a Strategy for Change for the SME.
• Organize all innovation activities in innovation workshops (So we organ-
ize the innovation activities in SMEs not in the organization chart, but in
the calendar…)
• Such innovation workshops should have the following characteristics:
– Implementation under the sole responsibility of the innovation m­ anager.
– Implementation outside the company’s building (i.e. off-site).
– The rules of the game for NT types apply (hence the off-site
­implementation).

32 KPI = Key Performance Indicators.

4.14 Merging the Innovation Needs of the Strategy ... 61

• Larger missing parts in the required knowledge are closed by specifically

set up innovation projects (just like in large companies).
• Not all activities need to be realized alone. It should also be considered
which activities can be tackled and carried by several SMEs together, e.g.
for very complex or very new topics. Depending on the situation, an entire
industry or an entire value chain is affected and (hopefully) also interested.

4.13 Maturation and Release of the Innovation Strategy

It is inevitable that many things only become clear in the course of the development of the
innovation strategy. Now that the work is complete, it is worth taking a moment to look back
at what has been achieved. It is difficult to resist the urge for the quickest possible release
and application when the innovation strategy is actually finished. Just as you should let a pre-
pared dough rest before processing it further, a strategy can gain substantially if it is allowed
to rest for two to four weeks before picking it up again and shaping it into its final form.
With such a slightly distanced view, it is often found that many statements are correct,
but get lost in the crowd. Here it is crucial to weight individual points more heavily and
thus help the applying employees to set the focus correctly. In addition, key statements
should be specified and concretized, so that the strategy becomes tangible and imple-
mentable. Pure declarations of intent leave too much room for interpretation and must be
linked with a promise to provide the necessary resources.
Although the innovation strategy has been created initially with the utmost care and good
intentions, some statements may unintentionally contradict each other or leave too much
room for interpretation. Such weaknesses inevitably have an impact when the strategy is
applied. To minimize them and to enhance the effectiveness of the chosen strategy, it is
therefore necessary to include this cleaning step at the end of the development process.
After the innovation strategy has now matured and has been refined where neces-
sary, it is now ready for approval and release. Since the innovation strategy affects the
entire company, the release must take place at the level of the CEO or the entire execu-
tive management or even by the board of directors. This gives the innovation strategy the
necessary weight. The formal step of release is important in two respects: By this, the
innovation strategy is now consolidated and gains the necessary legitimacy. In addition,
its release is a good opportunity to communicate the innovation strategy and its intended
goals and to make these clearly visible in the company. This lays the foundation for
effectively living according to the strategy in the future.

4.14 Merging the Innovation Needs of the Strategy

for Excellence and Strategy for Change

As introduced in Sect. 4.1, the innovation strategy covers all innovation aspects of the
company, i.e., the complete Strategy for Change, as well as all innovation aspects of the
Strategy for Excellence. Figure 4.27 illustrates this relationship.
62 4 Development of the Innovation Strategy

1 2

Strategy for 3
Change

Strategy for
Strategy for Innovation
4
Excellence

5 6

Fig. 4.27 Merging. © Huber, Kaufmann, Steinmann 2024. All rights reserved

While the Strategy for Excellence is developed classicly, i.e. according to the
approach described in the textbooks, for the development of the Strategy for Change
we need novel approaches (e.g. Future Blueprint process). We have described these new
approaches in detail from Sect. 4.3 onwards and have proposed the Innovation Frame-
work to achieve this.
We would also like to point out at this point that although the innovation component
of the Strategy for Change is usually more complex and requires new approaches, the
part that results from the Strategy for Excellence is also essential and usually requires
even larger budgets for its implementation. Both parts of the innovation strategy there-
fore are important.

The Innovation Needs of the Strategy for Excellence can also be mapped in the Inno-
vation Framework
It is possible to represent the development of the innovation needs of the Strategy
for Excellence, developed according to the classic method (see Sect. 7.2), also in
the structure of the Innovation Framework. Here, the same six fields are involved
as have been described in the previous chapters. However, the fields contain differ-
ent content in this case:
Field 1 analyzes the present and is thematically identical to Field 1 for the Strategy
for Change. The results of the analysis are evaluated here however from a present per-
spective. This of course leads to different results than if they would have been evalu-
ated from a future perspective, as it is done in the case of the Strategy for Change.
The clarification of the future in Field 2 is essentially limited to the vision and
the mission statement, as outlined in Chap. 8. Field 2, when filled out for the Strat-
egy for Excellence, accordingly contains exactly these two elements. Therefore, it
is Field 2 where the difference between the Strategy for Excellence and the Strat-
egy for Change is particularly large.
Field 3 then describes the gap. Due to the significant differences of the two
strategy parts concerning Fields 1 and 2, as described above, the gap in the case of
4.14 Merging the Innovation Needs of the Strategy ... 63

the Strategy for Excellence also differs significantly from the gap that can be iden-
tified for the Strategy for Change.
The innovation need in Field 4 of the Strategy for Excellence is determined based
on the gap identified in Field 3. Since this gap also differs significantly from the gap
of the Strategy for Change, it results a markedly different need for innovation.
The situation for the Fields 5, Focus, and 6, System, is different. Here, Guiding
Questions and Search Fields for all innovation needs (i.e. for the Strategy of Excel-
lence as well as for the Strategy for Change) can be formulated and the innovation
system is the same for all innovation activities.
So we can represent the innovation aspects for both strategy parts (Strategy
for Excellence and Strategy for Change) with a structurally identical Innovation
Framework. This means that the Innovation Framework is a universally applicable
tool in terms of its logic and structure.
In Fig. 4.28, we have combined the two Innovation Frameworks for the Strategy
for Excellence and the Strategy for Change. The Fields 1–4 are shown separately
for the two strategy parts, while Fields 5 and 6 are common to both strategy parts.

Strategy for Strategy for

Excellence (E) Change (C)

1
3
E1 E2 C1 C2

Initial vision Future

Present
situation mission Blueprint
E3 C3
SO WO

ST WT

E4 C4

5 6

Fig. 4.28 Extended Innovation Framework. © Huber, Kaufmann, Steinmann 2024. All Rights
Reserved
64 4 Development of the Innovation Strategy

4.15 Conclusion

Chapter 4 outlines what is necessary when we want to develop an innovation strategy. In

this chapter, we focus on providing all instructions as complete as possible and therefore
formulate recipes for each area on how to proceed. We limit ourselves to the information
necessary for understanding the procedure. For the interested reader the derivation of the
recipes is provided in Part II of the book.
For the development of the innovation aspects of the two strategies, we use the six
fields of the Innovation Framework. The action required for innovation efforts (Field 4)
results from the gap identified in Field 3, between the present analyzed in Field 1 and the
future targeted for the company in Field 2. Field 5 then concretizes this innovation need
with Guiding Questions and defines the relevant Search Fields for the company. With
the last field, Field 6, we finally ensure that the company can innovate at all. We define
the innovation process and a suitable organizational structure. We secure the necessary
human and financial resources and face the complex leadership problems by creating
appropriate leadership guidelines and wage and incentive structures.

References

Huber D, Kaufmann H, Steinmann M (2017) Bridging the Innovation Gap—Blueprint for the
Innovative Enterprise. Springer Verlag, Berlin, Heidelberg, (translation, original 2014 in Ger-
man)
Lombriser R, Abplanalp P (2005) Strategisches Management. Versus, Zürich, CH
Micic P (2007) Die 5 Zukunftsbrillen – So werden Sie zum Vordenker. Gabal Verlag, Offenbach
Voros J (2003) A generic foresight process framework. Foresight, Volume 5, Issue 3, Emerald
Group Publishing Ldt., UK
The Application of the Innovation
Strategy 5

Abstract

After the innovation strategy has been developed in its initial version according to
the procedure described in Chap. 4, it is now about bringing it to life. This means
that the innovation strategy must be carried into the organization, so that it can unfold
its effects in daily business. This requires a number of accompanying measures. The
responsibilities are clearly to be assigned and the necessary resources to be provided.
In addition, a constant support by the management and clear and transparent com-
munication must be ensured. A continuous monitoring of the application progress and
immediate corrective measures are the basis for successful implementation. Chapter 5
provides a number of hints and tips on this.

The innovation strategy should be more than just a declaration of intent. One of the chal-
lenges of any strategy is how the company can be enabled to effectively implement the
strategy. While the innovation strategy has already set the goals and also the financial
and human resources needed, the challenge of their application is, to get the company to
really act according to these plans. In addition, there are a number of difficulties and pit-
falls and it would be good to know about them in advance.
In Chap. 5, we provide some guidance and tips on this and demonstrate how the inno-
vation strategy can be applied successfully (Fig. 5.1).
Fig. 5.1 Chapter Application. Chapter 4 Chapter 5 Chapter 6
© Huber, Kaufmann, Development Application Update
Steinmann 2024. All rights
reserved
1

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer- 65
Verlag GmbH, DE, part of Springer Nature 2024
D. Huber et al., Innovation Strategy, https://doi.org/10.1007/978-3-662-69832-7_5
66 5 The Application of the Innovation Strategy

5.1 General Aspects of the Application of the Innovation

Strategy

The application1 of the innovation strategy in the company is challenging. It is not

enough to simply incorporate objectives from the innovation strategy directly into opera-
tional planning. Rather, it must first be ensured that the employees understand the basic
principles of the innovation strategy and, above all, why such a strategy is necessary at
all. Only then, can they take it into account in their daily actions and perceive their own
role.
In addition to exemplary behavior in leadership work and good communication, the
most important tool for successful application is the setting of appropriate incentives so
that strategy-compliant behavior pays off. However, even sophisticated precautions can
miss their mark. An accompanying control and correction mechanism is therefore indis-
pensable.
Figure 5.2 shows how the innovation strategy can unfold its effect in the company.
In its application, the innovation strategy affects mainly two places in the company:

1. The focus (Field 5) of the Innovation Framework provides the strategic guidelines for
controlling the innovation process. The implementation of innovation projects in the
innovation process generates the desired innovation performance of the company.
2. The system (Field 6) of the Innovation Framework provides the strategic basis to
establish and develop the innovation system. The innovation system in turn is the pre-
requisite for a company’s ability to innovate in the first place.

Together, the innovation performance and the ability to innovate determine the compa-
ny’s future viability.

1 In this chapter, we deliberately talk about the application of the strategy and not (as usual) about
its implementation. We want to point out that, in our view, it cannot be about simply implementing
a once-created strategy as a fixed plan, but that the strategy represents the standard by which we
align all activities thinking along. It’s about “applying” and not about simple (thoughtless) “imple-
menting”.
5.1 General Aspects of the Application of the Innovation Strategy 67

Development of the
Innovation Strategy

Application of the
Innovation Strategy steering the develop
innovation process innovation system

Effect of the innovation performance ability to innovate

Innovation Strategy

future viability

Fig. 5.2 Effect of the innovation strategy. © Huber, Kaufmann, Steinmann 2024. All rights
reserved

Principles for Action Planning

For the innovation strategy to be effective, it is necessary that it is applied appro-
priately. It is like with any project: You have to move from thinking to action. To
achieve this, it is recommended to create an action plan. Only then will it become
clear what you really need to get done. Thus, our strategy work will only be fin-
ished when we have defined all measures necessary to apply the strategy. It has
proven useful to present these measures in the form of a phase plan structured in
time (Fig. 5.3).

• Phase 0: Immediate actions (so-called Quick Wins): Such Quick Wins are
measures that can be implemented directly without much effort. Ideally, they
only require a decision.
• Phase 1: Phase 1 includes measures, which can be implemented within a plan-
ning period (e.g., one year). Additionally, this phase also includes those meas-
ures which require more effort than a single planning period, but which must be
tackled immediately. This includes preparatory work and preliminary projects
for larger undertakings.
• Phase 2: This phase includes all those activities, which are to be implemented
in the next planning period. These are typically the continuation sub-projects
from undertakings already started in Phase 1. Additionally, in Phase 2, the
preparatory work and preliminary projects of undertakings, which were only
assigned second priority until now, are added.
68 5 The Application of the Innovation Strategy

Phase 0

immediate actions

Phase 1 Phase 2 Phase 3

measures first measures second measures backlog

planning phase planning phase

Planning date Planning horizon

Fig. 5.3 Action planning. © Huber, Kaufmann, Steinmann 2024. All rights reserved

• Phase 2 becomes the new Phase 1 after the first implementation phase, follow-
ing the principle of rolling planning.
• Phase 3: In Phase 3, all those activities are listed, which are to be tackled later.
In each planning cycle, the new activities for the Phase 2 are selected from this
pool of Phase 3. Phase 3 thus represents the “backlog”, as we know it from
agile project management (Scrum).

Structuring of the action plan this way has proven itself and has great advantages
for the decision-making process. Since we have built the action plan on a rolling
basis, only Phases 0 and 1 need to be decided upon concretely. This significantly
reduces the decision risk for managers, as their decision only concerns a single
planning period. And it significantly reduces the budget amounts to be discussed.
Moreover, if decisions prove to be unfavorable, they can be corrected in the next
planning phase.

After the innovation strategy has been created, we now examine its implementation and
continuous application. Figure 5.4 serves as a guide.
In the detailed view, according to Fig. 5.5, the following parallel activities are pend-
ing: The innovation strategy, described in Chap. 4 and finally approved, is now be oper-
ationalized, i.e., it is now provided with an action plan for effective transfer into the
company.
Subsequently, the actual application begins along four parallel activity paths:

• Communicating and making the strategy understandable. This is to be done repeat-

edly, to anchor it well.
• The actual application in everyday situations of the ongoing business and especially
so with regard to innovation activities.
5.1 General Aspects of the Application of the Innovation Strategy 69

apply apply apply

strategy V1 V2

approve
strategy approved approved

create develop update

strategy

collect
raw Warehouse
material

Fig. 5.4 The application in the procedural model. © Huber, Kaufmann, Steinmann 2024. All
rights reserved

action plan communicate

approved

apply
operationalize

check

approved save

Fig. 5.5 Four activities. © Huber, Kaufmann, Steinmann 2024. All rights reserved

• Checking the effectiveness and success of these activities. Derived from this, the nec-
essary corrective measures.
• The ongoing storage of all insights gained, be it as preparation for the next update that
will get necessary sooner or later or for documenting learning effects. The activities
needed for using this storage will be discussed in detail in Chap. 6.

With these activities, four results are pursued (Fig. 5.6):

• A cultural anchoring of the strategy’s intention and its contents, so that their applica-
tion occurs naturally by itself and is integrated into the daily activities.
70 5 The Application of the Innovation Strategy

Fig. 5.6 The effects of Effect of the application of

the application. © Huber, the Innovation Strategy
Kaufmann, Steinmann 2024. cultural
All rights reserved anchoring

routine in
application

individual and
organizational
learning
raw material
for update

Time

• Growing routine with increasing application. Thus, all actions and decisions become
strategy-compatible and thereby substantially strengthen its effectiveness.
• Both at the level of the individual and the entire organization, learning effects are
achieved. This strengthens the overall cooperation in the company and the focus on
future-oriented goals.
• As a by-product, valuable insights are gained, which are collected systematically and
are available then for an upcoming update of the innovation strategy. This increases
both the quality and the speed of a next update.

5.2 Implementation of the Innovation Process

In this chapter, we provide some hints on which topics to consider when implementing
the innovation process, so that the innovation strategy can be implemented as well as
possible.
In Fig. 5.7, we now move on to the branch “apply”.

5.2.1 Content Topics

For the application of the innovation strategy, three questions are central regarding the
innovation process:

• Which topics in the Search Fields are passively observed and on which topics of the
Search Fields shall active work being done?
• Which topics deserve how much management attention, i.e. are allowed to absorb
leadership time?
5.2 Implementation of the Innovation Process 71

Fig. 5.7 Apply. © Huber,

Kaufmann, Steinmann 2024. communicate
All rights reserved

apply

check

save

• How many resources are allocated to the individual topics (The finances, but also the
time of our most capable employees, which we have to release from other tasks, since
the best are always already busy)

As we mentioned in Sect. 4.11 (Box “Recipe”) and will derive in Sect. 10.4, the ques-
tions and search orders, which affect the future of the entire company, must be separated
from those topics that exclusively concern the existing business. The former must be
placed under the protection of the CEO. If this is not done cleanly, innovation activities
will wither under the pressure of the business units, as business units claim the resources
for themselves and have no interest in innovations potentially cannibalizing their core
business. In addition, the employees of the business units are always shaped in their
thinking by their current business and its practices and understand the new ideas always
through this filter. As a result, innovation ideas can easily be diluted and lost this way.
That effect is another reason to locate all innovation activities directly under the CEO, as
long as they do not directly affect an existing business.

5.2.2 Interaction Between the Innovation Process and the

Innovation Strategy

The various phases of the innovation process interact with the innovation strategy, and
this interaction occurs in both directions:

1. On the one hand, the innovation strategy feeds the innovation process with specifica-
tions and strategic foundations.
2. On the other hand, the innovation process is a search and learning process and there-
fore must have the opportunity to contribute newly gained insights for the updating of
the innovation strategy.
72 5 The Application of the Innovation Strategy

strategic steering

Innovation Process
Innovation
Strategy

new insights and contributions

Fig. 5.8 Interaction. © Huber, Kaufmann, Steinmann 2024. All rights reserved

The second point is not provided for in the classical shaped management world with its
typical top-down leadership claim. Without such an interaction, however, a great learn-
ing and improvement potential in the innovation process is wasted. Figure 5.8 illustrates
the interaction between the innovation strategy and the innovation process regarding new
insights for the strategy.
Furthermore, it is important to be aware that the further development of the strate-
gic foundations and the further development of innovation content always run simul-
taneously and in parallel. Both levels are addressed in the innovation activities. When
a specific innovation project is progressed, the strategic foundations also mature at the
same time.
The individual phases of the innovation process, however, are at different flight lev-
els. While in the Early Warning System Phase the overall picture of the future, as well
as the portfolio of all innovation projects are important and thus the overall situation
is emphasized, subsequent phases successively focus at more detailed levels. This is
because innovation projects get more and more concrete as innovation work progresses
and the individual project thus increasingly moves into focus. In the later process phases
of Development and Market Introduction, the interaction between the innovation process
and the innovation strategy is therefore less pronounced. In the following explanations,
we can therefore limit ourselves to the first three process phases: Early Warning System,
Exploration, and Transfer.
In the following, we describe for each of these three phases how they can be imple-
mented and to what points we have to pay special attention. We repeat the most impor-
tant statements with regard to the application in the first three phases of the innovation
process, which we have derived and described in detail in our book Bridging the Innova-
tion Gap.2 The five phases of the innovation process are shown in Fig. 5.9:

2 [Huber, Kaufmann, Steinmann, 2017].

5.2 Implementation of the Innovation Process 73

Early
Market
Warning Exploration Transfer Development
Introduction
System

Fig. 5.9 Innovation process. © Huber, Kaufmann, Steinmann 2024. All rights reserved

5.2.3 Implementation of the Early Warning System Phase

The first phase of the innovation process, the Early Warning System, is all about identi-
fying topics that could become relevant for the future of our company and should there-
fore be clarified in advance. The aim is to recognize as early as possible which changes
in our environment could become relevant for our company in the future.
This means in particular that even small changes, so-called weak signals, should be
recognized if they could get relevant for our company. This is of course a difficult task
and requires a lot of expertise and intuition from those involved. It is helpful to rely on
the solidly developed pictures of the future that we have worked out in Field 2, Future,
of the Innovation Framework. These future images enable us to distinguish relevant weak
signals from irrelevant fluctuations.
This work can be described as a kind of a craft (sometimes more an art than a craft).
Therefore, success strongly depends on the skills of the employees entrusted with this
task and their intuition. Typically, NT-type employees prove to be suitable. Accordingly,
the employees used for this task should be selected carefully.
It often makes sense to distribute this demanding observation task among several
employees. This also has the advantage that several part-time mandates are more effec-
tive and that employees are strongly intrinsically motivated when they can work on
Guiding Questions which they are familiar with or which even are their favorite topics.
Of course, the employees responsible for collecting information on the different top-
ics in the Early Warning System Phase should be known by name so that other employ-
ees can supply them with potentially interesting information. The mutual exchange
between the information seekers is important. Only in this way, can impressions of dif-
ferent persons be compared and be integrated into an overall picture. And don’t forget:
Both, opportunities as well as threats should be recognized early.
Let us look at the Early Warning System Phase a little more deeply. The Early Warn-
ing System process phase has, as described, the function of identifying innovation poten-
tials relevant to the company. This can happen in two ways:

• On the one hand, rather passively and reactively: Simply collect and store relevant
internal and external information.
• On the other hand, actively: Actively developing and aggregating information into
innovation potentials.
74 5 The Application of the Innovation Strategy

The search for interesting information, concepts and new possibilities, the so-called
scanning and scouting, takes place both within and outside the company boundaries.

• Within the company, we regularly interview identified information carriers, especially

after business trips from which they have returned with new impressions.
• For an active external search, in addition to desk research, professional conferences and
trade fairs and whenever possible also company visits are good sources. During such vis-
its, there is the chance to interact directly with the information carriers. The information
obtained must be evaluated and integrated into the overall picture. To do this, it is helpful
to exchange ideas with colleagues, which is why it is worthwhile to carry out such visits
together with colleagues, for example in pairs. In addition to a significantly improved
evaluation, this also has the advantage that two (or more) people can discover more
and different types of information than one single participant. Sufficient time should be
planned already during the business trip for the evaluation and classification work.

In the search for information and early indicators, there is more to do than just to moni-
tor trends. In particular, attempts should be made to also estimate when tipping points
could occur, even though this usually proves to be difficult. Moreover it helps if suitable
indicators can be identified which can be monitored by setting alarm thresholds.
Such an approach subsequently requires regular reflection and bundling of results by
the responsible innovation manager. However, a certain degree of improvisation and also
some self-sustaining dynamics, are part of the game. Nevertheless, in the area of Early
Warning Systems a systematic approach should be applied as much as possible.
A second source of finding new concepts and possibilities is the systematic genera-
tion of ideas, e.g. by organizing ideation workshops. Various creativity techniques may
be used in this process.
An Early Warning System could be implemented in the following way (Fig. 5.10):

external search early warning

exploration
in the world system

internal search
in the company

network and decide

own idea- integrate it what shall be
generation into a potential explored

building blocks from exploration

Fig. 5.10 Early Warning System. © Huber, Kaufmann, Steinmann 2024. All rights reserved
5.2 Implementation of the Innovation Process 75

The Early Warning System can essentially be divided into four sub-functions:

1. The internal and external collection and classification of information (as described
above). Ideas and components from ongoing Exploration activities are also taken into
account.
2. The synthesis of new ideas in ideation workshops.
3. The networking and integration of all these ideas and information into suspected new
innovation potentials.
4. Subsequently, the formulation of potentials found in the form of proposals for the deci-
sion which topics should be addressed in the subsequent Exploration Phase. To do this,
we need good editors, who are able to put the information in the appropriate form.

We can limit our active search efforts to the Search Fields that we have defined in our
innovation strategy. The Search Fields point us to where we focus our search efforts. At
the same time, we should keep in mind the strategic Guiding Questions formulated.
For the implementation of the Early Warning System, we ask ourselves the following
questions:

• How do we implement our Early Warning System?

• Where in the company do we locate it?
• How many and which employees do we use for it?
• What methods does it use?
• What are suitable annual goals for it?
• What methods and tools can be useful for us regarding the Early Warning System?
• What means are there to capture the ideas of the employees?
• How can ideas be represented in general?

5.2.4 Implementation of the Exploration Phase

The Exploration Phase follows the Early Warning System Phase. The Exploration Phase
is not included in the Funnel Model (i.e. the innovation process described in the text-
books, which is usually used). However, this (new) Exploration Phase is of decisive
importance. It is the Exploration Phase that decides about the commercial value a poten-
tial innovation can achieve. The Exploration Phase concretizes the potentials recognized
in the Early Warning System Phase, developing solution concepts for them and develop-
ing business cases associated to these. These tasks are always carried out in project form.
It is crucial for the success of such projects that the project team is NT-dominated and
that it can work autonomously.
For a specific topic, usually a multitude of different use cases can be identified. And
each of these use cases has its own business case. Accordingly, it makes sense, to work
with multiple projects in parallel.
76 5 The Application of the Innovation Strategy

Enterprise and Environment

Zone 1 Zone 2 Zone 3 Zone 4

Business Technology

Warehouse

Fig. 5.11 Exploration process. © Huber, Kaufmann, Steinmann 2024. All rights reserved

Such a refinement of an original potential, which initially is unclear in its commercial

perspective, into a concrete business case is achieved essentially by the combination in a
novel way of the initial idea with elements from other concepts. Especially the combina-
tion with existing products and services proves promising. The choice of the business
context plays the key role here, i.e. the choice of the industry, the reachable clientele, the
competitors and generally the positioning of the company within the targeted market. We
must be aware that one and the same business concept has a different commercial value
dependent of the business context.3 This means that it ultimately matters for the achiev-
able commercial value, whether a company for example is a smaller SME or rather a
large and globally active corporation. Exploration is therefore about identifying the most
worthwhile business case.4
Overall, the Exploration Process looks like depicted in Fig. 5.11. A more detailed
description can be found in the book Bridging the Innovation Gap.5
To implement the process phase of Exploration, we ask ourselves the following ques-
tions:

• How do we implement the Exploration activities?

• Where in the company do we locate this?
• How many and which employees do we use for this?
• What methods do we use?
• How can new use cases and new business cases be represented?

3 See [Chesbrough, 2003] pages 168 und 176.

4 Finding the best business case may even mean that the new business is not built up by oneself,
but that it is more worthwhile to sell the innovation to another company, if this other company can
achieve a much higher commercial value with it.
5 [Huber, Kaufmann, Steinmann, 2017] pages 98 ff.
5.2 Implementation of the Innovation Process 77

• What are sensible annual goals for Exploration activities?

• What form is best suited to inform management?
• Who brings relevant new insights into the strategy process?

5.2.5 Implementation of the Phase Transfer

As the result of the Exploration Phase, a business case is now available. The company
now has to decide, which project it wants to implement, i.e. which specific project it
wants to transfer into the Development and the Market Introduction Phase.
To be able to start the upcoming development work, however, the existing business
case is not sufficient, because it describes the goal to be achieved by the developers too
vaguely. To be able to start a development, the developers do not need a business case,
but rather a detailed specification. And such a specification still needs to be worked out.
Therefore, after the basic decision to develop an innovation, the Transfer Phase serves to
prepare all documents needed to enable the start of the development work. These docu-
ments usually require a great deal of detail and their preparation therefore is often com-
plex and the effort required for that is often underestimated.
The main challenge of this phase is that the specifications to be developed must be
written in a way that is close to implementation. This needs the SJ way of thinking. And
this way of thinking is diametrically opposed to the way of thinking in which the busi-
ness case has been written (the NT way of thinking). This means that during the Transfer
Phase, some sort of translation work must be done between these two opposing ways of
thinking (similar to the translation between two languages). We have shown in the book
Bridging the Innovation Gap that this translation work only can be carried out success-
fully by NT-type employees.6
If during the Transfer Phase, this translation work is not given the necessary atten-
tion, misunderstandings are inevitable. Because of this difficulty, it unfortunately is reg-
ularly observed in practice that the innovation process unintentionally breaks down at
this point. If the work in the Transfer Phase is not carried out properly, the development
specifications remain vague and the resulting imprecise specifications must then be made
up for by expensive iterations during the Development Phase.
For a successful implementation of the Transfer Phase, the following questions arise:

• How do we carry out the transfer work?

• Where in the company do we locate this?
• How many and which employees do we use for this?
• What methods do we use?
• What are sensible annual goals for this?

6 [Huber, Kaufmann, Steinmann, 2017] pages 71 ff.

78 5 The Application of the Innovation Strategy

5.3 Application Aspects Regarding Organization

and Leadership

The strategic leadership claim, as specified in the innovation strategy, must now be trans-
lated into appropriate measures. The principles described in Sect. 4.11 apply here. Spe-
cifically, the following preconditions must be established:

• Create the positions that are required to effectively drive innovation activities.
• Make sure that the employees involved in innovation projects are able to actually
work on the innovation topics the working hours that have been committed for this
activity.
• Create specific committees, who can decide on innovation projects competently.
• Establish a transparent leadership culture that supports innovation and clearly com-
municates this.
• In the company, demonstrate your trust in the value and benefit of innovation. This
increases the acceptance of innovation activities in the company.
• Provide financial resources with a certain long-term consistency and communicate
this.

To ensure the application of the innovation strategy in the company, the required
resources must be provided. In addition, clear messages must be sent consistently. The
communication and leadership style used is crucial. We like here to use the image of
the gardener: Although the plants have to grow by themselves, the gardener can provide
the most favorable conditions: He provides appropriate locations and supply with water
and nutrients, he intervenes when his plants are threatened, he removes weaklings or on
the contrary he gives them special treatment. He transplants young plants into the open
ground at the right time, so they can unfold. Translated to the topic of innovation, this
means:

• Provide freedom while at the same time demanding accountability

• Apply fair evaluation criteria and explain them
• Conduct a transparent discussion about the expected output
• Show support, will, and appreciation
• Foster trust through stability in resource allocation

In addition, the innovation specialists must be protected from the department’s attempts
to use them for their interests. All too often, these talented innovation specialists are
seized by the departments, out of operational urgency. At most, occasional helping out
may be tolerable. And doing so even promotes support from the departments. But the
actual work of innovation is in the interest of the entire company and must be done
as well. And it is important that this does not happen with only subordinate priority,
because we should keep in mind that the future of the company depends on it. It is there-
5.4 Communication and Anchoring of the Innovation Strategy 79

fore wrong, if the innovation or development department is misused by the business units
as a practical pool of personnel to advance their own market-related projects. This pro-
tection from seizing the resources by the business units can only be secured by the CEO
personally. The CEO thus has a non-delegable responsibility here.
Because the success of innovations only emerges in the long term and is also exposed
to manifold risks in the meantime, it is difficult to measure success in innovation pro-
jects. For that reason, bonus incentives should preferably not be applied to innovation
projects.

5.4 Communication and Anchoring of the Innovation Strategy

We now move on to the main branch “communicate” (Fig. 5.12).

5.4.1 Communication Within the Company

For the innovation strategy to take effect, it must be communicated and disseminated
effectively within the company. This is a prerequisite for making sure that employees
behave in line with the strategy.
Therefore, the still widespread reflexes of secrecy with regard to strategy are not
appropriate. Secrecy prevents employees from being able to behave in unison (i.e. like a
rowing team) and to target the strategic goals by a coordinated effort. An innovation strat-
egy can only unfold its effect if it is shared by all employees and carried with pride and
conviction. Moreover, there is no need for secrecy all. If an innovation strategy is good, it
can only be implemented by this specific company anyway. If it were otherwise, it would
be interchangeable or too imprecise and therefore not particularly worth protecting.

Fig. 5.12 Communicate.

© Huber, Kaufmann, communicate
Steinmann 2024. All rights
reserved
apply

check

save
80 5 The Application of the Innovation Strategy

By communicating the innovation strategy, the employees shall be empowered to

think along (within their role) in order to be able to push in the same direction as a col-
lective.

Communication of the Innovation Strategy Beyond the Company

A strong innovation strategy can certainly also be shared with customers and
suppliers. This sends convincing messages: “We see ourselves as part of the eco-
system. We have an important mission and you are part of it. If we see the most
important things in the same way, we are stronger together and we are proud of it
and we don’t hide from each other!”.
Strong companies do this. They seek allies. They are convinced that their strat-
egy cannot not really be copied by somebody else and that they do have the neces-
sary skills to implement their strategy. Moreover, it is easier to be a convincing
pioneer as part of an ecosystem than it is if you are all alone. So, if you stand
by your ambitions and gather like-minded people around you, you implicitly also
influence the strategy formation of your business environment. The resulting strat-
egy then gets even more powerful than if you develop a strategy for your company
alone.
And don’t forget: The most important allies of course are your own employees.

The innovation strategy must therefore be transparent and understandable to the employ-
ees. And it is important that management clearly advocates for innovation. Such honest
and comprehensive communication lays the foundation for an innovative corporate cul-
ture.
Communication must always be congruent with action. The commitment of manage-
ment and its role model function therefore are essential. A symbolic event at the start can
gather energy. In the innovation environment, however, psychological safety and free-
dom from fear are crucial. Only in this way can employees build trust, which in turn is
the prerequisite for being able to deliver peak performance.
In leadership as well as in communication, the saying applies: Constant dripping
wears away the stone. Therefore, communication needs to be repeated several times. In
this regard, also the informal contacts are important, especially when they do not run
along the organization and the hierarchy.

5.4.2 Anchoring in the Company

After the strategy has been communicated at the appropriate level, the recipients should
not be left alone with their impressions. The exchange about the contents of the innova-
tion strategy should continue to be cultivated. It takes time for the innovation strategy to
5.5 Application of the Innovation Strategy in Daily Business 81

be well understood and to be internalized. And there will be regularly questions arising
from the day-to-day work that need to be answered anew.
In addition to repeated and consistent communication over a longer period, it is cru-
cial to set the incentives correctly. This affects annual goals and remuneration, but it goes
beyond that and requires committed leadership. This includes as well the way decisions
are made, how successes are celebrated, and also the requirement that failures shall not
be punished but learned from.
For the anchoring of the innovation strategy, it is useful to realize one’s own situation,
and to be proactive with regard to the difficulties that may arise with reaching openness
and flexibility, dealing with external determination, etc. Various measures have proven to
be helpful in this respect. Thus, suitable time periods, time islands, need to be reserved,
as a prerequisite for strategic thinking (including strategic action, such as exploring).
Such time islands allow, to involve other interested parties in the exchange of thoughts,
in addition to the innovation employees. This therefore anchors the innovation efforts
more broadly. The provision of innovation-friendly and exchange-promoting spaces
(i.e. rooms) can be helpful in this regard. It is important that such spaces be also regu-
larly used. Systematic playing of such spaces and curating of corresponding programs
can significantly contribute to the development of a vibrant innovation culture in the
company. However, this requires the designation of a person for that and an associated
budget. Such events and opportunities for reflection must be able to take place regularly
and at an appropriate rhythm, so that the use of such spaces does not fade away after a
short period of initial euphoria.
Furthermore, it is important to invest in continuing education on the topic of innova-
tion. The employees, especially the managers, must be able to understand how innova-
tion works and what rules of the game are necessary so that the company’s innovation
efforts are not unintentionally hindered or even torpedoed.

5.5 Application of the Innovation Strategy in Daily Business

Now we return to the main branch “apply” (Fig. 5.13).

With the anchoring, the prerequisites are created so that the innovation strategy can
naturally flow into everyday actions. Two opposing requirements are placed on the inno-
vation strategy: On the one hand, it should be stable and provide guidance in the hec-
tic everyday life. This requires continuity and only rare course corrections. On the other
hand, we are embedded in a dynamic environment, which requires flexibility and situ-
ational behavior. A certain degree of agility and adaptability is therefore indispensable.
This creates tension, and answers must be found in this environment on how to keep the
innovation strategy alive in the daily decision making.
Unfortunately, in practice, strategies sometimes drift along as well-sounding but inef-
fective declarations of intent. The innovation strategy is particularly at risk in this regard,
as it mainly deals with the future, which is somewhat further away from the daily busi-
82 5 The Application of the Innovation Strategy

Fig. 5.13 Apply. © Huber,

Kaufmann, Steinmann 2024. communicate
All rights reserved

apply

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save

ness. Therefore, special attention must be paid to ensure that the innovation strategy
really sets the guidelines and is effective and helpful as a benchmark for decisions at all
levels. It is only in this way that the strategy will regularly be applied in the company. An
innovation strategy must therefore be resilient also in difficult times and should not only
serve as an alibi in “good weather situations”.

5.6 Prototyping in the Innovation Process

A delicate point in the innovation process is prototyping. This means the point, when
during the exploration phase potential innovations are to be matured and validated under
conditions as realistic as possible. For this purpose, often existing customers are used
as lead customers. Sometimes even the sales department dictates which customers can
be piloted. Typically, in these cases long-standing customers are suggested. With this
type of customers, there is mutual trust and the relationship is fundamentally resilient,
which actually is a good basis. However, in this situation there is a risk that an implicit
obligation arises to implement also an innovation project even in the case, where it does
not look promising after the exploration phase. This is because with key customers one
wants to shine as being strong and innovative.
This means that the selection of lead customers is not optimal in many cases. How-
ever, lead customers should be selected very carefully based on the innovation aspects
of the pilot project. For this reason, suitable as lead customers are rather customers who
approach the prototypical project with some curiosity and openness and who ideally
already know this way of working from their own prototyping of innovation projects. If,
on the other hand, an existing key customer is chosen as a lead customer, one incurs a
lump sum risk due to its financial significance, That increases the pressure to succeed. In
this situation, we risk aligning ourselves too much with this single, but not representative
key customer. Companies with such an opportunistic approach feel closer to the market
in their own understanding. But, grown organically this way, they end up with a very
5.7 Maintenance of the Innovation Portfolio 83

heterogeneous product portfolio which turns out to be difficult to manage. Therefore, it

is worthwhile to create already in advance a list of three or four suitable pilot customers,
with whom experiments can be carried out.

5.7 Maintenance of the Innovation Portfolio

The management and shaping of the portfolio of the innovation projects is the respon-
sibility of the innovation manager. He creates transparency for the management team in
this respect. The contribution of the individual projects to answering the Guiding Ques-
tions from Field 5 of the Innovation Framework can be used for an assessment.
In addition to the majority of well-running innovation projects, there are in every
innovation portfolio often also projects that should be challenged. From the existing
innovation projects, we can distinguish different categories. We deliberately name these
in a somewhat provocative way.

• Zombies: A sensible approach must be found for such somewhat unstoppable pro-
jects, which are not really progressing. If they keep popping up, even though they
have been stopped several times, there seems to be a relevant core. In such cases, it
can be helpful to suspend these projects for a certain period of time and reassess them
every one to two years, or to dissect them through exploration and work out their rel-
evant core.
• Eternal Screamers: Eternal Screamers are not as dead as the Zombies are and con-
tinue to consume resources. They rather remind us of children who do not want to
grow older. They often originate from a top-down mandate and thereby implicitly
enjoy special protection. However, this is usually not justified and should be ques-
tioned.
• Overgrown Garden: The Overgrown Garden consists of projects of the type Free-
loader or Trial Balloon (see below). As long as these projects do not tend to expand
and compete with other projects for resources, they can be left to themselves. They
are often promoted by motivated individuals, even in their spare time. If they happen
to reach sufficient maturity, they may be integrated into the normal innovation port-
folio.
• Fighting Twins: For important topics sometimes deliberately more than one project
is started, which then are in competition with each other. In many cases, the teams
do not even know about each other. In doing so, it usually is the intention to ensure
progress or sometimes also, to get as a result several different approaches, which then
can be evaluated. At an advanced stage, such parallel projects must be merged or only
one of the parallel projects will be continued.
It should be pointed out here that such a parallel approach can release a great poten-
tial for frustration due to the selection decisions required at the end of the parallel
phase. It is therefore prone to conflict.
84 5 The Application of the Innovation Strategy

Also when including new innovation projects in the innovation portfolio, a critical
review should take place and one should be aware of what type of project one is talking
about. Here too, different categories of innovation projects need to be distinguished.

• Court Jesters: Court Jester projects pursue a question without precise prior knowl-
edge. They are free time and thought islands for new ideas. Early phase explorations
are typical representatives. Such projects are important, because they allow to deal
with a novel question without pressure to find a solution.
• Freeloaders: In addition to the official and approved projects, there must also be
room for individual unsolicited projects. These are typically started and kept alive by
intrinsically motivated employees and should be tolerated for a while. If they reach
sufficient maturity, they should be officialized. If this is not the case, they should be
discontinued after a reasonable period of time.
• Trial Balloons: Trial Balloons are still immature things, which usually arise from a
favorable opportunity or have arisen out of necessity. They are opportunities to ven-
ture first steps into a topic. Such initiatives can arise autonomously or are proactively
initiated. They can develop into the type of Practice Area.
• Practice Area: A Practice Area takes up a significantly larger scope than a trial bal-
loon. Practice areas often serve to explore new technologies. They have no direct ben-
efit for the company in themselves. But we can use them to build up knowledge in a
new area (e.g., blockchain), to build up new skills in the company or to lead suppliers
competently. The focus is on the learning effect.

With such forward-looking innovation projects, crucial time to market can be gained.

Impact Quadrant Model for Innovation Portfolios

The Impact Quadrant Model is a very simple portfolio representation for innova-
tion projects, which can easily be communicated. In the model, the innovation pro-
jects are grouped according to the time-period and the place of impact. Figure 5.14
shows the graphical representation of the model.
The horizontal axis represents the time-period of impact.

• On the left hand side of the portfolio, innovation projects are positioned that
solve current problems promptly. These projects are usually based on the inno-
vation needs of the Strategy for Excellence. They improve and preserve the sta-
tus quo of the company.
• On the right hand side of the portfolio, projects are positioned that take advan-
tage of future opportunities. These projects are usually based on the innovation
needs of the Strategy for Change and create a new status quo.
5.7 Maintenance of the Innovation Portfolio 85

The vertical axis represents the place of impact.

• On the top of the portfolio, projects are positioned, which generate customer
benefits in the market. The goal is to make the customer feel good. “Outside-In”
thinking characterizes these projects.
• At the bottom of the portfolio, projects are positioned, which generate effi-
ciency gains within the company. The goal is to make the company perform
well. “Inside-Out” thinking characterizes these projects.

The two axes form the four impact quadrants. Different approaches, methods and
competencies are necessary in each impact quadrant.

• Impact Quadrant 1: Innovation projects with short-term impact regarding

customer benefits. Typically, existing products and services are improved here.
Methods such as Human-Centred-Design, Design Thinking, Lean UX, Service
Design, Lean Startup, Customer Journey, etc. can be applied here.
• Impact Quadrant 2: Innovation projects with short-term impact regarding effi-
ciency gains. Typically, existing internal business and manufacturing processes
are optimized. Here, methods such as Six Sigma, Quality Management, Lean
Management, Kaizen, etc. can be applied.

Fig. 5.14 Impact quadrants. Customer benefits

© Huber, Kaufmann,
Steinmann 2024. All rights
reserved

1 3

Current 2 4 Future
Problems opportunities

Efficiency gain
86 5 The Application of the Innovation Strategy

• Impact Quadrant 3: Innovation projects with long-term impact on customer

benefits. Typically, new products and services are created here. Here, methods
such as Strategic Foresight, Future Thinking, Visioning, Lean Startup, etc. can
be applied.
• Impact Quadrant 4: Innovation projects with long-term impact on efficiency
gains. Typically, new business and manufacturing processes are designed here.
Here, methods such as War Gaming, Build Your Own Enemy, etc. can be
applied.

5.8 Conflicts and Blockades

Now we return to the main branch “communicate” (Fig. 5.15).

Even with the best intentions, the application of the innovation strategy never will
go smoothly. Innovation always involves potential for conflict. Those who know this,
remain more composed.
Even if we assume a constructively minded management, that only wants to exercise
its leadership claim to the usual extent and that is motivated by the long-term operational
capability of the company, its claims and values occasionally collide with everyday life.
Innovation efforts in companies are usually disturbed without malice, but out of igno-
rance or inattention. The following are a few known disruptive effects in the overview.
They basically can be divided into three categories: cultural incompatibility, incompat-
ible imprinting, and temporal incompatibility.

Fig. 5.15 Communicate. ©

Huber, Kaufmann, Steinmann communicate
2024. All rights reserved

apply

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5.8 Conflicts and Blockades 87

Cultural Incompatibility:

• An idea is personally rejected, due to lack of identification, even when the targeted
innovation would actually be attractive, but just not originated from oneself (the so-
called Not-Invented-Here Syndrome). “We have much better suggestions.”
• An idea has already been tried once and we failed with it. Perhaps there were even
several failed attempts. Therefore, one no longer believes in the idea. It is rejected as
a reflex, even if the conditions have changed in the meantime. “We have already seen
that this does not work.”
• The patience and understanding are lacking for the fact that innovation projects can-
not be arbitrarily accelerated, but often require time-consuming maturation processes
and iteration steps. “Why don’t you just double the number of employees on this pro-
ject?”
• Exaggerated expectations of the new. A short-term payback is expected, just like with
conventional business cases. However, innovations need time to become successful.
• And particularly dangerous: The project is a hope project that must not fail. It often
also serves as a projection surface for all sorts of things. “Our innovations must bring
us more profit next year.”
• A leadership climate with little tolerance for error. Risk-taking is generally not
rewarded and courageous behavior is not encouraged. “Who guarantees us that we
will be successful with it?”
• Lack of acceptance and appreciation of innovations themselves, i.e. lack of insight
into their benefits. This lack of acceptance is then formulated as follows: “You just
need our profits for your hobby.”

Incompatible Imprinting:

• The new idea is incomprehensible to the decision-makers. It is too novel and often
contradicts the common rules. It is too far away from what the decision-makers can
even imagine. “We don’t understand what you want to do.”
• The new idea seems foreign and unassessable to the decision-makers, as a different
business model is applied or new, unknown customer groups and demands are to be
served. “This is not our business at all.”
• An innovation that concerns the interest of the entire company, but is not necessar-
ily in line with the individual business area. This imprint from the division’s perspec-
tive is common and very delicate. The CEO or even the board of directors must take
responsibility and intervene here. They must protect the project. “If we invest these
funds in our (mature) business, we can guarantee that we can generate more sales.”
• Rejection because the project does not fit the established worldview. “This goes
against my grain. This is not our company.”
88 5 The Application of the Innovation Strategy

Temporal Incompatibility:

• The daily business takes priority. One is driven by the short-term agenda. Innova-
tion disrupts the daily business and its priorities (e.g., pushing sales). “We have more
important things to do now.”
• Time pressure. An important customer is applying pressure on his project; a customer
project with delay requires additional resources. Innovation is not considered urgent
in comparison. “We can do that later.”
• New things activate fears of the future. The idea may conflict with one’s own (possi-
bly already very mature) business. “Do we really want to initiate something like this?
Doesn’t this endanger our existing business?”

Challenges of this kind are best met with transparent communication. The better our
employees know these distorting effects, the higher the chance that such effects will be
recognized before they cause great damage. If there is a trustful error and criticism cul-
ture in the company, it should be possible to eliminate in time the difficulties mentioned.

5.9 Securing Success

Now we move on to the main branch “check” (Fig. 5.16).

In addition to correctly handling optimally selected innovation projects, it is important
to constantly check, whether we are really making progress. Securing success is indis-
pensable. This includes monitoring success, i.e. its measurement, and subsequently also
initiating appropriate corrective measures.

Fig. 5.16 Check. © Huber,

Kaufmann, Steinmann 2024. communicate
All rights reserved

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5.9 Securing Success 89

5.9.1 Observe and Monitor

As just said, it is necessary to monitor the application of the innovation strategy and
intervene when necessary. This is challenging, because we deal here with a continuous
development. For this, meaningful criteria for the measurement of success must be iden-
tified first. Moreover, as not everything is quantitatively measurable, it must be deter-
mined how qualitative assessments can be incorporated into the monitoring.
The impact assessment takes place at multiple points. Minor corrections can be
made immediately. Findings that are more significant are collected and set aside for
the next major update of the strategy. It is important to find a balance so that the com-
pany remains stable and on course. On the other hand, it is important to remain flexible
enough to always be capable of taking action. However, it is required to achieve this flex-
ibility without causing too much unrest and contradictions through constant detail cor-
rections.
Metrics for innovations are notoriously difficult to define. Well-known key figures
such as the number of new innovation projects or the revenue generated with innovations
younger than 4 years only indirectly reflect the company’s innovative power. At most,
one gets a rough indication of where the company stands. One should be wary of attrib-
uting too much importance to these quantitative measurements. Otherwise, there is a risk
of paralyzing the innovation process through an excessive burden of justification.
We would also like to point out that the innovation process is essentially qualitative in
nature. It matters less that we pursue many innovation projects, than that these are of the
highest possible quality. It has turned out, that instead of insisting on periodic (quantita-
tive) reporting, it is much better to organize review boards, at which (e.g., semi-annually)
the innovation efforts are discussed together. Such reviews aim to understand the pro-
gress of innovation efforts and provide guidance for further action in the sense of pro-
ject coaching. With this approach, the important qualitative aspects can be sufficiently
included. At the same time, we can review our assumptions and discuss these on a
broader base. The open and constructive atmosphere of such coaching reviews allows us
to discuss and understand the various aspects of an innovation project much better. For
management, this approach unfortunately is somewhat more strenuous because it has to
deal more intensively with the results and one cannot just reflexively skim over numbers.
When assessing the effectiveness of an innovation strategy, it is not only important
to identify any deviations, but it is much more important to identify their cause. It must
be distinguished, whether an undesirable effect is due to a weakness of the innovation
strategy, or whether a new development has occurred in the company environment, that
has changed the prerequisites for the project. Often, however, the exact cause cannot be
clearly identified. In this situation, it may be worthwhile to conduct experiments and thus
gradually feel one’s way forward.
90 5 The Application of the Innovation Strategy

5.9.2 Corrective Measures

We have now worked through possible deviations from the innovation strategy, and their
causes. In the next step, we now deal with the decisions of what measures should be
taken. Depending on the deviations found, different types of corrections may be neces-
sary:

• We can reinterpret the content of the innovation strategy for a specific project without
fundamentally changing its general basis.
• We can expand the content of the innovation strategy (e.g., formulate additional stra-
tegic Guiding Questions).
• We can reformulate or correct the content of the innovation strategy (e.g., changed
assumptions about market sizes and rates of change).

Depending on how urgent and how comprehensive the necessary adjustments are, a dif-
ferent approach is required. Small changes can be corrected immediately. Larger ones
should be deferred for the next strategy update (see Sects. 6.2 and 6.3). In the case of
massive changes, an update of the entire innovation strategy or even of the entire corpo-
rate strategy should be initiated (Sect. 6.4). And in any case, new insights found should
be communicated to the whole company (Sect. 5.4).
It is important to communicate larger changes clearly and to make their motivations
understandable. And in any case, the employees must always know what is valid and
what is not (yet).
However, not every detail needs to be communicated down to the employee level. It
is legitimate to keep certain complex, contradictory or immature insights initially within
the circle of innovation and strategy experts to avoid uncertainty and prevent unrest.

The Dual Role of the Innovation Manager

The innovation manager has a dual role regarding the innovation strategy:

1. He must ensure that he can answer all open questions relevant to him regarding
the application of the innovation strategy, i.e. to get instructions sufficiently pre-
cise to shape and promote innovation in the company. It is about identifying all
gaps and persistently asking for answers in the management team so that he can
fulfill his actual core task: To build and operate a suitable innovation system for
his company.
2. His second task is to take up and classify the strategic implications recognized
during the innovation process. This should allow him to provide feedback and
to be involved in the regular update process of the strategy. Moreover, this qual-
ifies him to feed newly found insights into the strategy work directly, i.e. not
5.10 Special Aspects in the Application 91

having to wait for the next update cycle. Ideally, he has formal access to the
strategy team.

Within the scope of these tasks, two activities are particularly noteworthy: In addi-
tion to maintaining the innovation portfolio, which should take up the majority of
the time, it is crucial to set up and start the Early Warning System, i.e., to actu-
ally provide the right strategic Guiding Questions from Field 5 of the Innovation
Framework.
The innovation manager is therefore responsible for contributions in both direc-
tions in Fig. 5.17, both the strategic control of innovation as well as the delivery
of insights and contributions to the innovation strategy. He thus has an important
key function in the application and updating of the innovation strategy. The often
underestimated role of the innovation manager therefore plays a key role with
regard to strategy. This shows that the innovation manager should be part of the
executive board. Only in this way can he fulfill his most critical roles: to be the
company’s conscience for the future and to be a bridge builder between the various
interests. At the very least, he must be close enough to the executive board to have
unrestricted access to the strategy managers and the relevant strategy documents.

5.10 Special Aspects in the Application

Now we return to the main branch “apply” (Fig. 5.18).

In this section, we want to gain additional insights regarding the individual situation
of the various companies. We will look at the 6 types companies introduced in Sect. 4.4,
with their different degrees of ambition. Additionally we look at the specific situation of
SMEs and start-ups.

strategic steering

Innovation Process
Innovation
strategy

new insights and contributions

Fig. 5.17 Interaction. © Huber, Kaufmann, Steinmann 2024. All rights reserved
92 5 The Application of the Innovation Strategy

Fig. 5.18 Applcation. ©

Huber, Kaufmann, Steinmann communicate
2024. All rights reserved

apply

check

save

5.10.1 Application Aspects Depending on the Different Initial

Situation of Companies

We gain more insights when we consider the application of our innovation strategy also
along the different initial situations of companies as described in Sect. 4.4. We present the
positions shown there again in Fig. 5.19. We had determined in Sect. 4.4 that the success
of companies differs depending on their ambition and the external pressure they perceive.
We describe below some of such peculiarities arising due to their different situations.
As already mentioned, each of these 6 characteristic groups has its own challenges in
applying their innovation strategy. Thus, a company will want to develop to a new posi-
tion, which, depending on the pressure to innovate, is further or less far away from its
current position.

The Fit
These are the ambitious performers who are already successful today and who therefore
want to make additional efforts to maintain the lead over competitors or even to expand
it. Even if they have done without an explicit strategy so far, they have obviously done
often the right thing.
To ensure that they can continue to shape their future autonomously, the responsibility
for their future design should not depend solely on the energy of their management team,
but should be placed on as many shoulders as possible. For this reason, during the imple-
mentation phase of the strategy, communication and the cultivation of skills and compe-
tencies within the company are of great importance. For the Fit particularly, it is tempting
to stay and rest in their position, instead of maintaining the pressure and the forward drive.

The Skimmers
The group of Skimmers is strong in the implementation of their business. Skimmers are
especially strong in optimizing their position. They are well aware of their strengths.
These are good prerequisites for strong innovation performance.
5.10 Special Aspects in the Application 93

Design ambition

5 1
high

Surprised Fit

6 3
moderate
Average
(profile-less)
2
Opportunists
(scroungers)
4
Skimmer
low Relaxed
(lethargic)
Corporate
perfomance
weak strong
medium
(crisis) (market leader)

Fig. 5.19 Design ambition. © Huber, Kaufmann, Steinmann 2024. All rights reserved

Skimmers therefore are in a position to get insight in the strength of their entire eco-
system that surrounds their company and to emphasize this strength in the market. This
however requires that they do not only focus on themselves, but also interact intensively
with their immediate business environment. If they choose their position cleverly, they
can play out considerable negotiation power in the ecosystem avoiding new dependen-
cies. By integrating the surrounding ecosystem into their strategy considerations, great
opportunities open up for skimmers.

The Average
The Average often are trapped in constraints, which are not easy to break. Nonetheless,
they need to explore their possibilities for shaping their future. Often they have found an
attractive niche in the market and have been content with that, perhaps a bit premature…
In such a case, it would be worth trying to get out of this middle zone and develop a
clearer profile.
The key lies in a sharpened vision and the key question of what defines us as a com-
pany and why we should exist or what the world would lose if we were to close our
company. Through such a sharpened vision, new energy is created in the company. This
creates a stronger impact, due to a better focus. However, this requires that the company
really wants this development and does not settle for simply muddling along in its com-
fortable and little exposed corner.
94 5 The Application of the Innovation Strategy

The Relaxed
Companies of the Relaxed type have maneuvered so far quite successfully. They have
arranged ad hoc with any challenges that came along. Perhaps too, they were somehow
not ambitious enough or they, due to success, became a bit fat and lazy over time.
For the Relaxed, it is important that they become aware that their current position has
benefited from favorable tailwind. Their own contribution to success is rather limited, but
their pronounced ability to seize good opportunities has helped.
Therefore, in this case, the innovation should not be limited to the strict viewpoint of
the company. It is essential to continue to invest in the network in such a way that it con-
tinues to support us in the future. We cannot take full order books just for granted.
Because it is notoriously hard for a company to shake off its image, the question
arises here as well: Do we want to continue to make ourselves comfortable in our niche
or do we have the ambition to set off for new shores?

The Surprised
For the Surprised, time pressure dominates. It’s urgent! Companies in this situation must
proceed in two stages: In a first step, it is necessary to stabilize the company first. How-
ever, one must not lose sight of the second step, to exploit strategic potentials. We are
dealing here with the classic situation of turnaround and re-positioning.
In the short term, the Surprised are driven by adverse circumstances. This calls for
decisive action under time pressure. In this situation, management must realize faster
than in other cases whether an innovation strategy works. This means, start immediately
and become operational as quickly as possible. Adapt later, if necessary.
Once the immediate danger is averted, the company can begin to reorganize with a
somewhat longer-term future in view. However, since different business areas can have
different commercial potential, this may imply that certain businesses have to be spun
off. This can be in particular a way to give the company more freedom of action and bet-
ter possibilities move towards new businesses.
It should be noted at this point that turnarounds usually require that new capital be
injected into the company. However, new capital can only be found, if one can show the
investors a viable perspective for the future. This means that even in the case of a turna-
round, an innovation strategy is needed and it is not enough to solve the acute problems.
It may also happen that it is not just a single company that falls into a crisis, but an
entire industry. For the companies affected, this situation offers the chance to play an
active role in the upcoming market consolidation. If one can position oneself as a pioneer
who sets the pace, it is possible to put potential competitors under pressure or even buy
them out cheaply.
A strategy crisis therefore primarily means a return to the values that characterize the
company and that have justified its existence. Based on this, a company vision can be
built that can successfully lead the company into the future.
5.10 Special Aspects in the Application 95

The Opportunists
The Opportunists are flexible in principle, which of course in general is an advantage.
Opportunists behave reactively and are therefore strongly determined by external factors.
But their classic “omnivore” role sets clear limits with regard to a well structured inno-
vation portfolio. However, thanks to an innovation strategy, opportunists can achieve a
clearer line in their business conduct. It may be, that opportunism is still prevailing, but
in this way, ad hoc “omnivore” opportunism gets less dominant. The company therefore
becomes less dependent from their environment.

The consideration of the six groups of companies described here with their different
starting positions shows once more that such positions are only valid for a certain point
in time and that they can be changed. Although companies are imprinted strongly by
their history, it is their leadership and culture that determine in the end which develop-
ments are possible.

5.10.2 Application in SMEs

SMEs have different prerequisites than large companies. Primarily, they have fewer
resources, but on the other hand, they have the advantage of significantly shorter commu-
nication and decision-making paths. As far as the innovation strategy is concerned, the
basic requirements do not differ from other (larger) companies.
Chapter 11 delves into the situation of SMEs. In addition to that, we only consider
here the implementation-related aspects of applying the innovation strategy.
How can an SME, despite its limited possibilities, still successfully (i.e. budget-
friendly) apply an innovation strategy? Although SMEs do not have the possibility to
hire many additional employees, it is still important for them to at least fill the role of
the innovation manager and to ideally provide him with a few helpers. Such functions are
often implemented in SMEs as part-time roles. If this is the case, it is important to ensure
that the employees entrusted with the new innovation tasks not only receive the additional
task, but are also relieved of their previous core task adequately. This should be done in a
formally binding way, e.g. by allocation appropriate job percentages in their job descrip-
tion. To ensure that the innovation tasks are not displaced by day-to-day business, it is also
important to make sure that the job percentages allocated to innovation activities are pro-
tected and that the employee can demand this protection if necessary (escalation option).
It is important to understand that it is not just about avoiding double time burden,
but that, due to their need for a different way of thinking, innovation activities cannot
be done as a side job. Innovation topics require that you can work on them undisturbed
for a longer period of time. The transition from day-to-day business to innovation topics
and back is not easy and such a changeover takes time. Innovation work should therefore
always be clearly separated from day-to-day business. The systematic creation of time
islands, in which you are undisturbed to take care of the innovation tasks, is therefore a
96 5 The Application of the Innovation Strategy

crucial success factor. This separation also applies to the required meetings. It is recom-
mended to not deal with innovation topics and day-to-day business topics at the same
meeting, but to schedule separate meetings for this.

5.10.3 Application in Scale-Ups

Once a start-up has found a commercially viable business model, it becomes a scale-up
company. Such newly emerged scale-up companies have specific challenges to master.
Scale-up companies are strongly driven by their vision, which gives them a lot of energy
and focus. Day-to-day business is still new for a scale-up company and operational activ-
ities are often perceived as unpleasant compulsory exercises. As a result, their perfor-
mance and reliability suffer (at least in the perception of business partners). Chapter 12
delves into the situation of start-ups and scale-ups.
A scale-up company usually has neither an explicitly formulated corporate strategy
nor an innovation strategy yet. Often the management team believes that it has inter-
nalized the vision so strongly that it can implement it directly. This results in the some
peculiarities for scale-up companies regarding the innovation strategy:

• It is the first time for the scale-up company to engage in strategic work.
• In a scale-up, a strategy is always forward-looking.
• The important mutual synchronization in strategic work usually works well in scale-
ups due to the small team.
• The management team of a scale-up often does not see the benefit of a strategy. They
are driven by the idea of wanting to implement their vision quickly.

It is precisely for the last reason that it would be valuable to take breaks sometimes dur-
ing the scale-up’s development to reflect on its own progress. Scale-ups typically operate
in a niche market and, as deep insiders and pioneers, they run the risk of overestimat-
ing individual market signals. They typically feel the competition breathing down their
neck and believe that their competitors are advanced already when they just make a first
announcement of something new. But often, their aim is merely to stir up expectations
among potential customers and maintain their image. The newly announced product
is often not developed yet and often not even really thought through. There are sev-
eral examples of start-ups and scale-ups that, despite of the best starting position, have
chased themselves to death in a kind of competitive panic.
It is in the nature of things that course corrections for scale-up companies are always
necessary. To not lose track here, an explicit strategy provides valuable services. Its
added value often does not lie in the paper per se, but in the knowledge gained during the
process of systematically carrying out strategy development.
5.11 Conclusion 97

A coherent strategy is also helpful towards customers, investors, or employees to be

recruited. It allows for a systematic structuring and development of storytelling and thus
enables consistent communication.
Depending on the type of scale-up, the application of its (innovation) strategy varies.
We distinguish below between a founder-driven scale-up and one that is active in a cor-
porate environment.
The founder-driven scale-up has many freedoms, but it must be careful not to lose
focus and its vision. The ability to make quick decisions is its great advantage, which it
should exploit. Resources will rarely allow multiple approaches to be pursued in paral-
lel. This limitation is offset by the ability to quickly correct direction. A critical point
is reached when for service delivery partnerships with other market players are agreed.
This thereby closes off certain alternatives.
The scale-up operating in a corporate environment (typically a new business unit)
is under greater pressure than a founder-driven scale-up, due to expectations from the
corporation. On the other hand, it has a more robust network in terms of infrastructure
and distribution support. It can scale much faster due to the financial strength of the
corporation, but it is confronted with greater incompatibilities with regard to corporate
culture between the scale-up and the corporation. This can sometimes lead to mutual
misunderstandings. Such misunderstandings can seriously endanger the existence of the
new business unit. It may also happen that a conflict arises between the interests of the
scale-up and those of the corporation. Such conflicts can be life threatening. Such inter-
ferences with the (innovation) strategy of the corporation can only be resolved, if the
management of the scale-up and the board of directors of the corporation already have a
high degree of maturity in innovation capabilities.

5.11 Conclusion

This chapter highlighted the essential aspects concerning the application of the innova-
tion strategy in the company. The overarching goal is to ensure the company’s future
viability through innovation. This is achieved by using the innovation strategy to secure
and control performance in the innovation process and for the advancement of the inno-
vation capability in the innovation system. To achieve the desired effect of the innovation
strategy, extensive communicative measures are required. Only if the employees have
well understood the innovation strategy, can they apply it and act in accordance with the
strategy in the daily business.
The success of the application of the innovation strategy should be checked regularly
in order to initiate corrective measures if necessary. Not only deviations should be identi-
fied, but the causes should also be well analyzed and understood.
The innovation manager plays a key role in the application of the innovation strategy.
He orchestrates and coordinates its application and ensures the feedback of the knowl-
edge gained in its application into the further development of the strategy.
98 5 The Application of the Innovation Strategy

From the practitioner’s point of view, the following success factors are crucial for
applying an innovation strategy:

• A strong vision that stands above everything and acts as a bracket for sometimes
diverging individual interests.
• Committed and well understandable communication.
• Clear and coherent leadership, which is familiar with the challenges of innovation
activities.
• An open learning culture, which understands mistakes as learning opportunities.
• Clear strategic guidelines, i.e. a well-executed strategy work that has been carried out
beforehand. This creates the necessary clarity and brings calmness to the implementa-
tion work, without affecting the flexibility required.
• In parallel to the application of the innovation strategy, retain the newly learned things
and share them in the company to advance the employees and the organization as a
whole.
• Continuously gather new insights and inputs for further strategic work.

References

Chesbrough H (2003) Open Innovation. Harvard Business School Press, 2003 Boston, USA
Huber D, Kaufmann H, Steinmann M (2017) Bridging the Innovation Gap—Blueprint for the
Innovative Enterprise. Springer Verlag, Berlin, Heidelberg, (translation, original 2014 in
German)
Updating the Innovation Strategy
6

Abstract

After the innovation strategy has been applied in its initial version and has unfolded
its effect in the company, the world of course continues to turn. The assumptions
on which the innovation strategy was based will change and market forces do shift.
This happens to some extent slowly and gradually, but sometimes the environment
also changes abruptly. For these reasons, it will be necessary to update the innovation
strategy over and over again.

After the development of the innovation strategy in Chap. 4 and its application in
Chap. 5, we now look at the aspects of updating the strategy in Chap. 6 (Fig. 6.1).

6.1 General Aspects of the Update Mechanism

The basics of the strategy need to be updated periodically, as the business environment
continues to change after the completion of the strategy. Updates may also get neces-
sary, not only due to changes in the company environment, but also due to changes in

Fig. 6.1 Chapter Update. © Chapter 4 Chapter 5 Chapter 6

Huber, Kaufmann, Steinmann Development Application Update
2024. All rights reserved

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer- 99
Verlag GmbH, DE, part of Springer Nature 2024
D. Huber et al., Innovation Strategy, https://doi.org/10.1007/978-3-662-69832-7_6
100 6 Updating the Innovation Strategy

the company’s direction. Fortunately, an update is generally less complex than the initial
strategy development, as many of the basic considerations remain the unchanged. There-
fore, we describe in this only chapter what differs from Chap. 4, i.e. only the peculi-
arities that arise when updating. Therefore, for the strategy update, it is recommended
to understand Chap. 6 as a supplement to Chap. 4 and to consider both at the same time.
The statement that the update is less laborious than the initial development of the
strategy, however, needs to be somewhat relativized. While the structure can largely be
adopted from the existing version, the points to be updated must be reworked and this
can, depending on the case, be even more laborious than at the initial development of
the strategy. Many statements must be formulated with greater precision and some previ-
ously deferred questions need to be finally assessed comprehensively. It often turns out
that in the past too many options were left open, which need to be clarified now.
Such a sharpened orientation is usually only possible after the experience with the
application over one to three years. At the same time, however, there is the danger that
the material already existing is uncritically just adopted as is. Updating therefore always
means a scrupulous and critical review of what is still valid from the existing material.
Strategy updates are often postponed, even though the insight that an update is neces-
sary is indeed clear. Most of the time, the operational day-to-day business takes prec-
edence. Precisely because the innovation strategy is a long-term issue and because it
eludes our attention due to its creeping development, it is important to install so-called
pacemakers. These can be implemented in the form of mandated employees who bring
up the topic at regular intervals or by simply fixing dates in the calendar. However, such
subjective or mechanistic handling runs the risk that the topic of innovation strategy is
not addressed at the right time and not with the required depth and seriousness, which
can effectively impair the strategy’s quality.
Figure 6.2 shows that changes in the corporate environment or in the company itself
have various effects. A single abrupt event can force us to act immediately. A series of
visible, but individually less significant events can in sum lead to the initiation of the
update process. This can also be caused by creeping changes once they have reached a
critical point.
In addition to these external factors, it is conceivable that the preferences from the
company’s point of view also change without changes in the environment and that a
course correction triggered by this requires an update of the innovation strategy. The
effects arise on three levels: seeing, understanding and acting.
It becomes clear, that the application (Chap. 5) and the update (Chap. 6) of the inno-
vation strategy mutually influence each other. For example, insights gained from the
application of the innovation strategy can influence further application, and at the same
time be noted for the next strategy cycle.
It is not only this mutual influence that makes things difficult. Tricky is also the fact
that the update of the innovation strategy takes place (must take place), while the com-
pany is still working according to the old, approved innovation strategy. People who are
6.1 General Aspects of the Update Mechanism 101

change change
in the corporate environment in the company

abrupt series of abrupt gradual course

individual event individual events cumulative change changes

trigger

See: recognize change

Effects Understand : recognizing the need for action

Act : trigger adjustments

Fig. 6.2 Triggers and effects. © Huber, Kaufmann, Steinmann 2024. All rights reserved

involved in the update process, therefore, must ensure that they do not mix up the two
worlds of thought. It is important to ensure that, towards the employees involved in the
implementation of the approved innovation strategy, you always express yourself clearly
in terms of the approved (old) strategy.
In the application of the strategy, three elements come together. On the one hand, stra-
tegic action must be taken in everyday business. On the other hand, the renewal process
of the strategy must always be considered simultaneously. In parallel, a learning process
is taking place in the organization, which is fed from the innovation strategy, concerning
the new insights associated with it. Figure 6.3 shows the update process, which runs par-
allel to the application of the previously approved innovation strategy.
In addition to the periodic overhaul, the update requires a constant classification of
new insights gained, either from the application itself, or else from the developments in
the market and environment. Therefore, we need constantly to collect, evaluate, and pro-
cess new information. Those continuously gained insights are used in parts immediately
to update the strategic foundations or alternatively they are for the time being put aside
and stored. During the update of the innovation strategy, material available in the ware-
house is then assessed, put into the overall context and processed.
102 6 Updating the Innovation Strategy

apply apply apply

strategy V1 V2

approve
strategy approved approved

create develop update

strategy

collect
raw Warehouse
material

Fig. 6.3 Update in the procedural model. © Huber, Kaufmann, Steinmann 2024. All rights
reserved

Although this chapter only deals with the update of the innovation strategy, the clas-
sic Strategy for Exploitation is also subject to an update process. The update process
described here can therefore be used analogously as well for the update of the Strategy
for Exploitation.
Since there are different types of triggering events, the possible updates vary greatly
in their characteristics. It is a constant interplay: The business environment changes, but
the company itself also changes! New opportunities arise and previous preferences lose
their importance. As long as the external pressure to adapt does not get too great, we
experience our ability to act as intact and we can cope well with such changes. A perma-
nent strategic dialogue and especially an effective Early Warning System are crucial for
this.
These multifaceted factors, however, limit the predictability of the update. Therefore,
it is important to always stay vigilant and to note for safety a fixed time interval in the
calendar for the complete update of the innovation strategy. This precaution ensures that
the innovation strategy is reviewed periodically in depth and that one does not inadvert-
ently slide into a situation of outdated strategic foundations.
How often should an innovation strategy be revised? In practice, it has proven use-
ful to review the strategy in depth every 9–15 months. However, these values can vary
greatly depending on the context, market maturity, and one’s own role within the value
chain.
The update is intended to adapt the initially created innovation strategy to the newly
recognized changes. This renews and strengthens the strategic foundation of the com-
pany and thus makes it more resilient. To get the maximum benefit from the update
6.2 The Process of Updating 103

process, it is worth to make sure that the innovation strategy is not just complemented
through additions, because by just acting this way, the innovation strategy may even
get contradictory. On the contrary, the strategy update can be used to reduce ambiguity,
sharpen focus, and set new focal points and accents. Therefore, when starting the work
on the update of the innovation strategy, you may aim to actually shorten it.

6.2 The Process of Updating

The process of updating is best described in three phases. Figure 6.4 shows the update
process from an initial version 1 (V1) to a subsequent version 2 (V2).
Phase 1, Seeing: Phase 1 is a continuous process that runs parallel to the application
of the strategy and that continuously collects material. Thus, the focus is on seeing and
collecting. With a critical view on market and environmental developments as well as on
the company’s own performance, it should be made sure that nothing is missed. The aim
is to identify, collect, and subsequently categorize and structure relevant information.
Based on such accumulated individual insights or a significant single event, it becomes
clear that an update gets necessary. This marks the transition to Phase 2.
In Phase 2, Understanding, we start to process the available information, contex-
tualize it, and relate it to each other. In addition, the information must be validated and
interpreted. Phase 2 revolves around understanding and recognizing the need for action
(while Phase 1 focused on recognizing the change itself). At this point, an explicit deci-
sion must be made to start the update work on the innovation strategy. All previous work
was preparatory and cannot be considered as being part of the actual update yet.
It may happen that management is not yet ready to initiate the update cycle. In this
case, the observation and monitoring activities continue in the background until the criti-

V1 V2
apply apply

approved

Phase 1 Phase 2 Phase 3

recognize, contextualize, integrate,

collect, weight, consolidate,
structure recombine complete

Fig. 6.4 The update process. © Huber, Kaufmann, Steinmann 2024. All rights reserved
104 6 Updating the Innovation Strategy

cal level of pressure for change is reached and the update is officially triggered. This then
leads us to Phase 3.
The commissioning for the update marks the start of Phase 3, Acting. This phase, fol-
lowing the phases Seeing and Understanding, now focuses on acting. It aims develop an
updated innovation strategy for the next application period.
In this Phase 3, activities still take place, which deal with the strategic material in
depth. Found elements are still evaluated and prioritized. This updates the starting point
for the work on the new innovation strategy. Therefore, Phase 3 is not only executive
but exploratory as well. The results elaborated, must then be discussed, challenged and
tested in a small circle and get stabilized this way.
In parallel, the Innovation Strategy Version 2.0 document is created. The suggestions
from Chap. 4 for its elaboration also apply here. After approval and release, the publica-
tion and distribution in the company take place as described in Sect. 5.4.
Various roles are involved in this update process, all working towards the common
goal:

• The Pace Maker: He ensures that the update process starts and runs end-to-end and
does not stall. The strategy manager or the innovation manager usually act as the
pacemaker.
• The Reporter: He reports relevant observations and events. All employees are
encouraged to act as reporters.
• The Interpreter: Interpreters typically are innovators and strategists who interpret
the available data in a small team.
• The Applicant: This role is typically taken by the Head of Innovation or the Head
of Strategy (or both together). The applicant formulates the formal application to the
executive board.
• The Editor: He edits the strategy document. He is an employee from the strategy or
innovation group and is commissioned by the strategy group.

Although the process of strategy updating is described here, there is a connection to the
further development and improvement of the innovation system. These activities take
place in parallel and the two influence each other. If the innovation strategy is developed
further, the tools for the innovation activities must keep pace. If this mutual consistency
is not maintained proactively, or if it even is prevented, a company misses great oppor-
tunities regarding its future viability. Figure 6.5 shows the interaction between the gain
in knowledge in the innovation process and the further development of the innovation
system.
We consider the three phases of the update described above in detail, one by one, in
the next Sects. 6.3, 6.4 and 6.5.
6.3 Phase 1: Preparing the Update 105

Fig. 6.5 Interaction. © Huber,

Kaufmann, Steinmann 2024.
All rights reserved Innovation Process Innovation System

6.3 Phase 1: Preparing the Update

Even during the application of the innovation strategy, material for its maintenance and
update is collected continuously. This means that we are dealing here with a parallel pro-
cess: While the old innovation strategy is still running, a small team is already active
with preparation work for the new version of the innovation strategy.
This dual-track approach is necessary, but it also contains certain dangers and can
lead to confusion. As a consequence the latest findings of this continuous collection work
should not be directly reported for operational use. It implies also that, on the one hand,
the circle of those knowledgeable should be kept small and that on the other hand, within
this circle, care should be taken that in discussions it is always clear whether the old
strategy or the strategy being updated is discussed.
Usually in this early first phase, the collection of information is ongoing anyway, but
it is not systematically evaluated yet and missing parts are not systematically supple-
mented. One is mainly under the impression of the experience from the daily application
of the current innovation strategy.
For a systematic collection of all strategy-relevant market signals and insights, it is
recommended to create a data warehouse. This should make it easier to find the infor-
mation when using it later on in the update process. For this, the material in the ware-
house must be well structured. In addition, with a suitable design of the warehouse, it
can be accomplished that we also get hints about what information is still missing.

6.3.1 A Dynamic Warehouse for Strategic Components

For the maintenance and the updating of the innovation strategy, a data warehouse that
holds the existing and continuously incoming new information in a suitable form is
indispensable. This warehouse should not only be a collection medium, but should also
have certain dynamic elements. These can be alarm functions (so that “forgotten” ele-
ments can make themselves noticeable after a certain time) or also automated links. The
warehouse ideally is realized from the very beginning. This way, it can be filled with the
insights already during the development and application of the innovation strategy. How-
ever, as soon as the update work begins, the warehouse definitely becomes indispensable.
106 6 Updating the Innovation Strategy

A description of this warehouse in all its details would go beyond the scope of this
book. Therefore, we discuss here only those functions and properties, which are of par-
ticular importance for updating the innovation strategy. A small overview of additional
benefits of an expanded warehouse can be found in the box “Further applications of the
warehouse”.
Figure 6.6 shows on the one hand the information flows that fill the warehouse (the
inputs) and on the other hand the activities that use it in the case of updating the innova-
tion strategy (the outputs).
In the warehouse, objects are stored in three granularities. Examples include:

• Individual data: Numbers and assumptions about customers and markets

• Groups: Whole blocks of information, such as business models or performance ele-
ments
• Integral overall pictures: For example, future scenarios or other objects showing com-
plex relationships

Overall pictures and groups can in turn be broken down into individual objects. This can
be useful if individual parts are to be used as building blocks in other (possibly multiple)
contexts, i.e. outside their original context. This mechanism of dividing and reusing cor-
responds to the approach we know from the exploration process.
However, not all stored objects behave the same over time. This fact must be taken
into account by different storage areas. We distinguish three ways in which objects can
change over time:

apply apply apply

strategy V1 V2

approve
strategy approved approved

create develop To update

strategy
renounced elements renounced
elements findings from elements findings
storage
collect
raw Warehouse
material

Fig. 6.6 Warehouse. © Huber, Kaufmann, Steinmann 2024. All rights reserved
6.3 Phase 1: Preparing the Update 107

• Neutral unchanged: When extracted from the warehouse, the statements are still cur-
rent and valid and the solution approaches are still applicable. This type of data is
therefore just as good when retrieved as it were at the time of storage. The quality of
the storage is therefore comparable to a parking lot or a safe.
• Improvement: Ideas and solution approaches can mature by themselves without hav-
ing been worked on actively. When data of this type are retrieved, they are of bet-
ter quality than at the time of storage. The quality of the storage is comparable to a
cheese cellar or wine cellar. When taken out after a certain time, an object has usually
not really changed a lot. But because the context or our experience has changed in the
meantime, the same object has in this changed environment a higher value. Projects
that have seemed uninteresting or unattractive months ago suddenly appear desirable
in the new light. This effect would colloquially be described as “We were ahead of
our time”. The decisive factor here is that a preliminary result was not prematurely
disposed of, but was retained intuitively without a clear intention yet. In a new envi-
ronment, it now represents an attractive option. In this respect, the metaphor of the
wine, which brings more joy after patient waiting than with immediate consumption,
is very apt.
• Deterioration: Values become outdated or worthless when the window of opportunity
has passed. When such data are retrieved, they are of lower quality than at the time of
storage. The quality of the storage in this case is equivalent to a garbage dump.

Even in the process of strategy updating, information can therefore be upon retrieval in
the same, in better or in worse condition, as shown in Fig. 6.7.

improved

Warehouse neutral, unchanged

worsened

Fig. 6.7 Objects from the warehouse. © Huber, Kaufmann, Steinmann 2024. All rights reserved
108 6 Updating the Innovation Strategy

Further Applications of the Warehouse

In addition to the creation and updating of the strategy, the warehouse can provide
great benefit in the context of other innovation-related activities, particularly in the
following areas:

• Innovation process: Exploration of solution approaches, customer needs, busi-

ness models
• Innovation process: Early warning system
• Innovation process: Creativity, ideation
• Marketing/Sales: Competitor analysis
• Development: Technology radar
• Management: Trends
• Corporate Foresight: Scenarios

In a later expansion stage, the data stock can be linked with further functionali-
ties to create even more benefit. It is conceivable to automate the largely manual
processing and research. In a first step, additional knowledge can be generated
applying pattern recognition. At a later stage, the use of artificial intelligence is
conceivable. The current state of technology however is not yet sufficient for sub-
stantial support of human information seekers due to the highly creative and con-
text-overlapping tasks expected in most cases in this context. But we expect in the
coming years massive progress in this regard.

6.3.2 Recognizing Deviations in Development

We have seen in Sect. 5.9 already that impact and deviations in the application of the strat-
egy need to be monitored. Small corrections can be made immediately. Certain insights
should not be lost, although they are not urgent. Insights of this kind can be stored in the
warehouse as described earlier. They are thus available again when updating the strategy.
In addition to this first source, it is worth installing a monitoring system, which has the
sole purpose of improving the basis for revising the innovation strategy and which allows
in particular to create a good base for decision-making. We need to determine, which topics
on one hand are important enough to be monitored actively, and for which we thus should
strive to stay as up to date as possible, and which topics on the other hand are only of a
rather subordinate importance and for which it is sufficient to monitor them just passively.
The easiest way to implement monitoring is to assign certain topics to individual
employees, who then act as topic observers and do report as soon as they have found new
and relevant information. Doing so, offers the possibility to accelerate the company’s
reaction speed significantly through so-called reserved decisions. Reserved decisions
define how to proceed in a certain case. This preparation, common in the military envi-
6.3 Phase 1: Preparing the Update 109

ronment, helps on the one hand to think about possible developments and on the other
hand to avoid making bad decisions under pressure due to overload.
Recognizing deviations is one thing. Prioritizing based on the expected impact is
another. For prioritization, it is worth distinguishing between a change in assumptions
and a change in principles:

• Changes in the assumptions occur often and are normal. Either they can be corrected
relatively easily, or the deviation can simply be acknowledged and left as it is. This
category also includes additional new strategic Guiding Questions that do not put into
question the direction taken.
• Changes in the prevailing principles (e.g. market mechanics, role distribution, prereq-
uisites or values) on the other hand are more difficult to handle. They have a deeper
effect. They can potentially make an existing innovation strategy impossible. They
thus often make a fundamental change of direction inevitable.

This distinction between changed assumptions and changed principles helps in the chal-
lenging balancing act between stabilizing the course (and thus bringing calm) and a
change of direction required by the circumstances (which creates unrest).
The position and the ambition of the company also play a role in recognizing devia-
tions. According to our typology, the “Fit” need to consider a slightly wider observation
space: It is not only the question of whether a certain effect influences their own innova-
tion strategy, but possibly also the strategy of their suppliers or customers. It may be that
these are affected even more strongly by a certain event (societal or industry-specific)
than the fit company itself! And although the fit company is not affected strongly by a
certain event, it may be hurt indirectly. For this reason, one should be careful not to dis-
miss aspects prematurely that seem at first glance of only little relevance!

6.3.3 Collecting and Preparing for the Next Regular Strategy Review

The collection and preparation of information is not an end in itself. We do this, to use
the new information and the new insights found for our innovation strategy. The informa-
tion therefore must be condensed to its essence. The warehouse must be maintained reg-
ularly and the stored elements must be evaluated and sorted. In order for this to be done
efficiently, it is important to do this preparation and clean-up step before deciding what
remains in the warehouse and what becomes part of the current strategy update.
Doing so, can also smooth any imbalances (e.g. dampening down loud voices or ampli-
fying silent sufferers). That allows neglected developments to get more attention. The fol-
lowing sources of information are central to the preparation of the concrete update work:

• The basic version of the innovation strategy V1 and any specific updates already car-
ried out. This also includes the associated considerations and justifications for the
110 6 Updating the Innovation Strategy

decisions that explain why a certain path has been chosen. Ideally, these considera-
tions are available as an entry in the warehouse. However, they usually have to be
determined retrospectively through interviews.
• Options considered but then discarded later on in the development of the existing
innovation strategy V1. Such options, which have been waived at the time, should ide-
ally also be documented in the warehouse. Here, the reasons for the rejection at the
time are of particular interest.
• Concepts and options that have not been explored in depth during the development
of the existing innovation strategy V1 for reasons of time or other reasons. Such con-
cepts and options should be reviewed and reassessed when elaborating the next ver-
sion (V2).
• Experiences from the application of the existing innovation strategy V1, i.e., feedback
on ambiguities, an identified need for stabilization or the cleaning up of ad hoc deci-
sions made.
• Insights gained from learning loops. Such newly gained insights should be available
in the warehouse.
• Moreover, it is recommended to browse the warehouse for other interesting things.

Doing that, should allow to establish an inventory of relevant facts including e.g. mar-
ket observations, updated assessments of the future and internal experiences and motiva-
tions.
Occasionally, there may be more than one attractive future option and it is not pos-
sible to prefer one over the other yet. In such a case, it may sometimes be appropriate to
allow two parallel development paths for a limited time period. At such moments, it is
important to clarify that one still does not know enough yet to be able to decide. How-
ever, it is also necessary in such cases to communicate clearly for how long the dual
track applies. Such seemingly competing projects must be transparently positioned as
equivalent; otherwise, the motivation of the employees involved suffers.
At the end of this process of collecting and preparing, there should be enough relevant
material ready to justify an update of the strategy. This then is the precondition to start
the actual development of the update.

6.4 Phase 2: Four Typical Cases of Updates

We have now reached Phase 2, Understanding, and want to gain certainty about whether
the update of the strategy is necessary now or whether it should still be postponed. Here,
it is now the question of understanding the urgency of our need for action.
At this point, the situation for the company can look different in various ways, both
in terms of urgency and scope of the update, but also in terms of the appropriate weight-
ing of the six fields of the Innovation Framework. Below, we describe the four typical
6.4 Phase 2: Four Typical Cases of Updates 111

cases of an update, which occur most frequently, and we look at their characteristics and
requirements:

• Case 1: A scheduled revision of the innovation strategy to version 2.0, i.e., the com-
prehensive update from version 1.0 to 2.0 (i.e. the normal case)
• Case 2: An event requires an immediate revision with a strong need for change, i.e.,
an urgent, but still largely comprehensive update (i.e. an emergency)
• Case 3: Accumulated minor events require only a small, but immediate revision, i.e.,
an urgent, but only punctual update (i.e. a minor emergency)
• Case 4: Proactive trial balloons for an alternative strategy, i.e., the case of a perma-
nently updated innovation strategy (i.e. a special case).

Figure 6.8 visualizes the four cases with the Innovation Framework.
We will now describe these four cases in detail.

6.4.1 Case 1: Revision of the Innovation Strategy to Version 2.0

(Normal Case)

Like any strategy, the innovation strategy should also be periodically updated and
revised. Due to the inherent uncertainties in innovation activities, innovation strategies
require a slightly different approach than classic strategies. Here we describe the normal
case, in which the existing innovation strategy version 1.0 is developed into version 2.0.
Figure 6.9 illustrates this process one more time.

Case 1 Case 2 Case 3 Case 4

normal case emergency minor emergency trial balloons

1 1 1 2 1 2
2 2

3 3 3 3

4 4 4 4

5 6 5 6 5 6 5 6

Fig. 6.8 Four cases of updates. © Huber, Kaufmann, Steinmann 2024. All rights reserved
112 6 Updating the Innovation Strategy

apply apply apply

strategy V1 V2

approve
strategy approved approved

create develop update

strategy

collect
raw Warehouse
material

Fig. 6.9 Normal case in the procedural model. © Huber, Kaufmann, Steinmann 2024. All rights
reserved

Classic (corporate) strategies are typically updated in a way, in which only a limited
number of sub-areas are redefined, while the majority of the strategy usually changes lit-
tle. This is no different with an innovation strategy. This is necessary for the company to
maintain the required long-term stability. In particular, the underlying values and vision
should show some continuity. The interpretation and implementation of values and
vision, however, may well adapt to the current situation and market changes.
It is important to understand that all six fields of the Innovation Framework influence
each other (Fig. 6.10).
Therefore, it is not simply a matter of working through the Innovation Framework
field by field, but we always need to keep an eye on the overall picture. Depending on
the identified weaknesses of the existing innovation strategy, the order of processing,
and the attention that a particular field deserves, varies. The differences that arise due to
the positioning and ambition of the company must also be taken into account (see box
in Sect. 4.4). For the Fit, the focus is clearly on maintaining the lead, a very proactive
approach. For the Opportunists, however, the reaction of their environment plays a larger
role and especially the competition has a dominant influence. Opportunists therefore will
behave significantly more reactively.
Otherwise, the same quality criteria and procedures apply as for the initial creation of
the strategy, as described in Chap. 4. Even when updating, it is recommended to discuss
the interim results long enough to let them mature.
In conclusion, to get implemented, the updated strategy must be approved and for-
mally put into effect (see Sect. 4.13). This step is important, so that everyone is clear that
from now on the old innovation strategy is no longer in force.
6.4 Phase 2: Four Typical Cases of Updates 113

Fig. 6.10 Dependencies in

1 2
the Innovation Framework. ©
Huber, Kaufmann, Steinmann PRESENT FUTURE
2024. All rights reserved

GAP

NEED

5 6

FOCUS SYSTEM

6.4.2 Case 2: An Event Requires an Immediate Revision with a

Large Need for Change (Emergency)

This special case deals with the advancement of the regular update (originally planned at
a later date) due to a significant, violent, surprising event. Two criteria are given: Due to
the urgency, immediate action is required and the impact is so large that a small update
(Case 3, minor emergency) is no longer adequate to the situation given (Fig. 6.11).
Current events can escalate and fundamentally shake the strategy. Examples can be
technological breakthroughs, competitor behavior, abrupt market adjustments or market
disruptions.
However, it is often possible to anticipate probable developments and even to cush-
ion these with reserved decisions. The techniques to analyze the future as described in
Sects. 4.10 and 8.2 can help us doing so. Nevertheless, something unexpected may hap-
pen and surprise us completely. If our strategic foundations become obsolete due to such
surprises, even a complete break with the past may sometimes be indicated. Patchwork
is poison in this situation and continuing on old paths makes no sense. Therefore, the
update process must be initiated.
Such an outright emergency should remain, whenever possible, the exception, as it
brings great unrest into the company. Its temporal urgency requires a strong focus on the
114 6 Updating the Innovation Strategy

apply apply
strategy V1 V2

approve
strategy approved approved

create develop update

strategy

collect
raw Warehouse
material

Fig. 6.11 Emergency. © Huber, Kaufmann, Steinmann 2024. All rights reserved

update work. However, this means that we cannot do everything in the usual depth, as
would be the case in Case 1. Therefore, with such shortcuts one must be aware of where
weaknesses remain and rectify these afterwards.

6.4.3 Case 3: Accumulated Minor Events Only Require a Small

but Immediate Revision (Minor Emergency)

This special case requires the advancement of a small, extraordinary update, because the
existing innovation strategy, V1, now has important weaknesses due to newly occurred
events. This has as a consequence that the current innovation strategy should no longer
be used in its original form.
The newly originated weaknesses can in this case be well defined and therefore do not
justify a comprehensive overall update as in Case 1 or 2. Therefore, in this “minor emer-
gency” it is not necessary to revise the strategic foundations. The newly gained insights
can thus be integrated into the existing innovation strategy. We speak here of a new ver-
sion 1.1 of the innovation strategy. Once created, it must, just like in Cases 1 and 2, go
through the formal approval process to become binding for the company. Figure 6.12
shows this process of updating from version 1.0 to version 1.1.

Different manifestations
It is easier to understand the different cases of this small update, if we look at concrete
examples.
The most common case is likely to be changes in market estimates (market size,
number of interested customers). Also, new competitor products with potential some-
6.4 Phase 2: Four Typical Cases of Updates 115

apply apply apply apply

strategy V1 V1.1 V2

approve
strategy approved collecting the approved approved collecting the
findings of the findings of the
the application the application

create develop update update

strategy

collect
Warehouse
raw material

Fig. 6.12 Version 1.1. © Huber, Kaufmann, Steinmann 2024. All rights reserved

times need to be taken into account. Such new insights make it necessary to update the
assumptions and values of Field 1, Present, and Field 2, Future. However, they do not
necessarily require a revision of Field 3, Gap, and Field 4, Need. In certain cases, how-
ever, also Fields 3 and 4 may need to be updated, for example when a competitor appears
with a new business model. Here, a market disruption threatens.
If the upheavals in the market, the environment are too great or if the future outlook
changes strongly, it must be weighed whether it is possible to wait until the next regu-
lar update (Case 1, Normal Case), or whether the urgency requires decisive action, thus
Case 2, Emergency.
As a rule of thumb: If the core of the innovation strategy can remain unchanged, a
small update will do. However, if numerous fundamental assumptions have shifted, the
original business can hardly be continued in its previously planned form or is even no
longer viable at all. In this case, a major intervention is inevitable and an update accord-
ing to Case 1 or even 2 is indicated.

6.4.4 Case 4: Proactive Trial Balloons for an Alternative Strategy

So far, we have been described only cases, where we lag behind the events: Changes
in the environment or novel future possibilities have triggered an update step. However,
it is also possible that we anticipate such a situation. Doing this, we can gain time and
stability. A progressive company should actually be able to proactively test its strategic
options, i.e. it will not wait until certain events do occur.
116 6 Updating the Innovation Strategy

Establishing such proactive options, the currently valid innovation strategy is not put
into question in any way, but an additional new experimental strategic field is opened!
This way, the core of the company continues to move within the approved framework,
while attractive, additional opportunities can be explored at certain clearly defined points.
Such opportunities can develop at different speeds. They can play a role in the next,
sometimes even in the one but next update of the innovation strategy. In some cases they
may also be dropped entirely, which should not be seen as failure, but on the contrary as
a valuable result of the experiment. Thereby we have verified that this specific path does
not work and we can redirect our forces to other, more promising strategic options.
Such experiments must be understood as pilot trials for the future innovation strategy
and complement the existing approved strategy. Without changing the original approved
innovation strategy, it gets therefore possible to launch such “strategic trial balloons”
with which potential future directions for the innovation strategy can be explored. Fig-
ure 6.13 makes this dynamic and iterative process visible.
In this proactive case, the outer and inner zones of the graphic are in intense
exchange. Strategic questions are carried from the current innovation strategy version 1
in the center into the explorative zone outside. From there, exploration results come back
as possible answers. A clear distinction is made between the approved and the explor-
ative zone. Experiments shall only take place in the explorative zone. However, these
should not deviate too far from the origin. Such experiments therefore are tolerated in the
sense of a pre-credit, to be later either confirmed or corrected. The aim of such proactive
attempts is to pave the way for next version(s) of the innovation strategy. By such a pro-

Fig. 6.13 Strategic trial

balloons. © Huber, Kaufmann, exploratory
Steinmann 2024. All rights zone
reserved
V1a approved V1b
zone

V1

V1c
6.4 Phase 2: Four Typical Cases of Updates 117

Fig. 6.14 Fluid Innovation

Strategy. © Huber, Kaufmann, exploratory
Steinmann 2024. All rights zone
reserved
approved
zone

active approach, next versions can be enriched with experiences already evaluated and
therefore impact on the innovation strategy may happen much faster.
At its highest level of maturity, it is conceivable that even the entire strategy becomes
fluid, i.e. the strategy in this case is in a state of constant restructuring (Fig. 6.14).
In a fluid strategy, we tentatively set new pillars and build temporary structures
towards the future, at the same time we transition to a more solid construction wherever
it becomes clear where the company wants to move in its core.
The approval process in Case 4 differs, as approval does not mark an endpoint of the
strategy development. The binding nature of the innovation strategy in this case is rather
achieved by periodically “freezing snapshots” from this dynamic process, including the
small (or large) updates (according to Cases 1, 2 or 3) requested by them.

The Fluid Strategy

As we have already described in Sect. 2.3, the business environment is changing
ever faster.1 Accordingly, not only products and services are becoming obsolete
faster, but this is also happening to business models. It is precisely these consid-

1 Argued in more detail in Bridging the Innovation Gap [Huber, Kaufmann, Steinmann, 2017] page
78, or Sect. 5.4 or also in [Steinmann, Huber, Kaufmann, 2021], pages 226 and 227.
118 6 Updating the Innovation Strategy

erations, which made us realize that innovation is getting increasingly important

for the success of any company. However, if the commercial environment of the
company is changing ever faster, the strategies of these companies must also be
updated more frequently.
As we have seen, the pace of change is accelerating and there is no end in sight
to this acceleration. This means that the once annual rhythm of strategy updating
must also accelerate, to several times a year. With the expected further accelera-
tion of environmental changes, companies will no longer be able to avoid viewing
strategy updating not as a periodically recurring task, but as a permanent process.
We call such a strategy, which is continuously adapted by a permanent process, a
Fluid Strategy.
Due to its constant change, a Fluid Strategy can, no longer simply be communi-
cated in the form of periodic new editions of a strategy document. Instead, a kind
of snapshot of the constantly changing Fluid Strategy must be taken when needed.
To enable such a snapshot, the (constantly evolving) Fluid Strategy can e.g. be per-
manently be published on the company-intranet. This snapshotted “still image” is
then applied in the project or initiative concerned. If needed, further such strategic
snapshots can be taken during the project progress.
The basic concept of the fluid strategy was already laid in 2007 and published
under the title A Living Strategy.2 In this article, strategy work is postulated as a
continuous processing of a portfolio of theme-oriented datasets (which can them-
selves have portfolio character). “The new approach to strategy allows strategy
work to be undertaken not as a sequential initiative, but as a set of tasks running
continuously in parallel.”3 This concept of a Fluid Strategy is referred to as “Liv-
ing Strategy” in the article mentioned. The article also discusses the various chal-
lenges of communicating and applying the Fluid Strategy.
With its dynamic approach, the Fluid Strategy represents the top league of
(innovation) strategy development. It is challenging to manage and therefore it
is not surprising that the concept of the Fluid Strategy is hardly applied in prac-
tice yet. However, due to the ever faster environmental changes, it is expected that
companies will sooner or later apply this fluid concept for their practical strategy
work. Until then, the Fluid Strategy should be understood as a long-term perspec-
tive.

2 [Huber, Jungmeister, Zahid, 2007].

3 [Huber, Jungmeister, Zahid, 2007], page 9.
6.6 Learning Loop 119

6.5 Phase 3: Creating the Updated Strategy

As previously described, we are faced with different requirements depending on the

case and must align the implementation activities accordingly. However, the approach
remains always the same as described in Chap. 4.
At the end of the strategy update, it is worthwhile to let the newly updated innovation
strategy rest for a moment and take some time to reflect on it. By such a period of rest,
the innovation strategy can mature even more and gain additional value.
It may also be worthwhile to look at the Strategy for Exploitation and assess to what
extent interaction or synchronization may seem sensible or even necessary.
Subsequently, the updated innovation strategy, as already described, is to be formally
released. The steps described in Sect. 5.4 concerning communication and anchoring, also
apply here.

6.6 Learning Loop

Learning loops arise from the daily application of the innovation strategy. It is helpful
to institutionalize post-processing tools such as debriefing or lessons-learned sessions.
Such learning loops are activated more intensively during the update, which increases the
learning ability of the entire organization even more.
Such learning processes result in insights, which typically cannot directly be inte-
grated into the innovation strategy. All the same, they can still be very valuable for the
company. However it is important to capture any such learnings. Such learnings can
e.g. be suggestions in favor of the daily application processes or new assessment results
regarding the market and the competitive situation. On the other hand, such learning may
also affect the meta-level, i.e. the steering and management of the company. In addition,
we collect all elements, which may be helpful in maintaining or using the innovation
strategy, or which may increase security or the acceptance within the company, and we
share them within the core team.
These activities help us to further train our strategic capabilities and to develop our
company in the direction of a learning organization. It therefore is important to anchor
such learning effects in the organization both at the individual level and in the teams.
Ensuring constant updating and maintenance of the warehouse, although important, is
not enough. All these activities should be understood as a training effort to reach future
fitness for the entire company and they therefore represent an investment. Our claim here
goes beyond the usual claim of agility and resilience experts as to merely master new
situations. We aim to be able to shape our future.
120 6 Updating the Innovation Strategy

6.7 Conclusion

This chapter dealt in depth with the update of the innovation strategy. There are various
triggers in the company environment and within the company itself, which can trigger
the update of the innovation strategy. These can be of different nature, such as sudden
individual events or slowly creeping changes. We have illuminated four different cases
for an update: A scheduled revision and comprehensive update from an initial Version
1.0 to a new Version 2.0 (Case 1). An emergency situation (Case 2), which requires an
immediate revision of the innovation strategy. A small emergency (Case 3), which forces
an urgent, but only punctual update. And finally, proactive “trial balloons” to explore
alternative strategy options (Case 4).
The increasing rate of change in the corporate environment forces companies towards
a continuous update effort for their innovation strategy. For this purpose, the concept of a
Fluid Strategy was proposed.
The update of the innovation strategy largely follows its initial creation described in
Chap. 4. However, the update differs in some important aspects:

• Learnings need to be captured, processed and integrated in the innovation strategy.

• It is important not to adhere too strictly to the existing strategic foundations, but to
question them critically.
• Unreflected adherence to initial assumptions is not an appropriate approach to save
time. This would lead to a weakening of the innovation strategy.

As a final step, the updated innovation strategy must again be applied, according to the
description in Chap. 5.
In conclusion, we also recommend involving external strategy experts in the updat-
ing of the innovation strategy. External experts with their experience and knowledge of
methods can contribute a lot to strengthen and focus the innovation strategy.

References

Huber D, Jungmeister A, Zahid M (2007) A Living Strateg.Strategy Magazine, March 2007, Issue
11, pg. 7 ff, The Strategic Planning Society SPS, London, UK
Huber D, Kaufmann H, Steinmann M (2017) Bridging the Innovation Gap—Blueprint for the
Innovative Enterprise. Springer Verlag, Berlin, Heidelberg, (translation, original 2014 in Ger-
man)
Steinmann M, Huber D, Kaufmann H (2021) Zukunftsgerichtete KMU-Unternehmensstrategie –
Warum die klassischeUnternehmensstrategie nicht mehr genügt. In Strategieentwicklung im
digitalen Zeitalter, Seiten 221 bis 234, Fachhochschule Nordwestschweiz FHNW, Olten, CH
 Part II
Derivation

Introduction to Part II
After we have shown how to develop an innovation strategy in Part I of this book, the
chapters of the second part will show how the insights used in Part I can be derived
(Fig. II.1).
For the interested reader, it should be comprehensible how the results were achieved
and how they can be justified. Figure II.2 provides an overview of the chapters in Part II.
In Chap. 7 we first deal with the basics of strategy formation. We consider how a
strategy is traditionally developed and then identify which aspects are typically over-
looked: It is particularly those aspects that concern the future of the company.

Practice Part I
Innovation Strategy

Part II
Derivation

Theory Part III

Context

Innovation Strategy

Strategy

Business Administration

Fig. II. 1 Part II. © Huber, Kaufmann, Steinmann 2024. All Rights Reserved
122 Part II Derivation

Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Chapter 12

Classic Future- Two Stars Innovation SME Start-ups,
Oriented Strategy Strategy Incubators
and
Accelerators

Fig. II.2 Chapters Part II. © Huber, Kaufmann, Steinmann 2024. All Rights Reserved

Chap. 8 deals with the question of how to better include the often missing aspects
of the future in a strategy. This leads us to a new strategy approach, the future-oriented
strategy.
In Chap. 9, we then arrive at our revised and completed strategy approach, the Two
Stars Strategy. This Two Stars Strategy consists of two equal parts, one of which essen-
tially corresponds to the classic strategy. The second and largely new strategic part is
the innovation strategy. We show that the innovation strategy, contrary to previous teach-
ing, is not a functional strategy, but an equal second part of the comprehensive two-part
(dual) corporate strategy, the Two Stars Strategy.
Chap. 10 analyzes the concept of the innovation strategy and derives its contents.
Here we establish the connection to the Bern Innovation Model and show what the pro-
cessual and organizational prerequisites for successful innovation activity are. Here the
foundations are laid for the Innovation Framework and the concrete proposals for action
of Part I.
Chap. 11 subsequently highlights those aspects of innovation activity that are particu-
larly relevant for SMEs. Here, the fundamental differences between “Innovation for an
existing business” and “Innovation through the establishment of a new business” are par-
ticularly addressed.
In Chap. 12 we deal with specific questions that arise for start-ups and which are also
relevant for those companies considering setting up, supporting, or acquiring start-ups.
Classic Strategy Formation
7

Abstract

To understand what an innovation strategy actually is and what it should contain, we

first have to deal with the term strategy. We find that a strategy defines the long-term
goal and, derived from it, describes what a company must do to successfully move
into this desired future. Crucial, indeed defining, is a mindset that prioritizes goals
over the means. Our analysis of the strategy formation process shows that a strategy
developed in a classic way does not sufficiently consider aspects of the future.

As its name suggests, the innovation strategy is a strategy. It thus has certain character-
istics that are inherent to all strategies. For this reason, we first want to look at what a
strategy is and what generic properties it has.

7.1 What is a Strategy?

There is extensive literature on the subject of strategy. Based on this fact, we would
expect that it is easy to define the concept of strategy. Unfortunately, this is not the case.
There are countless definitions of the term strategy. In fact, every book on this topic
redefines the concept of strategy again. Even textbooks usually avoid a clear definition
of the concept of strategy and instead describe the history of the concept of strategy or
describe what they understand by strategic management.1

1 As for example, the textbook used in this book by Lombriser and Abplanalp [Lombriser, Abpla-
nalp, 2005] or the strategy textbook by Müller-Stevens and Lechner [Müller-Stewens, Lechner,
2016].

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer- 123
Verlag GmbH, DE, part of Springer Nature 2024
D. Huber et al., Innovation Strategy, https://doi.org/10.1007/978-3-662-69832-7_7
124 7 Classic Strategy Formation

Even well-known authors of the theory of strategic management are not much more
precise in their statements. For example, they write:

• Peter Drucker2: “Efficiency is concerned with doing things right, effectiveness is

doing the right things” (Note here that at the time the concept of strategy in our cur-
rent use did not yet exist. What Drucker calls effectiveness here, we would today call
strategic thinking).
• Hans Ulrich3: “Strategie ist die Bestimmung der grundsätzlichen Vorgehensweise zur
Erreichung unternehmenspolitischer Ziele.”4
• Michael Porter writes in his famous article What is strategy?5: “Strategy is creating fit
among a company’s activities”
And in the same article, Porter writes, “Strategy is the creation of a unique and valu-
able position, involving a different set of activities.”
And further:
“Strategy requires you … to choose what not to do.”
• Igor Ansoff : “Basically, a strategy is a set of decision-making rules for guidance of
organizational behavior.”

In contrast, here are two explicit strategy definitions:

• From Gabler’s Wirtschaftslexikon: “Strategie wird definiert als die grundsätzliche,

langfristige Verhaltensweise (Maßnahmenkombination) der Unternehmung und rel-
evanter Teilbereiche gegenüber ihrer Umwelt zur Verwirklichung der langfristigen
Ziele.”6,7

2 Quoted from [Eschenbach, Eschenbach, Kunesch, 2008], page 90. Note: It is often difficult to
find the original quotes, especially with older contributions. Therefore, secondary literature is used
at this point. This of course weakens the scientific nature of the argument to some extent. However,
since the statements at this point mainly serve to illustrate and since they are not of decisive impor-
tance with regard to the statements made in our book, we allow ourselves this imprecision.
3 Quoted from [Eschenbach, Eschenbach, Kunesch, 2008], page 276.

4 In essence: Strategy is the determination of the basic approach to achieving corporate policy

goals.
5 [Porter, 1996].

6 In essence: Strategy is defined as the fundamental, long-term behavior (combination of measures)

of the company and relevant sub-areas towards its environment for the realization of long-term
goals.
7 According to Gabler Wirtschaftslexikon [Gabler, 2021].
7.1 What is a Strategy? 125

• From Wikipedia: “Unter Strategie werden in der Wirtschaft klassisch das (meist lang-
fristig) geplante Marktverhalten der Unternehmen zur Erreichung ihrer Unterneh-
mensziele verstanden.”8,9

In this difficult situation regarding definition, we can examine which properties are regu-
larly attributed to a strategy. We find that a strategy should essentially include the follow-
ing points:

• it should have a long-term perspective

• it should show who we want to be, our “raison d’être”10: the vision
• it should describe what we want to achieve: the strategic goals
• it should show how we want to achieve that: the strategic directions
• it should record which conditions we must create for this, i.e. which organization and
which means we need for this.

Essentially, it is about finding a meaningful targeting for the company. The key strate-
gic question is therefore: What should we want? So what is sensible, or smart, to want
(after all, we can also set ourselves goals, which turn out to be unattractive or even harm-
ful)?
Specifically and almost defining for strategies is the priority of goals over means.
So, we set the goals first, independent of the available means, and then determine the
required means as a result of the goal setting. This in contrast to the normal day-to-day
business, where we do just the opposite: In operational day-to-day business, we make the
best of the available means (Fig. 7.1).
It is this difference that distinguishes strategic from operational thinking.

Fig. 7.1 Comparison strategic strategic thinking

and operational thinking. ©
Huber, Kaufmann, Steinmann
2024. All rights reserved
Goal

operational thinking

8 Inessence: In economics, strategy is traditionally understood as the (usually long-term) planned

market behavior of companies to achieve their corporate goals.
9 According to Wikipedia [Wikipedia, 2021].

10 Right to exist.
126 7 Classic Strategy Formation

feedback

2
corporate
analysis

1 4 5 6 7 8
strategic strategic vision, mission strategy strategy strategy-
starting point analysis statement development implementation control

3
environment-
analysis

feedback

Fig. 7.2 Classic strategy process. © Huber, Kaufmann, Steinmann 2024. All rights reserved

So, after all that has been said, what is a strategy?

A strategy thus describes the long-term desired vision and it derives from it,
what the company must do to move successfully into this desired future.

7.2 Classic Strategy Formation

Let us now look at how a strategy should be developed according to general teaching. Of
course, the various textbooks describe the details of the strategy development process in
different ways. Nevertheless, there is something like a common line here. We stick to the
approach suggested by Lombriser and Abplanalp in their textbook.11 Figure 7.2 shows
the corresponding eight steps of a classic strategy process.

1. Strategic Starting Position

In the phase Strategic Starting Position, our starting position is described. The fol-
lowing questions are answered (among others):
• Where are we today?
• How are we doing?
• Where do we see the problems?
• What product groups do we have?
• Which markets do we serve?

11 [Lombriser, Abplanalp, 2005].

7 Classic Strategy Formation 127

• What business are we in? (What exactly is our business?)

• What is our business model?
Here we are dealing with terms such as product-market matrix, strategic Business
Areas (BA), Strategic Business Units (SBU), stakeholders and business model.
2. Corporate Analysis
In the phase Corporate Analysis, the strengths and weaknesses of the company in
its current state and in the context of the present are analyzed. In particular, we ana-
lyze our current market position, our portfolio and especially, in which phase in the
life cycle our offers are currently in. Furthermore, we analyze our staff and the skills
available in the company.
This phase involves terms such as the Boston Matrix, life cycle analysis, S-curves and
skills matrix.
3. Environment Analysis
While the Corporate Analysis deals with the internal factors of the company, the
Environment Analysis phase now focuses on the external factors. We determine the
opportunities that our (market) environment offers us as well as any threats that our
environment holds for us.
Here, terms such as environment analysis (also PEST12 analysis), Five Forces analysis
or also competitive analysis are in the foreground.
4. Strategic Analysis
The next phase, the Strategic Analysis now lays the foundation for the actual forma-
tion of the strategy: the strengths and weaknesses of the company resulting from the
Corporate Analysis phase are now compared to the opportunities and threats from the
Environment Analysis phase in the so-called SWOT analysis.13 Figure 7.3 shows the
well-known representation of the SWOT analysis as a matrix.

Fig. 7.3 SWOT. © Huber, helpful harmful

Kaufmann, Steinmann 2024.
All rights reserved
company
Strengths Weaknesses

environment Opportunities Threats

12 PEST = Political,
Environmental, Social, Technological.
13 SWOT = Strength, Weaknesses, Opportunities and Threats.
128 7 Classic Strategy Formation

Fig. 7.4 Extended SWOT. © Strengths Weaknesses

Huber, Kaufmann, Steinmann
2024. All rights reserved Remove Catch up
Opportunities
Strengths/ Weaknesses/
Opportunities Opportunities

Secure Avoid
Threats
Strengths/ Weaknesses/
Threats Threats

Subsequently, goals and measures are defined for each pairing of strengths/opportu-
nities, weaknesses/opportunities, strengths/threats and weaknesses/threats. Figure 7.4
shows the resulting extended SWOT, also called differential SWOT.
5. Vision and Mission Statement
Based on the previous steps, the Vision, i.e. the picture of the future of our organi-
zation, is developed. Statements from the Strategic Starting Position step as well as
those from the analysis steps (especially from the Strategic Analysis) are taken into
account. The vision, mission and values are defined here, which are crucial for the
future of the organization.14 This step, which is decisive for the strategy, is about
answering the strategic key question, which is, as we remember: What should we
want?
6. Strategy Development
In the subsequent phase Strategy Development the strategy (in its narrower sense) is
now being developed. The strategic objectives are defined in detail and suitable meas-
ures, projects and project bundles, the strategic thrusts, are defined. In addition, the
necessary human and financial resources (budgets) are determined at this point.
7. Strategy Implementation
The measures and projects identified in the previous step are now being implemented.
For this purpose, annual objectives are set, annual budgets are allocated, and the pro-
jects are carried out according to the common rules of project management.
8. Strategy Control
The strategy should be reviewed at regular intervals and adjusted if necessary. At the
same time, however, it must remain stable enough to provide the company with a sta-
ble orientation over a longer period of time. This usually is achieved by keeping the
vision, mission and values stable in the long term, while the strategic planning adapts
flexibly over time to changing circumstances.

14 Toadd to the general confusion, different authors use these three terms with different meanings,
sometimes even interchangeably. In our book, we adhere to the meanings as they prevail in the
English-speaking world.
7.3 Strategy Deficiencies in Practice—What is Missing? 129

For these strategy revisions, it is analyzed to what extent the implemented measures
have actually led to the desired effects. In addition, the assumptions underlying the
strategy are reviewed for any need for revision. The strategy should therefore ensure
a stable orientation of the company for the long-term, but without unduly affecting its
flexibility. In a time of ever faster changes, it thus acts as a calming, stabilizing factor
for the company.
So far our brief outline on the topic of strategy development according to classic
approach. We now want to look at what strategies actually look like in practice. After
that, we then will turn to the aspects that are not sufficiently considered in the classic
strategy.

7.3 Strategy Deficiencies in Practice—What is Missing?

The topic “Strategies in Practice” is difficult to assess scientifically. This is partly due to
the fact that current strategies are usually not accessible for third parties. A second prob-
lem is the requirement that for a scientifically based evaluation a statistically relevant
number of strategies must be available. Since there is usually only one strategy per com-
pany, a large number of comparable companies would have to be available in sufficient
transparency in order to make statistical statements scientifically reliable. These condi-
tions are not given in practice. A strictly scientific investigation of strategies in practice is
therefore not realistic.
What remains, is to evaluate (anecdotal) experience of people who have dealt in their
practical work intensively with strategic topics, e.g. strategy consultants. Such an evalua-
tion typically results in the following view:
• Case 1: Many, especially smaller companies do not have a written strategy at all. In
these cases, the company owner usually decides on new projects that may be of strate-
gic character in an ad hoc manner. A systematic approach is usually not discernible.

Some companies however do have a written strategy, but they do not live it. Their deci-
sions in the concrete case hardly refer to the written strategy. Here we have to distinguish
two more cases (2 and 3):

• Case 2: On the one hand, there are companies that revise their strategy not frequently
enough. These then live with an outdated strategy, which can no longer be applied to
the concrete questions at hand.
• Case 3: A second group of companies has developed a strategy, but does not care
about it in their daily business. Here we are dealing with companies where strategic
management has not developed sufficiently yet. In these cases, the written strategy is
either more of an alibi or just a first preliminary step in the introduction of strategic
management.
130 7 Classic Strategy Formation

• Case 4: In a final group are companies that systematically revise their strategy and
live by it. This group is the one most interesting to us, because only this type of com-
panies can actually be called strategically managed.

Looking at the strategies of the companies of Case 4, it becomes apparent repeatedly that
the strategies often describe a more or less sophisticated extrapolation of the develop-
ment of their business up to now. A systematic confrontation with possible changes in
the environment hardly ever takes place and the analysis of potential new businesses is
rare, and if it does occur, it is usually only sporadic.
What we find in our examination of strategies in practice is, besides the complete
absence of strategies, that the strategy work primarily is oriented towards the past
and present. What is typically missing is a deep engagement with the future.
Looking for explanations for this state of affairs, we find two points:

1. In the past, changes in the business environment occurred relatively slowly. Therefore,
a systematic confrontation with the future was not necessary. An intelligent continu-
ation of the previous development of the business provided a relatively accurate pic-
ture.
2. With regard to strategy development, it was not clear at all in the past, how to deal
with the aspects of the future in a systematic way.

Both points are now changing: the speed of change is increasing massively and this
makes an intensive engagement with the aspects of the future increasingly urgent.
Moreover, new methods are emerging that allow more and more to deal with the aspects
of the future in a systematic way. In the next chapter, we will show how to develop a
strategy that is truly oriented towards the future.

7.4 Conclusion

Our analysis of the classic strategy formation process briefly summarized in this chapter
shows that the classic strategy primarily refers to the current state of the business and
mostly just extrapolates the previous development into the future. By doing this, most
aspects of the future are largely ignored. This explains why many aspects of innovation
are not adequately addressed in today’s existing strategies.
So far, we are still moving in Field 1, Present, of the Innovation Framework. How-
ever, if a strategy, as required by definition, is to include everything that the company
must do to successfully move into the desired future, then two aspects are particularly
missing: The orientation towards the future and the development of new business that
will carry the company forward when its current business reaches the end of its lifespan.
References 131

References

Ansoff I, Kipley D, Lewis A, Helm-Stevens R, Ansoff R (2018) Implanting Strategic Management.

Palgrave Macmillan, London , UK
Eschenbach R, Eschenbach S, Kunesch H (2008) Strategische Konzepte – Ideen und Instrumente
von Igor Ansoff bis Hans Ulrich. Schäffer-Pöschel, Stuttgart
Gabler (2021) https://wirtschaftslexikon.gabler.de/definition/strategie-43591. 9/21/2021
Lombriser R, Abplanalp P (2005) Strategisches Management. Versus, Zürich, CH
Müller-Stewens G, Lechner Ch (2016) Strategisches Management – Wie strategische Initiativen
zum Wandel führen. Schäffer-Pöschel, Stuttgart
Porter M, (1996) What is strategy? Harvard Business Review, November–December 1996, Boston,
USA
Wikipedia (2021) https://de.wikipedia.org/wiki/Strategie_(Wirtschaft). 9/21/2021
Future-Oriented Strategy Formation
8

Abstract

In this chapter, we describe a way in which the classically missing future-orientation

can be incorporated into the strategy. With this extension, we can bring strategy work
to the next level of development. We speak in this case of a Future-Oriented Strategy.

8.1 Introduction to the Future-Oriented Strategy

With the classic strategy formation presented briefly in Chap. 7, we cover Field 1, Pre-
sent, in the Innovation Framework. At this point, it is clear to us where we stand today,
what challenges we face, and how we want to respond. This is correct and important.
However, it is not sufficient for our journey into the future.
What is still missing are the future aspects relevant to our company. We map these in
the Innovation Framework in Field 2, Future. This includes the company’s ambition, i.e.,
the vision, mission, and values, as well as the future images and scenarios relevant to the
company. Doing this, we can now define what we mean by a Future-Oriented Strategy:
We call a strategy future-oriented, when it makes its statements from a perspective of the
future (and not, as usual, from a position of the present). But how then can we achieve
such future-orientation?
In dealing with the future, we can basically adopt two perspectives: Traditionally, we
estimate the future from a position of the present. A kind of continuation of the past and
present is obvious from this position, as it is done in the classic strategy formation.
However, to arrive at a future-oriented perspective, it is advisable to first assume a
desired position in the future and to look from this future position back at the present.
Figure 8.1 illustrates these two very different perspectives and ways of thinking.

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer- 133
Verlag GmbH, DE, part of Springer Nature 2024
D. Huber et al., Innovation Strategy, https://doi.org/10.1007/978-3-662-69832-7_8
134 8 Future-Oriented Strategy Formation

present-oriented future-oriented
perspective and mindset perspective and mindset

Future

Today Future Today

Fig. 8.1 Different perspectives and ways of thinking. © Huber, Kaufmann, Steinmann 2024. All
rights reserved

With such a future-oriented perspective, we maximize our focus on the future situa-
tion. From this point of view, a pure continuation of the past does not lead to a mean-
ingful result. Through such a future-oriented perspective, we achieve in our strategy the
required focus on our situation in the future.
In practical implementation, the desired starting point in the future is found with the
method of Future Blueprint. From this point in the future, established by this method, we
can then look back at the present and in a further step determine the most suitable path
from the present to the desired future. This procedure can be illustrated as in Fig. 8.2.

1. Leap into the future

2. Look back

Today 1 Future

3. Path to the future

Fig. 8.2 Future Blueprint. © Huber, Kaufmann, Steinmann 2024. All rights reserved
8.2 Method for Systematically Determining an Attractive Position... 135

Output Oriented Design

We also call such a future-oriented perspective Output Oriented Design. This term
comes from engineering development activities, where one often also starts with
the desired result, the output, and then, based on the output, determines the neces-
sary development activities.
It turns out that Output Oriented Design represents an even more fundamental
principle. Thus, various activities lead to better results if one first becomes clear
about the ideally desired result. This way of thinking can particularly be used in
negotiations or even just for simple meetings.

When we look from a position in the future back to the present, it is easier to find the
way to this desired future than to seek a way to the future from a position in the present.
After all, from a given standpoint (in the present), one can aim for infinitely many future
positions. On the other hand, looking back from the future to the present simplifies the
task to connecting exactly two points.
However, the path from the present to the future found with this future-oriented per-
spective usually requires overcoming of all sorts of problems. Therefore, certain detours
usually cannot be avoided. Moreover, it helps if one develops several options of such
routes to the future.
However, for the development of a future-oriented strategy we are still lacking a suit-
able method to find an attractive and suitable future position for us in a systematic way.
This is the content of the next Sect. 8.2.

8.2 Method for Systematically Determining an Attractive

Position for a Company in the Future

To be able to develop a future-oriented strategy, we should, as shown above, adopt a

future-oriented perspective. To determine the necessary suitable position for our com-
pany in the future, different suggestions can be found in the literature. However, these
are either complete and powerful but sometimes very complex,1 or they are simply not
powerful enough. What is missing is a method of future analysis, which is simultane-
ously complete but still lean enough for use in everyday business.
For this purpose, we propose the method Future Blueprint (Fig. 8.3). We have already
described the method in Sect. 4.10. in detail.
To achieve the necessary simplicity while maintaining the effectiveness of the method,
we limit ourselves in the Future Blueprint to the qualitative aspects. The inevitable com-

1 E.g. the method “Eltviller Model” by Pero Micic [Micic, 2007].

136 8 Future-Oriented Strategy Formation

create different
futures
(Step 2)
2
win
orientation

build develop and define

future knowledge assumed future
(Step 1) (Step 3)

1 3 5
collect win formulate
informations security vision

4
recognize
opportunities

Fig. 8.3 Future Blueprint in detail. © Huber, Kaufmann, Steinmann 2024. All rights reserved

promises resulting from this limitation compared to known procedures are made with
regard to the level of detail and not at the expense of completeness. Completeness thus is
preserved.
Future Blueprint allows for a much faster implementation compared to known meth-
ods, e.g. it may be performed in just a few hours. The achievable results still are com-
plete, but due to the limitation of the method to the qualitative aspects, the results are
rather rough and not maximally founded. However, and this is the crucial point, although
somewhat rough, they are already systematically oriented towards the future of the com-
pany and not just continuations of the past.
In extreme cases, the Future Blueprint method can also be performed simply just in
the head. Doing this however, also makes the results much rougher and therefore some-
what tentative. With the Future Blueprint method, it is now possible to align our strategy
systematically with the future despite only limited effort.
8.3 Conclusion 137

8.3 Conclusion

We have seen in Chap. 7 how strategies should be developed according to the textbook
and also how they are effectively encountered in practice. We have found that to this day
a systematic orientation of strategic work towards the future is still largely lacking, both
in the textbook as well as in practice. With the Future Blueprint method introduced in
Sect. 4.10, we have found a way to systematically align strategic work with the future
with reasonable effort. With this simple method, we have made a systematic future anal-
ysis feasible for practical application.
We could now think that, by developing a Future-Oriented Strategy, we have aligned
our strategy with the future. Unfortunately, this is not the case. At this point, we have
indeed reached Field 2, Future, of the Innovation Framework. However, as we will see in
Chap. 9, aligning our vision with the future has implications for the design of the strategy.

Reference

Micic P (2007) Die 5 Zukunftsbrillen – So werden Sie zum Vordenker. Gabal Verlag, Offenbach
The Two Stars Strategy
9

Abstract

In this chapter, we now arrive at our now completed and fully formed strategic
approach, the Two Stars Strategy. The Two Stars Strategy consists of two equal parts.
On the one hand the “Strategy for Excellence”, which corresponds to the classic cor-
porate strategy, and on the other hand a new and additional “Strategy for Change”.
This new second part of the strategy is a significant part of the innovation strategy,
which thus appears in a new form. We show that the innovation strategy, contrary to
previous teaching, is not just a functional strategy, but must be understood as an equal
second part of a comprehensive corporate strategy, i.e. the Two Stars Strategy.

9.1 Impacts of Future-Orientation on Strategy Formation

In Chap. 8, we saw how we can break away from the present-orientation of classic
strategy formation by taking a position in the future for our vision formation. We have
already seen in Sects. 4.5 and 4.10 how to methodically arrive efficiently at a future posi-
tion that makes sense for the company: with the Future Blueprint. What we want to look
at now is the consequences of this approach for the design of the strategy.
If we follow the Future Blueprint, we get a new and future-oriented vision for our
company. We could think that this new future-oriented vision would now simply replace
our previous vision that we worked out in the classic way, and that we could derive the
mission, the values and the strategic directions simply from our new, future-oriented
vision. However, this is not the case. As so often, the matter is unfortunately a bit more
complicated.

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer- 139
Verlag GmbH, DE, part of Springer Nature 2024
D. Huber et al., Innovation Strategy, https://doi.org/10.1007/978-3-662-69832-7_9
140 9 The Two Stars Strategy

Let us go back to our classically worked out vision and strategy. What’s actually
wrong with it?—Well, actually nothing. As long as we refer to our current business, such
a strategy is quite suitable, as it shows what we need to do to ensure that this business
continues to flourish. And that of course is important, because only in this way can we
keep our company financially alive at all. So it obviously makes sense to maintain this
classic strategy. It is even vital for our survival. And this of course is the reason why we
have developed strategies in this way so far.
However, as we have seen in Chap. 8, such a classic strategy has the disadvantage
that future situations, which typically differ greatly from the present, are not sufficiently
taken into account in this classic approach. And in Chap. 8, we therefore demand that
we identify for our company a more precise target state in the future (using the Future
Blueprint method): our future-oriented vision. However, this future-oriented vision usu-
ally differs significantly from the vision worked out in the classic way. So which vision
to take?
At this point, we are tempted to simply replace the old, classic vision with the new
vision. If we do this, however, we lose the old classic strategy and we have just said that
it is vital for survival and therefore must be maintained. So what should we do?
The solution is that we need to work out two strategies!
On the one hand, we need to ensure that our company continues to be well financed.
And for this we need a well-running business and the associated classic strategy. We call
this strategy Strategy for Excellence.
On the other hand, we need a second strategy that prepares us for the changes of the
future. We call this strategy Strategy for Change. Figure 9.1 shows the resulting com-
prehensive strategy process, which consists of a present-oriented and a future-oriented
process. We refer to this comprehensive strategy, which results in a present-oriented and
a future-oriented strategy, as the Two Stars Strategy.
This new corporate strategy is supplemented by the aspects of the future. It therefore
consists of two parts. It is dual. As early as in the 1990s, Derek Abell proposed the forma-

Fig. 9.1 Two Stars Strategy

process. © Huber, Kaufmann,
Steinmann 2024. All rights Strategy for
reserved Change

Strategy for
Excellence
9.2 Characteristics of the Two Stars Strategy 141

tion of a dual strategy. And he argued in his related publications from 1993 and 1999 very
similarly to how we do here.1 By this, he laid the foundations for our considerations.

9.2 Characteristics of the Two Stars Strategy

Having seen why such a dual Two Stars Strategy is needed and what it means, we want
to deal with its characteristics. In particular, the question is of interest as to whether in
the Two Stars Strategy the newly added part, the Strategy for Change, plays a subordi-
nate role or not. We are also interested in the characteristics regarding short-term and
long-term orientation of the two parts of the strategy.
As we have seen, the new part of the strategy, Strategy for Change, is vital for the com-
pany, albeit somewhat less immediately than the Strategy for Excellence. Nevertheless,
we find that without the Strategy for Change, our company has no future, because it is
the Strategy for Change that points the way to the future of the company. Therefore, it is
not only the Strategy for Excellence that is important for the survival of the company. The
Strategy for Change is equally essential! This however means that the Strategy for Change
cannot simply be a subordinate functional part of the classic corporate strategy (i.e. the
Strategy for Excellence) as, for example, a marketing or production strategy is, but the
Strategy for Change must be considered as an integral part of the corporate strategy.
And what about short-term and long-term orientation? Abell has already pointed out
that both parts of the strategy must take into account both short-term as well as long-
term aspects. It would therefore be a mistake to believe that the Strategy for Excellence
was only of a short-term nature or that the Strategy for Change was only long-term ori-
ented. Thus, the Strategy for Excellence must ensure that today’s business continues to
be profitable for as long as possible, i.e. undoubtedly a long-term aspect. On the other
hand, the Strategy for Change must deal particularly with what needs to be done today,
i.e., in the short term, to ensure that the company still has a future.2
Next, we want to deal with how to arrive at the two identified parts of the strategy.

1 [Abell,1993] and [Abell, 1999].

Unfortunately, Abell has used different names for the two strategy parts depending on the context.
He refers to the Strategy for Excellence part as “planning for today” or “today-for-today strategy”.
For the Strategy for Change part, he refers to it as “planning for change” or “today-for-tomor-
row strategy”. He often uses the word “planning” and “strategy” synonymously for something we
would call strategy today.
To be as clear as possible, we always use Strategy for Excellence or Strategy for Change in this
book.
2 Abell used this aspect for naming. Therefore, he called the Strategy for Excellence “today-for-

today strategy” with the consideration that this should describe what today must be done so that
our current business continues to do well. On the other hand, he used for the Strategy for Change
the term “today-for-tomorrow strategy” with the view that this strategy part should describe what
already today must be done so that we tomorrow still have a business.
142 9 The Two Stars Strategy

9.3 Development of the Two Stars Strategy

As for the Strategy for Excellence part of the strategy, we already know how to develop
this: namely with the methods of classic strategy development, as we described in
Chap. 7.
The situation is different for the Strategy for Change part of the strategy. For this, we
have seen in Chap. 8 (and 4.5 or 4.10) how we can arrive at a future-oriented vision. We
could now assume by analogy that, just as in classic strategy formation, we can derive
the mission, values, and the associated strategic directions from the future-oriented
vision. However, this does not work with the Strategy for Change, as it is by no means
clear, how we can move from our current state to the desired state in the future. This
makes it impossible to formulate a mission statement or values, let alone something as
concrete as strategic directions. The only thing we know at this point is our current posi-
tion and the future-oriented vision, which we have developed for our company with the
Future Blueprint and which typically, differs significantly from the current state. This
difference is referred to as Strategic Gap.
So, we have identified now the gap that we need to fill with the Strategy for Change.
We are here, in the present, the actual position, and want to go there, to our desired posi-
tion for the future, the target position. Identifying the Strategic Gap has now created the
prerequisite for us to be able to plan, the prerequisite for a systematic approach.

9.4 The Strategic Gap

We have already dealt with the Strategic Gap in Sect. 4.6 in Part I of the book. In Part
II, we want to delve deeper into it.
The term Strategic Gap is already common in classic strategy development. However,
the classic view is primarily oriented towards financial development, especially towards
missing revenues. From the Future Blueprint introduced above, however, a second
dimension now arises, which is not financial, but which purely regards content. To close
the Strategic Gap, we now need to distinguish these two dimensions: the financial and
the content dimension (Fig. 9.2).
Let us first look at the financial dimension in a classic way. In financial terms, it is
about being able to achieve our sales or profit targets. There is a gap between the devel-
opment sales if we do nothing and the sales target we are strategically aiming for.
This difference can be reduced if the existing business is optimized, i.e. if it is made
more effective and more efficient. Such optimization is what normal business manage-
ment is dealing with. This reduction of the gap through optimization of the business is
also called Operational Gap, as it can be closed by interventions in the operational pro-
cess (Fig. 9.3).
9.4 The Strategic Gap 143

Content-Related
Strategic Gap

1 2

PRESENT Strategic Gap FUTURE

Financial
Strategic Gap

Fig. 9.2 Strategic Gap. © Huber, Kaufmann, Steinmann 2024. All rights reserved

Sales, earnings

goal

optimization

Operational
Gap
without
measures

Time
Planning date

Fig. 9.3 Operational Gap. © Huber, Kaufmann, Steinmann 2024. All rights reserved

The basis for this optimization of the existing business is provided by the Strategy for
Excellence. For this purpose, specific innovations are usually required: on the one hand,
small interventions for product maintenance, but on the other hand, also some larger
innovations regarding our existing business and the operational processes associated to it.
In most cases, however, optimizing the existing business is not enough to achieve the
sales targets. The remaining part of the gap is referred to in classic strategy development
as the Strategic Gap.3 This Strategic Gap is the difference between the sales target and
the value achievable by optimizing the existing business (Fig. 9.4). It cannot be closed by
operational measures. It can only be closed by innovations.

3 Compare also [Gabler, 2021].

144 9 The Two Stars Strategy

Sales, earnings

goal

Financial Strategic Gap

optimization

without
measures

Time
Planning time

Fig. 9.4 Financial Strategic Gap. © Huber, Kaufmann, Steinmann 2024. All rights reserved

This Strategic Gap however is not really addressed by the classic Strategy for Excel-
lence. It does appear in classic strategy work, but it is not closed by the (classic) Strategy
for Excellence.

9.4.1 The Financial Strategic Gap

As we have already mentioned, our new dual strategy creates a Strategic Gap in two
dimensions, a financial one and a content-related dimension. To be able to distinguish
these two dimensions conceptually, we rename the (classic) Strategic Gap in the finan-
cial dimension as Financial Strategic Gap, as it is a question of revenues. On the other
hand, we call the gap in the content-related dimension, Content-Related Strategic Gap.
We will discuss this Content-Related Strategic Gap in the next paragraph.

9.4.2 The Content-Related Strategic Gap

As we have seen above, even the classic strategic gap shown above, i.e. the Financial
Strategic Gap can only be closed by innovation. From the perspective of our new dual
strategy, closing the Financial Strategic Gap is therefore already a task of the Strategy for
Change (as the Strategy for Excellence refers exclusively to the existing business).
In addition to the financial consideration, the Future Blueprint (introduced in Chap. 8)
also provides a second and different perspective. The Future Blueprint typically shows
that a company must to a certain extent take on a new position in the future market,
because market and customer needs as well as technological possibilities change. Such
a change in position cannot be expressed simply as a financial gap. It is qualitative by
nature. It is all about content and not about revenues. That is why we speak in this case
of the Content-Related Strategic Gap.
9.5 The Two Stars Strategy and the Innovation Strategy 145

This additional, second dimension is new and we can only recognize it, if we have
properly analyzed our future. Obviously, the Content-Related Strategic Gap cannot be
closed in any way by optimizing the existing business. We need innovations for this. And
there is the additional requirement that these innovations must be able to close the Finan-
cial Strategic Gap at the same time. It is therefore the task of the Strategy for Change to
close the Content-Related Strategic Gap in such a way that the Financial Strategic Gap is
closed as well.

9.4.3 Conclusions for the Strategy for Change

The Strategy for Change therefore must close the Content-Related Strategic Gap and
at the same time ensure that the Financial Strategic Gap also closes. As we have seen,
this can only be achieved through innovation. Therefore, the Strategy for Change in its
entirety is part of the innovation strategy. We formulate the two strategic gaps and the
associated tasks in Field 3, Gap, of the Innovation Framework.

9.5 The Two Stars Strategy and the Innovation Strategy

So now, we have found our new corporate strategy, which also includes future aspects:
the dual Two Stars Strategy. It consists of the parts Strategy for Excellence and Strategy
for Change. The question now arises as to how these two terms relate to the term innova-
tion strategy (which is the subject of our book).

9.5.1 Components and Scope of an Innovation Strategy

Let us start with the Strategy for Change: The Strategy for Change is supposed to show
us the way, how we can move from our current position to the position we aim for in the
future. This means, we want to close the Content-Related Strategic Gap. It is therefore
necessary to find suitable content and ways that lead us into a largely unknown future.
This actually even means to create this future. It is a search and learning process, as it
is typical for innovation activities. As a conclusion, this means that the whole Strategy
for Change itself is a single large innovation initiative!
And what about the Strategy for Excellence? Here we have to deal with a classic
strategy, i.e. with vision, mission, values, and strategic directions. The strategic direc-
tions and the resulting strategic projects describe specifically what needs to be done.
And what needs to be done for achieving operational excellence is, in most cases, opera-
tional in nature, such as sales initiatives, optimizing utilization, or purchasing from other
sources. However, in some cases, particularly those that aim to close the operational gap,
it is necessary that products or processes need to be improved and developed further. It is
146 9 The Two Stars Strategy

exactly these development needs of the Strategy for Excellence that are its requirements
for innovation. It is these parts of the Strategy for Excellence, and only these, which
belong to the area of innovation and that therefore, are part of the innovation strategy.

9.5.2 Need for an Innovation Strategy

The question now arises, why we actually need an innovation strategy at all. Why isn’t a
Strategy for Change sufficient, as the innovation needs of the Strategy for Excellence are
already defined in this Strategy for Excellence?
As we were able to show in our book Bridging the Innovation Gap, innovation activi-
ties require a different and even contradicting leadership, mindset and organization com-
pared to operational business activities. For this reason, we therefore concluded in this
book that innovation activities should be organizationally separated from operational
business activities. This is the reason why we need to treat all innovation activities sepa-
rately from everything else. And that’s why we need an innovation strategy that covers
all innovation aspects of the company, both, those from the Strategy for Excellence, as
well as those from the Strategy for Change.

9.5.3 Conclusions

So what exactly do these innovation activities include? We have described it above:

• On the one hand, the innovation needs of the Strategy for Excellence (which help to
close the Operational Gap)
• And on the other hand, the entire Strategy for Change (which is supposed to close
both the Financial and the Content-Related Strategic Gap).

The innovation strategy therefore also consists of two parts: the Strategy for Change as
well as the innovation needs of the Strategy for Excellence.
And since the Strategy for Change, as outlined in Sect. 9.2, is an integral part of the
corporate strategy, the innovation strategy must thus also be regarded as an integral part
of the new corporate strategy, which now also takes into account the future aspects.4

4 Thishas not been the case so far, as the innovation activity is only a relatively small and subor-
dinate part of the classic strategy, the Strategy for Excellence. Therefore if you only consider the
Strategy for Excellence, then the innovation requirements related to it can indeed be understood as
a subordinate sub-strategy.
9.6 The Two Stars Strategy 147

9.6 The Two Stars Strategy

Based on our findings from Chaps. 7 and 8, we have now found in Chap. 9 the following
properties for the corporate strategy:

• The corporate strategy now consists of two parts, so it is dual.

• The first part of the strategy corresponds to the classic strategy. We call it Strategy
for Excellence.
• The second part of the strategy is new and includes everything the company needs to
overcome the Financial- and also the Content-Related Strategic Gap. We call this
second part of the strategy Strategy for Change.
• Both parts of the strategy are equal parts of this new comprehensive and dual corpo-
rate strategy with regard to their strategic relevance.

We have also seen that we need to separate all innovation activities from the operational
business activities and that we need a separate innovation strategy for this reason. From
the explanations in Chap. 9, the following statements about the innovation strategy there-
fore arise:

• The innovation strategy should cover all innovation activities and all the prerequisites
for them.
• The innovation strategy should contain the entire Strategy for Change because it is
innovative in nature as a whole.
• It should also cover all innovation aspects of the Strategy for Excellence.

This leads us to a new division of our corporate strategy, still with two parts, but one
part exclusively focused on everything operational and the other focused on everything
innovative. Figure 9.5 shows this partition into the operational and innovative strategy
aspects.

Strategy for Strategy for

Change Innovation

Strategy for Strategy for

Excellence Exploitation

Fig. 9.5 Partition. © Huber, Kaufmann, Steinmann 2024. All rights reserved
148 9 The Two Stars Strategy

This new partition has become necessary, as mentioned, due to the different and
indeed opposing ways of thinking for these two parts. We also call a dual strategy,
which is partitioned in this way, i.e. according to the categories of innovation and non-
innovation, a Two Stars Strategy. This Two Stars Strategy too is based on the orienta-
tion towards two different “stars”, towards the one of the present and at the same time
towards the one of the future (Fig. 9.6).
We use two figures from the strategy game chess as a symbolic image for the Two
Stars Strategy (Fig. 9.7). One chess piece is the knight. It symbolizes the Strategy for
Exploitation. It is a vital and proven figure on the chessboard and currently carries the
company. For the company’s future viability however, a new chess piece is needed to
represent the Strategy for Innovation. This game piece symbolizes the new and it devel-
ops novel abilities during the course of the chess game.
In summary, we thus obtain the following picture for the Two Stars Strategy:

• The Two Stars Strategy thus consists of two parts, so it is dual.

• It consists on the one hand of the strategy part Strategy for Excellence, without its
innovation parts. We call the Strategy for Excellence reduced this way Strategy for
Exploitation.
• On the other hand, it consists of the Innovation Strategy as the second part of the
strategy. This includes the entire Strategy for Change plus all innovation parts of the
Strategy for Excellence.

Strategy for Strategy for

Change Innovation
Two Stars
Strategy for Strategy
Strategy for
Excellence Exploitation

Fig. 9.6 Two Stars Strategy. © Huber, Kaufmann, Steinmann 2024. All rights reserved

Fig. 9.7 Chess symbols. ©

Huber, Kaufmann, Steinmann
2024. All rights reserved

Strategy for Strategy for

Exploitation Innovation
References 149

Both the Strategy for Exploitation as well as the Innovation Strategy are necessary for
success and therefore are equal parts of the Two Stars Strategy. Within the framework
such a comprehensive corporate strategy, the Innovation Strategy can therefore no longer
be understood as a functional strategy (as before).
And this innovation strategy is admittedly the main topic of the present book. We will
discuss it in detail in the following Chap. 10.

9.7 Conclusion

In this Chap. 9, we have shown why a dual strategy is needed, the Two Stars Strategy.
We have seen that innovation is necessary in both sub-strategies, Strategy for Excellence
and Strategy for Change, to close the strategic gap. We have further found that this strate-
gic gap, deviating from the previous view, has a second, qualitative content dimension in
addition to the quantitative financial dimension. We have further shown that the content
dimension becomes increasingly important with growing rate of change in the market
and that an additional part of the strategy is needed to close this content gap. We call this
new part Strategy for Change. The still necessary previous strategy is now referred to as
Strategy for Excellence. The corporate strategy thus consists of two parts, which can be
referred to as a dual strategy.
We have subsequently changed the division into the two strategy parts in such a way
that one part focuses exclusively on innovation activities and the other (as a result) exclu-
sively on operational activities. This division becomes necessary because innovation
activities must be managed according to other (contradictional!) rules than operational
activities. After this new division, we call the resulting two parts Innovation Strategy and
Strategy for Exploitation. Both together form the now comprehensive corporate strategy,
the Two Stars Strategy.
In short: The corporate strategy must be supplemented by a second part and thus
becomes a dual strategy. The two parts are the Strategy for Exploitation and the Innova-
tion Strategy. Together they form the Two Stars Strategy.

References

Abell D (1993) Managing with Dual Strategies: Mastering the Present—Preempting the Future.
Free Press, New York, USA
Abell D (1999) Competing Today While Prepairing for Tomorrow. Sloan Management Review,
Spring 1999, 40(3):73 ff
Gabler (2021) http://wirtschaftslexikon.gabler.de/Definition/strategische-luecke.html. 9/21/2021
The Innovation Strategy
10

Abstract

In Chap. 10, we now want to derive the rules and instructions for action, which we
have already formulated in Chap. 4 on the decisive fields of the Innovation Frame-
work. This concerns the need for innovation (Field 4, Need) the Guiding Questions
and Search Fields (Field 5, Focus) and very importantly the organization of our inno-
vation activities (Field 6, System). As far as the need for innovation is concerned,
we recognize the Strategic Gap as the big gap in strategy development, which has
not been recognized so far and which increasingly determines the future viability of
the company. This realization significantly increases our need for innovation and has
massive implications for the way, how innovation activities need to be organized.

In Part I Innovation Strategy, we have seen what an innovation strategy is:

“ …a strategy that shows us what needs to be done so that innovation can be successful and
as systematic as possible. That is the innovation strategy.”1

In Chap. 2, we saw what the innovation strategy achieves, i.e. its benefit, and what it
should contain. We have depicted this in Chap. 3 in the Innovation Framework. We have
subsequently described in Chap. 4 how to develop an innovation strategy concretely.
What we have not yet shown is, why this is so and how one comes to these contents and
this procedure. We want to make this derivation now.
The first chapters of Part II Derivation, the Chaps. 7, 8 and 9, have developed the
foundations for this derivation. The present Chap. 10 now reveals what the actual innova-
tion strategy should look like. In the Innovation Framework, it is about the Fields 3, 4, 5

1 See Sect. 2.2.

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer- 151
Verlag GmbH, DE, part of Springer Nature 2024
D. Huber et al., Innovation Strategy, https://doi.org/10.1007/978-3-662-69832-7_10
152 10 The Innovation Strategy

and 6. While we have already dealt with Field 3 in Chap. 9, we will in Chap. 10 now turn
to the Fields 4, 5 and 6.
In this chapter, we must therefore ask ourselves what exactly “needs to be done”2 and
above all why. First, we need to remind ourselves what innovation is all about. As we
already established in Sect. 2.1: “When we innovate, we do something new that is rel-
evant for the company. What we achieve is that we push our company a step into a future
that is new for the company. Therefore, when we innovate, we are building the future of
the company.”

10.1 Need for Innovation

The innovation strategy therefore has the task of leading and enabling all of the company’s
innovation efforts. We assume that the innovation strategy must be based on the present,
the status quo, but also refer to the future, the state we wish for our future and have set as
our goal. It should therefore close the strategic gap. Moreover, as we saw in Sect. 9.4, we
primarily have to close the Content-Related Strategic Gap in such a way that the Financial
Strategic Gap is also closed at the same time. We have illustrated this in Field 3 of the
Innovation Framework and this is achieved by the Strategy for Change. In addition, the
innovation strategy should also cover all innovation needs of the existing business.
These two parts, the Strategy for Change and the innovation needs of today’s opera-
tional business (i.e., the innovation needs of the Strategy for Excellence), determine how
much the company must innovate in total. And this “how much” is the need for innova-
tion of the company. The need for innovation therefore consists of two parts: the entire
Strategy for Change and the need for innovation of the Strategy for Excellence.
We represent this innovation effort needed in Field 4, Need, of the Innovation Frame-
work. This derivation of the need for innovation shows us the following:

• The need for innovation, which results from the Strategy for Change, is determined
by the two strategic gaps. The Content-Related Strategic Gap is particularly dominant
here. And the Content-Related Strategic Gap results directly from our ambition and
our vision derived from it. The need for innovation therefore directly follows from our
ambition. The need for innovation is therefore not an element that a company is
just free to choose.
• The need for innovation of the Strategy for Excellence, on the other hand, is deter-
mined by the company’s market decisions and can therefore be determined freely in
principle. However, the company’s market decisions directly result in market conse-
quences. Therefore, if the company changes its market decisions, it has to accept the
consequences of these.

2 See Sect. 2.2.

10.1 Need for Innovation 153

We can therefore state that the need for innovation varies from company to company. It
is company-specific. To understand more precisely how we can determine the need for
innovation in detail, we need to deal more closely with its two parts.

10.1.1 Need for Innovation of the Strategy for Excellence

The need for innovation of the Strategy for Excellence is, like the entire Strategy for
Excellence, determined by the needs of the ongoing business. Thus, it is all about inno-
vating in an already existing business. To determine the need for innovation of the Strat-
egy for Excellence, we must therefore first understand the general principles of how a
business develops. From these, we can then derive the need for innovation for the indi-
vidual development stages (see Sect. 4.14).
Clayton Christensen and two co-authors have dealt with the question of how a busi-
ness fundamentally develops and have laid the foundations under the term “Innovation
Journey”.3

10.1.1.1 The Innovation Journey According to Christensen

Clayton Christensen had already pointed out in his bestseller Innovators Dilemma4 that
for the successful realization of a disruptive innovation, a separate organization needs to
be created, as disruptive innovations require different organizational and process struc-
tures due to their different business models. This rule applies in principle to all innova-
tions where the business model is innovated, i.e., for all innovations that establish a new
type of business.
In a 2016 article,5 Clayton Christensen et al. elaborated on how the maturation pro-
cess of business model innovations takes place. They call this maturation process
“Innovation Journey”. They describe this Innovation Journey in three maturity stages:
Creation, Sustaining Innovation and Efficiency (Fig. 10.1).
The three stages identified follow each other always in the same order:

Creation
In the first stage, Creation, the innovation project is about finding a working business
model. A business does not yet exist at this stage.

Sustaining Innovation
In the second stage, Sustaining Innovation, a working business model has now been
found. The company will typically organize this newly found business as a new business

3 [Christensen, Bartman, van Bever, 2016].

4 [Christensen, 1997] page 130.
5 [Christensen, Bartman, van Bever, 2016].
154 10 The Innovation Strategy

3.
Efficiency

2.
Sustaining Innovation

1.
Creation

Fig. 10.1 Innovation Journey. © Huber, Kaufmann, Steinmann 2024. All rights reserved

unit. At this development stage, the focus is at first on establishing a solid market presence
and then about growing strongly. Therefore, at this stage industrialization, the establish-
ment of operational processes and scaling are in the foreground. We therefore find product
innovations at this development stage, which are necessary for getting established in the
market and for conquering new sales areas (e.g., for export to new countries). In addition,
product maintenance is also necessary in response to emerging competition.
The innovation efforts at the development stage Sustaining Innovation therefore focus
primarily on adapting the offer to the markets being served and on developing existing prod-
ucts further, i.e. product innovation in particular of the Sustaining Innovation type6 as well
as simple product maintenance. On the other hand, the establishment of professional pro-
duction and marketing processes, which is also necessary at this stage, is more of an opera-
tional issue, as it deals mainly with implementing known and proven operational processes.

Efficiency
As the third and final stage, Christensen and his co-authors have identified the Efficiency
stage. At this development stage, we now have a mature business in front of us. Mar-
ket growth here gradually decreases due to the increasing saturation of the markets. This
means that it makes less and less sense to invest resources in volume growth, which is
increasingly difficult to achieve. The focus therefore shifts to improve the efficiency
of the business processes the company, especially the efficiency of the processes for
production and marketing. The efforts for innovation are therefore shifting primarily
towards process innovations.

10.1.1.2 Impacts on the Innovation Needs of the Strategy

for Excellence
So what innovation needs arise from the Strategy for Excellence? As we have now seen,
this depends on the state of the various existing businesses:

6 See Clayton Christensen, Innovators Dilemma [Christensen, 1997].

10.1 Need for Innovation 155

• At the Creation stage, we are only in the process of searching for a business. There-
fore, the Creation stage does not yet belong to the Strategy for Excellence at all.
• If the business is at the Sustaining Innovation development stage, the focus is primar-
ily on product innovation (of the type Sustaining Innovations).
• If it is at the Efficiency development stage, process innovation is in the foreground.

The development stage of a business is a given and can be determined by an analysis.

Apart from that, however, the extent of the desired innovations and their content orien-
tation depends on the market decisions of the company. Therefore, in principle, man-
agement can take such decisions freely. However, one should not forget that market
decisions of course have direct effects on the market. So, the company is not quite as free
in its decisions as it might seem at first sight.
But at least it can be said that the innovation needs of the Strategy for Excellence
are directly dependent on the specific characteristics of this part of the strategy and that
no general statements can be made about this. The innovation needs of the Strategy for
Excellence are therefore not directly dependent on the vision and have nothing to do
with the Strategic Gap. It is best, to organize the innovation efforts from the Strategy for
Excellence in the form of orders from the company’s person responsible for the market
to the development department.

10.1.2 Strategy for Change

As for the Strategy for Change, we have already seen in Chap. 9 that the entire Strat-
egy for Change must be considered as an innovation effort. The task of the Strategy for
Change is to close the Strategic Gap (both financially and in terms of content). The Stra-
tegic Gap arises, because our goals for the future (both financial and content-related)
cannot be achieved with our current positioning and our current offer. This means, how-
ever, that these strategic goals require us to fundamentally rethink our offers and usually
even require us to enter new businesses. Optimizing existing offers and businesses is not
enough to close the Content-Related Strategic Gap.
The efforts of the Optimization and Modernization phases of Fig. 10.2 as well as the
Radical Modernization are all operational in nature and contribute to reducing the Finan-
cial Strategic Gap. However, this has no influence on the Content-Related Strategic Gap.
The Content-Related Strategic Gap can be closed in three different ways (Fig. 10.2):

1. By using our existing solution concept in further (usually adjacent) fields of applica-
tion. The business model remains the same in this case, so we are still innovating sus-
tainably.
2. By the further development of the business model in the existing business. Such
business model innovations are in most cases made possible by a technology change.
156 10 The Innovation Strategy

optimization modernization
operational
improvement
radical
modernization

new fields of application,

same business model

further development of the close the

business model in the strategic gap
existing business

completely new fields of

application

Fig. 10.2 Closing the Content-Related Gap. © Huber, Kaufmann, Steinmann 2024. All rights
reserved

Therefore when introducing new technologies, business model innovations are the
common rule (The above-mentioned radical modernization is the exceptional case).
3. The change in technology adds another element: The use of new technology also
shifts the limits and possibilities for the application. The introduction of a new tech-
nology usually opens up entirely new fields of application for the company, which
would not have been exploitable with the previous technology.

These three basic possibilities are available to us to close the Content-Related Strategic
Gap. They each have different risk profiles and are particularly dependent on technologi-
cal developments. It is the task of the innovation activities to identify such new opportu-
nities and to clarify their commercial prospects as well as the associated risks.
The Strategy for Change therefore directly results from the strategic gap to be closed,
which itself is derived directly from our ambition via the vision. In other words: Given
the company’s ambition, the Strategy for Change and thus the associated need for inno-
vation are also determined.

10.1.3 Provide Sufficient Resources

We have now determined our need for innovation and described it in Field 4 of the Inno-
vation Framework. The question now arises whether we have the strength and ability at
10.2 Search Fields and Guiding Questions 157

all to satisfy our innovation need. If it turns out that it exceeds our capabilities, we must
obtain additional resources from outside the company. In the simplest case, these can be
just newly hired people with new knowledge and skills. However, additional resources
on a larger scale may sometimes be required, which could require an increase in capital
or far-reaching strategic partnerships.
If we are however not willing to accept such potentially far-reaching consequences,
we must resize our ambitions for the future. This means that we have to take a step back
in the strategy process to the point where we set our goals for the future and formulate
our vision. Such setbacks are in fact typical in strategy development, which is why strat-
egy development must be understood as an iterative process.

10.2 Search Fields and Guiding Questions

Once we have identified our need for innovation in Field 4, Need, of the Innovation
Framework, the next step is to determine in which content areas we expect the most sig-
nificant contributions to possible innovations. Since innovation essentially involves the
search for something new and is therefore a search process, we refer to such content
fields as Search Fields.
Determining the Search Fields is a creative process and cannot be derived mechanis-
tically. We search, where it seems attractive to us. It can be helpful in this case, to be
guided by the questions that are still open on our way into the future. We refer to these
questions as Guiding Questions. And of course, formulating Guiding Questions is a cre-
ative process too.
Determining Search Fields can thus be somewhat structured if Guiding Questions are
formulated first and when the actual Search Fields are determined only afterwards. In
this case too, we may proceed iteratively. Furthermore, it is helpful to realize that Search
Fields may be very broad on the one hand, but that on the other hand they can also be
kept very narrow and precise. Broad Search Fields are formulated in the case when we
venture into new territory. They take the form: “Go there and see if there is something
interesting for us”. Search Fields are defined narrowly when it comes to missing indi-
vidual insights, in many cases crucial “missing links”. Narrow Search Fields are of the
form: “Find a solution for problem X” (e.g., “Find a material with strength Y and a melt-
ing point of more than Z degrees”).
Moreover, we should be aware that we often find something different from what we
actually have been looking for. And we should be aware that such accidental discoveries
often can be very valuable. Such accidental discoveries therefore deserve due attention.
If such accidental discoveries turn out to be of value, it may become necessary to adjust
the Search Fields. Sometimes even the innovation strategy needs to be revised!
We describe the Search Fields (and possibly also the Guiding Questions) in the Inno-
vation Framework in Field 5, Focus.
158 10 The Innovation Strategy

10.3 The Innovation Strategy in the Innovation System of the

Bern Innovation Model

In our book “Bridging the Innovation Gap”, we condensed our results on the “Bern Inno-
vation Model”.7 It consists of six parts: Dual Strategy, Corporate Model, Innovation Pro-
cess, Exploration Process, Organization, and Central Innovation. Figure 10.3 shows this
proven model.
The Dual Strategy forms the basis of the Bern Innovation Model. And of course, the
Strategy for Change is also dominant here,8 as the innovation model is about aspects of
change.
In our book Bridging the Innovation Gap, we had already introduced the concept of
the Qualitative Strategic Gap (for the Content-Related Strategic Gap).9 This gap corre-
sponds to the difference between our corporate identity today and the one our company
is aiming for in the future. We had also noted already in our previous book that it is “the

dual corporate
strategy model

Innovative
central
organization
innovation
Company

innovation exploration
process process

Fig. 10.3 Bern Innovation Model. © Huber, Kaufmann, Steinmann 2024. All rights reserved

7 [Huber, Kaufmann, Steinmann, 2017] pages 146 ff.

8 Strategy for Change is referred to in our previous book Bridging the Innovation Gap as “today for
tomorrow”, which is the term that Derek Abell used for this part of the strategy (See Bridging the
Innovation Gap, Fig. 8.1).
9 [Huber, Kaufmann, Steinmann, 2017] page 147.

In the book referenced, we spoke of “Qualitative Strategic Gap” when we talked about what we
now call “Content-Related Strategic Gap” in this book. This content-oriented part of the strategic
gap is, in contrast to the financial part, purely qualitative in nature. Hence the previous term. How-
ever, we find today, that to distinguish between content and financial makes the distinction clearer.
Therefore, we have renamed the term in this book to “Content-Related Strategic Gap”.
10.4 Creating the Prerequisites for InnovationModel 159

task of innovation activity to close this gap”.10 We derived the same result in Chap. 9,
albeit from a different angle.
If we look at the situation a little more closely, we see the following elements:

• The Bern Innovation Model is based on the Dual Strategy.

• This deals with the so-called “Today-for-Tomorrow Strategy” and implicitly also the
Content-Related Strategic Gap. Since this can only be closed with innovations, this
Content-Related Strategic Gap forms the starting point for the innovation strategy.
• This also makes the corporate identity the starting point of the innovation strategy,
as the corporate identity in its current form, together with the corporate identity we
desire for the future, defines the Content-Related Strategic Gap.
• The Strategic Gap can thus only be closed with innovation.

How to do this, i.e., how to organize innovation, can therefore be taken from the Bern
Innovation Model. Or, to put it another way: The innovation strategy must provide all the
prerequisites, which, according to the Bern Innovation Model, are necessary for success-
ful innovation activity.

10.4 Creating the Prerequisites for Innovation

As the final part of the innovation strategy, the company must now create the prerequi-
sites to allow the innovation activities to be promising at all. We describe the creation of
these pre-conditions in the final Field 6, System, of the Innovation Framework.
What prerequisites must be met for innovation to be possible at all was the topic of
our book Bridging the Innovation Gap. The argument related to this will not be repeated
here. However, we want to use the results we found there.

10.4.1 Innovation Process

The innovation process describes the procedure to be followed for innovation projects.
And this of course is fundamental for the success of innovation. In our book Bridging
the Innovation Gap11 we were able to show that the innovation process described in the
literature up to now has been incomplete. This leads to innovation projects unintention-
ally breaking off prematurely, which in turn explains why companies are typically not
very satisfied with the success of their innovation projects. In the book mentioned, we
were able to complement the innovation process so that it is now complete and there-
fore continuous (Fig. 10.4). The individual process steps are described in more detail in
Sect. 4.11.1. For the derivation of the completed process, we refer to the mentioned book.

10 [Huber, Kaufmann, Steinmann, 2017] page 147.

11 [Huber, Kaufmann, Steinmann, 2017].
160 10 The Innovation Strategy

prepare translate implement

Early
Market
Warning Exploration Transfer Development
Introduction
System

$
$ $
Raw Material Opportunities Specifications Products Sales

Fig. 10.4 Innovation process. © Huber, Kaufmann, Steinmann 2024. All rights reserved

10.4.2 Innovation Organization

As every process, our new and now completed innovation process needs a suitable
organizational structure. This too, is derived and extensively argued in the mentioned
book Bridging the Innovation Gap. The model organization of an innovative company is
shown in Fig. 10.5. Its individual elements are briefly explained in Sect. 4.11.2.

CEO

HQ

other
IPR Central
COO HQ Strategy Venturing
Mgmt. Innovation
functions

Reporting to

Business Business Business

Unit A Unit B Unit C

BUs

Innovation Innovation Innovation

Unit A Unit B Unit C

Fig. 10.5 Innovation organization. © Huber, Kaufmann, Steinmann 2024. All rights reserved
10.4 Creating the Prerequisites for Innovation 161

10.4.3 Human and Financial Resources Required for Innovation

As for all projects, the necessary human as well as financial resources must be provided
for the innovation activities. This is an aspect that is often given not enough importance
in practice. This then leads to innovation projects “starving” due to lack of resources.
These aspects are also presented and argued in the book Bridging the Innovation Gap,
which is repeatedly referenced here.
However, at this point we want to look at the budget aspects in some more detail. For
this purpose, we look at how different types of innovation should be differentiated to
make sure that our portfolio of innovation projects does not become unbalanced, which
would expose us to unnecessary risks. In addition, we want to work out how we can
ensure that our innovation projects remain adequately financed even if the priorities in the
company should change. This is important, because innovation projects only have a long-
term impact on the company’s financial success. Therefore, there is the latent danger that
such long-term efforts will be reduced or even eliminated in favor of short-term results.

10.4.3.1 Types of Innovation According to Pisano

First, it is necessary to categorize the different types of innovation sensibly. This was
done by Gary Pisano,12 based on previous work by William Abernathy,13 Kim Clark,14
Clayton Christensen,15 Rebecca Henderson,16 David Nadler17 and Michael Tushman.18 In
doing so, Pisano came up with his “Innovation Landscape Map”, which resulted in a clas-
sification according to Fig. 10.6, which proves to be very useful for our purposes here.
Pisano distinguishes four types of innovation:

Routine Innovation:
Routine innovations are the vast majority of innovations. These are the innovations
where existing products are further developed and improved. This includes, for example,
the expansion of a product line or the introduction of a new product generation: gener-
ally all those innovations that are typically initiated and controlled by product manage-
ment. The criterion for a routine innovation is that both the technology and the business
model remain fundamentally the same. Routine innovations are innovations in existing
business and they are best handled and accounted for within the existing business unit.19

12 [Pisano, 2015].
13 [Abernathy, Clark, 1985].
14 [Abernathy, Clark, 1985] and [Henderson, Clark, 1990].

15 [Christensen, 1997].

16 [Henderson, Clark, 1990].

17 Among others in [Nadler, Tushman, 1989].

18 Among others in [Nadler, Tushman, 1989].

19 See [Huber, Kaufmann, Steinmann, 2017] page 86, Rule 1 or also [Christensen, 1997].
162 10 The Innovation Strategy

Fig. 10.6 Types of innovation leveraging need for

according to Pisano. © Huber, existing technical new technical
Kaufmann, Steinmann 2024. capabilities skills
All rights reserved

need for a new disruptive architectural

business model innovation innovation

leveraging the
routine radical
existing business
innovation innovation
model

Radical Innovation:
Radical innovations are innovations, where the business model remains the same, but
the underlying base technology of the innovation changes significantly. Examples are
(according to Pisano) biotechnologically produced pharmaceuticals or jet engines for air-
planes instead of piston engines.
Here, the build-up of new technological know-how is required, which typically occurs
through the establishment of technology labs in the innovating business units. Here too,
the responsibility for innovation activities lies with the business unit.

Disruptive Innovation:
Disruptive innovations are innovations that contain a new business model. Disruptive
innovations are therefore (like architectural innovations) business model innovations.
Examples are (according to Pisano) ride-sharing services like Uber or open source soft-
ware. Disruptive innovations, like all business model innovations, shall be developed by
an innovation unit, which must be independent from the business units. Disruptive inno-
vations subsequently shall be built up as a new, independent business unit or alternatively
as a new subsidiary.20

Architectural Innovation:
Architectural innovations are business model innovations too. However, here additionally
a new base technology (new to the company) is used. This increases the complexity of
the project and thus the innovation risk. Architectural innovations, like disruptive innova-

20 See[Huber, Kaufmann, Steinmann, 2017] page 86, Rule 2.

or also [Christensen, 1997].
10.4 Creating the Prerequisites for Innovation 163

tions, must be developed by an independent innovation unit and be subsequently built up

as an new, independent business unit or as a new subsidiary.
Pisano notes that the company must decide in its strategy what weight and thus what
proportion of the available resources it wants to allocate to the four different types of
innovation. He points out that there are no right or wrong proportions, but that the alloca-
tion must be company-specific, taking into account the industry and market situation. In
addition, he rightly demands that a company in the long term must operate all four types
of innovation in order to survive. The company therefore must find a suitable balance
of the four types of innovation.21 According to Pisano, a company needs an innovation
strategy especially to define this balance.

10.4.3.2 “Strategic (Resource) Buckets” According to Cooper

We have now seen that our innovation portfolio must be balanced over four types of
innovation. Robert Cooper points out in a 2013 article22 that the allocation of resources
to innovation projects is implemented poorly in practice and that the resources, actually
intended for innovation projects, unfortunately end up in most cases in operational cus-
tomer projects.
As a countermeasure, Cooper recommends the introduction of so-called “Strategic
Buckets”. This is an approach, in which resources remain reserved for certain initiatives
or project categories (e.g., innovation projects) and this, regardless of the rolling wave
planning and the according (re-) prioritization of the operational customer projects.
In light of Cooper’s results, it is therefore advisable to make such a priori resource
allocations with “Strategic Buckets” for the four types of innovation described above
by Pisano. This way, we can protect ourselves against the risk that (long-term) strate-
gic decisions are diluted by (short-term) operational pressure. We particularly can ensure
that the balance between the four innovation project categories, as defined by Pisano in
the innovation strategy, is actually maintained, as routine innovation projects as well tend
to absorb all innovation resources.

10.4.3.3 Conclusion
We have thus found a few principles that we should consider with regard to the budget-
ing aspects of the innovation strategy.
We have looked at the four different types of innovation according to Pisano and
found that we should ensure that the company should handle all four types of innova-
tions in suitable volume. We have seen that this distribution is de facto implemented

21 One could use e.g. the following distribution as a starting point: Routine: 85%, Radical: 15%,
Disruptive 5%, Architectural: 5%. But at this point, we shall make clear again that these numbers
should be carefully reassessed and be modified if required, to make sure that they are adapted to
the specific company and its situation.
22 [Cooper, 2013].
164 10 The Innovation Strategy

through the use of resources. Pisano has suggested to us to define this distribution as an
important part of our innovation strategy.
On the other hand, we have had to acknowledge that resources can easily be redistrib-
uted to other project categories in everyday business (especially to customer projects), so
that the activity volumes originally intended for the various types of innovation are no
longer maintained. This leads to an inadequate implementation of the innovation strat-
egy. As a countermeasure, Cooper recommends that we allocate the innovation resources
to the project categories in the form of “Strategic Buckets”.
We have therefore incorporated these findings into the rules concerning human and
financial resources in Sect. 4.11.3.

10.4.4 Leading Innovators

In order to be successful with innovation projects in the phases Early Warning System
and Exploration, it is necessary to employ staff with the specific personality profile of
an NT type, according to the personality typology of Isabel Myers-Briggs.23 This system
was briefly described in the box “The Personality Types of the Myers-Briggs Type Indi-
cator ®, MBTI” in Sect. 4.11.4.
David Keirsey24 describes the required NT types as follows:

• “NT type: … NTs are the keepers of the key to knowledge. Keirsey refers to them as
the “rationals”. NTs are convinced that they understand how things work. They can be
regarded as the experts. NTs are creative, concept-oriented, professional and imper-
sonal. NTs typically learn without interruption, without ever giving a thought to ever
putting what they’ve learned to use. Knowledge, for them, is everything. NTs typically
think in analogies and work inductively. NTs tend to disdain hierarchies and instead seek
to form networks. They are likely to experience change as an interesting experiment. In
short, NTs make for ideal researchers and perform brilliantly when it comes to unfamil-
iar terrain. According to Keirsey, NTs account for around 5–10% of the population.”

Their profile is diametrically opposed to the SJ types, which are optimal in operational
business, and which Keirsey describes at the same place as follows:

• SJ type: SJs are the major organizers. Keirsey refers to them as “guardians.” SJs are
convinced that they “do it right”. They can be regarded as the pillars of the estab-
lished system. They are conservative, orderly, reliable and responsible. SJs are ana-

23 [Myers Briggs, 1980].

24 [Keirsey,2010] or [Keirsey, 2021]. The (no longer available) older description on web site [Keir-
sey, 2010] is used here. This, because it seems clearer and more suitable to us at this point of the
discussion than the newer description on the web site [Keirsey, 2021].
10.5 Conclusion 165

lytic and deductive in their thinking. They think in linear chains of cause and effect.
They optimize and strive primarily for efficiency. SJs value hierarchical enterprise
structures and easily find their stations in the structure. They are risk-averse, and
therefore tend to be opposed to change. In short, SJs make for ideal managers and
they perform brilliantly when it comes to operational tasks. According to Keirsey, SJs
account for around 40–50% of the population.

In our book Bridging the Innovation Gap, we have described, why these two profiles
are needed (NTs for exploration work and SJs for operational business) and we have
also derived, what this means for the organization of innovation work. It is obvious that
these two types of people cannot be led in the same way and that the rules of the game
must therefore be suitably adapted. We have inserted the necessary rules as “recipes” in
Sects. 4.11.3 to 4.11.6. We do not repeat the derivation in detail here. Instead, we refer to
the aforementioned book Bridging the Innovation Gap.

10.5 Conclusion

In Chap. 10, we have now derived the three Fields 4, Need, 5, Focus, and 6, System, that
were still missing for an innovation strategy.
Regarding the need for innovation, we have seen that the classic strategy is no longer
sufficient, due to the ever-increasing rate of change in markets and technologies. How-
ever, the classic strategy is still necessary to keep the company economically on track in
the short term, but it must be supplemented by a new Strategy for Change. This change
on the strategy side implies a great increase in the company’s need for innovation. In
addition, we identified the company’s aspiration as a second main driver of the need for
innovation.
Regarding Focus, we found that it makes sense to formulate Guiding Questions based
on the need for innovation and to define Search Fields required to answer them. This
ensures that our innovation efforts remain focused. We also saw that we should not
be surprised, if we find something completely different from what we have defined as
Search Fields and that it is advisable to remain flexible enough to continue working on
such unexpected results, as long as they appear interesting enough.
As the last area, we looked at what prerequisites must be met for the company to
become capable of innovating successfully in the first place. We rely on the results of our
book Bridging the Innovation Gap, which examines these prerequisites, the innovation
system, in detail. We find that building a functioning innovation system is a big challenge
for companies, which may require painful and sometimes counterintuitive decisions.
Based on the considerations described here in Chap. 10, we have developed the meas-
ures necessary for successful innovation and presented them as a guide to action in
Chap. 4.
166 10 The Innovation Strategy

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Christensen C (1997) The Innovators Dilemma. Harper Business, New York, USA
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Innovation Strategy for SMEs
11

Abstract

In Chap. 11, we look now at the specific situation in terms of innovation faced by
small and medium-sized enterprises (SMEs). We find that the basic rules of innova-
tion apply to SMEs too, but that, compared to large companies, SMEs are in a specific
situation, both in terms of their need for innovation and also with regard to how inno-
vation can be organized. We also recognize that not all SMEs are the same and that
the situation of start-ups in particular differs drastically from that of SMEs.

After deriving in Chap. 10 what an innovation strategy is and how to build one, we want
to look in Chap. 11 at how innovation can be realized for an SME.
Basically, innovation works for an SME in exactly the same way as for a large com-
pany. However, SMEs have certain characteristics that we need to take into account and
that can limit the company’s scope for action. They usually have fewer resources than
large companies do. On the other hand, they have the advantage of shorter communica-
tion paths and faster decision-making ability. First, we look at what exactly is actually
referred to as an SME.

11.1 Definition and Distinction of SME Types

SME stands for Small and Medium-sized Enterprises. A company is therefore referred
to as an SME if it is “small” or “medium”. This classification is usually made based
on the number of employees. In Switzerland and also in the European Union, a com-

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer- 167
Verlag GmbH, DE, part of Springer Nature 2024
D. Huber et al., Innovation Strategy, https://doi.org/10.1007/978-3-662-69832-7_11
168 11 Innovation Strategy for SMEs

SME

1 2 3a 3b

freelancer startup actual SMEs mini conglomerate

1 number of employees 250

Fig. 11.1 Types of SMEs. © Huber, Kaufmann, Steinmann 2024. All rights reserved

pany is considered an SME if it has fewer than 250 employees.1,2 Companies with fewer
than 50 employees are referred to as “small” and those with fewer than 10 employees are
referred to as “micro”. We can thus state that companies are classified as an SME, some-
times are very different. An SME may be a one-person freelancer or as well a respect-
able consulting firm with 250 employees. This means that companies with very different
characteristics are put into the same category, the SME. However, it goes without saying
that these companies have very different innovation needs and offer different prerequi-
sites for innovation. So let us look at what types of SMEs we can distinguish with regard
to innovation (Fig. 11.1).

A) Freelancers and micro-companies with up to 10 people typically sell the working

hours of their employees. An example would be a computer science freelancer or a
small IT company. Many craft businesses also fall into this category.
B) Start-ups are looking for a business model (i.e., start-ups according to the categoriza-
tion by Steve Blank3). It is typical for start-ups that they cannot yet cover their costs
with sales revenues. We will go into the situation of start-ups in more detail in Chap. 12.
C) Companies are organizations that implement a functioning business model (i.e., com-
panies according to the categorization by Steve Blank). Companies cover their costs
with sales revenues. There are two subgroups of these:

1 In North America (Canada and USA), the values are twice as high. In addition, in certain cases,
additional criteria are considered (as in the EU as well).
2 CH: [Bundesamt für Statistik, 2021]; EU: [Europäische Kommission, 2015].

3 [Blank, Dorf, 2012].

11.2 The Innovation Needs of SMEs 169

Table 11.1  The equivalent of SME types in large corporations

Organizational unit in the conglomerate SME type
Staff unit Freelancer
Innovation project Start-up
A single profit center Actual SME
(i.e. an organizational unit with profit and loss responsibility for just one
business)
A multiple profit center Mini-conglomerate
(i.e. an organizational unit with profit and loss responsibility for several
businesses)

(a) Actual SMEs: Companies with a single business, which is in almost all cases at
the development stage of Sustaining Innovation.
(b) Mini-conglomerates: Companies with several businesses, which are usually at
different stages of development each.

Even Departments of Conglomerates Can Be Considered SMEs

Individual organizational units of a conglomerate can also be considered as SMEs.
This makes sense in cases, where they are tasked with the complete management
of a business as a profit center.
A comparative analogy of corporate units and SME types is depicted in
Table 11.1:

11.2 The Innovation Needs of SMEs

We have seen in the preceding section that SMEs are not a homogeneous group of com-
panies, but that there are four fundamentally different types of SMEs: freelancers, start-
ups, actual SMEs and mini-conglomerates.
The innovation needs of the different types of SMEs and their prerequisites for this
are quite different. Therefore, we want to look at these in detail:
Freelancers typically sell their labor. Therefore, they do not need explicit innovation
activities. However, they must stay up to date with their skills and knowledge. Continu-
ing education and the maintenance of the partner network are therefore required.
Start-ups are, as Steve Blank has found, search organizations with the goal of find-
ing a functioning business model. Start-ups are therefore inherently innovation projects.
They are in the Innovation Journey at the Creation stage.4 They are specialized in their

4 According to [Christensen, Bartman, van Bever, 2016].

170 11 Innovation Strategy for SMEs

innovation goal, the finding of an implementable business model. They have no other
task. Additional innovation tasks are therefore unnecessary.
The situation is quite different for Actual SMEs (hereinafter referred to just as
SMEs). Such SMEs have a single business, which they need to take care of. They must
ensure that they remain competitive in their (only) business in the future. For this, inno-
vation in the existing business is required. They typically still have considerable growth
potential, so they are in the Innovation Journey at the Sustaining Innovation stage. Actual
SMEs are the main focus of this chapter.
Mini-conglomerates are rather a special case. Conglomerates generally have several
businesses, which can be at different stages of development. But Conglomerates are usu-
ally much larger than 250 employees. However, there are exceptions, where companies
smaller than 250 employees manage several businesses.
To such mini-conglomerates, the same rules apply to innovation as for large conglom-
erates. However, mini-conglomerates, like all smaller companies, have to cope with lim-
ited resources.

Example of a Mini-Conglomerate
An example could be an IT company with 100 employees, which on the one hand
develops software on behalf of customers (typically their main business), but on
the other hand also sells software as standard packages (usually as a side business).
These two businesses have completely different characteristics and must be man-
aged according to different rules.
Such a company would therefore have to be called a mini-conglomerate.

In the following, we will consider mini-conglomerates no longer, but will turn to our
focus for this chapter: the actual SMEs.

11.3 Key Characteristics of SMEs with Regard to Innovation

We focus now on the actual SMEs and look at their main characteristics. These are their
small size and their stage of development.

Small Size
First and foremost, an SME is relatively small. Therefore, only limited resources are
available for innovation activities. This means that smaller companies usually cannot
afford a specific organizational unit exclusively for innovation.
11.3 Key Characteristics of SMEs with Regard to Innovation 171

Smaller companies therefore sensibly do not organize their innovation activities

according to the organizational chart, such as large companies typically do, but rather
organize innovation activities in the time domain. This means that innovation activi-
ties are carried out in fixed periods of time, e.g. in workshops and time-limited projects.
Since the culture required for innovation activities differs greatly from that in operational
business, it is often sensible to carry out these (time-limited) innovation activities at a
location outside the company.

Stage of Development
Another fundamental difference between SMEs and large companies is their position in
terms of company development. Established SMEs, unlike start-ups, are no longer look-
ing for a working business model,5 but have already found it. Therefore, their first con-
cern is to establish themselves in the market and then, for a longer period of time, mainly
to grow and to economically exploit their existing business model.6 Accordingly, prod-
uct improvements are the main focus for SMEs. In certain cases, expansions into adja-
cent application areas and markets (so-called adjacencies7) may also be attractive. On
the other hand, fundamental innovations usually are of little interest to SMEs. In fact,
a study by Oliver Stalder8 has empirically shown that the topic of business models and
business model innovation is not perceived as interesting by SMEs.9

Innovation in actual SMEs is therefore innovation within an existing business.

11.4 Innovation in the Existing Business in Principle

Already in the 1970s, William Abernathy and James Utterback10 researched the topic of
innovation in the existing business. They came up with a model that distinguishes five
stages of innovation development11 (Fig. 11.2):

5 This would be the “Creation” stage in Clayton Christensen’s model, see Sects. 13.5, or 10.1.1.1.
6 Thus, in Christensen’s model, they have reached the stage of “Sustaining Innovation”, see
Sects. 13.5, or 10.1.1.1.
7 See also Sect. 14.7.

8 [Stalder, 2018].

9 Given the above, this finding is not surprising, as SMEs typically are in a phase of growth. Nev-

ertheless, for an SME it should also be of value to know how their current business model actually
works, something that only a few SMEs currently aware of.
Also not surprisingly, the opposite finding has been shown in those cases, where SMEs were still
in the phase of searching for a business model (i.e., not actual SMEs but start-ups). In these cases,
business modelling is part of their daily work.
10 [Abernathy, Utterback, 1978].
11 Terminology and phrasing by the authors.
172 11 Innovation Strategy for SMEs

Stages of development
5.
Modernization

4.
Optimization

3.
Dominant
Design

2.
Initial
Differentiation

1.
Initial Design

Time

Fig. 11.2 Development stages. © Huber, Kaufmann, Steinmann 2024. All rights reserved

1. The Initial Design of the inventor (this is the starting point)

2. The Initial Differentiation of the design12 to maximize performance
3. Emergence of a Dominant Design13
4. Elimination of the “teething troubles” and Optimization of the production process14
5. Modernization of the product

Development Stage 1: Initial Design

The innovation process in the existing business starts with the emergence of a new busi-
ness. Here, for the first time, an initial design of the product and the business model
appears on the market. This happens by transforming a former start-up into a first SME
or into a new business unit of a corporation. The initial design is just the starting point.
It is not yet part of the innovation in the existing business, as the new business has just
been born.

Development Stage 2: Initial Differentiation

After this first appearance of a new and successful business in the market, competition
is expected to arise. In a first step, me-too offers in the form of imitations and copies
emerge. As a result, the initial SME must defend itself against such copies. Since bla-

12 Called “fluid pattern” by Abernathy et al.

13 Called “transitional pattern” by Abernathy et al.
14 Called “specific pattern” by Abernathy et al.
11.4 Innovation in the Existing Business in Principle 173

tant copies are hardly successful, the newly emerged competition is forced to offer alter-
native solutions.15 This implies alternative designs, i.e., differentiations of the solution
approach. This is the initial differentiation of the design, with the aim to maximize per-
formance.

Development Stage 3: Dominant Design

Starting from this market situation with a variety of different solution offers, one of
designs will prove to be the most successful. At this stage, most of the providers will
begin to design their offers as variants of the same, obviously superior solution concept,
the now dominant design. How this reduction of solution variants exactly takes place
depends on the product or the associated market. For example, network effects can play a
role.16 It is also possible that the market splits into submarkets, each showing a different
dominant design.17

Development Stage 4: Optimization

Once a dominant design has been established, the providers now aim to consolidate and
expand their position in the market. The focus at this stage is on achieving sufficient
quality and increasing efficiency in production, distribution and marketing. So, we are
initially dealing with an immature market in which the offers still have teething problems
and quality deficits and in which the processes are not yet optimized. Competitiveness is
therefore achieved at this stage by offering better quality or a lower price.

Development Stage 5: Modernization

As the market matures, competitors will find it increasingly difficult to differentiate
themselves through quality or price. A new need for innovation comes into play: the
modernization of the product. Differentiation increasingly takes place through new addi-
tional functionalities and also through new design forms (design in the sense of external
design). In a late stage of this modernization phase, the use of new technologies (Radi-
cal Modernization), or the development of new application fields (Adjacencies) and new
business models, increasingly comes into focus.

Example: The Maturation of the Car Market

1. Initial Design: The first motor vehicle by Benz (actually a motorized ladder
wagon).

15 The customer needs do not necessarily have to be new ones. Often the “jobs to be done” are very
stable over a long period of time and only the solutions renew themselves and become better and
better.
16 Example: the typewriter keyboard.

17 Example: the Android and iOS operating systems of mobile phones.

174 11 Innovation Strategy for SMEs

2. Initial Differentiation: The car market around 1900: Various designs: tricycles,
motorized carriages, diverse engines, electric cars etc.
3. Dominant Design: The dominant design developed in two steps, the Ford T and
later again the design by GM with a steel roof.
4. Optimization: The car market around 1950. Here, the breakdown statistics are
the measure of all things.
5. Modernization:
A) Product design: The car market in the USA around 1960: chrome, “wings”,
taillights, white wall tires.
B) Functionality: The car market in Europe around 2000: e.g. turbo engines,
6-speed transmissions, navigation systems.

11.5 Innovation in the Existing Business According to Maturity

Phases

If we now look at the five stages of innovation in the existing business, we find specific
needs for each stage and associated to them, different leadership roles.

Development Stage 1: Initial Design

The initial design is led by the innovation managers and, as already noted, actually does
not belong to the innovation in existing business considered here, as a new business has
in this first step just been newly created.

Development Stage 2: Initial Differentiation

The identification of differing solution concepts required for differentiation or for perfor-
mance enhancement is in this next maturation step dominated by technology. It is led by the
innovation managers too. This means that at this development stage the innovators should
make corresponding proposals to the marketing responsible of product management.

Development Stage 3: Dominant Design

The transition to a dominant design can be identified by both, innovators, as well as
product managers. Good cooperation between these two groups is recommended in this
phase. The decision as to exactly when to transition to a dominant design, is then made
by product management. Accordingly, it is product management that commissions the
technical people with the new product development required. From this development
step onwards, the product managers are responsible.

Development Stage 4: Optimization

The product managers are also responsible for developing the optimization measures
with regard to quality and process efficiency. The development work required is there-
fore also commissioned by the product management.
11.5 Innovation in the Existing Business According to Maturity Phases 175

5.
Modernization

4.
Optimization

3.
Dominant
Design

2.
Initial
Differentiation

1.
Initial Design

Innovation management
Product management

Fig. 11.3 Leadership responsibility. © Huber, Kaufmann, Steinmann 2024. All rights reserved

Development Stage 5: Modernization

The same applies to modernization to maintain competitiveness. It is the task of the
product managers to determine which further developments or which refurbishment
measures need to be taken so that the offer remains competitive. The corresponding
development work is therefore also commissioned by product management.
Overall, this results in the following picture regarding leadership responsibility for
the innovation efforts needed: Innovation management is responsible for stages 1 and 2,
product management for stages 3–5. (Fig. 11.3):

11.6 Leadership Responsibility for Innovation

Based on these results of the early innovation research by William Abernathy and James
Utterback, it becomes clear, which leadership responsibilities an SME must have organi-
zationally, and how these should work in principle.
On the one hand, there is a development department. It works on behalf of product
management (PM), or, in the case of developments for process improvements, on behalf
of process management. This largely corresponds to the status quo, as it is normally
found in existing companies today.
On the other hand, however, there is the step from initial design to initial differentia-
tion, which cannot be commissioned under the leadership of product management. Here,
176 11 Innovation Strategy for SMEs

the exploration of new solution approaches is required and for this exploration, activities
under the responsibility of innovation management are necessary.

11.7 Innovation Through the Establishment of a New Business

If we observe how a business develops over a slightly longer period of time, the need
for exploration activities becomes even more pronounced. In addition to the exploration
need in the initial differentiation (Innovation Case 1), there are four more cases. Fig-
ure 11.4 shows the total of 5 cases for which exploration is required in an SME.
Case 1: Initial Differentiation. Searching for alternative solutions to a given cus-
tomer problem. This search process leads over time to the emergence of a dominant
design.
Case 2: The use of our existing solution concept in New (usually adjacent) Appli-
cation Fields. The business model remains the same, so we are still innovating sustaina-
bly (the business model remains unchanged). This is referred to as so-called Adjacencies
(see also Sect. 14.7).
Case 3: On the other hand, the use of new technologies is increasingly coming into
focus. This promises to relieve the now already strong competitive pressure more sus-
tainably than it would be possible through pure modernization. The use of new technolo-
gies often involves radical innovations in the existing business, so, although radical,
they are still sustaining innovations (as the business model remains unchanged and only
the technology changes radically): One could call this a Radical Modernization.
Case 4: In addition, the Further Development of the Business Model in the exist-
ing business is an important issue. The authors Anthony, Gilbert, and Johnson18 refer

Fig. 11.4 Cases for 1 Initial Differentiation

exploration. © Huber,
Kaufmann, Steinmann 2024.
All rights reserved
2 New Field of Application

Cases for
3 Radical Modernization
exploration

Further Development
4
of the Business Model

5 Newly Made Businesses

18 [Anthony, Gilbert, Johnson, 2017].

11.7 Innovation Through the Establishment of a New Business 177

to this case as “Transformation A” (see also Sect. 14.7). Such business model innova-
tions are in most cases enabled by a technology change and are actually the norm, when
introducing new technologies. The mentioned Radical Modernization is rather the excep-
tion. This is, because the Further Development of the Business Model makes any Radical
Modernization enabled by the same technology change immediately obsolete. If a tech-
nology change enables both, a Radical Modernization as well as a Further Development
of the Business Model, the Further Development of the Business Model usually wins.
Case 5: The technology change adds another element: The use of new technology
also shifts the possibilities and limits of the application. The introduction of a new tech-
nology therefore usually opens up additional Newly Enabled Businesses, which would
not have been exploitable with the previous technology. The authors Anthony, Gilbert,
and Johnson19 refer to this as “Transformation B” (Sect. 14.7). Such newly enabled busi-
nesses are often completely new for the company. This can result in the company trans-
forming from a small and medium-sized enterprise to a mini-conglomerate.

Example: Digitalization
The emergence of new application fields, which are only made possible by the
introduction of new technology, can be observed in the ongoing digitalization of
companies:

• On the one hand, the efficiency of the existing traditional business can be
increased through digitalization. However, this usually only ensures that the
company’s competitiveness can be maintained. A sustainable competitive
advantage is not achieved by doing this.
• Some companies, however, use the possibilities of digitalization for the innova-
tion of the business model in their existing business (“Transformation A” from
Sect. 14.7). This creates a disruption effect in the market, which promises the
innovating company a sustainable competitive advantage. Competitors who do
not innovate their business model (do not want to or cannot), can thereby run
into existential problems.
• Advanced companies also manage to enter completely new businesses for the
company with the new technologies (“Transformation B” from Sect. 14.7).
Here, the development of competitiveness is even more pronounced.

It is noticeable that in the case of innovation Cases 3, 4, and 5, significant explora-

tory work is usually required. In all these cases, it is about finding completely new
approaches, typically only made possible by the emergence of new technological pos-

19 [Anthony, Gilbert, Johnson, 2017].

178 11 Innovation Strategy for SMEs

sibilities. Therefore, in all these cases the impetus for this must come from innovation
management, as with the initial differentiation.
In summary, we have thus identified a total of five innovation cases that require explo-
ration in a small and medium-sized enterprise (SME), namely:

1. Initial Differentiation
2. New Application Fields (Adjacencies see Sect. 14.7).
3. Radical Modernization through the use of new technology
4. Further Development of the Business Model in the existing business (Transforma-
tion A, see Sect. 14.7).
5. Newly Enabled Businesses: New application fields, which are only made possible by
external progress (mostly new technology) (Transformation B, according to Sect. 14.7).

As mentioned, SMEs are usually well equipped with a development department, which
can handle the developments on order triggered by product management. This applies to
the stages Dominant Design, Optimization, and Modernization.
What is missing practically everywhere, however, is an organizational solution that
allows SMEs to carry out also the necessary exploration work successfully. This is neces-
sary for all five innovation fields mentioned above, i.e., for Initial Differentiation, New
Application Fields, new technologies (Radical Modernization), as well as Further Devel-
opment of the Business Model (Transformation A) and for businesses newly enabled by
new technologies (Transformation B). We will look at how this ability to explore, that are
newly necessary for these cases, can be realized organizationally in an SME in Sect. 11.9.

11.8 Innovation Strategy for SMEs

So how can, or should, SMEs innovate? What exactly needs to be done? The approach
corresponds in principle to the general findings of this book, also for SMEs.
An innovation strategy for an SME can be developed using the six fields of the Inno-
vation Framework. However, depending on the situation, different weights and imple-
mentation rules apply to the individual fields for SMEs.

11.8.1 Fields 1–4

An SME does not differ from other companies in Fields 1–4. Accordingly, the same rules
apply as presented in Sects. 4.4 to 4.7. However, it is much more common in SMEs that
there is no written corporate strategy.20

20 Making the strategy explicit is already an improvement to the status quo (even when outdated
future images are used) as inconsistent behaviors become more noticeable due to the written form.
11.8 Innovation Strategy for SMEs 179

11.8.2 Field 5, Focus: Guiding Questions and Search Fields

SMEs also generally proceed in the same way regarding Guiding Questions and Search
Fields, as presented in Sect. 4.8.
However, SMEs can limit themselves to the one business field they are working on
regarding Guiding Questions and Search Fields, as growth in the existing business field
is at the center of interest. The development of new business models and new business
fields is usually less of interest for SMEs. For achieving long-term stability, additional
Guiding Questions and Search Fields should all the same be formulated also for the
innovation Cases 2–5 of Sect. 11.7.
Depending on the development stage of the business field, the above-mentioned inno-
vation cases are of varying importance: If we are still in an immature market, the initial
differentiation is in the foreground. If the market is mature, however, the other innova-
tion cases become dominant.
The stages Dominant Design, Optimization, and Modernization are managed by
product management and are therefore a core part of the company’s marketing strategy.
Strictly speaking, these stages do not really belong to its innovation strategy.

11.8.3 Field 6, System: The Innovation Process

The innovation process in SMEs occurs as well according to the innovation process
described in Chap. 4 (Fig. 11.5).
The maintenance of the existing product lines in the stages Dominant Design, Opti-
mization, and Modernization takes place in the development process step. It is managed
in a traditional way by the development department under the leadership of product man-
agement. This way of procedure is usually well implemented already in SMEs.
The situation is different for the five innovation cases, as are Initial Differentiation,
New Application Fields, Radical Modernization, Further Development of the Business
Model, and Newly Enabled Businesses. All these innovation cases require exploration
activities, which have not been planned in the traditional SME up to now. Therefore, just
as in large companies, the early innovation process phases Early Warning System, Explo-
ration, and Transfer usually need to be built from scratch.

Early
Market
Warning Exploration Transfer Development
Introduction
System

Fig. 11.5 Innovation process. © Huber, Kaufmann, Steinmann 2024. All rights reserved
180 11 Innovation Strategy for SMEs

11.8.4 Field 6, System: The Innovation Organization

While the organizational prerequisites for the process phases Development and Mar-
ket Launch are met by the departments Development and Marketing and Sales, which
typically already exist, this is usually not the case for the process phases Early Warn-
ing System, Exploration, and Transfer. Therefore, an innovation organization needs to
be newly established to implement these three process phases. This is done in the man-
ner presented in Sect. 4.11.2. The following organizational components need to be newly
formed for this:

• Establishment of an Innovation Manager at the executive level, who reports directly

to the CEO. Here, the rare personality profile of an “NT-SJ-bilingual” is the ideal fit.
• Exploration workshops, conducted according to the rules of the NT corporate cul-
ture and under the sole responsibility of the Innovation Manager.
• A new project category exploration projects, conducted according to the rules of the
NT corporate culture and under the sole responsibility of the Innovation Manager.
• Early warning activities in the form of special exploration projects, conducted
according to the rules of the NT corporate culture and under the sole responsibility of
the Innovation Manager.
• Transfer projects, led by the Innovation Manager, but separately funded, either by
product management or by the CEO or a combination of both.21
• In addition to their financing, the commissioning of such transfer projects must also
be regulated explicitly.

11.8.5 Field 6, System: Human Resources and Finances

As with any organization, the innovation organization of an SME can only work, if it
is adequately endowed in terms of finances and personnel. The following points must
therefore be determined:

• Person responsible for innovation

• Any employees (staff) working for the person responsible for innovation
• Mechanisms for staffing exploration workshops and exploration projects with internal
and possibly also external employees
• Budget for financing these exploration activities

Just like in larger companies, the exploration activities should be financed through
a fixed budget. This should be kept stable over a longer period of time, i.e., it should

21 The situation here is different in every company. No best practice can be identified in this regard.
11.8 Innovation Strategy for SMEs 181

not depend on the course of business.22 The expenses for the Early Warning System are
sensibly part of the exploration budget and are controlled by the person responsible for
innovation.
The transfer activities on the other hand should be financed separately from the
exploration activities. Here, the corresponding budget must be discussed on a case-by-
case basis. The financing is done by the CEO, the product management, or a mix of both
financing sources.

11.8.6 Field, 6 System: Leadership Aspects

The statements on leadership aspects made in Sects. 4.11.5 and 4.11.6 also apply to
SMEs in the same way. An innovative company depends on maintaining two opposing
corporate cultures at the same time: an NT-oriented culture for the innovation phases
Early Warning System and Exploration, and an SJ-oriented culture for all other processes
in the company.
The operational business thus runs according to SJ rules. These are the leadership
principles that are taught in classic leadership training and are usually lived in companies.
However, for the exploration and early warning activities, other, namely NT-oriented
leadership rules must apply if they are to be successful. These are partly contrary to the
established leadership principles and must therefore be explicitly decided for these two
process phases.

11.8.7 Field 6, System: Wage and Incentive Systems

The statements made in Sect. 4.11.6 on wage and incentive systems apply to SMEs in
the same way. Since the (NT-oriented) exploration activities in SMEs, unlike in large
companies, are mostly implemented in workshop or project form, i.e., virtually, the pres-
sure to adapt the wage and incentive systems is rather lower in SMEs.

22 The amount saved is usually not proportional to the damage caused. In particular, symbolic cuts
as part of linear austerity measures should be avoided. The exploration budget should only be
reduced in an absolute emergency, otherwise the company’s exploration capability suffers massive
damage. In particular, austerity measures kill the creativity of the employees involved. Once cuts
have been made, they must later be ramped up again with a multiple effort. Accordingly, increases
in the exploration budget should also be made cautiously (i.e., only when they can be maintained
in the long term).
182 11 Innovation Strategy for SMEs

11.9 Exploration Organization

As we have seen in Sect. 11.6, development activities in an SME can be triggered by two
different instances:

• Development projects on the order of the product managers23: For the stages Domi-
nant Design, Optimization, and Modernization.
• Through the innovation manager as an integral part of the exploration activities for
the Initial Differentiation stage, as well as for the innovation cases of New Applica-
tion Fields, Radical Modernization, Further Development of the Business Model, and
Newly Enabled Businesses.

In a small and medium-sized enterprise (SME), both the development itself and the
responsibility for the product and for the processes are typically already present and well
organized. What is still missing, however, is the regulation of the overall responsibility
for innovation as well as the organizational structures needed for exploration activities.
The typical SME is functionally organized, with a department each for production,
marketing and sales, and a development department. Based on the basic principles of
innovation as described in this book, we could now suggest introducing an additional
innovation department. This is quite appropriate for large companies. SMEs, however,
are usually too small to bear the effort of such an additional fixed department. As already
indicated in Sect. 11.3, it is advisable to organize the exploration activities in separate
workshops and, in a somewhat more advanced phase, possibly in project form.
On the other hand, it is absolutely necessary that someone at the executive level
is entrusted with overall responsibility for all innovation and exploration activities.
This is necessary because there is a fundamental conflict between the interests of the
operational business units and the innovation activities required for the entire company.
This conflict of interest particularly affects the distribution of resources and management
attention. It is further exacerbated by the also generic cultural conflict between opera-
tional and innovative activities (innovators function differently and therefore need to be
managed differently than “normal” operational employees).24 We will take a closer look
at this in the following chapter.
For the sustainable anchoring of innovation activities, three new, additional elements
are required in an SME in addition to the existing functional departments:

1. A new and explicit responsibility for all innovation activities at the executive level (as
the only change in the organizational structure), the Innovation Manager.
2. Exploration workshops
3. Exploration projects

23 In the case of process optimizations, sometimes also triggered by the respective process owners.
24 Compare also [Huber, Kaufmann, Steinmann, 2017].
11.9 Exploration Organization 183

11.9.1 Overall Responsibility for Innovation and Exploration at the

Executive Level

The innovation activities must be overseen and controlled in their entirety. To do this,
a new role with direct subordination to the CEO must be created. This is necessary for
various reasons:

• Innovation costs money and is generically risky. Its effect is typically rather long-
term. Only the CEO has explicitly the mandate to secure the existence of the company
in the long term.
• To be able to innovate successfully, the early warning and the exploration activities
require an NT-dominated culture. This culture is in contradiction to the SJ-dominated
corporate culture, which must be maintained in all other parts of the company for the
company to be successful. Only the CEO can make sure that the different (NT-) rules
of the game required for the exploration activities can be lived out in the entities to be
created additionally for innovation (workshops and exploration projects). If these are
not protected by the CEO, the operational SJ-oriented corporate culture penetrates the
exploration entities and sabotages their success.
• Only the CEO has (together with the board of directors) the explicit responsibility to
determine how the entire company moves into the future. This becomes particularly
visible, when the company wants to enter new application fields.

The innovation manager has the difficult task of translating the results of the NT-dom-
inated innovation and exploration activities into the form required for a decision by the
operational SJ culture. For this to succeed, the ideal profile for an innovation manager is
NT-SJ bilingualism, i.e., a person, who can switch back and forth between NT thinking
and SJ thinking. Such people exist. However, they are rare.

11.9.2 Exploration Workshops

Exploration workshops are those entities, which are suitable for an SME to explore new
solution ideas, application fields or technologies. In the workshop, it is necessary to
develop creative new solution approaches based on a deep understanding of the problem
to be solved. Such exploration workshops can last several days and are best conducted
off-site, i.e. outside the company. This is optimal, because meeting outside the com-
pany walls makes it easier to create the NT culture crucial for the success of exploration
activities. Going into a new context outside the company also has a symbolic effect. In
addition, disturbances from day-to-day business can be minimized due to the different
venue.
184 11 Innovation Strategy for SMEs

For such exploration workshops to be successful, the following three points should
also be considered:

1. The participants should predominantly (though not necessarily exclusively) be of the

NT type.
2. The rules of the NT corporate culture must apply (which usually contradict the usual
rules! See the box in Sect. 4.11.5). It is advisable to explicitly present these NT rules
at the beginning of the workshop and explain their necessity to the participants.
3. Avoidance of hierarchy effects: Subordinates can be inhibited and thus less risk-tak-
ing and less creative simply by the presence of their superior. It is often better if the
CEO is not present at all, but perhaps has the results of the day presented to him at the
end of the workshop.

If these points are not considered, the result of the exploration workshops is likely to be
disappointing.
The processing of the workshop results into decision-ready proposals is the responsi-
bility of the innovation manager. He may, if necessary, be supported by workshop partic-
ipants. Larger organizations can also assign a few employees to the innovation manager
for this processing.
It may also be that larger information gaps and uncertainties are identified in explora-
tion workshops, which cannot be closed in the workshop itself. These require a deepen-
ing in the form of specific exploration projects.

11.9.3 Implementation of the Innovation Strategy

Once the basic direction of innovation efforts is outlined, the SME must still determine
in what form the implementation should take place. A desired positioning and market
impact can be achieved in different ways, each of which requires a different degree of
engagement, with corresponding different advantages and disadvantages. For the imple-
mentation of the innovation strategy, three approaches are basically possible:

• The company does everything on its own and relies on its own strength. This limits
the resources that can be used and results correspondingly in a flat growth curve.
• The company acquires an already somewhat matured service. This can be achieved,
for example, by acquiring a start-up or by refining several already available compo-
nents into a new overall service. This approach can accelerate market success.
• The company can join forces with one (or more) other market players (e.g. in a stra-
tegic alliance or in a joint venture). The partners can bring in complementary skills.
This approach also results in accelerated growth.

Thus, we are dealing here with a classic “Make, Buy or Partner” situation. And as in all
partnerships, the primary focus is on optimally combining the skills of the partners and
11.9 Exploration Organization 185

appropriately regulating their power claims. However, the key to success usually is that
the vision and especially the corporate cultures of the partners are compatible. This is the
prerequisite to be able to resolve the inevitable conflicts of interest in partnerships amica-
bly. And this in turn is the prerequisite for success.

11.10 Spinning-Off into a Start-Up

Clayton Christensen coined the term Disruptive Innovation and its counterpart, the
Sustaining Innovation.25 Disruptive Innovations are those that change the rules of the
game in the market. With Disruptive Innovations, a new game is opened in the mar-
ket. This is in contrast to Sustaining Innovations, where the rules of the game remain
unchanged. A closer analysis shows that Disruptive Innovations are based on changes in
the business model. Or conversely, that it is business model innovations that are disrup-
tive in the market. With Sustaining Innovations, on the other hand, the business model
remains unchanged.
Christensen already demands that Disruptive Innovations require their own autono-
mous organization, ideally a separate company, which must not be directly integrated
into the innovating company.26 This can be derived from the fact that Disruptive Innova-
tions require changes to the business model. Based on Henry Chesbrough’s rule that an
organization can only be optimized for one single business model,27 it directly follows
that Disruptive Innovations require their own, autonomous organization.
This means that the entity in which a new business is built and operated has a direct
influence on its chances of success. It can be fatal, if an SME, for cost considerations,
first launches a trial balloon in the existing structure, instead of directly founding a sepa-
rate company. If this is done anyway, the conflicting business models can either stifle the
new one or can even endanger the existing core business.
Spinning off into a start-up also has two other advantages:

• By decoupling from the core business, the proximity to the company name can be
controlled. Depending on the necessity, the start-up may get more creditworthiness
through adhering to the company name. On the other hand, there is a risk of damaging
the existing brand by an uncertain new business.
• If the new business is organized as an independent legal entity, it becomes easier to
spin it off if required. This e.g. when there are intentions to sell or when a potentially
necessary development partner should be involved in the new business.

More about start-ups in the following Chap. 12.

25 [Christensen,1997].
26 [Christensen,1997] pages 198, 202 and 252.
27 [Chesbrough, 2003] pages 70 and 90.
186 11 Innovation Strategy for SMEs

11.11 Conclusion

In summary, we come to the following conclusions regarding innovation for SMEs:

• Innovation in SMEs fundamentally follows the same insights as apply to all com-
panies. In this case too, a dual Two Stars Strategy is required, i.e. a Strategy for
Excellence and a Strategy for Change, or better, a Strategy for Exploitation and an
Innovation Strategy.
• Actual SMEs are typically in the phase of growth and economic exploitation of their
implemented business model. The Strategy for Excellence is therefore dominant and
so, if at all, also the only one existing. The innovation needs of an SME are thus dom-
inated by market-driven improvement innovations, optimization and modernization,
which are controlled by product management. These can largely be satisfied by tradi-
tional development orders.
• However, SMEs must also increasingly account for the fact that the lifespan of their
business models is limited, either because their business is already very mature and
therefore the SME needs to think about a repositioning of the company for further
growth, or because its business model is threatened by disruptive challenges in the
market. This will increasingly be the case in the future. SMEs can therefore no longer
afford to do without a Strategy for Change, as has usually been the case so far.
• SMEs for that reason also have to deal with the establishment of new business. This
can be achieved by entering related markets (Adjacencies), through radical moderni-
zation, through the further development of the business model (Transformation A) or
through new businesses enabled by new technologies (Transformation B).
• Innovation efforts of these types of must be controlled centrally by a person respon-
sible for innovation. And for this, budgets in the form of “Strategic Buckets” must be
firmly reserved in SMEs. It is therefore also important for SMEs that all innovation
efforts are centrally controlled by a person responsible for innovation, who reports
directly to the CEO.
• Due to their smaller size and therefore fewer resources, SMEs must however organize
their innovation activities differently than large companies.
– They are not implemented by a specially established business unit, but typically in
the form of workshops.
– The rules of the game that are optimal for NT types apply to such exploration
workshops. The NT culture should apply.
– For this reason, such exploration workshops ideally take place off-site, i.e., outside
the company’s own buildings.
References 187

– Employees of the NT type are primarily suitable for participation in such explora-
tion workshops. However, it does not hurt to also integrate a few employees of the
SJ type into the team.
– If larger gaps in the required knowledge become apparent in these exploration
workshops, they can be closed by specifically set up exploration projects (just as in
large companies).

References

Abernathy W, Utterback J (1978) Patterns of Industrial Innovation, Technology Review, Vol. 80,
No. 7 (June–July 1978):40–47
Anthony S, Gilbert C, Johnson M (2017) Dual Transformation. Harvard Business Press, Boston,
USA
Blank S, Dorf B (2012) The Startup Owner’s Manual. K&S Ranch, Pescadero, CA, USA
Bundesamt für Statistik (2021) https://www.bfs.admin.ch/bfs/de/home/statistiken/industrie-dien-
stleistungen/unternehmen-beschaeftigte/wirtschaftsstruktur-unternehmen/kmu.html. 9/15/2021
Chesbrough H (2003) Open Innovation. Harvard Business School Press, 2003 Boston, USA
Christensen C (1997) The Innovators Dilemma. Harper Business, New York, USA
Christensen C, Bartman T, van Bever D (2016) The hard truth about business model innovation.
MIT Sloan Management Review, Fall 2016:31 ff
Europäische Kommission (2015) Benutzerleitfaden zur Definition von KMU. Amt für Veröffentli-
chungen zur Europäischen Union, Luxemburg
Huber D, Kaufmann H, Steinmann M (2017) Bridging the Innovation Gap—Blueprint for the
Innovative Enterprise. Springer Verlag, Berlin, Heidelberg, (translation, original 2014 in Ger-
man)
Stalder O (2018) The Business Model Concept: An Exploration of its Conceptualisation and Appli-
cation in Switzerland. The University of Gloucestershire, UK, April 2018
Start-Ups, Incubators and Accelerators
12

Abstract

In this chapter, we deal with a few questions that specifically arise for start-ups and
that are also relevant for companies and organizations that deal with the promotion of
start-ups. Since the founding of a start-up is an effective way to organize an innova-
tion project, the topic is important for an innovation strategy.

In recent years, incubators and accelerators for start-ups have increasingly emerged. The
goal is to create optimal prerequisites for the success of start-ups. The support services
may include among other things: office space, technical equipment, infrastructure or val-
uable knowledge. Incubators and accelerators differ in terms of the maturity level of a
start-up:

• An Incubator is an institution that supports start-ups in the company formation

phase. The goal is to develop start-ups to the point, where they are ready for investors
or venture capitalists. The focus is on the development and validation of a new busi-
ness idea.
• An Accelerator is an institution that coaches start-ups for a limited time. The goal is
to bring already validated business ideas to market success more quickly. Accelerators
sometimes provide seed funding and may demand a share of the company in the event
of success.

In practice, the two types of support organizations are often not precisely discriminated,
and mixed forms are common. To avoid unnecessary complications, we do not distin-
guish the two terms in the further text. We therefore always refer to accelerators in the

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer- 189
Verlag GmbH, DE, part of Springer Nature 2024
D. Huber et al., Innovation Strategy, https://doi.org/10.1007/978-3-662-69832-7_12
190 12 Start-Ups, Incubators and Accelerators

context of our topic of innovation strategy. Such accelerators can be found in government
innovation promotion, but are also found in large companies.1
In the following, we first examine the importance of accelerators for innovation. Then
we deal with some general problems regarding the management of start-ups.

12.1 Accelerators

As mentioned, accelerators are supposed to create optimal environmental conditions

for start-ups to accelerate their development. The aim is to increase the chances of suc-
cess and survival of the start-ups. In addition to premises, secretarial and IT services or
(sometimes) management consulting services are provided, often under special condi-
tions.
After the start-up is founded, it is transferred to the accelerator with the aim of later
establishing a financially successful company, or alternatively a profitable new business
unit within a large company. However, the track record of such accelerators is not always
satisfactory. After their transfer to the accelerator, start-ups usually do indeed fare better.
However, it seems difficult to subsequently turn them into truly successful companies.
Some of these difficulties are to be expected, as we know from the outset that most start-
ups will not make it. Or, as Henry Chesbrough so aptly put it: “Most innovations fail.”2
As we have already seen in Chap. 11, start-ups are in search of a business model (i.e.,
start-ups according to Steve Blank’s categorization). For such start-ups, it is typical that
they cannot yet cover their costs with revenues.3 Start-ups should therefore stay in the
accelerator until they have found a scalable business model. A start-up is thus a search
organization. It is looking for a promising business model. According to Blank,4 a start-

1 We can distinguish between internal corporate implementations, so-called Corporate Venturing,

from externally operated incubators/accelerators, in which a company can participate, and from
state-run incubators/accelerators as part of innovation promotion programs. Some of these incuba-
tors/accelerators are thematically focused; others are completely neutral in terms of business con-
tent.
Internal corporate incubators/accelerators usually serve to develop company-owned initiatives.
Occasionally they are also used to develop external start-ups in which the company has a financial
stake, usually for strategic reasons. In such cases, the financial motivation plays a subordinate role.
This is in stark contrast to commercially operating venture capitalists, where the financial concerns
are paramount.
2 “Most innovations fail. But companies that don’t innovate die.” [Chesbrough, 2003] page xvii.
3 See Sect. 11.1.
According to the categorization of Clayton Christensen (as presented in Sect. 13.5) the start-up
is at the Creation stage.
4 [Blank, Dorf, 2012].
12.2 Strategic Alignment of Start-Ups 191

up is fundamentally different from a company, which has already found its business
model. The accelerator is a great help in this phase.
Once a business model is found, it must be validated in the market.5 Even in this
phase, the accelerator remains a suitable environment.
After validation, however, the new company should leave the accelerator and establish
itself as an independent company or as a separate business unit of a corporation, depend-
ing on the situation.
This transition can be designed in three ways.

1. Establishment of an independent company

2. Splitting the existing start-up into an exploratory part and an operational part
3. Conversion into a new business unit of a corporation

Sections 12.3, 12.4 and 12.5 describe what we need to pay particular attention to during
this transition. First, we will deal with the principles of strategic alignment of start-ups in
Sect. 12.2.

12.2 Strategic Alignment of Start-Ups

Not for all types of innovation is the organizational form of a start-up equally optimal.
From Christensen, we know that particularly disruptive innovations should be designed
as separate organizations. For scale-up companies, the distinction between sustaining
and disruptive business models leads to the following rules:

• Scale-up companies, which are sustaining in nature, i.e., which have a business
model similar to their competition, must be more efficient than their competitors, as,
due to the identical business model, they use the same sales arguments as their com-
petition.
Such sustainably innovative scale-up companies must allow themselves to be bought
out by the big players in the market, if those demand it. They can hardly exist along-
side them in the long run due to fewer available resources. Sometimes it is worthwhile
to even proactively seeking a takeover offer.
• However, this does not apply to scale-up companies that are disruptive in nature. Dis-
ruptively innovative scale-up companies can exist very well alongside dominant com-
petitors due to their differently structured business model. They have different sales
arguments and characteristics.

5 For this, the method of Lean Startup can be used for example (see [Mauria 2012]).
192 12 Start-Ups, Incubators and Accelerators

A sale to a large market participant is therefore voluntary in this case. But such a sale
can offer other advantages such as simplifying market access and thus achieving a
higher growth rate which other start-ups launched at the same time cannot achieve.
It is also not mandatory that disruptive innovations must be more efficient than the
existing products in the market, as they have completely different sales arguments.
Often, even the opposite is the case, namely that their customers have lower demands
and are satisfied with a performance that, from the market leaders’ point of view,
would be perceived as being too low.

Some founders allow themselves to be bought out and then try to make the start-
up a success in the corporate environment. However, this does not always succeed, as
acquired start-ups are often mismanaged by their new owners. For savvy founders, it is
a viable option in this situation to leave the start-up bought by the corporation, and start
anew just across the street. If the corporation has not understood how to operate the new
business, the new company just started across the street has little to fear from such an
approach.
However, let’s now return to the transition of a start-up into a self-financed scale-up
company. We have already identified the three possibilities of this transition at the end of
Sect. 12.1:

1. The establishment of an independent company

2. The splitting of the existing start-up into an exploratory part and an operational part
3. The restructuring into a new business unit of a corporation

We will now take a closer look at these three possibilities.

12.3 Building an Independent Company

Building a productive company is something completely different than searching for a

business model. A start-up is, as mentioned, a search organization, while a company rep-
resents an implementation-oriented organization. As we have shown in our book “Bridg-
ing the Innovation Gap”,6 for the search process personnel of the NT type is required.
The implementation, however, only succeeds under the leadership of SJ types, which in
their personality structure are almost opposite to the NT types (see also box “The Per-
sonality Types of the Myers-Briggs Type Indicator ®, MBTI” in Sect. 4.11.5).
The transition of leadership from NT to SJ types is critical. If it does not succeed, the
new company will not be able to be successful. However, this means that the leadership
team must be replaced when transitioning from the start-up to the (scale-up) company!

6 [Huber, Kaufmann, Steinmann, 2017] pages 29 ff.

12.3 Building an Independent Company 193

This of course is a great challenge and it is not surprising therefore that a large part of
start-ups fail at this very change.
There are various ways in which such a change can be carried out:

12.3.1 Conscious Replacement of the Leadership During

the Transition to Operational Business

This solution is obvious. If we consider the transition from the state of start-up to the
state of (scale-up) company, the search was apparently successful and a functioning
business model has been established. In this case, we can assume an NT-dominated
leadership team.7
In order for us to be successful as a now new operational company, we must there-
fore restructure the management team, so that it becomes SJ-dominated. For the existing
NT-dominated leadership, this is obviously a painful, risky and in every respect difficult
process. It is all the more difficult to implement, as it can be assumed that the majority
of shares are owned by the founders, i.e. the NT types. A solution may therefore only be
possible with the consent of the founders.
In the best case, the (usually NT-dominated) founders recognize the necessity of such
a leadership change. In such a case, they look for an SJ-CEO. The founders then typi-
cally retreat to the position of CTO (or Chief Strategist or similar). A well-known exam-
ple of such a case is the appointment of Eric Schmidt as CEO of Google8 by the founders
and owners Sergey Brin and Larry Page.
Unfortunately, this insight is not given in many cases, as the need for a change to a
different leadership culture is counterintuitive for NT types.

12.3.2 Capital Requirements Lead to the Influence of the Capital

Provider on the Management

Another situation that can lead to a successful exchange of leadership culture is the
need for additional capital. When transitioning from a start-up to an actual company,
the organization must be transferred from search mode to growth mode. And growth,
usually requires capital to finance the necessary pre-investments. This additional capi-
tal typically has to be obtained from outside through a financing round. This influx of
capital usually occurs through the issuance of new shares and leads to a dilution of the

7 Founders of start-ups (i.e., new companies, which are still in search of a functioning business
model) are typically NT types. If the founding team is not NT dominated, the start-up may have
difficulty finding a functional business model.
8 CEO from 2001 to 2011.
194 12 Start-Ups, Incubators and Accelerators

founders’ ownership stake. The new investors often also set conditions for the company
and in many cases take a seat on the board of directors. At this turning point in the com-
pany’s development, the new investors often enforce a reappointment of the CEO posi-
tion. If the right person is appointed here, the personnel reshuffle proves to be a blessing
for the company, as it can realize the transition from an NT-dominated to the newly
required SJ-dominated leadership culture. In this case too, the founders typically retreat
to a position as CTO or Chief Strategist.

12.3.3 A Sale Causes the Restructuring of the Management

Another often-encountered situation is the sale of the start-up. The timing for the sale of a
new company seems indeed to be optimal, when a working business model has been found
and validated. At this point in the company’s development, the value of the company for
a potential buyer is already clearly visible. On the other hand, the major investments and
the associated risks are yet to come, which makes a sale attractive for the founders.
If start-ups are sold at this point, the new owner has the opportunity to transfer the
leadership to his own employees, usually to experienced SJ-type managers. This process
too leads to the necessary change from the NT leadership culture to an operational SJ
culture.
In all these cases, the art lies in finding the optimal timing for the culture change.
Moreover, the culture change is painful and often dramatic for the affected employees.
It is therefore important to ensure that valuable employees do not leave the company, as
otherwise the knowledge of the usually still small start-up threatens to disappear. It is
particularly important that the specific knowledge of the founders is not lost. Achieving
this requires leadership finesse. In extreme cases, it can happen that the new company
that emerged from the start-up completely forgets the business idea and vision of the
start-up after some time. The specific value of the initial business idea would thus be lost.
In addition to replacing the management team, there are also other variants possible
for the necessary culture change.

12.4 Dividing the Start-Up into an Explorative Part and an

Operational Part

As shown above, due to the necessary change from an NT-dominated to an SJ-dominated

leadership culture, the transformation of the initial start-up into an operational company
poses the risk of conflicts and a, sometimes fatal, outflow of knowledge. To mitigate this
risk, instead of simply replacing the management team, a more subtle approach can be
taken. In order to establish the SJ leadership culture (necessary for any successful opera-
tional business) without risking to destroy the existing NT-dominated organization, one
can build the operational business simply alongside the existing start-up organization.
12.4 Dividing the Start-Up into an Explorative Part and an Operational Part 195

The resulting company in this case consists of two parts with each having a differ-
ent, indeed opposing culture. To be successful, both need to flourish equally. In order for
the two cultures not to hinder each other, it is necessary that both parts have extensive
autonomy, especially regarding their goals, wages, incentives as well as their promotion
criteria. We are dealing here with the typical innovation gap issue and the interactions
between the two parts are also to be organized accordingly.9
As described in Sect. 14.5 on the ambidextrous organization, it is also recommended
in such a case, to organize the executive meetings in such a way that they either con-
tain exclusively operational items (SJ mode) or pure innovation items (NT mode), i.e.,
to hold pure executive meetings or pure strategy meetings. Moreover, these two types of
meetings should not take place at the same day if ever possible.10
This form of transition from the start-up’s search mode to the operational business
mode is relatively complex, as the existing start-up organization remains fully intact
without contributing too much to the operational business development. For this reason,
it is counterintuitive and, unsurprisingly, rarely encountered in reality. However, it has, in
addition to the mentioned difficulties, also great advantages:

• The start-up organization remains intact and can serve as a guarantee that the initial
business idea is not diluted or even completely forgotten.
• The founders of the company retain their previous function in the start-up part. This
reduces the susceptibility to conflict.
• All previous employees also retain their function unchanged and can continue to work
under an NT-dominated culture. The risk of brain-drain is thus sustainably reduced.
• Both parts can develop undisturbed, as they are largely autonomous.
• The company receives the structure required for the long-term right from the start,
with an SJ-dominated business part and the NT-dominated innovation part (which
even predominates at the beginning). It learns to deal with the innovation gap right
from the start.11
• The company’s ability to innovate is preserved.

This type of solution can be implemented in many variants. It is particularly interesting

in a corporate environment, where the previous start-up becomes a department of R&D

9 See Huber et al.,Bridging the Innovation Gap

10 [O’ Reilly, Tushman, 2016] page 211.
11 It must be pointed out that the transition from the explorative part of the company to the opera-

tional part of the company is a challenge in practice, as doing so implements the Innovation Gap. It
is therefore necessary to take appropriate precautions to ensure that this transition can be success-
fully managed (see [Huber, Kaufmann, Steinmann, 2017]). It is helpful to have a strong common
vision that can serve as the bracket to hold the two parts of the company, which are thinking very
differently, together.
196 12 Start-Ups, Incubators and Accelerators

(which is often already the case from the beginning) and the new company is built up in
parallel to it as a new business unit.
The solution through the construction of a new operational organization in parallel
has great advantages. However, it is expensive. The decisive factor here will be, to what
extent one wants to afford this solution, or can afford it.

12.4.1 The Founding Team Already Consists of NT and SJ Types

A particularly favorable situation arises when the founding team of the start-up already
includes members of both the NT type and the SJ type. In this case, there is the pos-
sibility of building up the operational business through a founding member with an
SJ personality and leaving the (further) development of the product under the aegis of
an NT-oriented founding member. In this way, the advantages outlined above can be
achieved without the company having to be split into two separate units immediately.
This variant is particularly effective when it is a founding pair with an NT and an SJ
personality respectively. It is not surprising that such scale-up companies can be very
successful. A prominent example of this form is the early company HP with the contrast-
ing founding pair Bill Hewlett and David Packard.
However, it should be noted that such pairings are inherently unstable, as the two
personalities cannot actually understand each other, due to their contrasting personality
types. The two people must therefore trust each other blindly in business matters. To do
this, it is necessary for them to build and maintain a strong relationship of trust into one
another, often on the private level.

12.4.2 The Founders Are “Bilingual”, Both in NT and SJ Mode

In the above considerations, we assumed that the founders are either of the NT personal-
ity type or of the SJ personality type. We have neglected the fact that there are people,
who are able to behave as NT or SJ type depending on the situation, i.e., people who
combine both personality types within themselves. However, such people are rare. More-
over, it turns out that, although they can switch from one mode to the other, they can
hardly use both modes almost simultaneously. Moreover, this switching process seems to
be somewhat strenuous and takes place rather slowly.
So, there is the special case that the founder of the start-up has this rare personal-
ity profile (of “NT-SJ-bilingualism”). Such a person is thus able to function in the CEO
role in the start-up phase in the manner of an NT type and to switch to an SJ mode when
transitioning into the operational company. We thus can make the cultural change in this
situation without changing the leadership person.
For the organization of the new company, all the variants described above are pos-
sible, i.e., the transition from the searching start-up to the operational business, but also
12.5 A Start-Up as a Vehicle in the Corporate Environment 197

the parallel management of both modes. This, with the already described advantages and
disadvantages of ambidextrous management.

12.5 A Start-Up as a Vehicle in the Corporate Environment

12.5.1 A New Business Unit in the Corporation

In the corporate environment, the situation is basically similar as with the foundation of
a company. However, in the corporate case, there are additional possibilities. Basically,
the start-up phase in the corporate environment corresponds to an innovation project and
is usually located at the innovation department. This project is looking for a functioning
business model. Once such a business model has been found, the new business is inte-
grated into a business unit or built up as a new business unit.
During this transition, it must be noted that an integration into an existing business
area can only be successful, if the business model of the new business is the same or at
least very similar to the business model of the existing business unit. If this is not the
case, a new business unit or even a new (subsidiary) company must necessarily be estab-
lished.12
As already mentioned above, in a corporate environment, the previous start-up can
become a additional area of R&D and the new business can be built up in parallel to this
as a new business unit. In this respect, it is easier in the corporate environment to con-
tinue to hold the know-how built up in the search mode. And of course, there is also the
advantage that resources of the corporation can be used,13 however with the limitations
and risks of ambidextrous management.

12.5.2 Acquisition of a Start-Up

In the corporate environment, in addition to the independent founding of a start-up, there

is always also the possibility of buying a company. If we look at the situation of a (large)
company that intends to take over such an externally founded scale-up company, it

12 [Christensen, 1997] page 130.

13 A start-up in a corporate environment also has further advantages over a start-up founded inde-
pendently. For example, it does not have to build up the operational and supporting functions such
as finance, human resources and law from scratch, but can use the resources of the corporation.
This allows it to achieve professionalism more quickly and it can therefore better focus on building
its new business. This then can show its effects particularly in the scaling phase, when the number
of customers and suppliers increases exponentially.
Regarding the establishment of start-ups in a corporate environment, see also [Viki, Toma,
Gons, 2020].
198 12 Start-Ups, Incubators and Accelerators

is necessary to distinguish to what extent the business model of the takeover candidate
differs from one’s own.

• If the business model from the perspective of the acquiring company is the same (also
sustaining), the company to be acquired can easily be integrated into the existing
organization.
• However, if it is different (from the perspective of the acquiring company, therefore
disruptive), an integration would destroy the acquired company sooner or later, as the
processes and structures of the acquiring company do not match the business model
of the takeover candidate. In such a case, the company must continue to operate
largely independently as its own autonomous unit, usually as a subsidiary.

12.6 Conclusion

We agree with Steve Blank that an organization should be called a start-up when it is still
in the process of searching for its business model. We also agree with him that such an
organization cannot yet be called a company and that this should only be the case, when
the organization can finance itself.
A start-up, according to this understanding, is thus engaged in a search process. It is
therefore an exploration project. Accordingly, we can conclude that it can have a good
chance of (search) success, if it maintains an NT-dominated corporate culture. In particu-
lar, it applies that the leadership of a start-up should primarily be dominated by NT types.
However, if the start-up is successful and finds a scalable business model, then the
situation changes. The start-up transforms into a (scale-up) company. The search pro-
cess comes to an end and is replaced by the establishment of the operational business.
And we know that operational business requires an SJ-dominated corporate culture to be
successful. NT culture is poison for this. This means that this transition from start-up to
(scale-up) company is a critical and often difficult process. And indeed, numerous scale-
up companies fail exactly at this point.
In this chapter, we have described various ways how to deal with this difficult issue.
We have also found that the transition from a start-up to a scale-up company is generi-
cally difficult and there is no simple solution for this. However, it is important that one is
aware of this issue, otherwise there is little chance of successfully mastering this difficult
transition.

References

Blank S, Dorf B (2012) The Startup Owner’s Manual. K&S Ranch, Pescadero, CA, USA
Chesbrough H (2003) Open Innovation. Harvard Business School Press, 2003 Boston, USA
Christensen C (1997) The Innovators Dilemma. Harper Business, New York, USA
References 199

Huber D, Kaufmann H, Steinmann M (2017) Bridging the Innovation Gap—Blueprint for the
Innovative Enterprise. Springer Verlag, Berlin, Heidelberg, (translation, original 2014 in Ger-
man)
Mauria A (2012) Running Lean. O’Reilly Media, Sebastopol CA, USA
O’Reilly Ch, Tushman M (2016) Lead and Disrupt. Stanford Business Books, Stanford CA, USA
Viki T, Toma D, Gons E (2020) The Corporate Startup. Vahlen, München
 Part III
Context

Introduction to Part III

In this third and final part of the book, we want to put the results found so far in the con-
text of important contributions to innovation research and management theory from other
authors. Figure III.1 shows how Part III fits into this book.
We focus on a small selection of contributions, which we consider particularly rel-
evant. Figure III.2 provides an overview of the chapters in Part III.
In Chap. 13, we present contributions that we used directly for our book.
In Chap. 14, we describe concepts and methods that are well known in companies
and we try to explain their significance in the context of this book. This compilation of
contributions from innovation research and business administration allows us to gain

Practice Part I
Innovation Strategy

Part II
Derivation

Theory Part III

Context

Innovation Strategy

Strategy

Business Administration

Fig. III.1 Part III. © Huber, Kaufmann, Steinmann 2024. All Rights Reserved
202 Part III Context

Chapter 13 Chapter 14 Chapter 15 Chapter 16

Support Reference Comparison Conclusions

Fig. III.2 Chapters Part III © Huber, Kaufmann, Steinmann 2024. All Rights Reserved

a more comprehensive understanding of the innovation process. This can be helpful in

developing an innovation strategy in a specific case for a specific company.
In Chap. 15, we compare the contributions to comprehensive innovation models and
those to business development models.
In Chap. 16, we conclude this book and compile our most important findings in a
table as an overview.
Contributions of Other Authors, Which
We Have Relied on 13

Abstract

Chapter 13 presents some contributions to innovation research that we have directly

used in this book. Further contributions that appear relevant to us, but which we
have not directly used in this book, we will discuss in Chap. 14. On the one hand,
Chaps. 13 and 14 thus reflect the context in which the findings presented in this book
are used, and on the other, from which they also have emerged.

13.1 Types of Innovation

The first contribution to be mentioned here is the classification of the types of innova-
tion, which Gary Pisano, presented in his 2015 article “You need an Innovation Strat-
egy”.1 In this “Innovation Landscape Map”, Pisano distinguishes between four types of
innovation: Routine Innovations, Radical Innovations, Disruptive Innovations, and Archi-
tectural Innovations. And of course, Pisano bases his contribution on the groundbreaking
discovery of Disruptive Innovations by Clayton Christensen.2
We have already described Pisano’s contribution in more detail in Sect. 10.4.3. We
use his classification of types of innovation to structure our innovation portfolio.

1 [Pisano, 2015].
2 [Christensen, 1997].

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer- 203
Verlag GmbH, DE, part of Springer Nature 2024
D. Huber et al., Innovation Strategy, https://doi.org/10.1007/978-3-662-69832-7_13
204 13 Contributions of Other Authors, Which We Have Relied on

13.2 Strategic (Resource) Buckets

We have also already presented the concept of “Strategic Resource Buckets” by Robert
Cooper in Sect. 10.4.3. Robert Cooper proposes this concept in a 2013 article3 to pre-
vent the budgets for strategic innovation from being “absorbed” by day-to-day business
projects. We have applied this concept in our innovation strategy.

13.3 The “Traditional” Innovation Research

The types of innovation we use from Gary Pisano are based on the preliminary work
of earlier authors, which we summarize here under the title “traditional” innovation
research. Without claiming to be complete, we would like to mention the following
authors at this point:

• William Abernathy and James Utterback: They have researched innovation in

existing business. They came up with a model that distinguishes a total of five phases
of innovation4 and which we used in Sect. 11.4.
• Giovanni Dosi: He introduced the concept of technology trajectories,5 which Clay-
ton Christensen subsequently used in his famous book Innovators Dilemma to explain
Disruptive Innovations.
• William Abernathy and Kim Clark: They distinguished between the types of inno-
vation: Regular Innovation, Niche Innovation, Revolutionary Innovation, and Archi-
tectural Innovation.6 They thus laid the foundation for the classification of types of
innovation on which Pisano built.
• These works were subsequently continued by Rebecca Henderson and Kim Clark,
who divided the types of innovation into Incremental Innovations, Modular Innova-
tions, Architectural Innovations, and Radical Innovations.7

13.4 The Boston Matrix

The Growth-Share-Matrix, known as the Boston Matrix, introduced as early as 1970 by

Bruce Henderson, the founder of the Boston Consulting Group (BCG), compares the
market attractiveness of a business with the market share of a company in this business.
It is shown in Fig. 13.1.

3 [Cooper, 2013].
4 [Abernathy, Utterback, 1978].
5 [Dosi, 1982].

6 [Abernathy, Clark, 1985].

7 [Henderson, Clark, 1990].

13.4 The Boston Matrix 205

Market attractiveness

Question marks Stars

high

Poor Dogs Cash Cows

low

Market
share
low high

Fig. 13.1 Boston Matrix. © Huber, Kaufmann, Steinmann 2024. All rights reserved

This results in four quadrants, which correspond to four different phases of a prod-
uct’s development in the market. The four quadrants have different characteristics and
therefore different management priorities apply to the different phases. Applied to inno-
vation projects, the Boston Matrix can be read as follows:
When an innovative product is introduced to the market, it starts in the quadrant of the
Question Marks: The market share is low (all new products start at zero) and the mar-
ket attractiveness is hopefully high (otherwise, the product would not have an innovative
character and would probably have little chance of success).
If the market launch is successful, the product becomes a Star: The market share
increases rapidly (usually a direct consequence of the innovativeness of the new product)
and the market is still attractive, as the product is still innovative.
Over time, the once new, successful product faces competition. The market growth
slows down due to market maturity, but the market share is still high. The product
becomes a Cash Cow.
At the end of the life cycle, the market share, with the increasing obsolescence of the
product, decreases to fewer and fewer customers. The product becomes a Poor Dog. Due
to this situation, the product hardly generates any more relevant cash flows and gradually
leaves the portfolio. Figure 13.2 shows the development of the cash flows.
For the market launch, i.e. in the Question Mark phase, investments must be made
primarily and no significant revenues can be expected. This results in large negative cash
flows.
206 13 Contributions of Other Authors, Which We Have Relied on

Market attractiveness

high
strongly negative moderate
cash flow cash flow

low moderate strongly positive

cash flow cash flow

Market
share
low high

Fig. 13.2 Cash flows. © Huber, Kaufmann, Steinmann 2024. All rights reserved

With a successful market launch, revenues begin to grow increasingly: We thus enter
the Star phase. The growing revenues allow the investments necessary for market growth
to be covered to a certain extent. Therefore, the cash flows in the Star phase move around
plus-minus zero. Larger free cash flows are not to be expected, as these will immediately
be reinvested in new growth investments.
As the market matures, the achievable growth rates decrease and thus the investment
volume will decrease too. However, since the revenues remain consistently high, larger
free cash flows are generated in this phase. For that reason, products in this phase are
referred to as Cash Cows, as money can be “milked” here.
If the market share of the product decreases as it slowly ages, the revenues will also
decrease. Depending on how many customers remain and depending on the margins that
can still be achieved, the product can still be kept profitable in the market for a while.
However, at some point, this is no longer worthwhile, as the number of customers will
decrease and the costs begin to exceed the revenues. At this point, the product is removed
from the portfolio. Here its life cycle ends.
Therefore, throughout the entire product life cycle, larger profits can only be made in
the Cash Cow phase. It is thus very natural that companies try to keep their products in
this phase for as long as possible. However, the lifespan of Cash Cows is limited and if
the company is to remain stable in the long term, it must be ensured that new Cash Cows
follow. The profits generated in the Cash Cow phase therefore are needed to finance the
initial losses of the first phase, the Question Mark phase, as well as the costs of all pre-
ceding innovation projects. This is shown in Fig. 13.3.
13.5 Stages of Innovation in a Business Unit 207

Market attractiveness

high
strongly negative moderate
cash flow cash flow

low moderate strongly positive

cash flow cash flow

Market
share
low high

Fig. 13.3 Refinancing. © Huber, Kaufmann, Steinmann 2024. All rights reserved

The Boston Matrix proves to be a valuable tool for the analysis of product portfolios
in general and accordingly, it also turns out to be useful for the analysis of innovation
portfolios within the framework of an innovation strategy. It is for that reason that we use
the Boston Matrix in this book as a reference model (especially in Chaps. 14 and 15).

13.5 Stages of Innovation in a Business Unit

One of the characteristics of large companies is that they typically divide into several
business units, each of which independently handles a specific business. We therefore
understand the term business unit here as an organizational unit which has profit-and-
loss responsibility for a certain business area and which has sufficient autonomy, to be
able to lead the unit autonomously.
The question now arises as to how such independent business units should innovate.
Clayton Christensen has dealt with this question and laid the foundations for it with his
Innovation Journey.8

8 [Christensen, Bartman, van Bever, 2016].

208 13 Contributions of Other Authors, Which We Have Relied on

3.
Efficiency

2.
Sustaining Innovation

1.
Creation

Fig. 13.4 Innovation Journey. © Huber, Kaufmann, Steinmann 2024. All rights reserved

13.5.1 Innovation Journey According to Christensen

Clayton Christensen had already pointed out in his bestseller Innovators Dilemma9 that
for the successful realization of a disruptive innovation, an independent organization
must be created, as disruptive innovations, due to their different business model, also
require different organizational and process structures. This rule applies fundamentally
to all innovations, where the business model is being innovated.
In a 2016 article,10 Clayton Christensen et al. also elaborated on how the maturation
process of innovations takes place. They call this maturation process Innovation Jour-
ney. They describe this Innovation Journey in three maturity stages: Creation, Sustain-
ing Innovation and Efficiency (Fig. 13.4).
The three stages follow each other always in the same order:

13.5.1.1 1st Stage: Creation

In the first stage, Creation, the innovation project is about finding a functioning busi-
ness model. So here, it is all about business model innovation. The focus is on the value
proposition, the customers, and on how to deal with the resources, which are still very
limited at this stage.
At the Creation stage, the project shall best be processed in the innovation department
of the corporation. In suitable cases, the project can alternatively also be spun off as a
start-up (also referred to as a spin-off). It is this phase, which Steve Blank says: “A start-
up is not a small version of a big company”.11 Blank states that the start-up at this stage
does not operate as a normal business, but that up to this point the project just represents

9 [Christensen,1997] page 130.

10 [Christensen, Bartman, van Bever, 2016].
11 [Blank, Dorf, 2012] page 1.
13.5 Stages of Innovation in a Business Unit 209

an organization entity that exists solely to find a functioning business model. For Blank,
such a search organization does not yet classify as a company.
In the Boston Matrix,12 such a project in the Creation phase is at best in the Question
Mark status. In most cases however, it must even be considered as still being a research
project; and in that case, it would not yet be visible in the Boston Matrix at all.

13.5.1.2 2nd Stage: Sustaining Innovation

In the second stage, a working business model has now been found and for the organiza-
tion, it is all about establishing itself in the market and growing strongly. Here, industri-
alization, scaling, and the establishment of operational processes are in the foreground.
Business model innovation is no longer the focus in this phase.
Within a corporation, the project at the Sustaining Innovation stage is typically organ-
ized as its own business unit or as a subsidiary respectively, according to the basic rule
mentioned at the beginning of this Sect. 13.5.1. According to Steve Blank’s categoriza-
tion, it shall now be classified as a company and no longer as a start-up, as it now oper-
ates a business.
In the Boston Matrix, we are now in the Star state.

13.5.1.3 3rd Stage: Efficiency

As the third and final stage, Christensen et. al. have identified the Efficiency stage. At
this stage, market growth is increasingly saturating. This means that it makes less and
less sense to invest resources in volume growth, which gets increasingly unattainable.
Therefore, the focus shifts to increasing efficiency in business processes, especially in
production and marketing.
In this state, we now deal with a mature business. In this phase, cash flow is at its
maximum. Such businesses are therefore usually the economic mainstays of companies.
They form the main business units within the corporation. We are now in the Cash Cow
state in the Boston Matrix. Understandably, companies do everything they can to main-
tain this phase as long as possible. Therefore, business model innovation is hardly in
demand in this phase.
However, it should be noted that the lifespan of businesses is limited in any case.
After the Efficiency phase, businesses die off. It is therefore important to ensure early on
that new businesses follow. This corresponds again to the Creation stage.

13.5.2 Innovation Strategy of a Business Unit

Based on the categorizations by Christensen et al. presented here, we conclude that a

business unit is always at the Sustaining Innovation or Efficiency stage, since a business

12 [BCG, 2021].
210 13 Contributions of Other Authors, Which We Have Relied on

unit is only formed at the transition from the Creation stage to the Sustaining Innovation
stage. Let us look at the two cases in more detail below.

13.5.2.1 The Business Unit at the Sustaining Innovation Stage

If the business unit is at the second stage, Sustaining Innovation, the growth of the busi-
ness is in the foreground. The business model has already been found at this stage. How-
ever, the pressure to innovate is high due to the great market dynamics. The innovation
efforts, although large, are limited at this stage to innovations with an unchanged busi-
ness model (Sustaining Innovations) and to the existing business or possibly to busi-
nesses in adjacent areas. Therefore, product innovations are in the foreground. The aim
in this phase is to find the most attractive product for the market. On the other hand, the
ability to deliver for the now strongly expanding demand (in case of success) becomes
the highest priority.13
According to the Bern Innovation Model, the responsibility for this type of innovation
activity should lie with the business unit itself.14 This requirement can also be under-
stood from our perspective presented here: Business model innovation is not in demand
in this phase, as it would only distract from the improvements and adjustments necessary
for maximum growth. The competitive pressure is great at this stage and time is very
short. Short-term growth targets therefore dominate.
However, as we know, innovation efforts sometimes do not find what they are looking
for, but produce sometimes different results (e.g. new business models), which however
may also be attractive. In such a case, the business unit should pass on such an innova-
tion result to a central innovation office within the group, as, although valuable, it is not
suitable for the business unit.
In summary, it can be said that the innovation efforts for a business unit at the Sus-
taining Innovation stage should focus on product innovation as well as on producibility
and deliverability, given the business model.

13.5.2.2 The Business Unit at the Efficiency Stage

As explained above, a business unit is only formed when the innovative project leaves
the Creation stage. Afterwards, the innovation project is at the Sustaining Innovation
stage. As just discussed, this stage is typically characterized by strong growth. After
this, sometimes turbulent, growth phase, the market eventually becomes saturated. Here,
market growth gradually levels off. Market shares are now distributed and it is up to
the companies to extract as much profit as possible from their (now established) mar-
ket shares. At the Efficiency stage, these profits no longer need to be invested in growth
(unlike the Sustaining Innovation stage), as growth has now leveled off. The profits gen-
erated can therefore be used in this phase to finance new innovation projects and are also

13 [Moore, 1995] page 67.

14 Rule 2 from Bridging the Innovation Gap, Page 88.
13.5 Stages of Innovation in a Business Unit 211

partially available for dividend distributions to shareholders. In the Boston Matrix, we

reached the Cash Cow quadrant.
As outlined above, according to the Bern Innovation Model, the business units them-
selves are responsible for innovation in their business areas. The question now arises as
to where the business unit should focus its innovation activities when it has reached the
Efficiency stage.
At this stage of development, growth stagnates, and the competition between pro-
viders subsides. The only way to grow is to poach customers from a competitor. While
this is fundamentally possible, it is very labor-intensive and usually not profitable, i.e.,
the efforts required are usually greater than the return. Because the competitive pres-
sure between competitors is reduced for this reason, prices increasingly stabilize: market
prices are formed.15 It therefore gets attractive to minimize one’s own costs. And since
these are usually dominated by process costs, process innovation becomes the focus of
innovation efforts. It is here, at the Efficiency stage, where quality management systems
like TQM,16 ISO 9000,17 EFQM18 or Six Sigma19 have their place in innovation manage-
ment.
However, at the Efficiency stage, process innovations alone are not sufficient. In par-
ticular, additional types of innovation efforts must ensure that the customers already won
remain loyal to the company. Ideally, existing customers should become fans and ambas-
sadors of the company. For this, innovations are required that serve to secure that the
company still has products on the market that do not need to shy away from comparison
with the (still existing) competition. Product innovation is therefore still important.
On the other hand, in addition to the existing core products, complementary so-called
Value Added Services are to be developed, which are aimed at certain sub-areas of the
existing customer base and which are intended to bind them even more strongly to the
company. Attractive margins can also be achieved from such complementary products
and services, as we are here in our own sub-market, where the pressure from competitors
can be kept minimal.
At the Efficiency stage, innovation efforts are therefore no longer primarily directed
at the competition as in the growth phase, but at the needs of our own customers and the
efficiency of our own production and sales processes.
Even at the Efficiency stage, business model innovation is not in demand from the
business unit’s point of view. From the perspective of the overall company, however, it

15 Market prices are only established in this phase and exclusively in this phase!
16 TQM = Total Quality Management.
17 ISO 9000 = Series of standards from the International Standards Organisation (ISO) on the sub-

ject of quality management.

18 EFQM = European Foundation for Quality Management.

19 Six Sigma = Management system for process improvement, particularly known for its success at

General Electric (GE).

212 13 Contributions of Other Authors, Which We Have Relied on

is very much so! The Efficiency stage is the last development stage of a business and
what follows is the decline and death of the business. From the perspective of the overall
company, it must therefore be ensured for this case, that a lucrative new business gets
ready. However, for this to happen, innovative business models are required. As innova-
tion efforts in this direction are not in the direct interest of a business unit (as they typi-
cally make it obsolete), such new business models must be provided by the corporation.
This result is consistent with the demand of the Bern Innovation Model, that business
model innovations must be developed by a central innovation unit directly reporting to
the CEO. And this is also the reason why the stage “Creation”, which is addressed here,
should be handled by the central innovation unit.
It must be pointed out at this point again that the business areas of the Efficiency
stage represent the economic main pillars of the company (because they, due to declining
growth, generate the majority of the company’s profits). That is why the business areas
of the “Efficiency” stage always represent a significant power factor within the company.
It is therefore essential that in this situation the CEO and his staff ensure that the innova-
tion needs of the other development stages (i.e., Creation and Sustaining Innovation) are
still satisfied in a balanced way. This requires strong leadership, as the innovation activi-
ties of the stages “Creation” and “Sustaining Innovation” sometimes run counter to the
interests of the business units of the “Efficiency” stage. An effective solution to these
conflicts of interest can be achieved through an appropriate innovation strategy, which
keeps the different types of innovation upright and stable through “Strategic Buckets”.
This completes the circle here.
In summary, it can be said that the innovation efforts for a business unit at the “Effi-
ciency” stage should focus on the process innovation as well as on the provision of so-
called Value Added Services complementing a given core product. At the corporate level,
however, for those business areas that have reached the “Efficiency” stage, activities
should be initiated in the central innovation unit that lead to new businesses and new
business models, which can eventually replace the mature main businesses of today.

13.5.3 Our Conclusions on the Innovation Journey According to

Christensen

So we now recognize that, depending on the maturity of an innovation, certain organiza-

tional forms and also certain innovation topics must be preferred:

• for the Creation stage, a separate innovation department (or a start-up) is required to
allow for business model innovation, i.e. finding new businesses.
• for the Sustaining Innovation stage, a newly created business unit (or the newly cre-
ated (subsidiary) company) is required and the focus must lie on product innovation
and all innovations that contribute to delivery capability.
13.6 Rules for Innovating in Large Companies 213

• for the Efficiency stage, the required organization type is the business unit and the
focus lies on process innovations (incl. quality assurance) and the development of
Value Added Services.

In this book, we use these results from Christensen et. al. at various points and refer to
this chapter each time. In particular, Christensen’s results are helpful for our discussions
on the situation of SMEs in Chap. 11.

13.6 Rules for Innovating in Large Companies

From the perspective of the entire company, innovation in large companies can therefore
be represented as follows:

1. Businesses fundamentally develop over three stages: Creation, Sustaining Innovation,

and Efficiency (according to Christensen et al.,20 see Sect. 13.5)
2. It is sensible to implement the Creation stage through an innovation department,
which ideally is directly subordinate to the CEO and is financed by the entire corpora-
tion. Here, new potential businesses are explored and found for the entire corporation.
In certain cases, it may make sense to form start-ups for these tasks.
3. Once a new business is found, the associated commercial implementation subse-
quently takes place in a newly formed and sufficiently autonomous entrepreneurial
unit, be it a new business unit in the corporation, or a new (subsidiary) company. We
are here at the Sustaining Innovation stage. The innovation efforts in this phase ini-
tially lie in the development and maturation of the new product, which is the root
of the new business. In later growth phases, the product is then further developed to
remain competitive. The focus in this phase is primarily on expanding the market, be
it geographically or in terms of market share. In the event of success, special attention
must be paid to the ability to deliver. It is typically the ability to deliver at the critical
moment, that is decisive for the distribution of market shares.21
4. An exception to the rule of an independent organization is made for the Sustaining
Innovation stage only, when the project is of great strategic importance to the entire
company and when its success is at the same time heavily dependent on the resources
and capabilities of the entire company. In this case, the rules of ambidextrous man-
agement apply22 (see Sect. 14.5). However, ambidextrous management poses a special
challenge for every company.

20 [Christensen, Bartman, van Bever, 2016].

21 [Moore, 1995] page 67.
22 [O’Reilly, Tushman, 2016] page 206.
214 13 Contributions of Other Authors, Which We Have Relied on

5. Incubators and accelerators (see Sect. 12.1) represent optimized environments for
newly founded start-ups. Their use is suitable in the following cases:
a. Advancing an innovation project of the Creation stage, when this is done in the
form of a start-up.
b. Supporting third-party Creation projects, where this is in the interest of the com-
pany.
c. The immediate founding phase of a Sustaining Innovation stage company. In this
case, it must be ensured that the new company does not stay in the accelerator for
too long, but stands on its own feet as soon as possible.
6. For the Efficiency stage, two possibilities arise:
a. Normally, a business unit at the Efficiency stage focuses on maximizing the profits
of the mature business. It supports all those innovations that serve this goal. In this
case, it is up to the corporate management in the innovation department of the cor-
poration to search for new businesses that can replace the mature business later on.
b. In principle, it is of course possible too for the business unit of the mature busi-
ness, to invest in the development of a successor business. However, this requires
an appropriate foresight capability and will of the management of this business
area. In addition, considerable resources are needed to do so. For this reason, close
coordination with corporate management is required in this case as well.

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Product Technologies and the Failure of Established Firms. Administrative Science Quarterly,
March 1990:9
Further Well Known Contributions
of Other Authors and Their Relation 14
to Our Results

Abstract

This chapter illuminates the professional context of the discipline and topic of inno-
vation strategy. Although we have, due to space constraints, to limit ourselves to a
narrow selection of contributions to innovation research, we can demonstrate that the
innovation strategy is well compatible with all those findings and that it can fruitfully
apply the contributions presented.

In Chap. 14, we now turn to some contributions from innovation research that seem rel-
evant to us and are well known in companies. On the one hand, our goal is to show their
relation to the contents of this book. However, on the other hand, we also want to point
out these contributions, as we know that they can be of use to the interested reader. Thus,
they serve as a good supplement to the explanations made in this book.

14.1 The Stage-Gate Innovation Process

The most well-known contribution to innovation research is probably the Stage-Gate

Innovation Process by Robert Cooper (Cooper himself calls it the “Idea-to-Launch
System”1). This process is widely used in practice and is successfully implemented in
numerous companies. However, it is based on the traditional so-called funnel model of
the innovation process. The funnel model, however, only works for very simple inno-
vation projects and overlooks the fundamentally important Exploration phase. Accord-
ingly, Cooper’s Stage-Gate Innovation Process suffers from all those weaknesses that

1 [Cooper 2017] page 99.

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer- 215
Verlag GmbH, DE, part of Springer Nature 2024
D. Huber et al., Innovation Strategy, https://doi.org/10.1007/978-3-662-69832-7_14
216 14 Further Well Known Contributions of Other Authors …

are inherent in this traditional view of the topic of innovation. We have analyzed these
weaknesses in detail in our book Bridging the Innovation Gap and proposed a new and
completed innovation process based on this. On the other hand, as already indicated,
Cooper’s Stage-Gate Innovation Process proves to be very useful in practice, and the
question arises as to where exactly this obviously successful process belongs in practice.
The analysis2 shows that it is very suitable for the process phase development in the new,
completed innovation process.
This also explains why it has proven useful in practice so far, as it is the case that the
Exploration phase in simple innovation projects is minimal. Thus for simple innovation
projects, the completed new innovation process degenerates into the traditional funnel
process. In such cases, the development phase becomes dominant and Cooper’s Stage-
Gate Innovation Process fulfills its purpose.

14.2 The Life Cycle Diagram

The Life Cycle Diagram was used among others by Geoffrey Moore in his various
books.3 Moore represents the life cycle of a product according to the phases of market
development, but always with a focus on the customer groups typical of each phase of
market development. Moore thus divides the market development phases according the
type of customers that buy the product for which reasons. He has identified five customer
groups: enthusiasts (Techies), visionaries (Early Adopters), pragmatists, conservatives,
and skeptics (Fig. 14.1).

2 Cooper’s Stage Gate process comprises a total of six process phases, i.e.: Discovery: Idea Gen-
eration, Scoping, Build Business Case, Development, Testing and Validation, Launch. The first
process phase, Discovery: Idea Generation corresponds to the Ideation phase of the classic fun-
nel process. One might now suspect that the following two phases Scoping and Build Business
Case correspond to the Exploration phase of the innovation process (according to [Huber, Kauf-
mann, Steinmann 2017]). However, this is not the case. No real exploration is carried out. Cooper
describes his Scoping phase simply as “a quick, preliminary investigation and scoping of the pro-
ject—largely desk research”, i.e., a lightweight review of the idea using desk research ([Cooper,
2017] Page 121). The idea itself is not really changed. This is in stark contrast to Exploration,
where the result in the end often has little to do with the original idea.
However, for Cooper’s phases Scoping and Build Business Case, this means that the idea must
be good from the outset in order for it to be possible at all to write an attractive business case.
Cooper is aware of this, as he writes in [Cooper, 2017] Page 124: “Don’t expect a superb new-
product process to overcome a deficiency in good new-product ideas”. Unlike Exploration, the
Scoping phase lacks the refinement aspect. However, this means that the exploration must be com-
pleted before the scoping. That is what positions the Cooper process in the development phase.
And indeed, it is the case that the final and detailed business case must still be worked out in the
development phase.
3 E.g. Geoffrey Moore, Inside the Tornado [Moore, 1995].
14.2 The Life Cycle Diagram 217

Frequency

chasm

Risk avoidance

enthusiasts pragmatists skeptics

(Techies)

visionaries conservatives
(Early Adopters)

Fig. 14.1 Life Cycle Diagram. © Huber, Kaufmann, Steinmann 2024. All rights reserved

The enthusiasts (Techies) buy the new product because it is new and they want to
be the first to know the new product. Enthusiasts are usually technically savvy and tend
to publish their early assessment of the new product. They are therefore relevant to the
manufacturer as early indicators and market influencers. However, it should be noted that
the customer group of enthusiasts usually does not lead to larger sales and also that this
customer group does not occur in every product category.
The second group of early customers are the visionaries (Early Adopters). The
visionaries are visionary customers, who hope to solve with the new product a (business)
problem for themselves. Visionaries are often willing to spend larger sums for this. How-
ever, they usually demand certain adjustments to the product.
After the visionaries, the pragmatists are the next buyers. While enthusiasts and
visionaries only make up a very small portion of the total potential market, the main part
of the market consists in about equal parts of the pragmatists and the conservatives.
The pragmatists are (in contrast to the conservatives) innovation-friendly and buy
a new product to use it in large volume and also for mission-critical applications. The
pragmatists are pragmatic, but they are also cautious and insist on seeing reference
implementations before making a purchase decision. This poses a problem at the begin-
ning, as the first pragmatist customer can only see reference implementations from
visionaries and enthusiasts. Pragmatists, however, judge this as insufficient, as both
enthusiasts and visionaries are different personality types than they are themselves. They
cannot for that reason understand the purchase arguments of neither enthusiasts nor
visionaries (pragmatists typically are SJ types, while enthusiasts and especially vision-
aries are usually NT types). Therefore, it is difficult to find first pragmatist customers.
Geoffrey Moore refers to this difficulty with the term chasm. The chasm is particularly
218 14 Further Well Known Contributions of Other Authors …

pronounced for products with high investment costs and high investment risks. For prod-
ucts, which cause no or very low costs for product trials and use, the chasm can be very
small to non-existent.
Due to their large number, it is crucial for the success of a product to win the market
segment of the pragmatists. Since pragmatists also tend to herd behavior, it is likely that
in case of success there will be avalanche effects in market development (Moore speaks
here of the Tornado). The market shares that finally are achieved, are typically deter-
mined by these avalanche effects and it is exactly in this phase of market development
that delivery capability becomes decisive.
The conservatives then make up almost the other half of the market in terms of num-
bers. Their market segment thus is about the same size as that of the pragmatists. Unlike
the pragmatists, however, the conservatives would rather not buy anything and only act
when they have to. Due to their large number, they are important to the company despite
their reservations.
The last segment are the skeptics (or laggards). This segment is small and of little sig-
nificance to the provider.
In the Boston Matrix, the enthusiasts and visionaries are in the Question Marks quad-
rant, while the segment of the pragmatists maps to the Stars phase. In the Cash Cows
phase we have conservative customers in front of us, while in the Poor Dogs area we
deal with the skeptics (see also Chap. 15).
The Life Cycle Diagram thus represents the introduction and penetration of new prod-
ucts in the market. Due to its customer focus, it ideally complements the Boston Matrix
tool. In the context of an innovation strategy, the Life Cycle Diagram can therefore serve
us as another valuable basic tool.

14.3 Innovation in the Existing Business in the Optimization

Phase

Howard Yu has described in his book Leap4 the stages through which, according to the
model for innovation in existing business (see Chap. 11.4, Fig. 9.7), a product develops
within the Optimization phase. This maturation always takes place over three stages, as
shown in Fig. 14.2:

1. Craftsmanship Stage: Here, expert knowledge is crucial. The aim at this stage is to
be able to offer a functionally better product.
2. Mass Production Stage: At this second stage, optimizing the (production) processes
becomes crucial. The goal now is to be able to provide the offer more efficiently.

4 [Yu, 2018].
14.3 Innovation in the Existing Business in the Optimization Phase 219

Fig. 14.2 Stages of Automation

innovation. © Huber,
Kaufmann, Steinmann 2024.
All rights reserved Mass Production

Craftsmanship

3. Automation Stage: At this third stage, the processes are automated as much as pos-
sible (e.g., with robots). By avoiding human intervention, both efficiency and quality
are improved.

With each of the three stages, a competitor has the opportunity to establish itself against
the established market dominator (the incumbent). Each of these stage transitions can
therefore potentially have a disruptive effect.
After reaching the Automation stage, according to Yu, a Leap must necessarily occur,
otherwise the company begins to stagnate. Yu refers to Leap as a transition to new basic
knowledge, a technological leap, that is. This means a transition at least into the Radi-
cal Modernization phase according to the model for innovation in existing business (see
Sect. 11.7, Fig. 10.2). This can be a new business (i.e., an Adjacency or a Transformation
A or B according to Sect. 14.7), but it can also be the existing business, which, however,
is put on a new technological basis (Radical Modernization according to the model of
Fig. 11.4 in Sect. 11.7)). As an example, Yu cites the pharmaceutical industry, which in
terms of basic knowledge has undergone two leaps: from organic chemistry to microbiol-
ogy to bioinformatics/genomics (Fig. 14.3).
Such a transition in terms of basic knowledge (a Leap that is) is counterintuitive for
managers. It requires a long and expensive lead time, during which the Leap project
must be able to develop with great autonomy. And moreover, such projects are not really
plannable. At the time of the Leap decision, a large financial commitment is therefore
required, although at this point, no clear business case can yet be presented. Risk man-
agement in the classic sense is therefore not possible.
The question arises here, how these insights in the Innovation strategy can be taken
into account. Yu already provides an answer to this. He recommends designing the strat-
egy process in such a way that a larger number of different opportunities can be created,
that can be analysed to find out, which one of these is attractive. This is achieved in our
innovation process by the Exploration phase. The Leap thus corresponds to the transition
from the Optimization phase to Radical Modernization, or to the further development of
the business model (Transformation A) and to newly enabled businesses (Transformation
B), as described in Sect. 11.7.
Once it is clear how to proceed, Yu then recommends full commitment, full throttle.
This is achieved in our innovation process by the Development phase.
220 14 Further Well Known Contributions of Other Authors …

bioinformatics, genomics

Automation
microbiology

Mass Production

Automation Craftsmanship
organic chemistry

Mass Production
2nd technological leap

Automation Craftsmanship

Mass Production
1st technological leap

Craftsmanship

Fig. 14.3 Example pharmaceutical industry. © Huber, Kaufmann, Steinmann 2024. All rights
reserved

Yu finally condenses his findings into five principles for corporate management, as
follows:

1. Understand the firm’s foundational knowledge: Understanding the basic knowl-

edge of the company, which forms the foundation of its success. This means, analyz-
ing the status quo. In our approach, this is done during the development of the vision.
2. Acquire new knowledge: Building up new basic knowledge as a basis for future
Leaps. In our approach, we do this by formulating suitable Guiding Questions and
Search Fields in Field 5 of the Innovation Framework.
3. Leverage seismic shifts: Clarifying future prospects. We enable this in our approach
with the future orientation of the strategy in Field 2 of the Innovation Framework.
4. Experiment: Enabling experimentation. We allow for this with our process phase
Exploration.
5. Deep dive into execution: This is the company’s commitment to the Leap. This is
ensured in our approach with the Development phase.

Yu’s findings are thus fully compatible with our view and are taken into account in our
discussions on innovation strategy.
14.4 Effectuation 221

14.4 Effectuation

Effectuation is a proposal by Saras Sarasvathy5 on how projects can be managed for

which due to their novelty there are no reliable data and for which therefore no sensible
plans can be made.
In such an environment, the usual method of planning projects based on their Return
on Investment (RoI) is not applicable. In this situation of uncertainty, Effectuation sug-
gests, instead of the unfeasible RoI planning, to determine the approach based on the
“affordable loss”. In this case, the individual actions are defined as experiments based on
“affordable stakes”, through which the unknown environment can be gradually explored.
Implementation is opportunistic. We undertake what can be implemented right now and
not necessarily, what has been intended originally. The activities are thus determined
not by the achievable return, but by the affordable loss. Effectuation is therefore
essentially an agile approach, in which the direction can change flexibly depending on
the opportunity.
Contrary to the opinion of various authors on this topic6 however, even in a project
managed with Effectuation, it is necessary to start with a first vision. It is this original
vision that creates the motivation to even start the project in the first place.
Effectuation follows five principles:

1. Vision: The vision provides the reason to even start the innovation project in the first
place.
2. Orientation towards available resources: We implement what is feasible under the
given circumstances and with the resources available to us. And we do not orient our-
selves towards abstract goals. We consider not only our own resources, but also those
of potentially interested suppliers and partners.
3. Affordable loss: We align our commitment to the affordable loss and not to the tar-
geted returns.
4. Coincidences: We consider coincidences and unexpected circumstances as opportuni-
ties.
5. Partnerships: We look for interested parties as partners and also work with their
resources.

Effectuation is therefore suitable as a procedure wherever there are no reliable planning

data available, typically in the Exploration phase of the innovation process. In the Chris-
tensen model, this particularly applies to the Creation stage. For mature businesses, e.g.
at the Efficiency stage, the classic ROI approach is quite suitable.

5 [Sarasvati, 2006].
6 For example, with Michael Faschingbauer and Dietmar Gichnik [Faschingbauer, Gichnik, 2011].
222 14 Further Well Known Contributions of Other Authors …

14.5 Ambidextrous Organisation

Another aspect relevant to the management of innovations in large companies was

found by Charles O’Reilly and Michael Tushman7: the Ambidextrous Management.
O’Reilly and Tushman understand this to mean that a company may have to manage its
projects according to different rules depending on whether they are projects for estab-
lished businesses or projects to establish a new business. Ambidextrous management is
difficult for companies, as it requires proactive handling of contradictions.

14.5.1 Ambidextrous Management

According to O’Reilly and Tushman, renewal projects go through three stages of organi-
sational development: Exploration, Growth and Exploitation. Different focus points
apply to each stage and therefore each stage must be managed according to different
rules.

• In the exploration business (Exploration): Searching, speed, autonomy, flexibility, dis-

covery, increasing the range of variation.
• In the growth business (Growth): Strategy, success factors, employees, culture, organ-
isation.
• In the mature business (Exploitation): Predictability, stability, efficiency, control and
reducing the range of variation.

Figure 14.4 illustrates the ideas of O’Reilly and Tushman.

O’Reilly and Tushman are thus in line with other authors (such as Christensen’s Crea-
tion, Sustaining Innovation, and Efficiency, see Sect. 13.5). And O’Reilly and Tushman
also conclude that development projects should therefore be developed in separate inde-
pendent organizational units as much as possible.
Unlike other authors, however, they also deal with the issue of how to use as many
synergies with the existing organization as possible. For this purpose, they divide the
development projects according to two criteria: the strategic importance for the entire
company and the relation to key resources and key capabilities existing in the company.
The resulting four quadrants can be seen in Fig. 14.5:

1. Quadrant: Small strategic importance, few potential synergies in terms of resources

and capabilities: In this case, it is recommended to organize the project as a separate
company (spin-out).

7 [O’Reilly, Tushman, 2016].

14.5 Ambidextrous Organisation 223

mature
Sales volume
business

growth
business

exploration
business

Maturity level

variation selection maintenance

Fig. 14.4 Organizational development. © Huber, Kaufmann, Steinmann 2024. All rights reserved

2. Quadrant: Small strategic importance, many potential synergies in terms of resources

and capabilities: In this case, it is recommended to implement the project in an exist-
ing business unit.8
3. Quadrant: High strategic importance, few potential synergies in terms of resources
and capabilities: In this case, it is recommended to set up the project as a new busi-
ness unit.

So far so unspectacular and largely consistent with other sources. What is new, however,
is the fourth quadrant:

4. Quadrant: High strategic importance, many potential synergies in terms of resources

and capabilities: In this case, it is recommended to lead the project within the entire
company, but to run it according to its own rules (ambidextrous organization).
The innovation project must be built within the company because of the large syner-
gies, as it needs access to the company’s resources. However, it must be managed as
a separate unit and according to different internal rules, a kind of “internal start-up”.
However, these requirements result in contradictions in management.

8 However, this only works with a compatible business model. Otherwise, a new business unit must
be formed.
224 14 Further Well Known Contributions of Other Authors …

Strategic importance of
the desired innovation

new ambidextrous
business entity organization
large

existing
spin out
business entity
small

Relation to existing key

resources and skills
low high

Fig. 14.5 Ambidexterity. © Huber, Kaufmann, Steinmann 2024. All rights reserved

14.5.2 Principles of Ambidextrous Management

To cope with the contradictory requirements of ambidextrous management, O’Reilly and

Tushman establish a few principles:

1. A strong common vision and values should show everyone in the company that they
are part of the same team! Through this strong bond, the ambidextrous parts of the
company are held together despite contradictions.9
2. Exploration and operational business hinder each other. Conflicts are therefore inevi-
table, e.g. the fight for resources.10 To prevent these inevitable conflicts from blocking
the entire company, they must be regulated and decided explicitly. The optimal way
to do this is to divide the company into two areas: The operational business under the
leadership of a COO, who must not simultaneously be the CEO, and the exploratory
business under the leadership of an innovation manager, who must be a member of
the executive board.11 The conflicts are thus explicitly decided under the leadership of

9 [O’Reilly,Tushman, 2016] page 206.

10 [O’Reilly,Tushman, 2016] page 207.
11 This organizational setup is compatible with the demands of the Bern Innovation Model (see

[Huber Kaufmann Steinmann 2017]).

14.5 Ambidextrous Organisation 225

the CEO in the executive board. This is possible as long as the entire executive board
has a common strong vision.
3. Do not desperately seek harmony, but explicitly name the inevitable conflicts.12 This
applies particularly to the executive board. So, explicitly address and manage con-
flicts.
4. The explore business and the exploit business need almost opposing leadership prin-
ciples! For this reason, different incentive systems are needed for the operational
(exploit) business and for the exploratory business. The new business and the existing
business should therefore be managed deliberately and explicitly differently.13,14
5. However, all this can only be achieved, if the steering meetings for the existing busi-
ness are separated from those for the new business: Therefore, hold separate review
meetings, establish different KPIs and different definitions of success.
Important! Even in the executive board, operational items must not be dealt with in
the same meeting as exploratory items. Therefore, there need to be two different types
of executive board meetings: an operational one and, separate from that, an explor-
atory executive board meeting. This separation must also be made for the board of
directors’ meetings.15
The reason for this separation is that it is psychologically extremely difficult for the
members of the respective bodies to change their values and decision criteria in a
short time. Without this separation, the company risks decisions that were made based
on wrong criteria and that are therefore likely to cause damage.

14.5.3 Our Conclusions on Ambidexterity

The management of new businesses should generally be carried out as an independent

business unit (Christensen’s Sustaining Innovation stage). This allows the decision-mak-
ing processes of the exploratory new business to be cleanly separated from those of the
operational main business. This is important because exploratory projects must be man-
aged according to different, opposing rules than the operational business.
An exception to this organizational separation must be made when the new business
strongly depends on resources and capabilities that already exist in the company. Only in
this case should a new business be managed within the existing decision-making mecha-
nisms. And only in this case ambidextrous leadership must be applied.

12 [O’Reilly, Tushman, 2016] page 208.

13 [O’Reilly, Tushman, 2016] page 210.
14 This demand too is compatible with the demands of the Bern Innovation Model (see [Huber

Kaufmann Steinmann 2017]).

15 [O’Reilly, Tushman, 2016] page 211.
226 14 Further Well Known Contributions of Other Authors …

To conclude, it should be noted one more time that ambidextrous leadership poses a
great challenge for every management team.

14.6 Developing New Business Models

The development of new business models is at the core of every company’s innovation
efforts outside of its existing business. Accordingly, it is a central element in the imple-
mentation of the Strategy for Change and thus also central to the innovation strategy.
Various authors have dealt with this topic and developed tools for the development
of new business models. The most important and most widely used tools come from
Alexander Osterwalder and Yves Pigneur. It can be said justifiably so, that they were
the first to solve the problem of business model development with their book Business
Model Generation.16 The Business Model Canvas and the Value Proposition Canvas
are the basic tools for business model development. In a second book, Value Proposi-
tion Design,17 the same authors refined their method and provided numerous tools for the
entire course of business development.
We would also like to mention the work of Mark Johnson on the same topic. His
book Seizing the White Space,18 published in the same year as Business Model Genera-
tion, convincingly explains the topic and rightly points out that in the end, it’s not about
bringing a new product to market, but that the commercial success of a product primarily
depends on how well one understands what a potential customer actually wants to do.
Johnson calls this Jobs-to-be-done. He points out that the purchase of a product or
service by the customer does not occur because of the product itself, but that the cus-
tomer actually “hires” a product to do a “job” for him. The most important insight from
this is that we should not only focus on our existing customers, but that we primarily
need to understand why certain market segments are not our customers and what pre-
vents them from becoming our customers. We achieve this, when we understand what
their job-to-be-done is. We should therefore also focus on our non-customers. This is a
rather counterintuitive approach. Johnson calls this area of non-customers White Space
(by analogy to the white space between the letters of a text).
Osterwalder, Pigneur and as well Johnson thus lay essential foundations for business
model innovation and provide important tools for our Strategy for Change.

16 [Osterwalder,Pigneur, 2010].
17 [Osterwalder,Pigneur, Bernarda, Smith, 2014].
18 [Johnson, 2010] (Title: Seizing the White Space, revised edition under new title: Reinvent Your

Business Model, 2018).

14.7 The Disruptive Transformation 227

14.7 The Disruptive Transformation

In addition to the normal situations of innovation activity presented here, companies can
be faced with a particularly difficult challenge, namely when they are affected by a dis-
ruptive transformation of their business.
A business is disruptively transformed when a novel business model begins to meet
the needs of existing customers better than it was the case with the previous business
model. For the affected companies, this results in a situation that their mature main busi-
ness, which has formed the economic mainstay of the company, loses its competitiveness
in a short time.
Disruptive transformation of a market is therefore a particularly vehement form of the
demise of a mature main business (as described in Sect. 13.5, among others). The great
vehemence of the transformation process in the market (hence it is called disruptive),
makes it difficult for the affected companies to respond successfully.
This difficult special case has been thoroughly analyzed by the authors Scott
Anthony, Clark Gilbert and Mark Johnson and in their book Dual Transformation.19
They conclude that for successful survival in this case, it is necessary to transform the
company twice (hence the title Dual Transformation).
This means a radical change in a company’s innovation strategy. It is this fact that
makes the results of Anthony et al. relevant for our book on innovation strategy, even
though they are actually considering a special case. However, this case is important. We
therefore want to take a closer look at the concept of dual transformation in the follow-
ing.
As mentioned, a disruptive transformation of a market occurs, when the business
model of a usually mature and traditional market is replaced by a new and more efficient
business model. Such changes in the business model are often technology-induced; i.e.
new technological possibilities allow for novel, usually more efficient solutions to satisfy
customer needs that have hardly changed. Due to their higher efficiency, this means that
the total market volume after the complete transition to the new business model is usu-
ally much smaller than before. Typically, not only is the market volume smaller, but the
achievable margins are also lower. It is precisely this characteristic, that makes it so dif-
ficult for traditionally managed companies to adapt: It is counterintuitive to move from a
business model with a good margin to a business model with a lower margin.

Recommended Approach to Disruptive Innovation

In such a case of a disruptive transformation of the market, Antony et al. recommend a
four-step approach:

19 [Anthony, Gilbert, Johnson, 2017].

228 14 Further Well Known Contributions of Other Authors …

1. Optimizing the existing business

2. Finding new business in the old business model, usually in an adjacent business
area. Anthony et al. refer to this as “Adjacency”.
3. Radical (technical) Modernization of the old business model. This usually leads to
improved product features and functionalities.
4. Rebuilding the existing business according to the new business model. Anthony
et al. refer to this as “Transformation A”.
5. Building a new business, which is based on the new technological possibilities and
uses existing strengths of the company as competitive advantages. Anthony et al. refer
to this as “Transformation B”.

Anthony et al. explain their approach using the reference diagram in Fig. 14.6.

1. Optimizing the existing business

The first step is to optimize the current product within the existing business model.
This is done to benefit as long as possible from the generally larger profit margins of
the old business model. It is not that the old business model disappears overnight. It
just becomes weaker. We need these short-term profits to finance the upcoming two
transformations.

Product
(what we do)

new new field of application newly feasible

2 5
businesses

initial
1 differentiation
existing further development
4
radical of the business model
3
modernization

Business model
(how we do it)
existing new

Fig. 14.6 Dual Transformation according to Anthony et al. © Huber, Kaufmann, Steinmann
2024. All rights reserved
14.7 The Disruptive Transformation 229

2. Adjacencies—Finding new business in the old business model

This can also include entering new adjacent markets with our existing business model,
so-called Adjacencies. In this first step, we simply behave as the management of an
Efficiency level business naturally does (see Sect. 13.5).
3. Radical Modernization of the existing business
The so-called Radical Modernization is also part of optimizing the existing business.
Here, the existing business is radically innovated through the use of new technolo-
gies. However, the business model remains unchanged. An example is the transition
from piston engines to jet engines in aircraft propulsion. Radical innovations are often
confused with disruptive innovations. But since their business model does not change,
they do not affect the market disruptively.
4. Transformation A—Rebuilding the existing business according to the new busi-
ness model
As the fourth step, we now tackle Transformation A: We rebuild the business, in
which we have already been active according to the new business model. It is recom-
mended to carry out this development step by setting up a new business unit, which
should be as autonomous as possible. This second step is counterintuitive, as we are
establishing a direct and potent competition to our own main business. This step can
only be understood if one is aware, that the previous main business cannot be saved in
the medium term. What remains for us in the end, is our newly built business accord-
ing to the new business model.
5. Transformation B—Building a new business
It is typical that after this Transformation A (i.e., with the new business model), the
business volume is lower than before and usually also the margin is lower. However,
we have to accept this. The alternative would be to lose the existing business entirely!
We now have to compensate for these losses in terms of business volume and margin,
and preferably even to overcompensate. We achieve this with the second transforma-
tion: The Transformation B. So while the first Transformation A saves our exist-
ing business for the future, albeit with a lower volume and lower margin, the second
Transformation B serves to build new future prospects based on the new market con-
ditions.
In Transformation B, we are looking for a new business that can be newly tapped into
due to the changed possibilities. We make sure that we can at least play out a part of
our previous strengths in the new business. This gives us a competitive advantage over
the start-ups appearing in such new businesses. And of course, this is anything but
easy: It is quickly said, but difficult to do.

Our Conclusions on Dual Transformation

If the need for innovation is the result of a disruptive market transformation, in addi-
tion to the rules for innovating in large companies formulated in Sect. 13.6, the rules of
230 14 Further Well Known Contributions of Other Authors …

Dual Transformation apply. For this case, Anthony et al.20 have shown us how to deal
with such a disruptive market transformation. Nevertheless, a Dual Transformation in
response to a disruptive market transformation remains a major challenge for every com-
pany. It is partly counterintuitive and anything but easy.

14.8 Design Thinking and Other Innovation Methods and Tools

Today, innovation has become a much-used and sometimes also misused buzzword.
Many use the word innovation to make their idea appear more interesting. However, a
large part of the buzzwords offered in this extensive discourse are less generic innova-
tion models, but in most cases methods or tools. This is understandable, as methods and
tools, unlike models, can be applied directly and are therefore of immediate interest to
users. They sometimes have a great significance and can be used beneficially in innova-
tion projects at certain stages.
However, methods and tools unfortunately are often presented as complete innova-
tion models. This is often due to a lack of understanding, but sometimes also done quite
deliberately, in the hope of getting more attention and wider distribution. The handling
of the methodology of Design Thinking can serve as an example here. The following are
a few methods and tools that are often mistakenly presented as integral innovation
models:

• Design Thinking
• Business Model Canvas
• Lean Canvas
• Lean Startup
• Business Experiments
• Test Marketing
• Minimal Viable Product, MVP
• Prototyping
• Boost Camps
• Venturing
• Incubators
• Accelerators
• Trend Scouting
• Scenarios
• Story Telling (and sometimes also Science Fiction)

20 [Anthony, Gilbert, Johnson, 2017].

14.9 The Invincible Company 231

exploit

return

Strategy for
Exploitation

Two Stars
Strategy death and
explore
disruption risk
expected
return

Innovation
Strategy

innovation risk

Fig. 14.7 Portfolio Map according to Osterwalder et al. © Huber, Kaufmann, Steinmann 2024.
All rights reserved

14.9 The Invincible Company

At this point, we would like to mention another contribution by Alexander Osterwalder

et al., which they have made with their book The Invincible Company.21 They outline
in this book, how a company should be designed from their perspective, so that it can
deliver excellent market performance and at the same time also excellently renew itself,
i.e., innovate.
Osterwalder et al. base this on an insight that we first published in 2014 in our book
Bridging the Innovation Gap,22 namely that operational activities must be separated from
innovation activities, as they function according to different, opposing rules. Osterwal-
der et al. focus in their book on the activities of the company, which they arrange in two
activity portfolios, an Explore Portfolio for renewal activities and a Exploit Portfolio
for operational activities. They present this as a so-called Portfolio Map (Fig. 14.7).
Osterwalder et al. go into detail on how to build and manage such a portfolio set. In
the last chapter of the book, they then suggest how, in their view, a company should be
organized, which would thereby become “invincible”. The representations by Osterwal-
der et al. are largely compatible with the statements made in this book.

21 [Osterwalder, Pigneur, Etiemble, Smith, 2020].

22 Published in German 2014, in English 2017.
232 14 Further Well Known Contributions of Other Authors …

Our book extends and complements the steering of the overall project portfolio (using
the Portfolio Map) with the necessary strategic foundations. This makes it possible for
the first time to have a truly holistic strategic control of a company. The Strategy for
Exploitation strategically controls the Exploit Portfolio and the Innovation Strategy stra-
tegically controls the Explore Portfolio.
Their organizational suggestions too, generally coincide with our view. However, we
consider the organizational suggestions they made, to be difficult in practical industrial
implementation. The model organization we presented in our 2014 book (2014 in Ger-
man, English translation 201723) takes more into account the practical feasibility and
therefore presents itself somewhat differently. It should also be noted that both organiza-
tional suggestions can largely be reconciled if one appropriately (re-) interprets the terms
used.
Osterwalder et al. thus go with their book in a similar direction as we do. However,
they choose a different path and focus on the activities in the company, while we in this
book approach the topic from the strategy side.
The contribution of Osterwalder et al. is thus largely compatible with the results in
this book and, with its focus on the activities and the two different activity portfolios, it
is a good complement to this book.

References

Anthony S, Gilbert C, Johnson M, (2017) Dual Transformation. Harvard Business Press, Boston,
USA
Cooper r (2017) Winning at New Products. Basic Books, New Yourk, USA
Faschingbauer M, Gichnik D (2011) Effectuation. Zeitschrift für Führung und Organisation zfo,
05/2011:337 ff
Huber D, Kaufmann H, Steinmann M (2017) Bridging the Innovation Gap—Blueprint for the
Innovative Enterprise. Springer Verlag, Berlin, Heidelberg, (translation, original 2014 in Ger-
man)
M Johnson (2010) Seizing the White Space. Harvard Business Press, Boston, USA
Moore G (1995) Inside the Tornado. Harper Business, New York, USA
O’Reilly Ch, Tushman M (2016) Lead and Disrupt. Stanford Business Books, Stanford CA, USA
Osterwalder A, Pigneur Y (2010); Business Model Generation. Wiley, New York, USA
Osterwalder A, Pigneur Y, Bernarda G, Smith A (2014) Value Proposition Design. Wiley, New
York, USA
Osterwalder A, Pigneur Y, Etiemble F, Smith A (2020) The Invincible Company. Wiley, Hoboken,
USA
Sarasvati S (2006) The affordable loss principle. University of Virginia Darden School Foundation,
UVA-ENT-0075
Yu H (2018) Leap. PublicAffairs, Hachette Book Group, New York, USA

23 [Huber, Kaufmann, Steinmann, 2017], page 118.

Comparison of Innovation Models
and Business Development Models 15

Abstract

In Chap. 15, we attempt to identify innovation contributions that can be related to

each other and thus compared. Our goal is to bring some order into the large number
of different contributions to innovation research and thereby achieve more transpar-
ency. In doing so, we can distinguish two categories: innovation models and business
development models. We are aware that the effort undertaken here and the results
achieved are in no way conclusive. However, a start has been made and a first step
towards increased transparency seems to have been achieved too.

15.1 Innovation Models

In this chapter, we look first at those among the many contributions to the topic of inno-
vation that can be understood in the broadest sense as innovation models in the true
sense of the word, i.e. which make a statement about the entire innovation process. This
is in contrast to the numerous contributions that merely describe methods and tools that
can be useful in innovation (see Sect. 14.8).
We were able to identify the following as innovation models:

• Three Stages of Disruptive Innovation by Charles O’Reilly et al.1

• Innovation Journey by Clayton Christensen et al.2

1 [O’Reilly, Binns, 2019].

2 [Christensen, Bartman, van Bever, 2016].

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer- 233
Verlag GmbH, DE, part of Springer Nature 2024
D. Huber et al., Innovation Strategy, https://doi.org/10.1007/978-3-662-69832-7_15
234 15 Comparison of Innovation Models and Business Development Models

Go- no-go Market introduction

decision decision
Phases/ Strategy Fuzzy Transfer Development Growth Efficiency
Authors Phase Front End Phase Management Management
Charles
1
O'Reilly Ideation Incubation Scaling Scaling
Clayton Sustaining
2
Christensen Creation Creation Innovation Exploitation

3 Steve Blank
Startup Enterprise Enterprise

4 Gary Pisano Innovation

Strategy
Acceleration,
5 Mark Johnson
Incubation Transition Transition

Early Market,
6 Geoffrey Moore Chasm,
Tornado Main Street
Early Warning Development,
7 Daniel Huber Innovation System, Market
Strategy Exploration Transfer Introduction

Fig. 15.1 Innovation models. © Huber, Kaufmann, Steinmann 2024. All rights reserved

• Customer Development by Steve Blank et al.3

• Tornado Marketing by Geoffrey Moore4
• Innovation Strategy by Gary Pisano5
• Stages of Business Model Implementation by Mark Johnson6
• Open Innovation by Henry Chesbrough7
• Bern Innovation Model by Daniel Huber et al.8

However, the various innovation models are not equivalent. Instead, they focus on dif-
ferent aspects in the course of the development of an innovation. We have juxtaposed
the innovation models in random order in Fig. 15.1. This allows to make the different
focuses visible. In this figure, the Open Innovation concept by Henry Chesbrough is not
included. This is of a different quality and cannot be directly compared with the other
innovation models.

3 [Blank, Dorf, 2012].

4 For example in Geoffrey Moore, Inside the Tornado [Moore, 1995] or also Crossing the Chasm,
[Moore, 1991].
5 [Pisano, 2015].

6 [Johnson, 2010] page 136.

7 [Chesbrough, 2003].

8 [Huber, Kaufmann, Steinmann, 2017].

15.1 Innovation Models 235

In the following, we describe the rows of the table very briefly:

1. Charles O’Reilly et al.9 distinguish the phases Ideation, Incubation and Scaling. The
Ideation phase refers to the finding of ideas and thus belongs to the Fuzzy Frontend.
The Incubation phase then refers to the elaboration of the idea, so it can be assigned
to the Development phase. The Scaling phase subsequently deals with growth (scaling
indeed) and efficiency optimization. The Innovation Strategy and the (difficult) trans-
fer between the Fuzzy Frontend and the Development phase are not addressed.
2. Clayton Christensen et al.10 divide his Innovation Journey in the three stages Cre-
ation, Sustaining Innovation, and Exploitation. We have described the concept in
Sect. 13.5. The Creation stage deals with the creation of the product, its development,
and the preceding idea-finding phase, which belongs to the Fuzzy Frontend. The Sus-
taining Innovation stage then deals with the growth phase and the Exploitation stage
deals with efficiency optimization, so it belongs to Efficiency Management. In this
case too, the Innovation Strategy and the Transfer between the Fuzzy Frontend and
the development phase are not addressed.
3. Steve Blank et al.11 focus on company structure and distinguishes between a start-up
and a company. A company is, as mentioned, an organization that can finance itself
based on its business model, while a start-up is still in search of a viable business
model. A start-up according to this definition is thus still in the Development phase.
All preceding phases are not addressed by Blank et.al.
4. Gary Pisano12 in turn focuses exclusively on the Innovation Strategy in the article
considered here.
5. Mark Johnson13 in turn, fundamentally considers the entire innovation process. He
divides this into the three phases Incubation, Acceleration, and Transition. In his Incu-
bation phase, ideas are generated. This therefore belongs to the Fuzzy Frontend. The
development is largely skipped (and thus, of course, the consideration of the Transfer
phase as well). The Acceleration phase, then, deals with growth and the Transition
focuses on the maturation processes at the end of the growth phase and in the Effi-
ciency Management phase, especially on the question of how such a new business can
be reintegrated into the existing company. In addition to development and transfer, the
topic of Innovation Strategy is also not considered.
6. Geoffrey Moore14 focuses on the Life Cycle, that is, what happens after the new
product has already been introduced to the market. In this case, we are already out

9 [O'Reilly, Binns, 2019].

10 [Christensen, Bartman, van Bever, 2016].
11 [Blank, Dorf, 2012].

12 [Pisano, 2015].

13 [Johnson, 2010].

14 Among others in [Moore, 1995].

236 15 Comparison of Innovation Models and Business Development Models

of the Development phase and are looking at the Growth phase and the phase of Effi-
ciency Management. The Development phase, and everything that happens before, are
not in focus. The Life Cycle by Geoffrey Moore is thus a representative of the busi-
ness development models, as they are presented in the following Sect. 15.2 and stands
here also as a representative for these.
7. Daniel Huber et al.15 deal in depth with the early phases of innovation: the innova-
tion strategy, the Fuzzy Frontend, Development, and Market Launch. It is the only
one of the innovation models listed here, that also deals in depth with the difficult
Transfer phase between the Fuzzy Frontend and development. The Fuzzy Frontend
is structured and divided into the sub-phases Early Warning System and Exploration.
Likewise, two sub-phases, Development and Market Introduction, are distinguished
in the Development Phase. However, Huber et al. do not deal with developments after
the market launch.

As shown here, the various innovation models focus on different aspects of the inno-
vation process. This makes a direct comparison difficult. The structuring undertaken in
Fig. 15.1 allows for a fair comparison for the first time and thus makes the context of our
innovation strategy somewhat clearer and more transparent.

15.2 Business Development Models

To conclude this brief consideration of the context in the discipline of innovation

research in which our remarks on innovation strategy are embedded, we want to take a
look at how various common business development models relate to each other. We refer
to business development models as these models that make a statement about the path of
a new business, from its introduction to the market to its withdrawal. Business develop-
ment models are thus a subset of innovation models. They exclusively represent the late
phases of the entire innovation process, namely those that take place in the market. We
have included the Life Cycle Diagram model by Geoffrey Moore in Fig. 15.1 as repre-
sentative of the others.
Not surprisingly, there are some connections between different business development
models. We want to make these transparent.
To do this, we need a reference to which we can compare the various business devel-
opment models, which we can use as a kind of yardstick. We choose the Boston Matrix
as this reference. We can thus assign the four quadrants of the Boston Matrix to the
respective representations of the various business development models, i.e., Question
Mark, Star, Cash Cow, and Poor Dog.

15 [Huber, Kaufmann, Steinmann, 2017].

15.2 Business Development Models 237

In the preceding sections, among others, we mentioned the following business devel-
opment models:

• The Boston Matrix (Sect. 13.4)

• The Life Cycle Diagram by Geoffrey Moore (Sect. 14.2)
• The Innovation Journey by Christensen (Sect. 13.5)
• Also the “Three Innovation Horizons” (not yet described in this book)
• The Organizational Evolution by O’Reilly and Tushman (Sect. 14.5)

We now want to compare these with each other.

15.2.1 Boston Matrix

We have already described the Boston Matrix in Sect. 13.4. It classifies a company’s
offerings in the market according to market attractiveness (usually measured by growth)
and market share (usually volume). The resulting four quadrants are called Question
Marks, Stars, Cash Cows, and Poor Dogs (see Fig. 15.2) and are explained in Sect. 13.4.
Also in Sect. 13.4, we have shown already, how the cash flows typically behave in the
four quadrants and how we use cash flow surpluses in the Cash Cow quadrant to offset
the negative cash flows in the Quadrants can finance Question Marks (Fig. 15.3).

Market attractiveness

high
strongly negative moderate
cash flow cash flow

low moderate strongly positive

cash flow cash flow

Market
share
low high

Fig. 15.2 Boston Matrix. © Huber, Kaufmann, Steinmann 2024. All rights reserved
238 15 Comparison of Innovation Models and Business Development Models

Market attractiveness

high
strongly negative moderate
cash flow cash flow

low moderate strongly positive

cash flow cash flow

Market
share
low high

Fig. 15.3 Cash flows and refinancing. © Huber, Kaufmann, Steinmann 2024. All rights reserved

We use in the following the four quadrants of the Boston Matrix as a reference model
to illustrate the relationships between the various business development models consid-
ered here.

15.2.2 Life Cycle Diagram According to Geoffrey Moore

The Life Cycle Diagram used by Geoffrey Moore in his books, represents the phases of
the market penetration for a successful product. The Life Cycle Diagram was described
in Sect. 14.2. The Life Cycle Diagram shows, how the profile of the buyer changes over
the life cycle of a (successful) product. Figure 15.4 illustrates this.
The journey through the market segments is also a “journey” through various growth
phases in the market. These growth phases can be assigned to the quadrants of the Bos-
ton Matrix. Figure 15.5 shows the flow of financing from the Cash Cows to the Question
Marks.

15.2.3 Innovation Journey According to Christensen et al.

The Innovation Journey according to Christensen is described in detail in Sect. 13.5.

Christensen considers the development of a product’s innovation in three stages, spread
over its lifespan within a large company: from the Creation stage, where the offer is
15.2 Business Development Models 239

Frequency

chasm

Risk avoidance

enthusiasts pragmatists skeptics

(Techies)

visionaries conservatives
(Early Adopters)

Fig. 15.4 Life Cycle Diagram. © Huber, Kaufmann, Steinmann 2024. All rights reserved

Time
Market launch Growth Maturity Profit optimization Exit

Fig. 15.5 Refinancing. © Huber, Kaufmann, Steinmann 2024. All rights reserved

created, to the Sustaining Innovation stage, in which the product enters the market and
establishes itself. This growth continues until the Efficiency stage, where the market no
longer grows and we optimize our margin through improvements in production and mar-
keting efficiency. Figure 15.6 shows this as a graphic.
Here too, we can now assign the four quadrants of the Boston Matrix to the various
stages:
240 15 Comparison of Innovation Models and Business Development Models

3.
Efficiency

2.
Sustaining Innovation

1.
Creation

Fig. 15.6 Innovation Journey. © Huber, Kaufmann, Steinmann 2024. All rights reserved

3.
Efficiency

2.
Sustaining Innovation

1.
Creation

Fig. 15.7 Innovation Journey with Boston Matrix. © Huber, Kaufmann, Steinmann 2024. All
rights reserved

The Creation stage corresponds to the Question Marks, the Sustaining Innovation
stage corresponds to the Stars, and the Efficiency stage corresponds to the Cash Cows.
Figure 15.7 illustrates this and shows the flow of finances between Cash Cows and Ques-
tion Marks.

15.2.4 Innovation Horizons

Another, often used subdivision of the Innovation activities is the so-called 3 Horizons
Model (according to Mc Kinsey).16 In this model, innovation activities are divided into
three areas with different time horizons:

16 The
model of innovation horizons is not used in this book and is presented here for the sake of
completeness.
15.2 Business Development Models 241

Growth potential

Exploration business

Growth business

Core business

Uncertainty

Fig. 15.8 Innovation Horizons. © Huber, Kaufmann, Steinmann 2024. All rights reserved

• Optimization innovations in core services are attributed to “Horizon 1”, with a con-
sidered period of about 12 months.
• “Horizon 2” then aims for growth at the core. Here, the time frame is thought to be up
to about 36 months into the future.
• “Horizon 3” then includes renewal innovations with a long-term time horizon (greater
than 3 years).

Figure 15.8 shows the three horizons. Here too, we have assigned the quadrants of the
Boston Matrix for comparison. Innovation Horizon 1 concerns the core business, i.e.,
the Cash Cows, Innovation Horizon 2 concerns the growth business, i.e., the Stars, and
Innovation Horizon 3 concerns the explorative future business, the exploration business,
i.e., the Question Marks.

15.2.5 Organizational Evolution According to O’Reilly and Tushman

A representation related to the Innovation Horizons can be found in Sect. 14.5. Profes-
sors O’Reilly and Tushman present the development of an organization in this repre-
sentation.17 In Fig. 15.9, we have again assigned (for the reason of comparability) the
quadrants of the Boston Matrix. It equally shows that the three phases of O’Reilly and
Tushman can be directly assigned to the three horizons of Mc Kinsey.
According to these authors, an organization must always simultaneously operate three
types of business in parallel:

17 [O’Reilly, Tushman, 2016].

242 15 Comparison of Innovation Models and Business Development Models

mature
Sales volume
business

growth
business

exploration
business

Maturity level

variation selection maintenance

Fig. 15.9 Organizational development. © Huber, Kaufmann, Steinmann 2024. All rights reserved

• Exploration business: New business for the future in the Exploration phase
• Growth business
• Mature business: The “milking” of mature business.

O’Reilly and Tushman point out that these three development phases of the business
must be managed differently and they assign specific characteristics to the three phases:

• In the exploration business: Searching, speed, autonomy, flexibility, discovery,

increasing the range of variation.
• In the growth business: Strategy, success factors, employees, culture, organization.
• In the mature business: Predictability, stability, efficiency, control and reducing the
range of variation.

15.3 Conclusion to Chaps. 13, 14 and 15

The aim of Part III is to shed some light on the environment in which the contribution to
innovation strategy made in this book is located. This is necessary, because an innovation
strategy should take into account all areas of the innovation process.
Such an overview is only possible to a limited extent, as the number of contributions
on the topic of innovation is overwhelming. For this reason, we had to limit ourselves to
some selected contributions to innovation research that seemed important to us. In addi-
References 243

tion, we found that while there are a huge number of contributions on the topic of inno-
vation, there are hardly any that illuminate the relationship between contributions from
different authors. We have now made a first attempt to do this in Chap. 15, with all the
previous limitations regarding selection.
It has been shown that the various contributions discussed can indeed be related to
each other. This is not surprising, as all the contributions discussed refer to the same
topic, innovation. In our review, we found the following patterns:

• In general, the contributions to innovation research discussed seem to be well aligned

with each other.
• A few contributions need to be repositioned in light of the latest findings, as they still
assume the incomplete innovation process according to the funnel model.
• Many of the older contributions from the 1990s and before can also be well integrated
into the overall picture.
• There are many contributions for the phases of market introduction and
• market penetration. These have different focuses and perspectives, but are largely
compatible with each other. We were able to demonstrate this in Sect. 15.2.
• The development phase also seems to be well understood.
• However, there are hardly any contributions to the early phases of the innovation pro-
cess. This is not surprising, as these phases are also somewhat mockingly called Fuzzy
Frontend, indicating that this phase is still poorly understood. We examined these early
phases in our last book Bridging the Innovation Gap and have for the first time clearly
structured these early phases of the innovation process and supplemented it accordingly.
• There are a great many contributions that focus on individual steps in the innovation
process and propose procedures and tools. This is explained by the fact that tools
in particular can be easily advertised as useful in practical use (in many cases quite
rightly so) and are therefore immediately attractive to many readers. In addition,
focusing on a single aspect saves one from having to deal with the whole complexity
of the innovation process, which also increases the readability of such contributions.
• Furthermore, it appears that some of these tools and methods can be used in several,
different phases of the innovation process.
• Unfortunately, we also found that such procedures and tools that in fact focus on an
individual step in the innovation process are sometimes mistakenly regarded as com-
plete innovation models. This can lead to disappointments when applied, which dam-
ages the credibility of the proposed method (which often is quite useful, when used at
the appropriate process step).

References

Blank S, Dorf B (2012) The Startup Owner’s Manual. K&S Ranch, Pescadero, CA, USA
Chesbrough H (2003) Open Innovation. Harvard Business School Press, 2003 Boston, USA
244 15 Comparison of Innovation Models and Business Development Models

Christensen C, Bartman T, van Bever D (2016) The hard truth about business model innovation.
MIT Sloan Management Review, Fall 2016:31 ff
Huber D, Kaufmann H, Steinmann M (2017) Bridging the Innovation Gap—Blueprint for the Inno-
vative Enterprise. Springer Verlag, Berlin, Heidelberg, (translation, original 2014 in German)
Johnson M (2010) Seizing the White Space. Harvard Business Press, Boston, USA
Moore G (1991) Crossing the Chasm. Harper Business, New York, USA
Moore G (1995) Inside the Tornado. Harper Business, New York, USA
O’Reilly C, Binns A (2019) The Three Stages of Disruptive Innovation, California Management
Review, Vol. 61(3):49–71
O’Reilly C, Tushman M (2016) Lead and Disrupt. Stanford Business Books, Stanford CA, USA
Pisano G (2015) You need an Innovation Strategy. Harvard Business Review, June 2015:44 ff
Final Remarks
16

Abstract

Finally, we will once again consider our results. Among other things, we will illus-
trate how our previous state of knowledge has evolved through the work on this book
and the associated preparations. Finally, we will explicitly answer the research ques-
tions from Sect. 2.5.

16.1 The Innovation Strategy and the Two Stars Strategy

With this book, we have undertaken, to clarify what an innovation strategy is and how it
can be developed. We have seen that the classic strategy development pays not enough
attention to the aspects of the future. Accordingly, we have shown how to develop a
future-oriented strategy. Then we realized that, in order to be successful in the long term,
a double, i.e., dual strategy must be created, which in the first part must secure the exist-
ing business from a position of the present, the Strategy for Excellence, and which in its
second part, the Strategy for Change, leads the company into the future. This Strategy
for Change must be written from a future-oriented position. A corporate strategy, which
consists of a present-oriented and a future-oriented strategy part, we called Two Stars
Strategy. With that, the company strategically aligns with two future visions.
In order for the Two Stars Strategy to be implementable in the company, the opera-
tional strategy aspects must be separated from the innovative strategy aspects. The opera-
tional strategy aspects are recorded in the Strategy for Exploitation and the innovative
strategy aspects in the Strategy for Innovation. The Strategy for Innovation therefore
includes the innovation aspects from the Strategy for Excellence and the entire Strat-
egy for Change. This merging of the innovative strategy aspects is necessary, because

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer- 245
Verlag GmbH, DE, part of Springer Nature 2024
D. Huber et al., Innovation Strategy, https://doi.org/10.1007/978-3-662-69832-7_16
246 16 Final Remarks

i­nnovative activities must be managed differently (contrarily!) than operational activities.

Only through this grouping does the Two Stars Strategy become implementable.
While the development of the Strategy for Exploitation can be carried out using the
classic strategy development methods, a new approach must be found for the develop-
ment of the innovation strategy, the Future Blueprint process. We have described this
approach and put it into the standardized form of the Innovation Framework for practi-
cal use.
For the first time, we thus are able to systematically and completely develop an inno-
vation strategy, as up to now, it was not at all clear, what exactly belongs in an innovation
strategy. With doing this, we now have answered our research questions. With a view to
the practical application of these new findings, we have also addressed some questions
that specifically arise for SMEs and start-ups, or also for large companies that intend to
take over start-ups.
In Part III, we have established the connection between our newly gained insights and
concepts and the previous results in innovation science.

16.2 Some Important Insights

The in-depth engagement with this book has fundamentally changed our view on the top-
ics of strategy and innovation. In Table 16.1, we show how the picture differs from the
previously widespread views.
16.3 Answering the Research Questions 247

Table 16.1  Comparison of innovation models

Previously widespread views Confirmed views and new insights
Corporate Strategy
The classic process for the development of the The classic process for the development of the
corporate strategy takes the aspects of the future corporate strategy does not take the aspects of
into account sufficiently the future into account sufficiently
To develop a corporate strategy, only one pro- To develop a corporate strategy, two processes
cess is required need to be run in parallel. The resulting two
strategy parts are then integrated into the Two
Stars Strategy
The strategy can be developed by purely opera- To develop a strategy, strategic thinking is
tive thinking required, i.e. it is required to put the (strategic)
goals first and to identify the means to achieve
them just as a consequence of the goals
Operative thinking is not adequate
Innovation Strategy
The innovation strategy is a functional strategy, The innovation strategy is an integral part of
which is derived as a sub-strategy form the the Two Stars Strategy. It is one of the two parts
corporate strategy of the Two Stars Strategy, and is equivalent to
the Strategy for Exploitation
It is not clear, what an innovation strategy shall The six Fields of the Innovation Framework
comprise describe the contents of an innovation strategy
exhaustively
The innovation strategy consists of the prior- The innovation strategy comprises much more
itized innovation areas than just the prioritized innovation areas. It
consists of the six Fields of the Innovation
Framework
Neither tools nor methods are known that An innovation strategy can be developed by
would enable a systematic development of an elaborating a Two Stars Strategy using the
innovation strategy Innovation Framework
The value of developing an innovation strategy The value of developing an innovation strategy
lies in the need to know what shall be innovated lies far more in its effect that it induces innova-
tive thinking of the decision makers
An innovation strategy gets effective by making An innovation strategy can be effective only,
it available in written form when it is supported by all employees. Internal
communication therefore is mission critical
Future
It is enough, if the innovation entity takes care To be future-proof, the innovation entity needs
of the aspects of the future of the enterprise to care about the aspects of the future as well as
those of the present at the same time
(continued)
248 16 Final Remarks

Table 16.1 (continued)

Previously widespread views Confirmed views and new insights
As the future remains unknown, it can be The position of the present is not the only
assessed only from a position of the present one possible. To take a position in the future
is feasible. The view backwards, form such
a position in the future back to the present,
reduces the way into the future to connecting
exactly two points in time. This makes it easier
for enterprises to come to (strategic) decisions
There is no systematic and comprehensive With the Future Blueprint, a systematic and
method for a company to approach the future easily understandable approach is available to
formulate the relevant future
Innovation in SMEs
SMEs are too small for developing innovations There is an approach to innovation adapted for
systematically SMEs, which does not differ from the approach
of large companies in principle, but only in its
design
SMEs are usually in the phase of growth and Indeed, in the exploitation phase, the need for
exploitation. Therefore, their need for innova- market-related improvement innovations domi-
tion is less pronounced nates. However, because their proven business
model is increasingly threatened, SMEs can no
longer do without a Strategy for Change
For SMEs, it is sufficient if the innovation Innovation activities concern the SME as a
activities are carried out in the development whole. Therefore, and to defuse potential con-
department flicts with operational business units, innova-
tion activities must report directly to the CEO
Innovation in Start-ups
Start-ups are on the pulse of time and are by Start-ups are not innovative by definition. A
definition innovative systematic look at the future is also worthwhile
for start-ups. This can stabilize the chosen path
and often, opportunities that are even more
attractive can be identified
A start-up is a small company that is supposed A start-up is not a small company, but a search
to implement an innovative business idea into organization. It is looking for a promising busi-
reality ness model. This is in contrast to a company,
which has already found its business model
Start-up and scale-up company are synonymous A scale-up company differs from a start-up in
that it has completed the experimentation phase
and is implementing its business model
16.4 Outlook 249

16.3 Answering the Research Questions

We can now answer our two research questions. We formulated these in Sect. 2.5 as fol-
lows:

Research Question 1:

What is an innovation strategy and how is it structured?

Research Question 2:

How can an innovation strategy be developed systematically?

Regarding Research Question 1, we have found out that the innovation strategy is one
of two equal parts of the Two Stars Strategy. The innovation strategy is therefore not
simply a functional strategy (which is subordinate to the corporate strategy) as has been
the prevailing opinion so far, but it is an integral and equal part of the two-part and com-
prehensive Two Stars Strategy.
We have also shown how an innovation strategy should be structured, namely accord-
ing to our Innovation Framework and its six components: Present, Future, Gap, Need,
Focus, and System.
The Innovation Framework also provides the answer to our Research Question 2. An
innovation strategy can be systematically developed by moving along the six Fields of
the Innovation Framework, namely Present, Future, Gap, Need, Focus, and System. In
this order. We have detailed how this can be done in practice in Chap. 4 and derived it in
Part II of this book.

16.4 Outlook

In this book, it becomes clear for the first time what an innovation strategy actually is
and how we can develop such a strategy. Together with newly found insights into strat-
egy formation, companies can now develop into the future in a well-founded and system-
atic way. This enables companies to remain competitive in the long term. At the same
time, a significant contribution is made to the successful shaping of the future of the
society as a whole.
We, the authors, continue to deepen our knowledge in the field of innovation. We
make these insights directly available to other companies and organizations through our
consulting company inobooster.com. We are grateful for suggestions regarding further
topics and methods. We are particularly interested in your experiences from practical
application and we look forward to you contacting us at www.two-stars-strategy.com.
Afterword: The Story of the Origin of this Book

This book arose from the surprising realization of the three co-authors that on one hand,
the term innovation strategy is indeed frequently encountered in the literature on innova-
tion, but that on the other hand, practically no literature exists on the topic of innovation
strategy. So, it is not clear from the literature, what the term innovation strategy actually
means, nor what such a strategy should contain in terms of content. And of course, there
is absolutely no information on how to develop an innovation strategy. We wanted to
close this gap with this book.
The collaboration of the three co-authors Daniel Huber, Heiner Kaufmann, and Mar-
tin Steinmann began many years ago at the Bern University of Applied Sciences, where
Daniel Huber and Heiner Kaufmann were professors of innovation. At that time, there
was a close research collaboration with Martin Steinmann in the field of innovation.
While Daniel Huber had a broad horizon of experience as a long-standing innovator
and innovation manager in the innovation department of Swisscom, Heiner Kaufmann
brought rich experiences as a founder and start-up CEO. Martin Steinmann, on the other
hand, was (and still is) a successful business consultant, a business he built after a career
as a start-up manager and previous innovative activity at Swisscom1.
It is the combination of these different horizons of experience, that made it attractive
to write the book as an author team in the same composition as we did write “Bridging
the Innovation Gap—Blueprint of the Innovative Company”.2 In that book, they explain
why innovation, based on previous knowledge, must systematically fail and what can be
done to rectify this regrettable state. The authors propose the “Bern Innovation Model”,
which suitably corrects the recognized incomplete innovation process and shows the
organizational prerequisites for systematic innovation activity.
In the present book “Innovation Strategy—The Bridge to the Company’s Future”, the
three co-authors now go one step further and, based on the “Bern Innovation Model”,
show how a company can specifically implement its innovative capabilities, based on its

1Huber and Steinmann know each other already from there.

2The origin story of that book is described in more detail in its introduction chapter (page 1 ff).

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer- 251
Verlag GmbH, DE, part of Springer Nature 2024
D. Huber et al., Innovation Strategy, https://doi.org/10.1007/978-3-662-69832-7
252 Afterword: The Story of the Origin of this Book

strategy. Therefore, it is the path to the innovative company, which is outlined for the
company in its innovation strategy.
The basis for this book was originally developed from challenges in teaching innova-
tion at the university. In these courses, the topic of innovation strategy was covered in
term papers. It was noticed that the expression innovation strategy is often used in the lit-
erature, but surprisingly, there is hardly any literature about what an innovation strategy
actually is, let alone how to create one in a somewhat systematic way.
In order to work with the students in the field of innovation strategy anyway, Daniel
Huber, as the then responsible study director, did the obvious: He collected all the infor-
mation available on the term innovation strategy and he looked for a partner active in
this topic in practice. Daniel Huber found this in the Bern Innovation Promotion Agency
innoBE (today be > advanced). InnoBE worked among other things with corporate clients
on the topic of innovation strategy. This collaboration resulted in various joint projects
on this topic. Parallel to this, the innovation students, as part of their course, developed
an innovation strategy for their employer as a term paper. The experience from these pro-
jects and student term papers were then successfully used by Daniel Huber and Martin
Steinmann in joint consulting mandates.
With growing experience in consulting practice and with such term papers, a certain
approach and structuring of content crystallized. It became increasingly clear, how the
strategic basis of a company’s innovation activity, its innovation strategy, can be devel-
oped.
In this situation, the decision matured to write a book on this topic. In this book, the
authors have now consolidated their experiences that have matured over more than ten
years. Contrary to their expectations, however, this implementation in a book did not go
without surprises. Therefore, at certain places, the authors found contradictions in their
own views and it also showed that additional content areas need to be addressed. This led
to sometimes intense discussions, which resulted in new insights and manifold additional
contents.
Today, however, the authors are very satisfied that they have finally succeeded in
bringing the topic into a consistent and clear form. Thus, for the first time, a book is
now available that comprehensively covers the topic of innovation strategy. Companies
receive with this book the basics on how to build their innovation capabilities systemati-
cally, or how to optimize them.
Through the steps outlined in the book, the innovation capability of companies can
systematically be increased.
Glossary

German English Definition/Explanation

“used in this book as” or “newly coined”
Abteilung für Intellectual ­Property Organizational unit that ensures the protection of a
Rechte an geistigem Rights (IPR) company’s intellectual property
­Eigentum ­Departement
Accelerator Accelerator An accelerator is an institution that coaches start-
ups for a limited time. The goal is to bring already
validated business ideas to market success more
quickly
Adjacency Adjacency Finding new business in the existing business
model, usually in adjacent business areas (according
to Anthony et al.)
Ambidextre Ambidextrous Organization that is suitably structured for ambidex-
Organisation Organization trous management. The most important thing here
are the rules of the game. (according to O’Reilly Ch
and Tushman M)
Ambidextres Ambidextrous Managing a company simultaneously according to
Management ­Management two different (actually opposing) principles, one
management style for the operational business and
one for renewal activities (according to O’Reilly Ch
and Tushman M)
Ambition Ambition The claim (to oneself) to achieve a certain goal
Architekturale Architectural Type of innovation according to Pisano, which
­Innovation ­Innovation requires new technologies and proposes a new busi-
ness model at the same time [Pisano, 2015]
Bagger Innovation Excavator Creation of new products and services. Suitable
Innovation for products and services with a very high need for
renewal
Berner Bern Innovation The new innovation model proposed in the book
­Innovationsmodell Model Bridging the Innovations Gap [Huber, Kaufmann,
Steinmann, 2017]

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer- 253
Verlag GmbH, DE, part of Springer Nature 2024
D. Huber et al., Innovation Strategy, https://doi.org/10.1007/978-3-662-69832-7
254 Glossary

German English Definition/Explanation

“used in this book as” or “newly coined”
Boston Matrix Boston Matrix Analysis tool of the Boston Consulting Group. It
analyzes a company’s product portfolio
Business Case Business Case Systematically described business idea, which
roughly describes its drivers qualitatively and also
quantitatively in a rough form. The term is used in
this book specifically for the first rough business
concept in the exploration phase
Business Plan Business Plan Formal and detailed documentation of the planned
business. Its essential drivers and its success in a
multi-year view are described quantitatively
Commodity Commodity Interchangeable standard goods
Content Related Content-Related Content gap that separates a company from its
Strategic Gap Strategic Gap intended strategic positioning for the future.
Innovations are needed to achieve the new strategic
positions
Creation Creation Stage of the Innovation Journey according to Chris-
tensen [Christensen, Bartman, van Bever, 2016]
Design Thinking Design Thinking Innovation method
Differentielle Differential Method of strategy synthesis, based on the SWOT,
SWOT SWOT in which strategic directions are assigned to the let-
ter pairs SO, ST, WO, and WT
Also Extended SWOT, SWOT analysis or SWOT
matrix (there is no uniform naming)
Disruptive Disruptive Type of innovation described by Clayton Chris-
Innovation Innovation tensen. It is based on the fact that the buying criteria
for a product change over time (see book Innovators
Dilemma [Christensen, 1997]). Disruptive innova-
tions can change the hierarchy of providers in the
market
According to Pisano, an innovation, in which the
technology remains unchanged, but the business
model changes [Pisano, 2015]
Disruptive Disruptive The transformation necessary for a company when
Transformation Transformation its market is disrupted by a new business (according
to Anthony et. al.). It comprises a total of 4 stages
Dominantes Design Dominant Design Stage of innovation in the existing business
Dual Transformation Dual Transformation Double (dual) fundamental business renewal, which
according to Anthony et al. becomes necessary in
the case of a disruptive transformation. It includes
Transformations A and B
Duale Strategie Dual Strategy Strategy with two equivalent parts
Glossary 255

German English Definition/Explanation

“used in this book as” or “newly coined”
Effectuation Effectuation To lead an innovation activity according the maxi-
mal bearable loss and not accrording the expectable
gain (according to Saraswati S)
Efficiency Efficiency Stage of the Innovation Journey according to Chris-
tensen [Christensen, Bartman, van Bever, 2016]
Eigentliches KMU Generic SME SME that implements one single business model
Entwicklung und Development and Phase of the innovation process
Produktion Production
Ergänzende Produkte Value Added Products and services offered to existing customers
und Dienstleistungen Services (in a mature market) with the goal to complement
products these customers already have purchased
from the enterprise earlier on
Erweiterte SWOT Differential SWOT See Differential SWOT
Exploration Exploration Phase in the innovation process, during which early
insights are combined and integrated systematically
and in a playful way to form new technical and busi-
ness solutions
Extrapolation Extrapolation Forward projection of a trend
Financial Strategic Financial Strategic A gap in revenue that is caused by the aging and
Gap Gap growing obsolescence of existing products. Such
aging products may be renewed or replaced through
innovations. In this way, innovations create new
revenue potentials
Five Forces Five Forces Method of strategy analysis. It analyses the structure
Analyse Analysis of the market (according to Porter M)
Fluide Strategie Fluid Strategy A strategy that is in permanent development and
renovation. Fluid strategies are implemented using a
freezed image at a certain point in time
Freelancer Freelancer A single person that offers his expertise and labor on
the market
Frühwarnsystem Early Warning The first phase of the innovation process. It identi-
System fies new business-relevant informations and devel-
opments with regard to markets, technology and
(business) environment. It is also in this phase that
new ideas are created
Funktionalstrategie Functional Strategy The strategy subordinate to (and derived from) the
corporate strategy for a single business function
(e.g., marketing)
Future Blueprint Future Blueprint Method, which allows to develop in a short time an
image of the future for the company
256 Glossary

German English Definition/Explanation

“used in this book as” or “newly coined”
Fuzzy Frontend Fuzzy Frontend Term for the first two phases in the traditional
innovation process (funnel model). The term refers
to the fact that in the traditional understanding, the
first two process phases (of the funnel model) can
be structured only very poorly and therefore remain
diffuse (fuzzy)
Gegenwartsorientierte Present Forward Mindset, in which the future is viewed from the
­Denkweise Mindset position of the present
Gegenwartsorientierte Present-Forward Strategy developed from a present forward mindset.
Strategie Strategy This is the case with all classic strategy development
methods
Geschäft Business Here: Any activity that a company carries out to
make a profit
Geschäftsentwick- Business Develop- A model that makes a statement about the path of a
lungsmodell ment Model new business, from its introduction to the market to
its withdrawal. Business development models are a
subset of innovation models
Geschäftsmodell Business Model A business model describes the logical functioning
of a company and how it generates profits
It can be structured e.g. according to the Business
Model Canvas (see [Osterwalder, Pigneur, 2010])
Hammer Innovation Hammer Innovation Change and transformation of existing products and
services. Suitable for products and services with a
high need for renewal
Incentives Incentives Benefits in money (bonus) or otherwise, which a
company offers its employees to motivate them to a
certain behavior. A management tool
Incubator Incubator An incubator is an institution that supports start-
ups in the company formation phase. The goal is to
develop start-ups to the point where they are ready
for investors, or venture capitalists
Initiale Initial Development stage of innovation in existing busi-
­Differenzierung Differentiation ness
Initiales Design Initial Design Development stage of innovation in existing busi-
ness
Innovation Innovation An economic novelty that simultaneously exhibits
the following three properties: novelty, relevance,
and successful application
Innovation durch den Innovation by This type of innovation serves to build a new profit-
Aufbau eines neuen Developing a New able business. See Transformation B
Geschäfts Business
Glossary 257

German English Definition/Explanation

“used in this book as” or “newly coined”
Innovation für ein Innovation in an This type of innovation serves to keep an existing
bestehendes Geschäft Existing Business business alive as long as possible
Innovation Gap Innovation Gap Gap in the innovation process before the develop-
ment phase. Many innovations fail at this transition
Innovation Journey Innovation Journey Stages of business development in a business unit
according to Christensen [Christensen, Bartman,
van Bever, 2016]
Innovation Innovation Classification of types of innovation proposed by
Landscape Map Landscape Map Gary Pisano [Pisano, 2015]
Innovation Innovation A type of balanced scorecard, adapted for the man-
Scorecard Scorecard agement of a company’s innovation activity
Innovation-­ Innovation A type of map, which, in a maximally reduced form,
Framework Framework allows for the first time an overview of the innova-
tion process
Innovationsbedarf Innovation Needs The quantity and type of innovations that a company
needs in order to achieve its future goals
Innovationsdenken Innovation- Thinking in the categories and concepts of inno-
Thinking vation. Innovation thinking is a prerequisite for
innovative action
Innovationsfähigkeit Innovation The ability of a company to act innovatively. The
Capability innovation capability is determined by the precon-
ditions of the company regarding organizational
structure and process, and by the rules explicitly and
implicitly in force in the company
Innovationshandeln Innovation Systematic action in accordance with the insights of
Execution innovation thinking
Innovations­ Innovation Systematic management of a company’s innovation
management Management efforts
Innovationsmodell Innovation Model System of elements that are necessary to innovate
successfully and that covers the entire innovation
process. This includes processes as well as struc-
tures
Innovation­s­ Organization for The type of organization required for innovation. A
organisation Innovation suitable innovation organization is a prerequisite for
the ability to innovate
Innovationsprozess Innovation Process The process of how innovation activities are organ-
ized in sequence. A suitable innovation process is a
prerequisite for the ability to innovate
258 Glossary

German English Definition/Explanation

“used in this book as” or “newly coined”
Innovationsstrategie Innovation Strategy Strategy that describes what the company must do
to innovate sensibly. Traditionally understood as a
functional sub-strategy, but according to Abell, it is
an integral part of the dual strategy equivalent to the
corporate strategy
The part of the Two Stars Strategy that encompasses
the innovative strategy aspects
Innovationssystem Innovation System The organizational structure and process that allows
the company to innovate
Innovatives Innovative A company that is optimally organized in terms of
Unternehmen Enterprise its ability to innovate and is therefore capable of
innovation
Intrinsische Intrinsic Motivation Motivation from inner drive
­Motivation
IPR-Management IPR-Management Systematic management concerning Intellectual
Property Rights (IPR)
Job-to-be-done Job-to-be-done Expression by Mark Johnson and others for what
the customer actually wants to do with the offered
product (“The customer hires a product for the job
to be done”)
Jungunternehmen Scale-up Company A company that begins to finance itself through
market services. As soon as start-ups have found
their business model, they become scale-up compa-
nies
Klassische Classic Strategy Approach to strategy development, as it has been
­Strategiebildung Development taught in textbooks so far
Kleine und Mittlere Small and Medium Companies smaller than 250 employees are consid-
Unternehmen (KMU) Enterprises (SME) ered medium, companies smaller than 50 employees
are considered small and companies with fewer than
10 employees are referred to as “micro”
Known Unknowns Known Unknowns Still unknown aspects of the future, of which one
can already know (according to Rumsfield D)
Leap Leap Hward Yu refers to Leap as a company’s transition
to new basic knowledge, a technology leap
Lebenszyklusanalyse Life Cycle Analysis Analysis of the status of a product using the Life
Cycle Diagram
Leitfragen Lead Questions Key questions that still need to be answered for
innovation progress
Life Cycle Diagram Life Cycle Diagram Representation of the life cycle of a product, struc-
tured according to the primary customer categories
served
Glossary 259

German English Definition/Explanation

“used in this book as” or “newly coined”
Make or Buy Make or Buy Decision whether a capability should be built up by
­Entscheidung Decision oneself or purchased, or whether a product element
should be developed by oneself or purchased. An
alternative to buying is to team up with a suitable
partner (Make, Buy or Partner)
Managementattention Management (Limited) opportunity to gain attention from the
Attention management team
Markteinführung Market Introduction Phase of the innovation process. Introduction of a
new product in the market
Megafon Innovation Megaphone Changing the perception of existing products and
Innovation services with purely communicative means. Suitable
for products and services with small renewal needs
Minikonzern Mini Corporation SME that implements several different business
models (like a corporation)
Mission Mission Those fundamental activities that the company
intends to carry out to get closer to its vision (Mis-
sion Statement)
Modernisierung Modernization Development stage of innovation in existing busi-
ness
Myers-Briggs Myers-Briggs Today’s probably most widespread personality
Type Indicator Type Indicator typology and the associated test method
Neu ermöglichtes Newly Enabled Busi- Transformation B
Geschäft ness
NT-Typ NT Personality Group of personality types according to Myers
Briggs, focus on Intuition/Thinking
Operative Lücke Operational Gap The part of the revenue gap that can be closed by
operational measures
Optimierung Optimization Development stage of innovation in existing busi-
ness
Output Oriented Output Oriented A future-oriented approach in which the procedure
Design Design is determined based on the desired result for the
future
Performance Performance Here: The economic performance of a company
PEST- PEST Analysis Environment analysis of a company according to
Umgebungsanalyse the four categories Political, Economical, Social and
Technological. A well-known analysis method
Pflichtenheft Specification Describes specifically how the development depart-
ment intends to meet the requirements of the order-
ing party (often the management)
260 Glossary

German English Definition/Explanation

“used in this book as” or “newly coined”
Pinsel Innovation Brush Innovation Improvement and optimization of existing products
and services. Suitable for products and services with
low renewal need
Positionierung Positioning Positioning in the market. Determines the (sub-)
market, the market segments and the relevant perfor-
mance differentiations against the competition
Produkt Product A service offered on the market. Something that the
company can sell
Produktinnovation Product Innovation Innovation by providing a new product (the pro-
cesses often remain unchanged)
Produktpflege Product Maintaining the competitiveness of an existing
Maintenance product through mostly minor adjustments and
improvements
Prozessinnovation Process Innovation Innovation through novel processes (the products
often remain unchanged)
Qualitativer Qualitative Qualitative gap, which separates a company from
­Strategischer Gap Strategic Gap its intended strategic positioning for the future.
Innovations are required to achieve the new strategic
positions
→ Content-Related Strategic Gap
Quantitativer Quantitative Revenue gap, which is caused by the aging process
­Strategischer Gap Strategic Gap of existing products. Through innovations, the prod-
ucts are renewed or replaced and can thus release
new revenue potentials
→ Financial Strategic Gap
Quasimonopol De-facto Monopoly A de facto monopoly situation
Radikale Innovation Radical Innovation Type of innovation according to Pisano, which
requires new technologies, while the business model
remains unchanged [Pisano, 2015]
Radikale Radical Development stage of innovation in existing
­Modernisierung ­Modernization business
Routineinnovation Routine Innovation Type of innovation according to Pisano, where
technologies as well as the business model remains
unchanged [Pisano, 2015]
Six Sigma Six Sigma A process and quality management system
SJ-Typ SJ Personality Group of personality types according to Myers
Briggs, focus on Sensing/Judging
S-Kurve S-Curve (Non linear) Curve of a successful development of
a product in the market. With slow growth at market
entry, strong growth in the growth phase and a flat-
tening off of the growth rate in the maturation phase
(The curve therefore has the shape of an S)
Glossary 261

German English Definition/Explanation

“used in this book as” or “newly coined”
Speicher Warehouse, A data warehouse for strategy elements. The
Memory warehouse is a tool to help the development and the
updating of the innovation strategy
Spielregeln Rules of the Game Here: The explicit and implicit rules that govern the
enterprise
Spin-along Spin-along External founding of a new company, followed by
its later re-integration in the corporation. Spin-along
is used in most cases to allow an innovation project
to mature
Spin-in Spin-in Integration of an enterprise, usually after an acquisi-
tion
Spin-out Spin-out External founding of a new company, based on a
project of an existing corporation (sometimes also
called Spin-off)
Stage-Gate-­ Stage-Gate-­ Innovation process according Robert Cooper, con-
Innovationsprozess Innovationprocess sisting of the process phases:
Discovery: Idea Generation, Scoping, Build Busi-
ness Case, Development, Testing and Validation,
Launch. Cooper calls this process: “Idea-to-Launch-
System”. [Cooper, 2017]
Stakeholder Stakeholder Here: The stakeholders of an enterprise. The stake-
holder include, in addition to the shareholder, also
the employees, the customers as well as the society
as a whole
Start-up Start-up An organization that is in the process of finding a
commercially viable business model (according to
[Blank, Dorf, 2012])
Start-up Start-up Enterprise Newly founded company, which is still searching
Unternehmen for its business model (according to [Blank, Dorf,
2012])
Strategic (Ressource) Strategic (Ressource) Budgets (buckets) fixed for certain activity cat-
Buckets Buckets egories for strategic reasons (according to [Cooper
2013])
Strategie Strategy A strategy describes the vision desired for the long-
term and derives from it what the company must do,
to successfully move into this desired future
Strategische Analyse Strategic Analysis Another term for SWOT analysis. A well-known
analysis method, which analyzes the strategic situ-
ation of a company based on the strengths (S) and
weaknesses (W) of the company and its opportuni-
ties (O) and threats (T) in the market
262 Glossary

German English Definition/Explanation

“used in this book as” or “newly coined”
Strategische Lücke Strategic Gap Difference between the possible development of a
company and its development if the current strategic
instruments are maintained. In contrast to the opera-
tional gap, the strategic gap can only be closed with
new products, technologies and/or markets (i.e. with
innovations)
According to Gabler Business Dictionary [Gabler
2021b]
Strategy for Change Strategy for Change The part of the Two Stars Strategy that is fully
focused on the future
Strategy for Strategy for The part of the Two Stars Strategy that focuses on
­Excellence Excellence the needs of the present
Strategy for Strategy for The part of the Two Stars Strategy that includes all
­Exploitation Exploitation operational aspects
Strategy for Strategy for The part of the Two Stars Strategy that includes all
­Innovation Innovation innovation aspects
See also Innovation Strategy
Suchfeld Search Field Content areas, which are given priority for searching
for answers to the guiding questions. They provide
the necessary focus for a company’s innovation
activities
(sometimes also Search Area)
Sustainig Sustainig Innovation, in which the rules of the game in the
Innovation Innovation market remain unchanged (according to Clayton
Christensen). Based on unchanged purchasing crite-
ria of customers in the market
Also denotes a stage of the Innovation Journey
according to Christensen [Christensen, Bartman,
van Bever, 2016]
Szenariotechnik Scenario Technique Method of futurism
Transfer Transfer Phase of the innovation process. Elaboration of a
specification sheet, based on a business case
Transformation A Transformation A Reconstruction of the existing business according
to the new business model (according to [Anthony,
Gilbert, Johnson, 2017])
Transformation B Transformation B Establishment of a completely new business
(according to [Anthony, Gilbert, Johnson, 2017])
Trichtermodell Innovation Funnel Generally accepted concept of the innovation
process, which selects the best from originally many
ideas and develops them further into some few inno-
vations (sometimes also Funnel Model)
Glossary 263

German English Definition/Explanation

“used in this book as” or “newly coined”
Two Star Strategy Two Star Strategy Dual, i.e. two-part strategy, which in its first strategy
part aligns with the “star” of the present and in a
second strategy part with the “star” of the future
Umweltanalyse Environment The part of the SWOT that analyzes the external
­Analysis factors of the company (O and T)
Unknown Unknowns Unknown Unknowns Yet unknown aspects of the future, of which one can
know nothing yet (according to Rumsfield D)
Unternehmen Enterprise An organization, that has found a commercially
viable business model and finances itself through its
activity in the market (according to [Blank, Dorf,
2012])
Unternehmensanalyse Corporate Analysis The part of the SWOT that analyzes the internal fac-
tors of the company (S and W)
Unternehmensstrategie Corporate Strategy Strategy that reflects the (existing) business of the
company and proposes measures for its prosperity
Venturing Venturing Organizational unit, which has the capabilities to
found new companies
Vision Vision Guiding idea, according to which a company aligns
itself. The vision of a company has an identity-
forming character
Weak Signals Weak Signals Concept of futurism. Weakly pronounced facts in
the present, which are recognized as precursors of
future relevant developments based on future images
Weiterentwicklung Development of a Development of a new business model for the exist-
des Geschäftsmod- new Businessmodel ing business. See also Transformation A
ells im bestehenden for the existing Busi-
Geschäft ness
Wirkungsquadranten- Impact Quadrant Simple portfolio representation for innovation pro-
Modell Model jects according to the period and location of impact
Zukunftsdesign Future Design Method of futurism
Zukunftsorientierte Future-oriented A mindset, in which the present is viewed from the
Denkweise Mindset perspective of a standpoint in the future
See also Output Oriented Design
Zukunftsorientierte Future-oriented An approach, in which the strategy is determined
Strategie Strategy based on the desired outcome for the future
See also Output Oriented Design
Zukunftsreise Future Journey Method of futurism