Innovation and Business Strategy

Innovation

Getting a patent on an invention and business strategy is too often treated as mutually exclusive either by the inventor or by the equity owners who acquired the patent, if addressed at all.  A patent is not enough to introduce innovation in the market by a firm.  That firm must consider alignment of resources (e.g., intellectual and financial capital) and strategy (e.g., mass production versus niche market) to create profit opportunities relative to competitive advantages.

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Framework

Hoffman Strategy Group created the Innovation and Business Strategy Framework™ through its work with entrepreneurs, owners of business start-ups, and upper management in mature firms.  This framework has five essential components with various flows and deliveries (i.e., value-chains, logistic dynamics) between and within the components.  The components are: Innovation, Product Life-cycle, Business Life-cycle, Markets and Industry.

The best way to illustrate the usefulness of the framework is with a specific example.

Innovation: High Pressure Pasteurization

Product Life-cycleAvure Technologies is the first company to invent a machine that extends the shelf life of packaged foods without additives or preservatives.  The patented-technology of the high pressure food preservation machine is an innovation in the food processing industry.  That machine as a technology innovation has a life-cycle: research and development, ascent in the market, maturity and decline.

Business Life-cycle: Firms in the food processing and warehousing industry have their own business life-cycle: start-up, growth and development, maturity, and decline.  Avure's innovation may appeal to mature firms, say refrigerated food warehousing firms, to shift their production capacity in ways that generate a new life-cycle.  The high pressure food preservation machine is also resource-intensive (i.e., capital and labor) and, thereby, Avure may enjoy a market populated by profitable mature firms with enough cash on-hand to purchase the equipment.

That, in fact, is the case with Lincoln, NE-based Universal Cold Storage/Pasteurization.  Universal started as a refrigerated and frozen food logistics and warehousing firm in 2001.  Universal purchased their first high pressure pasteurization (HPP) machine from Avure in 2010.  Today, Universal is adding their ninth HPP machine and creating the facility capacity for 10 more.  (The National Provisioner, April 2012)

This relationship is indicated by the HPP-to-Mature line connector.

Markets: There is strong market demand for food and packaged food that contain no additives and preservatives.  For example, Tyson values the HPP innovation and uses Universal to toll process their Grilled & Ready® products.  Once "processed", the product is trucked to area grocery stores, e.g., Hy Vee, for purchase by consumer households.  Similarly, Texas-based Fresherized Foods product Wholly Guacamole® receives high pressure pasteurization before hitting the shelves both at Hy Vee and Wal-Mart.

Industry: Logistics, transportation, warehousing, and food industries are thus impacted by the use of Avure's innovation by firms that have properly aligned resources with business strategy.  In this case, Universal has aligned their resources (e.g., physical, financial, human, and logistics) with a business strategy to extend the shelf life of food.

A further market iteration: online grocery stores like Netgrocer and Peapod.

Summary

Innovation and business strategy are mutually related.  Hoffman Strategy Group's Innovation and Business Strategy Framework™ provides a useful tool to entrepreneurs, owners of business start-ups, equity investors, and managers in their explicit alignment of firm resources -- innovation -- with business and market strategy.

Jerry L. Hoffman

Hoffman Strategy Group LLC, 4424 Hallcliffe Road, Lincoln, NE, 68516, United States

Jerry L. Hoffman is owner of Hoffman Strategy Group LLC, a firm nationally known for strategic development, economic analysis, and market location consultancy.