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How to Achieve Competitive Advantage Through Innovation

By Julia Myllylä - January 16, 2019

SME Strategy is a strategy consulting firm that specializes in helping organizations align their teams and operations around a shared vision, mission, values, goals, and action plans. Our strategic planning services offer guidance on how a strategic planning facilitator can provide support in constructing an effective strategic plan that ensures your strategy is communicated and implemented across your entire organization.


Innovation is one of the keys to growing your business and increasing its competitiveness that you can include in your strategic planning process. It can help you to improve your productivity, reduce costs and become more profitable. Because small to mid-sized companies usually aren’t as capable of benefiting from economies of scale to the same extent that big companies can, the ability to innovate becomes even more important.

We at Viima have learned that especially in small and medium-sized organizations, innovation isn’t usually anyone’s only job. In companies where no one is solely responsible for it, innovation may not be treated as a top priorityAnother reason why smaller businesses may decide not to prioritize innovation is that they often have fewer resources at their disposal compared to large corporations with separate innovation units and labs.

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The nature of innovation is often described as uncertain because it’s difficult to tell in advance which ideas will be the most profitable. Also, these profits can take a while to be realized, which is why companies with limited resources decide to invest in initiatives that are perceived less risky and generate faster results.

However, if we look at startups, we can see that ideation and execution doesn’t have to cost a fortune. In this post I’ll shed some light on how you can achieve competitive advantage through innovation without having to invest tons of money.

Make innovation a part of your strategy and processes 

Innovation cannot and should not be outsourced. Instead, it should originate within your company. Small or mid-sized organizations often innovate by making small changes to improve their operations. It wouldn’t make much sense to use an outsourced company for the job, as transferring the project takes a lot of time and still requires support. Also, because it’s not financially feasible for smaller companies to purchase innovation through acquisitions, making it a part of everyday work is the best and the most cost-efficient option.

Companies that are able to make innovation a continuous practice by integrating it into the actual ways of working have a much better chance of succeeding now and in the future. Although aligning innovation with your structure might not be the easiest of tasks, paying attention to the following aspects can help make innovation a part of your strategy and ways of working:

  1. Choose your goals
    Integrating innovation with your strategy and processes begins with defining your long-term goals and breaking them into smaller ones. Once you know what you want to achieve in the long run, it’s a lot easier to align your short-term innovation goals to support that vision.


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  2. Build processes
    To make things run smoothly in practice, seamless integration to your ways of working is the key. The best way to do that is to
    build a process for managing ideas. A proper idea management process should include all the phases from idea generation to development and execution. It should support your existing business processes and only focus on what’s essential.
  1. Measure systematically
    The best ways to encourage desired behaviour is to
    measure it. Start simple and select a few supporting metrics on company and individual level. Aligning your innovation metrics with the big picture is one of the best ways to ensure you’re actually doing enough of the right things. As opposed to occasional innovation campaigns, constantly measuring your progress will help make innovation a continuous practice.

  2. Put the right tools in place
    Using the right tools helps in managing innovation when you know what you want to achieve, and you have a clear process for it. To be able to effectively gather and develop new ideas, think about whether your existing tools can help you achieve your goals. If not, look for a suitable solution that meets your requirements.

Foster a pro-innovation culture

Having  strategies, processes and tools are great, but these alone won’t make innovation happen. The ability to cultivate a mindset of growth and shape your culture to support innovation is as important as the right tools and processes.

Culture is the collective way in which things get done in your company. It’s a combination of implicit and explicit rules and norms that help determine people’s behaviour and responses to certain situations. In other words, it’s everything your company stands for, including how and why people do what they do. 

When it comes to achieving competitive advantage, culture plays a significant role. In general, a pro-innovation culture means a collective and constant ambition to become better at what you’re doing. A healthy culture enables your organization to adapt to changes. If your competitive advantage is your customer experience, make sure all of your employees are on board with your customer-centric attitudes and behaviours.


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When creating a culture conducive to innovation, you might want to consider the following aspects:


  1. Communicate mission
    Make sure your employees know what needs to be done by communicating your mission and expectations clearly. Instead of saying: “Let’s do this”, explain the reasoning behind your decisions and try to motivate your employees by making them feel what they do is an important part of the bigger picture. Focus on empowering people but hold them accountable for their work and decisions.
  1. Clarify and reinforce values
    Shared values are the driving force behind any culture. However, your desired values are often different compared to your values in practice, which is why you should approach them critically. Are these actually the values we want to reinforce? If not, how do we shape them to be more realistic?

    When you’ve clarified the values of your organization, the next step is to constantly reinforce the way you behave and what you believe in. Leading by example is a great way to get people to act according to those values. Keep in mind that when fostering a culture of innovation, communicating collective values isn’t enough if personal values aren’t aligned with them. Therefore, try to hire for cultural fit and prioritize qualities that have a positive influence on the entire work environment.
  1. Improve your skills
    When hiring for cultural fit, don't overlook people’s skills. Without relevant skills, you will not be able to execute your ideas. Make sure you have talented people on all levels of the organization, as a skilled workforce can really help your organization to improve and grow. Encourage learning and support continuous personal improvement.

Final words

Innovation is all about improving your business. It’s important because it can help your organization to become more competitive and strategic. The aforementioned aspects make a good starting point if you’re looking for ways to increase innovation within your team or entire organization.

The best way to get started is by clarifying your goals and communicating them clearly to everyone who will be involved in the process. Once you know what you want to achieve with innovation, you can start executing your plan in practice. Keep in mind that integrating innovation into your ways of working is often the easy part. Cultural change, however, is what takes the most time and requires constant reinforcement and development. 


If you are looking to address cultural change and innovation within your next strategic plan development or update, learn more about working with a strategic planning facilitator.



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