Yves L. Turcotte 
President, Senior Partner 

We often associate innovation with new technologies and scientific discoveries.  In certain industries, these are essential to being competitive.  In traditional ''tech'' companies, innovation is even more important because competitors are never far behind.  Yet this association is erroneous.

Opportunities for making innovative, low-tech changes abound in all areas of an organization, in all industries.  The challenge is putting the pieces of the puzzle together to make those changes possible.

Innovation is a means of achieving a competitive advantage; it provides a company with something unique that is sought by its market and that competitors do not offer.  Innovation is therefore not an end in itself for a business.  It is the means of promoting its growth and performance.

In other words, innovating means finding new and unique ways to deliver greater value to customers.

Innovation is measured by the gap in competitiveness between one company and that of it's closest competitor, in each market.  A company is innovative as long as it maintains that gap, in spite of its competitors trying to gain an advantage.

Improve or innovate?

A company improves when it makes a change to match its competitor's offer and it innovates when it makes a change that gives it a competitive advantage.

As well, a company is innovative if:

• it increases its competitiveness by successfully implementing changes to its products, services and business processes frequently and continuously;

and

• it retains a distinct and sustainable competitive advantage that differentiates it from the competition and creates diversity in its products and services.

The customer is the ultimate judge in determining a company's competitive position since its efforts are geared towards meeting customer needs more effectively than its competitors.

The three areas of innovation

Let's see why innovation is the cornerstone for developing a competitive advantage.

There are three areas of innovation.  These areas include the following seven types of innovation:

1. Product innovation  - The development of a new or improved product.

2. Process innovation - The development of a new or improved manufacturing process.

3. Organizational innovation - A new division, a new internal communication system, a new business model.

4. Management innovation - TQM systems, business process reengineering, SAP systems.

5. Production innovation - Quality circles, just-in-time manufacturing system, production planning software, a new inspection system.

6. Commercial/marketing innovation - New financial agreements, new sales methods.

7. Service innovation - Financial or phone services.

Gradual or radical?

As well, innovation can also be gradual or radical. 

it is said to be gradual (incremental) when a product or service is improved so that it offers unique benefits that create value for the company or the customer.

The automobile market is a perfect example where slight changes are made to cars year after year to differentiate them from the competition.

At the other end of the spectrum, we find radical (revolutionary) innovation which requires the redefinition of a company's business model, cost structure and markets.  A radical innovation in the corporate-travel market requires an analysis of its global context and its evolution.

For example, an innovative company could see videoconferencing as a threat.  As a result, it could decide to change its strategy and invest massively in a videoconferencing product.

Successful innovation

An accumulation of incremental innovations has the power to make a big difference in market positioning.  Whereas radical innovation has the power to create new markets or to transform an existing market.

The combination of these two extremes results in companies sucessfully changing their operating model and achieving a durable competitive advantage.  Thus, the will to be an innovative company must be reflected in all corporate strategies.

This is attained by seeking innovative projects and allocating the proper ressources to these projects.

In short, constant innovation through a dynamic business strategy is the cornerstone for developing a sustainable competitive advantage.