Strategies for knowing where to innovate

Most organisations know that they want to be innovative, but where should they innovate? To know were to innovate (assuming one has limited resources and can not innovate perfectly everywhere...) organisatons need to know what their strategy is.

One of the tried and tested frameworks for strategy development is Professor Michael Porter's five competitive forces that shape strategy, which he has recently updated.

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Porter's original paper was published in the Harvard Business Review in 1979, titled "How Competitive Forces Shape Strategy" - in the January 2008 edition of the HBR he has updated the original article, titled "The Five Competitive Forces Shape Strategy", to include more modern case studies and to generally make it more relevant to today. His original thesis, however, has not changed.

Porter's analysis indicates that the same five forces still shape competition today, namely:

• The threat of new entrants
• The bargaining power of buyers
• The threat of substitute products or services
• The Bargaining power of suppliers
• Rivalry among existing competitors

So where to exert one's efforts in innovation and where is it a waste of time/money or even counter productive?

Porter's article lays out a framework within which to undertake the strategic analysis ...