There are two parts to devising the strategy. The first part has to do with devising your key differentiators, which are the aspects of your product-service offering that make it different from, and more valuable than, your competitors’ offerings. For example, one of Southwest Airline’s key differentiators is that it provides more frequent departures than its competitors. The second part is to use an activity map to design your activity system. An activity map diagrams the system of activities that will enable your company to realize its key differentiators. Southwest Airlines provides more frequent departures by turning its planes around faster than its competitors. It is able to do faster turnarounds because of a system of activities that includes faster boarding by not having seat assignments, faster provisioning by not providing meal service and flight crews that clean the planes. Which brings us to the point where we can provide a more complete answer to our central question—how do you determine which innovation initiatives will have the most impact on your company’s performance? To get the most bang for your innovation buck, focus your innovation initiatives on defining your product-market scope, identifying your key differentiators and creating the activity system you will use to realize the differentiators. In short, let your competitive strategy drive your innovation strategy. Get the full story at