As a strategic business coach, innovation is a key subject that I teach and work on with my client companies. Once we assess the market and a company's current strengths and weaknesses, we look to find new business opportunities that remain unnoticed or unexploited by competitors.

While startups have many challenges, they do have the luxury of the blank slate. They can explore and try to build a business based on just about any model and address any possible problem they see in the market. Since they have no existing business or customers, they have very little at stake and can try radical ideas and take big risks.

Existing companies, however, need to get creative about exploring new ideas and business models; if they extend themselves too far, they will lose footing and overextend their resources too quickly. To innovate well, a business needs to find levers and pivot points from its existing model.

There are two dimensions a business can innovate on: first, the company's current customers, and second, the company's current products and services. While you can innovate on either, trying to innovate on both at once is extremely risky and fails to leverage your current knowledge and assets. 

1. Find new products/services for existing customers.

The first way in which a company can innovate is by keeping their existing customer base and finding new products or services that these people might find valuable. In this direction, you leverage your existing relationships but consider new lines of business to develop.

In some cases, these can be subtle but important changes. Say you're a fitness center that provides unique fitness programs and classes and you have a strong and dedicated customer base. While those customers don't need more fitness classes, they may need nutrition coaching, apparel, or at-home workout services. Same customers, but new products and services.

In some cases, these new directions are quite different. Say you're a staffing company that provides candidates for companies to hire. However, you see that companies need more than just people, but also training and project management. You can develop online certification and testing programs to help your clients train and level-up their current staff. Same customers, but you're solving a different, more valuable need.

The trick with this approach is to have deep relationships with customers and to develop insights into what really drives value for them. You need to understand the bigger, more important problems they are facing and then find new and improved solutions to offer them.

If your business is transactional and doesn't provide deep customer insights and strong relationships that you can leverage in the sales process, this approach might be difficult.

2. Find new customers for existing products/services.

The second way to drive innovation is to take your current products/services and find a new customer segment or a new market for them. While you might need to tweak them and/or repackage them to fit the new scenario, you're leveraging your current capabilities and solutions and finding new problems to solve.

This might be as simple as looking at adjacent and related markets. If you provide cleaning services to offices, you can try selling to universities. If you provide accounting services to multi-store retailers, you can try selling to chain restaurants. Think about who else has similar problems that your skills might be a good fit for.

Some companies can make bigger jumps using this strategy. One of my favorite examples is Gore, which started with making high tech fabrics but branched out and found all sorts of applications for its material technology in medical, biotech, automotive, and electronics. They even figured out that their waterproof fabric product Gore-Tex works great as dental floss which is now sold as the product Oral-B Glide.

If your core strength is in services and development of products, then this might be a more fruitful approach to finding new ways of expanding your business. To be successful in this approach, you need to explore many businesses and industries looking for problems that haven't been solved, that also have significant value to companies with money.

While either approach to innovation can yield good results, trying to do both at the same time is extremely difficult. Changing both your customers and your products and services leaves you with no stable leg to stand on. You'll basically launch yourself into start-up mode. And with an already existing company to operate on top of that, you'll make your life extremely difficult.

Growing and expanding a company requires a smart strategy and clear process. Good companies stumble on opportunities and take advantage of them. Great companies make innovation a core process and invest time, money, and energy into finding new ways to expand their reach and the value they create.