Today we answered your question:
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How do you understand the business or business opportunities that can be generated from the surrounding environment?”

Intimately knowing the individual business and the environment within which it operates, both globally and locally, combined are essential to identifying ‘good fit’ opportunities that will strengthen and drive the business forward.

The surrounding environment comprises of PESTLE or STEEPLE, that is the politics, economy, social, technologies, legislation, environment, ethics. Researching this environment regularly highlights potential business opportunities.
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Knowing the specific business comes from having clearly defined business capabilities as strengths and weaknesses, which highlight which opportunities would strengthen the business and overcome weaknesses.

Today we answered your question:

A business usually has more than one strategy but for the purposes of this article the focus is on a strategic (business future) perspective.

Regardless of whether your goal is to grow your business into something or is simply a means to earn a monthly income for yourself, without knowing which you are aiming to achieve getting there will be a hit and miss affair, decision-making weak and difficult, resources may not be available when you need them, and it could take longer than necessary to get there with a trial and error approach rather than strategic. The trial and error approach historically provide other businesses with the opportunity to get to your customers before you do.

I will use the popular analogy of going on a journey to explain further.

Let’s say you decide to go on a journey. Would you immediately jump into a car and start driving? Or would you first decide on where you were going, the best route to take, the type of transport required to get there, how long it will take, do you need overnight stays, rest stops, will fuel be needed along the way? And so on.

Most of us would do the latter, that is, before setting off, decide on a destination (the goal/purpose/problem to solve), determine our preferences such travelling at low congestion times to reduce carbon emissions (guiding principles). We would precisely plan the roads to take, the required rest and fuel stops, book hotels to stay at along the way, all from the start of the journey to the destination and back (actions).

Of course, there are many analogies like the journey analogy. For example, I could have used another well-known analogy of  a general planning and managing an army to win a war without fighting as compiled in “The Art of War” by Sun Tzu.

Whichever analogy is used any good strategy has these 3 key elements: a clearly identified goal/purpose/problem to solve or ,destination, guiding principles, and precise planned actions required to produce the desired ‘destination’. These three elements transformation the current situation to where it should be, what inputs are required, when, to obtain desired outputs.

But why is it so important in business? Here are five simple reasons.

Mulgan (2007) [1] describes innovation as “new ideas that work”. Social innovation can refer to innovation in interactions and relationships. It can also refer to innovation aiming to overcome a social need rather than a market need. Here we focus on the latter.

Social innovation ecosystem can occur across a national, regional, global scale, across sectors, organisations, and entrepreneurs. As technologies advance, new opportunities for any individual, organisation, or company to innovate, to find new ways to do old things, arise, often providing solutions to social problems. And, of course, lets not forget that without society social innovation would not be required.

In recent times it has become very expensive for organisations to have their own in house R & D department. Technology has provided a platform for global collaboration. Together, innovation can happen faster and produce more effective innovations than any one company can produce. In addition, the availability of funding for innovation and product development is often directed at solving pressing social needs.

Here is one practical example of how innovation addresses social needs from The Alzheimer's Society[2]:

Problem:
Lewis’s grandmother Pat has reduced cognitive function as a result of Dementia. Pat forgets to drink, or does not enjoy, water throughout the day, as a result of the reduced cognitive function. The result is dehydration for which Pat needs to be hospitalised. How can dehydration be prevented, or at least reduced so that Pat can continue to live a full, independent life?

Possible social solution:
Because Pat enjoys sweets, Lewis has developed large sweets called JellyDrops that are 90% water. Pat can eat as many as she wants, whenever she wants. Pat can place jars of Jellydrops throughout the home in every room. The bright colours attract attention, look tasty, so encourage regular consumption. The more consumed the less chance of dehydration.
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This solution can be easily distributed across society at low cost supporting everyone with a similar problem.
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Footnotes
[1] http://eureka.sbs.ox.ac.uk/761/1/Social_Innovation.pdf
[2] Jelly Drops sweets to tackle dehydration in dementia

​Most innovations are build on what already exists. Very few are inventions. The definition of innovation according to BIS (2012), is “innovation is the process by which new ideas are successfully exploited to create economic, social, and environmental value.”

In today’s business environment all businesses are developing the internal capabilities to innovate their products/services/processes dynamically and continuously. The capability is a necessity born out of the exponential growth of technological developments. New technologies are developed every 18 months (Moore’s Law). So most business are innovative. Those that have not adapted by developing this capability have closed, are closing, or have bought smaller, more innovative companies.

Here are a few household names who innovate services/products/processes since around 1995:
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Apple (IPod),
Air BnB (holiday accommodation),
IBM (their business model)
Procter and Gamble (their innovation business model)
Amazon (online books, Cloud services)
Uber (Taxis)
Elon Musk (space travel, electric cars)
Facebook, You Tube, Instagram, Snapchat, Whatsapp (social media apps)
Boston Dynamics - Google (robotics)
Google - (machine learning)
Ebay (online auction).
These are examples of how companies formed through skillful application of technologies to create new products/services/processes/business structures valuable to new and existing markets.