I’m sure you’ve heard the statement – “we’re doing this innovation for strategic reasons”. Quite often “strategic” used in this context as a euphemism for “it’s not going to make any money but we need a reason to justify it”. Strategy should rarely be used as the sole reason or even excuse for innovation. It should always be strategic and make money.
So what is strategic innovation? The short answer is that anything you do in innovation should be rooted in strategy. This applies whether that strategy is total corporate, divisional or functional. Any sensible company should have a view of the markets in which it will compete, where it will source new business e.g. market expansion, share gain, recruiting new users etc. It should reflect on internal competencies and define the battles you can and must win. Once you know that, you can put your innovation priorities into context.
In many companies innovation is seen as something special, over and above routine operations. In those circumstances it is even more important to ask the “why?” question. Anything that disturbs “business as usual” will be greeted with more challenge and skepticism than a simple addition to the manufacturing schedule or another sales promotion. You will need a very clear reason, and that should primarily come from a reason to support the achievement of your strategic goals.
The status of innovation in strategy may be driven by a stated but non-specific need to innovate, and then activities put in place to deliver it. This is wrong. It must be informed by the stated strategic goals of the company. Of course the strategy does not define the detailed rationale and specification for every single project, but each project should make strategic sense. Innovation that is ad hoc is both ineffective and inefficient – meaning you do the wrong things and probably do them wrong as well.
You should also beware of innovation solutions seeking a problem. It is highly unlikely that you would find a strategic match for such a project, so make sure it doesn’t suck valuable resource away from a project that is strategically aligned.
In an ideal world you will have an innovation strategy and plan as a cascade from the overall strategy. Even better, you will include Open Innovation within your innovation strategy, having decided what will be developed inside and what sourced inside.
Very occasionally an innovation opportunity comes along which is so spectacularly attractive that it can influence the strategy. It can provide upside potential beyond most of the options currently under development. In that instance there should be no hesitation on behalf of the project team. They should ensure that agreement is gained to alter the strategy appropriately. Then, once the correct priority is given, the whole company needs to be aligned behind the new initiative, such that the whole “go to market” machine is not only prepared but also motivated.
Last but certainly not least, the people doing the innovation work must be aware of the strategy. Increasingly companies also understand that close external partners, for example core suppliers, also need to know the strategies. If they know, they will be able to bring new ideas aligned with the strategy, as well as being more motivated to work with you to achieve your strategic goals.
This sensible approach ensures that all noses are pointed in the same direction, resources are applied where they will have the biggest impact and the company has the best chance of meeting the objectives of its strategic plan.