Monday, January 19, 2009

Strategic clarity and innovation

The more I work with senior leaders who are interested in innovation, the more clear it becomes clear that the number one barrier to innovation is what I'll call strategic clarity. Some will call it "strategic intent" from Hamel or others, some will call it a "common purpose" or core strategy. I'll call it what I think it really is - having a clear, communicated purpose and intent for the business.

Here's the thought experiment. In a firm that has a very clear purpose or strategy that everyone understands, it is easy to generate and evaluate ideas. New ideas either support or augment the strategic purpose that people understand, or they don't. In that environment, it may be difficult to obtain funding for an idea, but it shouldn't be difficult to gain agreement that the idea aligns to the strategies and core purpose of the business. Now, consider a firm that does not have a clear, communicated strategy. How does one recognize a good idea, if the strategy and direction of the business is not clear? What may appear to be a good idea in one quarter of the business may be shrugged off in another, since each business unit or team may have its own interpretation of the strategy and direction of the business.

I suspect that whether you look at Apple or Google, or W.L. Gore or other "innovative" firms it is relatively clear top down and across the organization "what business they are in" and what their core objectives and strategies are. If it's evident from the outside looking in, then certainly it must be relatively clear on the inside. This constancy of purpose and strategy, well communicated, reinforced and compensated, is what makes these firms successful at innovation. Since innovation is inherently risky and uncertain, the more clarity and direction provided, the easier the work becomes. On the other hand, I have worked recently with firms where mid and senior level managers are constantly struggling to understand what their core mission and strategic intent is - which leads to much back and forth as to what is innovation and how it can be applied within the firm.

David Ogilvy, the famous ad man, said that he loved the "freedom of a tight brief". In other words, the more structure and information available about the expected outcomes, the easier his work became. In the same way, firms that can define their objectives, strategies and purposes and communicate those effectively internally and externally have a huge advantage when it comes to innovation, since they have established a clarity of purpose within their organization, which builds scope for the innovation teams. Firms that lack the ability to define their strategy and communicate it effectively can still innovate, but at a much more tactical level. Innovation will thrive at the level of the organization where the strategies and purpose can be defined explicitly and will struggle where the strategies and strategic intent are less well defined.
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posted by Jeffrey Phillips at 6:42 AM

4 Comments:

Anonymous Kate Shore said...

Great post. What is your definition of strategy?

My observation is that the difference between a vision and a strategy for innovation is that strategy is supported by process. Many companies painstakingly develop corporate visions that are posted on the wall and promptly forgotten. In order to be a strategy, the vision must be connected to the company's specific objectives and integrated into the everyday working processes. For instance, you mentioned evaluating new ideas. Ideally the company's vision (e.g. providing cutting edge solutions to common problems, developing elegant user-friendly designs, etc.) is part of the evaluation criteria for new ideas.

In your experience, is the lack of strategic clarity really the issue or is it the lack integration with supporting processes to move the strategic clarity into action?

2:00 PM  
Blogger Jeff said...

Very insightful post.

An inspiring strategy that is clearly articulated, widely disseminated, frequently repeated, and broadly understood will do a lot to both spark innovation as well as focus the efforts. If you know where you are trying to go, it's a lot easier to generate good ideas for different innovative ways of getting there.

I specifically like the focusing aspects of a crisp strategy. An innovative company can quickly become an unfocused company if all the idea seeds are automatically allowed to be planted and watered. In the company I lead, AGY, we put all potential new product innovation ideas through 4 simple questions prior to devoting resources:

1) Is there a real idea here that can be produced and a real market to consume it?
2) Have we earned the right to compete in this space and do we have the capability and experience to win?
3) Is this project worth doing in terms of creating shareholder returns at acceptable risk levels?
4) Does this product help advance AGY towards its strategy of being a leading global provider of differentiated material technologies for high performance composites?

If the answer to any of the 4 questions is not a resounding YES, we probably won't fund or resource the project.

Well defined strategy gives innovators a sense of purpose and helps ensure that your business is "Innovating On Purpose".

@JeffreyJDavis
President & COO
AGY
www.agy.com

7:14 AM  
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