Monday, May 03, 2010

Innovation Failure Points: Disconnected from Strategy

As I noted in my previous post, I think it can be more instructive to learn from failure than from success.  Too often a success is situational, and the conditions for that success aren't necessarily repeatable.  But we can also see many consistent failures, which I know can be addressed.  Today we'll look at the second weak link in an innovation chain, the confusion around innovation and strategy.

All too often, executives are interested in innovation but have strong reservations because innovation is likely to explore areas where the business does not have specific strengths or will make recommendations that cannibalize existing products or services.  None of this activity is necessarily wrong, just creates some uncomfortable discussions when it comes time to invest.  This, compounded with the fact that often corporate goals, strategies and strategic intent are murky at best or simply poorly communicated, means that innovation can seem to be poorly aligned with strategic goals.  This means that the innovation teams, while pursuing ideas they find valuable and interesting, aren't supporting key strategic goals, and seem to be off on a wild goose chase.  Nothing will gain management attention more quickly than a team spending a lot of resources on sensitive investigations that don't align to strategic goals.

Why is the linkage between strategy and innovation a "failure" point in the innovation process?  Because too often innovation programs and initiatives are kicked off without a clear purpose or goal in mind.  Executives have seen the impact on the share prices of competitors who are more "innovative" and have decided to become more innovative as well.  As I've written previously, this is problematic since most executives didn't climb to the top of their organizations through successful innovation.  They don't have extensive innovation experience and aren't familiar with the tools and techniques.  When these executives talk to the teams about innovation, they are earnest in their desire for innovation, but a bit naive about the request and what it entails.

There are two critical factors to consider when linking innovation and strategy.  First, innovation is not a strategy.  It is a tool or enabler for other corporate strategies like organic growth, differentiation, excellent customer experience and so forth.  Anyone who merely says "We need to be more innovative" without linking that goal to specific outcomes misses the point.  Second, innovation teams need clear communications and clear directions about the corporate goals and strategies.  It's surprising how often we're called on to build an innovation program and end up spending time trying to clarify specific strategic goals and strategies that we can accelerate or support.  Innovation in the absence of clear strategy is like picking needles from a stack of needles.  Without specific guidance on what strategic outcomes are important, any idea seems reasonable.

If innovation isn't aligned to corporate strategy, and if strategic goals and outcomes aren't clearly defined, the innovation program is like a brushfire.  It will burn hot and quickly, then flame out for lack of fuel and direction.  The team will find itself spinning its wheels, because in the absence of clear goals and outcomes, the team cannot make headway.  As the team flails, it will send back requests for clarification on its purpose, its goals and it measurements.  This will lead to a frustrated executive team doubling down on the need for innovation, often without clarifying the goals or purposes.  In this scenario the team is fairly quickly exhausted by the effort and either decides to define its own goals, or simply scatters back to more productive work.

A successful innovation effort requires that innovation is understood as an enabler or tool to accelerate the desired strategic outcomes, and those outcomes or goals must be communicated clearly and concisely.  If either of these factors is missing, and usually both are, innovation is exceptionally difficult to achieve.  This is the second "failure point" for innovation processes.

How do you address this in advance?  Educate your executive team on what innovation can do, and its proper role in strategic goals and outcomes.  Build a communication plan that helps the executive team communicate its strategies and the role innovation plays.  Ensure the innovation teams understand the expected outcomes and create projects or initiatives that support corporate strategic goals.
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posted by Jeffrey Phillips at 5:41 AM

18 Comments:

Anonymous H. Chimoff said...

Jeffrey,
Your point is excellent about setting clear strategy and direction first. Innovation and go-to-market strategies should naturally flow from a well-thought and easy-to-understand corporate strategic direction. Take the time for the hard upfront thinking and decision-making and then make sure it's understood up and down the organization. Remember the old saying: you can't get there if you don't know where you're going.

12:38 PM  
Blogger anshul said...

Well written...

It's true that, we can do so much. But without a clear strategic orientation, lot of what we do can be in wrong direction.

6:50 AM  
Anonymous Cindi Fitzgerald said...

Extremely good points, dead on with my experience as an 'innovation consultant', how important it was to nail down the strategy first.

Can you comment though on the situation where a company wants to set a new strategy, doesn't know where it wants to go, and hopes that some innovative new ideas will lead to a new strategy?

1:40 PM  
Blogger Jeffrey Phillips said...

Hi Cindi:

Thanks for your comments. I guess my response to your question is the old saying, "when you don't know where you are going, any road will take you there".

Generating ideas to spark a strategy seems so backward that perhaps it is a good idea. Generating ideas in the absence of strategy is a fool's errand, because in the absence of strategy all the ideas seem equally valid.

Additionally, most business strategies are set by the core capabilities or competencies of the firm and its competitive position in the market. If a firm doesn't understand it's competitive differentiators or chooses to ignore them, that firm can easily enter any product category it would like to, probably to dramatic failure.

6:35 AM  
Blogger Hardik Upadhyay said...

Awesome post Jeffrey.

I have been part of innovation lab of one of the largest IT company of India - Tata Consultancy Services.

And I have personally felt this situation. Innovation is truly like a bushfire. It is short lived. And if there is no true direction, it goes around and frustrates the higher management.

Learnt few important things from your post.

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Innovation depends on the time and place. Sometimes what is innovative is just regurgitation of something that failed in the past. I find that if I keep old ideas that "failed" I can reuse them later...

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