Wednesday, October 15, 2014

Innovation is not a strategy

I've written about this concept before, but I believe it bears repeating:  innovation is not a strategy.  Strategies, according to Webster, are:
careful plan or method for achieving a particular goal usually over a long period of time
Your corporate strategy may be to become the leading provider of a specific product in your chosen market, or to be the most profitable company in your segment.  These are strategies, which then require definition of the direction, and some ability to measure and recognize when you've achieved your goal.

Now, imagine that we use innovation as a strategy.  In fact we don't have to imagine, it happens quite frequently.  Executives will say:  we need to be more innovative, as if that is a strategy.  What does this statement miss?
  • More innovative in what capacity?
  • What does "innovative" mean to you?
  • How will we know if we've been innovative?
  • What are the outcomes or results you seek?
 You can learn a lot by the answers you get when you ask these questions.  If the answers are:  we aren't sure, or, just get busy and we'll figure that out later, then innovation is window dressing.  In many cases I don't expect executives to be able to state exactly how much innovation should contribute to growth, or exactly how many new products it should generate, but at least provide a ballpark! 

One of the big problems with innovation today isn't in our ability to execute innovation, it's in our ability to direct innovation against interesting challenges that align to strategic needs and goals.  There are plenty of people who, if given the training and time, can develop interesting new ideas.  The real question for innovation is:  what problems are really important, and what new ideas are acceptable?

The challenge that many executives face, and the reason that strategy and innovation are so often lumped together, is that there is true symbiosis between strategy and innovation.  The more clear cut the strategic goals are, the easier it is for innovation to find ways to support and achieve the strategic goals.  Conversely, the murkier the strategy, the more difficult it is to define innovation programs or projects that matter.  This isn't to say that all strategies demand innovation.  They don't.  But many strategies have goals that require us to stretch our thinking or introduce new thinking to drive new results.  This is where corporate insanity comes into play.

Einstein said that insanity is doing the same things over and over again and expecting different results.  If we have the same strategies, and implement the same tools and methods to achieve those goals, expecting different or better outcomes, we may be falling into his trap.  However, it's exceptionally hard to change tools, methods and thinking in a company, and even more so when so much is on the line.  It's no wonder that executives revert to tried and trusted tools, hoping to squeeze out new ideas from exhausted but familiar processes.  It's even more difficult to do this when there's confusion between what is "strategy" and what is "innovation" and how they interrelate.

Strategy consists of goals that the company sets in order to grow or differentiate, and should have measurable outcomes.  Grow profitability 15% over three years.  Enter a new market and win 10% market share in three years.  These are strategies.  Innovation is a tool that helps you achieve your strategies when the every day tools can't or won't succeed.  In a specific strategy, say entering a new market and growing share, my existing methods and tools may help me achieve some of that growth.  But gaps may still exist between what I can achieve with my existing knowledge, products and solutions, and what I hope to achieve.  These gaps are perhaps some of the best use of innovation - striving to achieve a well-defined and accepted strategic goal by introducing new tools and new thinking.

If you paid attention to the definition of strategy above, you'll note one other factor that I've ignored till now.  "...over a long period of time".  Here's where innovation and strategy are similar.  Strategies aren't short term things.  You can't enter a new market and take significant share in few weeks.  Strategies are supposed to take work and evolve over time.  They are worth the investment.  Innovation is the same.  Innovation is not a tool that can be grasped in times of emergency or on an occasional whim.  Good innovation takes time to develop, time to change the culture, time to recognize the outcomes.  But while they share similar traits, it's easy to see that strategy is far more important than innovation.  Strategy provides the goal, provides the clarity and should provide the support and resources.  Innovation is the tool that bridges the gap between what's achievable with every day methods and what's expected.  Without clear strategy, innovation is just an interesting set of tools that most people find interesting but something of a distraction from real work.

There can definitely be strategy without innovation.  Plenty of business strategies don't require innovation, they require good execution using existing tools and methods.  Some strategies can only be successful using innovation.  But the reverse is also true in larger organizations.  It's very difficult to innovate if strategy is missing or unclear.
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posted by Jeffrey Phillips at 6:57 AM


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