Wednesday, February 24, 2010

Why clear strategy is so important to innovators

One of the reasons that it is so difficult to innovate successfully over a long period of time - say a couple of years or more - is that most organizations simply don't have very clear strategic goals or mission statements that are well understood and form the basis for what gets done.  When there's a lack of clear, concise direction and strategic goals, it is exceptionally difficult to measure or predict the value of an innovation initiative.  When the absolute value of an innovation effort is not easily calculated, the work is marginalized or worse, left on a slow burn just to "see what will happen".

Many organizations are taking the "slow burn" approach - keeping a pot of innovation cooking on the back burner of the stove to see what unfolds.  These firms are waiting to see what happens in the near future, and hoping that the stew in the pot on the back burner will produce something interesting when, and if, they need it.  This methodology is both reactive and unplanned.  Reactive in the sense that the firms are waiting for the future to unfold to see what products and services are important, rather than placing a big bet to move the industry with a radical new product or service.  Unplanned in that they are allowing the market, new entrants and consumers to shift demands, rather than creating demands with interesting new products.  When the future does unfold, they'll likely find that the good ideas that were in the pot are now outdated.  When that happens, innovation will be deemed a failure, since there weren't any good ideas ready when the organization finally decided to pull the trigger.

What's needed for innovation to succeed in these environments is a clear, definitive strategy about the future of the business, and what aspirations or goals the firm has for itself.  If the executive team thinks disrupting other markets or taking on product and service leadership is important, that must inform the work of the innovation teams.  Innovators can easily create ideas and products that will radically change the existing markets, in any industry, when given the resources and the direction.  However, a clear strategy comes with significant risk.  Often it's easier for executive teams to examine "best practices" and mimic the strategies of other firms, rather than embark on a different course.  Then, innovation is at best enabling a fast follower model, and it can prove difficult to get any long term value from being a fast follower, as your products and services are at best second or third to market and the innovation leader is well ahead on its course to create a new product or service.

Innovators in most firms aren't frustrated because they can't come up with new ideas, they are frustrated because they aren't sure which of their ideas is the most valuable and relevant to the management team. Compound that fact with the fact that few firms do a good job of trend spotting and scenario planning, and it's likely that few firms do a good job understanding the wants and needs of their customers just a few years into the future, or how to direct those customers to demand new products and services.  In fact, often the only people with a good sense of what will be required or demanded by consumers in the near future are the innovators who take the time to do trend spotting and scenario planning, which is another powerful yet underutilized process in most firms.

We as innovators talk about the importance of linking innovation and corporate strategy, but the fact is that often corporate strategy is unclear or poorly communicated.  In other cases the strategy is to be a lot like everyone else in the industry, which is anathema to innovators.  Until your firm has a clear strategic goal and communicates that clearly to its innovators, you'll have executives frustrated with the new ideas that aren't implementable and innovators frustrated that no one will help them understand what markets, customers or needs are important.
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posted by Jeffrey Phillips at 5:44 AM


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8:57 AM  
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Anonymous Anonymous said...

The elements that make up a truly innovative company are many: a focused innovation strategy, a winning overall business strategy, deep customer insight, great talent, and the right set of capabilities to achieve successful execution.


1:47 PM  

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