Harris KhanDespite massive investments of management time and money, innovation remains a frustrating pursuit in many companies. Innovation initiatives frequently fail, and successful innovators have a hard time sustaining their performance—as Polaroid, Nokia, Sun Microsystems, Yahoo, Hewlett-Packard, and countless others have found. Why is it so hard to build and maintain the capacity to innovate? The reasons go much deeper than the commonly cited cause: a failure to execute. The problem with innovation improvement efforts is rooted in the lack of an innovation strategy.
What is Innovation Strategy In Business?
Innovation strategy is a comprehensive approach to innovation. It develops a company’s capacity to compete by generating and capitalizing on new ideas. It focuses on distinctive capabilities for innovation, rather than on “best practices” (which are inevitably industry-specific).
There are two types of innovation strategy. Incremental innovation strategy is inspired by the belief that incremental improvements on existing products, services, and processes can ensure sustained competitive advantage. Radical innovation strategy is based on the premise that new, disruptive technologies, business models, and markets ensure sustainable competitive advantage.
Innovation strategy is a lens to view your company’s strategy through. Is your company’s current strategy about beating competitors to market, or about delivering breakthrough products and services? Do the processes you use to compete reflect a strategic vision that is continually tuned to learning and change?
Innovation strategy has three components:
- What you will do to innovate (clearly defined innovation objectives, processes, and organization)
- The learning capabilities you need (including internal and external intelligence systems)
- The innovation-related metrics that will keep you on track (forward-looking benchmarks and criteria)
Since innovation strategy doesn’t rely on the execution of specific innovations or on the occurrence of specific events, it can be practiced in any kind of business and at any time. It can be used to help an existing business innovate, or to develop the capacity for innovation in a start-up.
For example, Google, the company, unlike the product, Google, the search engine, makes almost all its money from advertising. It is what is called an atypical business model. Google’s clients are not end users, but advertisers. Every time you search on Google, an ad pops up about tennis . That’s the business. An innovator used his strategy to change the world of online advertising.
Innovation strategy is dynamic, and requires ongoing evaluation and adjustment. The method of development of innovation strategy must match your business setting, the requirements of new product and service innovation, and the learning capabilities of your organization.
- Define your objectives.
A key to successful innovation is building sustained excellence in your innovation objectives, processes, and organization.
Dare to define innovation objectives that stretch what is within your company’s reach. A stretch objective sets a performance target that challenges people to build new capabilities, to innovate with new intensity. Stretch objectives are the single most important factor in setting up an effective innovation strategy.
Dare to define innovation objectives that appear too difficult to achieve at first sight. Define innovation objectives in concrete, measurable, time-bound ways. This approach creates a tangible target for innovation that is internally consistent and specific. It is often difficult to translate a general company objective, like “to sell more overseas,” into specific objectives. The vagueness and inconsistency of a company’s innovation objectives will decrease its overall innovation performance. Define measurable innovation objectives in concrete, time-bound terms. Don’t be afraid of the word “measurable.” Measurable objectives take an idea and translate it into a quantitative target.
Dare to define innovation objectives that appear too difficult to achieve at first sight. Define innovation objectives in concrete, measurable, time-bound ways. This approach creates a tangible target for innovation that is internally consistent and specific. It is often difficult to translate a general company objective, like “to sell more overseas,” into specific objectives. The vagueness and inconsistency of a company’s innovation objectives will decrease its overall innovation performance. Define measurable innovation objectives in concrete, time-bound terms. Don’t be afraid of the word “measurable.” Measurable objectives take an idea and translate it into a quantitative target.
Dare to define innovation objectives that appear too difficult to achieve at first sight. Define innovation objectives in concrete, measurable, time-bound ways. This approach creates a tangible target for innovation that is internally consistent and specific. It is often difficult to translate a general company objective, like “to sell more overseas,” into specific objectives. The vagueness and inconsistency of a company’s innovation objectives will decrease its overall innovation performance. Define measurable innovation objectives in concrete, time-bound terms. Don’t be afraid of the word “measurable.” Measurable objectives take an idea and translate it into a quantitative target.
- Build a process.
Innovation is about building a new capability. Excellence in innovation strategy depends on a well-planned, disciplined, and scalable innovation process. A total quality-type approach is not needed. A more subtle, positive approach makes sense. As I learned in the automotive industry, innovation is not about defect prevention, but about perfection—or excellent performance, anywhere and on any day.
A well-designed innovation process should look like this:
Idea generation: Gain a variety of new ideas and different points of view. Diverse participation is key. Widen your net and increase your probability of a positive capture of all ideas.
Gain a variety of new ideas and different points of view. Diverse participation is key. Widen your net and increase your probability of a positive capture of all ideas.
Fail-fast decision: Make fast decisions and let your team members fail fast as well. As innovation manager, you are responsible for team members’ decisions. Don’t hold them accountable for all details when they make a decision. The most important single factor in an innovation process is the freedom to fail fast.
Make fast decisions and let your team members fail fast as well. As innovation manager, you are responsible for team members’ decisions. Don’t hold them accountable for all details when they make a decision. The most important single factor in an innovation process is the freedom to fail fast.
Try out: Get to the prototype stage fast and then try out what works and what doesn’t. Iterate your ideas and concepts through a series of prototypes, starting with rough designs and ending with a realistic model. Participation in this phase is key. Everyone needs to be involved in defining an innovation strategy.
Get to the prototype stage fast and then try out what works and what doesn’t. Iterate your ideas and concepts through a series of prototypes, starting with rough designs and ending with a realistic model. Participation in this phase is key. Everyone needs to be involved in defining an innovation strategy.
Track and assess: Develop metrics to track and assess your innovations. Your team should not only design the innovation product or service (through the first three steps of the innovation process), but also define how you will track and test its success. When the team is done, innovation metrics should reflect your innovation strategy.
- Build the organization.
Once your innovation strategy is defined, you must build the organization to support it. This includes selecting, defining, and training innovation ideators; engineers; designers; marketeers; and other innovators. These people must be in the right place and ready to go to work! It is worth the time and money.
Executors: Ideators, engineers, designers, marketers, and other innovators should make their ideas real. An effective way to do this is to put them in a DoTank (named for its ability to solve problems, generate ideas, and design new products or services).
Ideators, engineers, designers, marketers, and other innovators should make their ideas real. An effective way to do this is to put them in a DoTank (named for its ability to solve problems, generate ideas, and design new products or services).
Scholars: You and your people are the experts in your business. Make sure you are respected as such! Find a way to translate your knowledge into effective innovation strategies. I have found a variety of approaches to this end effective in terms of value creation. The Innovation Dialogues I describe in Chapter 7 are one example.
- Create a second team.
Once you have defined your strategy, build a parallel organization. This second team should deal with any organization as an independent unit with a clear objective and a vast remit. This group can consist of individuals from within the organization or be entirely external to it.
- Keep it alive!
You need to keep your innovation strategy alive. Remember that the innovations you need are out there already. They are waiting to be extracted from today’s external environment—from people and from existing companies and businesses. It is up to you to find and harvest these innovations. You can do this by:
Thinking of innovation as a company-wide or organization-wide activity, and not just the purview of your R&D team.
Working with other departments and functions to link internal and external ideas.
Collaborating with champions and change agents on your team who support your strategy and can work well with others.
Keep innovating for your organization. Also, keep innovating for yourself. Spend time with your people, speak the language they speak and understand what it is like to be an employee in your organization. Listen to people. Learn and communicate with them. If you live the job and dream it, you can lead it.
Continuous Improvement: The Little Things We Do for Innovation Success
The practical tips laid out in this article are straightforward, but in my experience they do not allow managers and organizations to fully exploit the power of continuous improvement. Continuous improvement is a big and complicated topic. It is my ambition, though, that these practical tips should be a good foundation for continuous improvement efforts.
The only way to develop an innovation strategy that works is to integrate it into all the other activities of your business. Involve all stakeholders and all functions within the organization to create an innovation mindset. It is not enough simply to design and implement a business model.
Design is important, but it is not the most important thing.
At the very foundation of continuous innovation is a fundamental drive to constantly improve the performance of your business.
Making continuous improvement a part of your innovation strategy, and of innovation itself, needs a fundamental break with old concepts. Simply said, innovation and continual innovation are the same thing.
The process of innovation is an ongoing process of change.
Good design drives innovation. It is essential for functioning. However, for continuous improvement, a deeper reality is at work. You need to lead by example.
Leading by example is the most important tool of the innovation practitioner. To do this, you need courage. Effort is required, but effort is a necessity for continuous improvement.
More fundamentally, you need personal courage. Continuously improving your business requires decisive action. Your actions will need conviction and dedication.
Continuous improvement requires you to be the change you want to see in the business.
With these things in place, you can create a new culture. In the end, you need open, honest, direct people in your DoTank.
The Culture of Innovation: What’s Your Role?
Are you a decision maker? If so, drive change from the top down, but be ready to change with an open mind. Be open to the possibilities of the people you will be leading.
Think intently about the culture that you want within your DoTank. Is your group really the group you want to have? Are you willing to take a chance? Try to choose new members.
Look at the problem as your bottom line (and your top line, for that matter!). What do you want? How do you want to do things?
As innovation leader in your company, develop a culture that supports continuous improvement in everything you do. Get practice at it.
Your people report to you. They report to you. You are also a member of the team. We would be remiss if we did not acknowledge this fact. Ask them what they think about your decisions.
As you get down to the nuts and bolts of initial planning, you and your team will need to go beyond the brainstorming process and get down to the details. On this level, understanding your business is essential.
Planning your innovation strategy is not simply defining the different things you need to do. It is the blueprint for the business, too.
Use your business’s performance as your guide to refining what you need and how you need to do it. When you are working on the specific innovation dynamics of your business, you can use your DoTank’s performance as a measuring stick.
The DoTank dynamic means you have all the bases covered. You will have the right people with the right skills in place to do the right work for the right reasons.
As you plan and develop your strategy, you can be certain that you will have the right talent in your group of innovators. Your team will not be a jack of all trades. You will have experts in each area of the business. They will be hard-core, with extensive experience.
You will be able to understand the different matters that you need to address in your strategy, but you cannot accomplish your goals without a plan. To help you develop one, play with different options and approaches.
You will find that when you involve your DoTank in the process, the innovators and the strategists become one, with fluidity between the two disciplines.
Your innovation strategy must define how you intend to engage with the external environment. Obviously, you can contact people and businesses directly. Another approach is to ask them to contact you. In this way, you can get to jobs or problems before they even arise.
Outliers have a place in your DoTank. When dealing with matters like these, it is essential to take different perspectives. View the solutions from a variety of angles.
In every case, you need to develop your overall strategy. You need to know what innovation means to you and your organization, how you will be able to achieve results.
This will depend upon how you define it as a group. For example, if you work with the DoTank group to develop a culture of continuous improvement, you will be able to brainstorm and come up with strategies for continuous innovation. For example, you will want to remind them of the importance of continuing to improve without stifling innovation.
The presence of the group will stimulate brainstorming and offer new ideas. Obviously, you will have to prioritize and choose what’s right for the company. The culture you want will depend upon the goals you define for your organization.
Innovators and strategists alike will work to define your culture. First, you must envision the future you want to create, and then you must step back and analyze your current situation for strengths and weaknesses.
Continually Improve the Culture of Innovation: It Pays Off
To review: your DoTank is your best resource to generate ideas and develop and implement your strategy. The creation of the culture is tied to the strategy. The more your people understand and support the strategy, the more likely the plan is to work.
Keep in mind, though, that continuous improvement is not concrete and set in stone. It is not a theoretical exercise. It is a plan of action. It is a business management technique that focuses on systematically identifying, analyzing, reducing, and eliminating waste.
Continuous improvement requires that you and your team keep your eyes open and look for opportunities to improve what you do. At every turn, you must strive to keep improving your business.
You will find yourself pushing new standards and re-thinking everything you do.
You never know where you will find ideas. For example, if you build your product or service, you will be able to see how it functions, and you will find ways to improve it.
If you look closely, inspect what you have carefully and critically, you can find places where you can improve. If you do this, you will be able to make things better.
By applying Lean principles, you and your team will be able to generate more value per unit of input toward the development of your products or services.
As you develop your Innovation Strategy, you will be hard-nosed about your bottom line. You will use value stream mapping and other tools to understand the core issues of what you do. This will make it easier to visualize what you want to do and what you need to do it.
We suggest you get together with your team frequently and often. This will keep the ideas flowing and the back-and-forth going. You could start a meeting every two weeks or so. The conversation could lead to new insights and opportunities.
Innovation Strategy: Where We’re Going and How We’re Getting There
This is not rocket science. Innovations happen everywhere in organizations. Keep in mind, though, that in every case, there is a big problem. Why would you want to bother with a big problem?
While the organization will have its share of people who want to keep things the same and who resist change, they will be overcome by the innovators. For every person who wants to leave things alone, there are probably fifty who want to reshape the business.
Innovation Strategy: Engaged, Not Complacent
These new people are not strangers to you. They are new to the company and your DoTank group, but they are not really new people.
As you apply Lean principles, your associates and the work they do for your organization will get better. This improvement will make everyone’s job easier and more fulfilling. People will be more aware of the overall process.
Innovation Strategy: Cultivate an Environment That Rewards Risk Taking
At the same time, you will want to formalize the process of innovation by assigning a manager or owners to each improvement project.
This discipline will help you manage risk.
Manage Innovation Strategy Risk.
There is no alternative to innovation. You must create an innovation culture that is the centerpiece of a company that is a high-performance, high-performance organization.
Continuous, incremental redesign is the centerpiece of this approach. All other corporate initiatives—including process innovation—must be driven by this cost-saving imperative.
You need to build in metrics at every level.
An innovation strategy can be thought of as an effort to put the emphasis on the customer.
What do you mean by that?
From an innovation standpoint, you will be able to look at your organization from a different perspective. This new viewpoint will allow you to examine your organization from the perspective of your customers.
What do you mean by that?
Your customers do not care about your organization—they care about getting a job done. You need to keep this in mind when you develop your innovation strategy.
When you go to the manufacturing department, you want to give them a complete picture of what they do. You will encourage them to look at the work they do and to ask whether anything can be done more efficiently.
Innovation Strategy: Look at Your Products, Services and Processes
In the past, the emphasis was on the internal organization. Managers assumed they knew what was best for the organization. They did not always look at the customer’s point of view.
It is a very different story today. In a world filled with competition, innovation is absolutely essential. In fact, your success will hinge on your ability to respond to your customers and to your competitors.
In the future, your ability to innovate will determine your survival.
You will give this group the responsibility of working on innovation, but you will not distract them. You will give them the freedom and encouragement to explore innovative ideas. They can work on small projects or big ones. However, your team will not have the time or the resources to pursue every idea. Therefore, you will have to focus on what your team regards as important.
If you succeed, you will learn a lot about what works and what doesn’t. If you don’t push the envelope, you will never know what lies ahead of you.
But what is the goal?
The goal is that you will continue to innovate and innovate. It does not matter if you have three years or thirty years to make changes. You could be shutting down or starting up. It is a fact. You need a sound innovation strategy moving forward.
What then is the bottom line?
The bottom line is that you will move forward. You will embrace change as part of your everyday life. You will face your future with optimism, and you will be prepared for it.
Innovation Strategy: Get Your Innovation Culture
The key question is, what is one of the conditions that will allow your organization to move forward?
Your organization will not be able to realize innovation fast enough to compete if it does not embrace the idea of continuous improvement.
In business, the notion of continuous improvement is about moving forward with small and big projects at the same time. So if you are making changes, you are improving what you do right now.
Of course
While you are working on improvements, you can not ignore immediate deadlines. You will know that you are making progress when you start noticing improvements. You will be working away at it, looking for ways to make it better.
The most intelligent and fast-moving learners are those who are not satisfied with the status quo. If you do not like your current situation, you must look at your organization from a different perspective—something you have never thought of before.
Innovation Strategy: A Strategy for Success
The first thing you need to do is build a vision—an image of what will be. It must be a vision that the team can use to get you to where you want to be.
The vision must bring people together in meaningful ways. Your people must form a powerful alliance of administrators and staff who see the future together.
It’s very exciting, isn’t it?
The time to get started is now. You must start right away. In fact, you should be thinking about starting a DoTank group even if you are not the captain. This group could help you review your operations and support your division.
Innovation Strategy: The Time to Start is Now
The way to make an informed decision about this is to carefully examine your organization. Your first step is to look at your organization’s goals. Ask whether your goals and values are aligned. There is no right or wrong. You simply need to make sure that everyone has the same understanding of what your organization is trying to do.
Next, you must look at your organization’s goals and your organization’s values. You will know that your organization has a goal when you try to focus on your organization’s goals. Does everyone in your organization know what its values are?
The creation of a clear vision and clear values are essential.
