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Why do we need an innovation strategy?
During my conversations on innovation, I have come across two common questions.
Isn't innovation a process?
Why is innovation strategy required when we already have a business strategy?
In this blog, I have attempted to clarify these two questions.
Is innovation not a process?
Innovation is most categorically an outcome!
The ISO 56000 standard refers to innovation as a new or changed entity, realizing or redistributing value. It includes a note clarifying this further.
Note 3 to entry: The word “innovation” sometimes refers to activities or processes resulting in or aiming for, innovation. When “innovation” is used in this sense, it should always be used with some form of a qualifier, e.g. “innovation activities”. (ISO 56000 standard)
The confusion that innovation is a process comes from viewing it as similar to creativity and the common practice of passing off quality and continuous improvement as innovation.
Innovation as output could result in a product, platform, service, business model, channel, customer experience, enabling process or structure.
This is achieved through a structured process of innovation that includes exploration and execution. Exploration involves generating ideas and selecting promising ideas. Execution involves developing ideas into concepts and commercializing those concepts.
This is enabled by leadership, culture, different personas, tools, methods and a management system.
Why is innovation strategy required when we already have a business strategy?
If you belong to an organization that has already looked at the future and developed a business strategy that factors in the challenges that are likely drivers of your future growth (solutions that you don't have), congratulations!
You don't need an innovation strategy. You have probably included innovation in your business strategy.
A vast majority of organizations unfortunately haven't acknowledged the uncertainties of the future in their business (growth) strategies. Many 5 year strategies suffer a few weaknesses
They don't factor in the uncertainties of the future arising from factors such as climate change, political factors, social changes and demography
They underestimate the impact of emerging technologies and disruptive players.
They overestimate the competitiveness of existing offerings.
In most organizations, the growth gaps, in reality, are larger than assumed and without innovation, the goals are unlikely to be achieved.
We strongly believe that business strategy needs to be supported by innovation strategy.
Without a strong grounding in business strategy, innovation is unlikely to be taken seriously within the organization and especially by the leaders and managers.
Without answering the question of why are we innovating, the organization will be unlikely to achieve any innovation.
On the other hand, without innovation, the future of the organization will be uncertain.
The type of innovation an organization delivers is dependent on the direction given by the business strategy and the innovation strategy. Business strategy dictates the risk appetite of the organization and this results in choices about the innovation
Do you aspire for incremental or radical innovation?
Do you aspire for innovation based on technology drivers or evolving customer needs or market trends?
Do you want to be a creator, solution builder, leverager, expander, defender or a fast follower?
On the other hand innovation capabilities aligned with your ambition will help you achieve the right type of innovation; product, services, business model, structure, process/production, customer experience or channel. Keeley et al (2013) identified that successful innovators used double the number of types of innovation as others.
We submit that innovation must be a key component of your business strategy and without it being an important part, you are unlikely to achieve future growth.
If you would like to explore this topic further, feel free to reach out for a free 60 minute consultation using the link https://bit.ly/talktoKRN
Krishnan Naganathan
Krishnan is a leading innovation consultant and focuses on helping people and organizations innovate and build capabilities for innovation. He brings over 25 years of experience in the industry and consulting. You can reach him by phone / WhatsApp: +919791033967 or email: krishnan@thinkhorizonconsulting.com