The Essential Connection between Strategy and Innovation
20 August, 2018 / Articles
Most organizations are seeking solutions to the necessary connections between Strategy and Innovation. The connection between the two is often broken.
Often it is within the strategies that should be outlined, lies the potential new spaces to play for innovation’s design. Yet how often do we fail to connect the innovation’s we design and execute specifically aligned to the strategic need?
We somehow seem to stay locked in the ‘here and now’ constantly repeating and refining the known and established within our domain of responsibility. Is this because innovation is not at the core of the business as it should be? Often we are inherently resisting to exploring change as it becomes risky and far more demanding. A good strategy, well outlined should encourage innovation and gain engagement but it can equally determine how we break down our imposed boundaries by its strategic intent, to encourage exploring and extending on what we know into the what we need to know. Strategic intent informs innovation.
If you have a clear strategic understanding of the needs of the business you are getting more of the understanding of where-to-play and how-to-win in your innovation activities and market investment. It is making these strategic connections that are giving innovators a better chance to deliver back concepts that offer alignment to this strategic need. Investing in this understanding and alignment should never be understated. The time invested, allows for the innovation investments to do their part in supporting the business and feeding it with the growth options required, or highlighting where the possible gaps might be, for additional investment or M&A activity, to accelerate this and bring-in fresh innovating momentum.
We need to close down the issue that Innovation is full of open interpretation by purposeful design
How often have we heard “innovation is important for our future success” but when this is probed deeper there is a huge dissatisfaction on its performance or contribution at all levels within organizations, why is that? Where does the problem lie? Certainly we all have multiple suggestions, some perhaps radical in the extreme but most are confirming this growing frustration with innovation’s performance yet not fully pointing to the underlying cause. This suggests that there are multiple failure points within the management of innovation.
One absolute critical one that needs resolution is achieving alignment and engagement of innovation understanding throughout the organization. It is one of the biggest challenges to resolve, it takes hard coordinating work to sort out of numerous amount of problems that need rectifying.
Frustrations abound up and down the Organization
Clearly, one critical part of this present frustration is a seeming lack of alignment between the organization’s strategic goals and its mission and how innovation is expected to contribute, so as to fuel the growth and deliver many of the essential parts of the strategic need. Often it is left far too open or unclear for individual interpretation. It is often when we have uncertainty, opportunism steps in and attempts to fill the space. Innovation needs a much stronger alignment to strategy, they need connecting far better. One suggestion here is the adoption of the choice cascade model, discussed later as part of the suggested solution.
One of the basic troubles increasingly today is we are not in the world of stable markets, we are seeing increasing competitive intensity and challenges to market definitions that are radically altering how we proceed. Technology has become both the enabler and the disruptor to this. We are ‘reacting’ far more in knee-jerk ways to resolve a sudden crisis and look increasingly towards fast innovation solutions to fill the gap. Some of these solutions create ‘knock-on’ effects and create a mismatch between solving an interim problem and causing disruption to the longer-term direction. They also can distract resources away from more critical solutions to solve underlying growth issues within the organization.
This is why the three horizon framework are recommend as part of this discipline of managing the ‘needs of today’ with the strategy of having a thoughtful portfolio of options for the future that requires this different horizon thinking.
Of course much in the future has no boundaries we can determine and evaluate against and this gives high levels of uncertainty but it can be reduced, by being driven by a clearer clarity of purpose or intent. It is this ‘clarity of purpose’ that innovation needs to ‘track, mirror and explore’. If we keep ‘reacting’ constantly to the present we might never arrive at the future.
The strategic purpose ‘informs’ and I think we all have this growing recognition that today’s business model will not remain viable for long periods, as we operate increasingly in fluid and volatile conditions, that require constant adjustment and response. This means our innovation resources must align far more with the direction seen or looks reasonably plausible and ‘shape and form’ around this. Foresight should be governed by beliefs about the future and innovation should be driven in this direction but always with a word of caution that we equally have to always recognize that the future is a moving target. It is beholden to innovation to explore and exploit this, to pursue an evolutionary path towards understanding and validation.
Taking action in designing your innovation alignment
“Strategy informs”. Knowing where to place your innovation thinking becomes critical; it is knowing where the leadership places its importance, its ‘bets to win’. This might be in having the need for a richer user engagement experience, a more robust futurist product portfolio to test, learn and explore potential options. It can be where it plans to invest its technology options to leverage knowledge.
We have to keep asking those essential questions that link strategy and innovation in understanding. It becomes important to know if the growth is going to come through acquisition of capabilities and competencies that fill critical gaps. What are those ‘perceived’ gaps? Can they be filled by shifting the innovation competencies, capabilities or capacities? If you are not ‘informed’ by strategy, you are simply ‘second guessing’ and here is where alignment breaks down by not having this understanding. Often the designers of strategy omit the essential details of “how we believe we will get there” and what are the primary resource levers to commit to this.
You need to know what type of company ‘we are’ today and does it need to change: are you integrators, leader, laggards, or best in class, pioneers, or fast copiers. This recognition equally ‘inform’ much of the innovation activity. What types of business model are you working towards, where is the scope to expand and explore from the innovation perspective? What processes and structures would then need to be in place to complement and align with the strategic aspirations or positioning stated?
These answers become the foundation that aligns strategy direction with innovation activity.
These can only come from formulating strategic thinking between the strategy of the organization (its goals, mission, and visions) and innovation, for it to be directed in its efforts to contribute to these aims and growth aspirations.
Then the other, often the unspoken silent part, of any strategic thinking that needs to be drawn out, actually revolves around the ‘creative destruction’ being faced, externally and internally. It indicates the prevalence of change and opens the dialogue up on how innovation will respond to this. Often boards remain in denial or lack the essential relevant understanding of the changes occurring and do not address change or transformation as strongly as they should in any strategic design. Innovation then has a really hard time to respond.
How to build an Innovation Master Plan
It is structured and designed and externally facilitated. Facilitation becomes critical as the external provider can ‘draw out’ all the different views, often highly diverging, where prejudices and opinions abound, around innovation. Opinions differ so much, you need to work through divergence to then seek the convergence. It is only when you get a ‘collective view’ you can begin to get that greater alignment of strategic and innovation activities
Here is how you might set about alignment…
The Executive Innovation Work Mat, makes a compelling case and one outline of the framework offering a further alignment view, as this Work Mat approach becomes a critical framework to communicate the fit of innovation and strategy. It becomes the “living” innovation document to refer too, engagement with (and improve).
Within that Innovation Work Mat approach, it is designed to allow engagement from the top to communicate and cascade down the organizations, to allow for the growing understanding of how and where innovation fits and what is provided to support this. The “cascading effect” becomes critical to success and often missed out on any innovation thinking this design of the Work Mat allows for a greater connected design of innovation.
The science man and innovator, Fernando Fischmann, founder of Crystal Lagoons, recommends this article.
