ORGANIZATIONAL DEVELOPMENT: INNOVATION STRATEGY: PART II

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As with any strategy, innovation strategy must start with a fundamental analysis of what it will take to win in the market – what will create customer value, is the proposed innovation cost effective, and will the innovation help maximize profits? Some of the things to consider and explore when determining the appropriate innovation strategy for the organization are as follows:

• What are the current and future needs of the marketplace?
• What industry rules or norms can we rewrite or transform?
• What are the critical driving forces for change affecting the marketplace?
• Who are the real competitors and what are they doing?
• What are the key technologies in the marketplace?
• Are the key technologies mature, developing, or in a state of transition?
• What constitutes the next possible window of opportunity?
• Where are the best global opportunities for our products and services?
• What resources are available to implement an innovation strategy? (People, facilities, funding, intellectual capital/property, strategic alliances?)
• What are the long and short-term objectives of the overall business strategy?
• Does our innovation strategy fit our business strategy?
• How will our technology be a differentiator in the marketplace?
• What new functionalities could we/should we create for our industry?
• Does the innovation strategy create options that will both create value for the customer and position the enterprise for future growth?

Discovery is the journey and insight into possibilities is the mechanism, which produces new organizational wealth and sustained growth. Research shows that innovation that exploits change is generally the most effective. Strategic innovation is the continual and purposeful organized search for changes. It is the systematic analysis of strengths, weaknesses, opportunities and threats, finding which can be capitalize upon, and which offers the best possibility for the creation of wealth and growth. Innovation can address change in two ways: incrementally and by a transformational or major breakthrough. Both should be considered when deciding which approach can best satisfy the marketplace and the organizations business strategy. However, it should be realized that incremental thinking in a world of profound change is unlikely to add much value or drive industry leadership.

A useful approach to evolve or create an innovation strategy is as follows:

• Understand the market trends, relevant technologies, the competitive environment, regulatory change and other forces of change.
• Observe users of existing product, yours and your competitors, looking for gaps, inefficiencies, and opportunities for increased performance or consider rewriting of the rules of your particular industry.
• Visualize and predict “possible” and seemingly “impossible” innovation opportunities that could constitute a major breakthrough in your industry.
• Test, try, evaluate and refine the product, service or process in the lab and with the end user to see if it truly solves a problem or enhances performance.
• Obtain and implement feedback quickly from the end user.
• Before being asked, make changes to ensure the end user is more than satisfied with the finished product, service or process.
• Formally launch the production of the new product, start providing the new service, and implement the new process in a dramatic but honest manner.
• Market the new product, service or process, looking for possible spin-off or next generation possibilities.

Strategic alignment of the organizations innovative initiatives, require the constant adjustment of people, structures and systems, so thy can best facilitate the strategic intent of what is trying to be accomplished in real time. Two of the most traceable and visible factors in strategic alignment relative to innovation and growth, is (1) the continual development of the internal ability to develop new products and services, followed by (2) the acquisition and/or strategic alliance strategy, which brings outside innovation into the organization. Rarely can (step 1.) the same people, structure and systems continually produce growth and new innovative products and services. That is why (step 2.) acquisitions, partnerships and strategic alliances should be considered.

The following metrics are typically used to measure the success of the organizations innovation strategy:

• Percent of incremental revenue derived from the new product or service.
• New revenue produced per development headcount.
• Number of new patents/technologies produced.
• Turnover, loss or gain of intellectual capital.
• Time to market.
• New markets entered including acquisitions.
• Total market share.
• Profitability of the new product or service

A good innovation strategy helps to define where the organization is going and how it is going to get there. Of equal importance, it sets boundaries that define where the organization is not going. That is why developing the innovation strategy should be a thoughtful process. This may sound obvious, but research shows that in many organizations the innovation strategy is often a haphazard process. Organizations are often caught hoping that a bright idea will appear and save the day or that a project that has been around a long time may get life or have a miraculous healing, when in fact it should be declared dead. In other organizations the innovation process is strictly a matter of financial mechanics, in which all the numbers must continually line up. Often, organizations take only a cursory look at the possibilities rather than making explicit the underlying and well thought out assumptions upon which their innovation strategy can be based. Still others take only a safe, low key approach, hoping to take a small set of causes or changes in the marketplace and let them drive the innovation process. This usually presents itself as a small incremental change, which does not add significant wealth to the enterprise.

Quoting Gary Hamel, from his book Leading the Revolution “The world is increasingly divided into two kinds of organizations: those that can get no further than continuous improvement, and those who’ve made the jump to radical innovation.” You can’t keep wringing a bit more wealth out of yesterday’s innovation and expect to be the industry leader. Continuous improvement is needed; however, to create new wealth, to meet the rising expectations of shareholders, an organization must innovate. The organization must innovate in ways that the competition are not or cannot. To do this, you must instill a sense of collective curiosity and imagination in which every employee dreams, explores imagines, invents, and creates a product, service or process that makes a difference in the overall success of the organization. Research will quickly point out the fact that high performing companies do not do what everyone else does. They have the courage to be different.

What is needed and found in the industry leaders is a comprehensive and engaging process with high quality analysis, visual ownership, and clear lines of communication to enhance alignment, which quickly leads to focused action planning. The desire to be the industry dominant leader resulting from a predictive and well thought-out innovation strategy is the key to the on-going success and growth of the organization. The future cannot be known, it will be different from the present, but it holds the opportunities for success. Creating an innovation strategy will require analysis of all opportunities through an organized and systematic approach. Strategy, knowledge, innovation, time, technology and action, must be applied together for the greatest results.

As you can see, thinking through a strategy can require time and a focused effort. It may appear to be difficult to write your innovation strategy. Clarity in a complex world takes determination and perseverance, but the effort will in both the short and long-term, keep the organization focused on preserving and strengthening its unique competitive niche.

A final step with regard to strategy is implementation. When a new or radically different strategy is formulated, it most likely will involve structural changes to the organization along with policy and procedural changes. Change always will call upon leaders to handle the tangible as well as the intangible variables, including the motivation and commitment of people, possible restatement of values, the modeling and monitoring of behaviors, and the establishing and networking of relationships. The subject of personal and organizational will be addressed in a later issue Effective change is where the rubber meets the road.

Begin to craft “specific strategies” which will help you sustain your mission and allow your vision to become reality. This exercise will no doubt require the input and collaboration of others. To start this important process list five strategies you believe would have a positive impact on sustainability and future growth of your organization and why.


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