5 Key Phases of a Killer Corporate Innovation Strategy
‘Innovation’ and ‘innovation strategy’ are, let’s be honest, the business buzzwords du jour among forward-thinking companies…and that’s no bad thing.
Thanks to technology that would have been nearly unimaginable a couple of decades ago, businesses are now starting to think about how they innovate to get ahead of the competition.
Perhaps that’s why, despite being a nearly unheard of position just 20 years ago, 29% of Fortune 500 companies now have a Chief Innovation Officer, or some other form of senior innovation executive.
Leadership teams across the world are actively implementing innovation strategies as a way to achieve this. But what is an innovation strategy? And how can one be implemented across an entire organization effectively?
Below, we provide a concrete definition of what an innovation strategy is. We’ll also spend some time discussing how to create and implement an innovation strategy that works for your organization’s unique needs, giving you the maximum chance of success.
What is an Innovation Strategy?
Innovation strategies are unique to every organization. This can make them difficult to define.
There are quite a few innovation strategy definitions floating about online, but they are broadly aligned on the basics. We like the Board of Innovation’s for its conciseness and simplicity:
“An innovation strategy is a commitment to a common innovation mission and a structured set of activities which aim to support the future growth of the organization.”
There are three key elements to bear in mind here. A killer innovation strategy needs:
- A defined mission. This means specified goals you want to achieve, rather than an unfocused and vague desire to digitalize.
- A mapped-out set of clear, structured steps to get there. Alongside having clearly identified goals, you know how you want to achieve them.
- A strong growth focus. Whilst an innovation strategy can provide immediate benefits for your organization, it’s not truly innovative unless it deals with long-term growth.
Given the rate at which technology is progressing, it’s possible that you’ll need to adapt your innovation strategy as time goes on. If you don’t make any modifications at all as you go, you may be missing some key lessons and opportunities along the way.
Whenever you need to restructure or adapt your plan, always bear the three areas above in mind. This helps everyone involved to stay aligned.
Different Types of Innovation Strategy
It may help to envisage your innovation strategy in the context of a wider framework.
In a landmark 2015 study, Harvard Business Professor Gary Pisano identified four different types of innovation. These are based on two dimensions: change in business model and change in technology:
- Routine innovation: innovation that builds on an organization’s core competencies within its existing business model. Microsoft has traditionally done this, but is now starting to branch out.
- Disruptive innovation: innovation centered around a new business model, but not necessarily new technology. For example, Android was disruptive as an open source operating system, but wasn’t technologically anything new.
- Radical innovation: innovation that is purely technical – for example, advances in stem cell research or CRISPR technology
- Architectural innovation: combines both technological and business model innovations, for example Apple’s launch of the cutting-edge iPhone in 2007.
Regardless of the type of innovation you want to implement, it’s likely you’ll need to go through some sort of technological change to get there.
Digital transformation is now essential for businesses who want to stay ahead of the curve because of the speed at which it allows you to innovate, and the cost savings it offers whilst doing so.
In other words: investment in technology is a non-negotiable part of your innovation strategy. You may well be implementing other initiatives alongside it, but you certainly won’t be able to progress without it.
How Should You Implement Your Innovation Strategy?
Having an innovation strategy is one thing. Having an innovation strategy that’s geared for long-term growth, wide-ranging organizational buy-in and successful implementation is quite another.
Every business will have to overcome its own unique set of challenges. However, there are a few tips that can be applied nearly universally.
1. Decide Where To Focus Your Innovation Strategy
Different organizations innovate in different ways.
Some prefer to focus on internal innovation – for example by organizing design sprints, building internal spin-offs or encouraging innovation at a departmental level.
Others choose to take a more externally-driven approach to innovation. So, rather than centralizing their innovative practices internally, they place a strong emphasis on cooperation with start-ups, acquisitions and corporate ventures.
There is no right or wrong way to innovate – it’s all down to the resources and the expertise you have on hand, and how your company likes to work.
If, for example, you have a large development team to hand, you might naturally focus on internal innovation for new approaches to software products. On the other hand, if you lack technical expertise but pack plenty of business know-how, you might look for disruptive startups to partner with.
It’s also important to understand that:
- You may come down on one side of the divide currently, but want to shift the other way for strategic reasons.
- You may need to incorporate elements of both internal and external innovation into your strategy to get the results you want.
- You don’t have to pursue either of these paths particularly aggressively if it’s not right for you at a given moment. Innovation strategies can be low commitment or high commitment depending on company needs.
For example, Apple’s main approach to innovation has evolved from being primarily outsourced to a hybrid approach. The company now uses internal accelerators to develop new ideas whilst acquiring disruptive startups to extend their core competencies.
The Board of Innovation’s Innovation Matrix is a useful way of visualizing these considerations. Think about where you sit on the internal/external and low commitment/high commitment axes.
Does that position work for you now?
Will that position work for you in a few years’ time?
Does that position support the types of innovation you want to create?
Once you know the answer to these questions, you can start to shape the building blocks of your innovation strategy. These could include:
- Organizational restructure to accommodate new positions
- Changes in budget distribution
- Creation of new departments or internal spin-outs
- Developments in acquisition strategy or investment in
- More customer testing/feedback initiatives
- Increased presence at industry events to network and gather ideas
2. Have a Clear Governance Structure
The governance structure you choose will depend on the type of innovation strategy you’re pursuing.
If you’re in an experimentation phase, you might want to encourage specific departments to innovate internally. The findings from these experiments can then be passed upwards to inform development of an overall strategy.
On the other hand, a sustained, organization-wide innovation drive should be headed up by a centralized leadership team to ensure balance and avoid competing departmental priorities.
If your primary focus for innovation is external, it might be wise to keep governance separate from your core organization, with input only from the most relevant and senior top-level execs. This helps keep minds open to exploring new ways of collaborating and working.
3. Liaise With Key Stakeholders
Think about who your innovation strategy is likely to affect.
Which departments will be involved? Which departments will be using any new technology you implement? Who will have their workflows disrupted, or their current organizational structure reworked?
Insight from all of these groups is absolutely essential. Whichever stage of your innovation strategy you’re at, talk extensively with representatives from each of your key stakeholder groups.
4. Pick Your Moment
There’s a balance to be struck between winning the race against your competitors and rushing into things too quickly.
It’s tempting, given how much we talk about innovation right now, to feel like you should always be constantly pushing new initiatives into the public eye. But that isn’t the case.
True innovators wait for the right moment to act. This is when:
- You understand the value in your particular innovation
- You know how to monetize that value
- You’ve put in the right amount of R&D to know that your customers will love a particular product or innovation
Take Microsoft as an example. Traditionally they have been incremental innovators, building on a well-established business model and not diverting from their own status quo too much. Now, however, they’re branching out and piling resources into R&D for a number of new initiatives, including a number of healthcare-related initiatives.
Microsoft has developed – and continues to develop – these initiatives at a pace it judges suitable. They know when to launch, when to invest and when to hold back a little, and that’s why they have been so successful to date.
4. Track, Track, Track
This is true of any strategy you pursue within your organization, but it’s worth restating here.
You won’t know if your innovation strategy is working unless you track how you’re doing. This helps you understand:
- Whether you’re on track to reach your goals
- Whether your goals are realistic
- Whether individual actions in your plan have the intended effect
The good news is that with the sheer amount of data generated today, and more real-time data processing capabilities than ever before, this is relatively easy to do.
Pick some key metrics. Track them over time to monitor progress towards your goals. This will allow you to make adjustments as time goes on, rather than working hard for months only to find your efforts have been misdirected.
It’s also important to be kind to yourself and your team here. Not getting the results you planned? It could be that your targets were unrealistic or a particular idea was bad, rather than a lack of effort and hard work. The ability to learn from failure is an essential pillar of all truly innovative companies.
Lack Of Technical Expertise Doesn’t Need To Hold You Back
This particular wave of digital innovation is likely to affect all industries, as customer expectations are shaped by digital experiences elsewhere and disruptors capitalize on these.
This means that companies who have never needed to consider technology a core competency may feel out of their depth.
But before you hurriedly adjust your innovation strategy to include ‘hire full-time in-house development team’, consider the following:
- Developers, designers and IT teams in general are in demand. They come with a hefty price tag, and you’ll be competing for top talent with the likes of Apple, Google and a host of other attractive, top-dollar tech firms.
- Your needs may change as time progresses, and hiring new talent can take time. Finding a full-salaried machine learning expert at the exact point you need one may set you back months, whilst hiring before you need the expertise results in unnecessary expenditure.
If technology currently isn’t one of your core competencies, one alternative is to outsource tech development to an external partner. This gets you access to a global network of top talent when you need it, without the time and salary cost.
At Tivix, we have over a decade of experience creating custom-built digital solutions for clients as diverse as Tesla, the United Nations and Zoetis, spanning:
- Front and backend web development
- Mobile app development
- UX and product design
- Database design
- On-the-horizon techs including machine learning and analytics
If you’re at the stage of your innovation strategy where you need to switch things up technologically, get in touch.