How to Unlock The Key Connection Between Strategy And Innovation?

That morning in the conference room, the team sat surrounded by digital screens flickering with the results of the company-wide call for innovative ideas.

The response was overwhelming - over 500 proposals had poured in, ranging from the practical to the wildly imaginative.

At first, the energy was palpable as they dove into the repository of creativity.

They congratulated themselves on the campaign's success.

However, as the days turned into weeks, the challenge of filtering these ideas to find those that aligned with the company's strategic objectives became increasingly complex.

Sarah, the project lead, felt the frustration mounting among her team.

Despite the plethora of ideas they had, finding the needles in the haystack was more daunting than anyone had anticipated.

"It's like looking for a specific wave in the ocean," Mark, one of the senior strategists, remarked during a particularly taxing review session.

Their endeavor to link innovation to strategy had become a daunting task, not due to a lack of ideas but because of the sheer volume and variety.

The excitement of possibility was now shadowed by the pressure to deliver actionable insights and feedback to each team that took the time to propose an idea.

This was a crucial learning curve for this company— recognizing that the real challenge lay in sifting through the abundance to uncover gems that could truly drive change and represent sustainable opportunities for the company.

Defining Strategic Direction

Innovation is the pulse of dynamic businesses, the talisman against stagnation, and the engine for propelling sustainable transformation.

Yet, the pursuit of innovation often feels like an erratic game; it leads to a field strewn with abandoned projects, dwarfed by the success of nimble startups, and plagued by inconsistent results.

As I've observed in my experience working with businesses, the missing link in this narrative, as for Sarah and her team, is often the weak synergy between innovation and a company's strategic direction.

How can established companies innovate to pull their chariot of sustainable development?

The first step is to get the strategy right and establish a firm bridge between the visionary heights of innovation and the grounded path of their strategy.

“To have a strategy, rather than vague aspirations, is to choose one path and eschew others. There is difficult psychological, political, and organizational work in saying “no” to whole worlds of hopes, dreams, and aspirations.” Rumelt

Like a boat without an anchor flailing about in the open sea, strategy has become unmoored from its true meaning.

Strategic Thinking Institute research with 400 companies shows that more than half (55.7%) don’t have a common strategy definition.

If there’s any question in your mind as to strategy’s decomposing meaning, take a look at a few of the plans in your company and see if the strategy has a consistent understanding.

Then, sit in on some meetings and listen to how it’s used.

Do you see a clear and consistent use of the term strategy?

For most people, the answer is no.

Research published by Harvard Business Review by Robert S. Kaplan and David P. Norton on a global sample of 1,854 large corporations reveals that, on average, 95% of a company’s employees are unaware of or do not understand its strategy.?

Hence, when discussing innovation, we should exercise caution because great ideas do not necessarily lead to great results.

History is filled with inventors who may have received credit but did not make profits or were just left on the unused patent list.

Nikola Tesla, the Serbian-American inventor, is a prominent example of an extraordinary mind whose innovations far outpaced his gains.

Best known for his contributions to the design of the modern alternating current (AC) electricity supply system, Tesla was a visionary who also dabbled in the development of various technologies ahead of their time, such as wireless communication and energy transmission.

Despite his profound contributions to electrical engineering and his numerous patents, Tesla faced financial difficulties throughout his life. He spent his later years living in poverty, demonstrating a stark contrast between the recognition of his inventions and his personal economic success.

The Essence of a Strategic Vision

Groundbreaking innovation does not always translate into value capture for the company and value shared for society and the ecosystem.

Before engaging in innovative pursuits such as company-wide idea collection or seeking startups for strategic partnership, a company must clearly define its strategic vision.

Innovation alone is not enough; it must align with the organization's purpose and goals to be not just successful but meaningful.

Many of these attempts, without strategic guidance, yield minimal results. Startup companies outpace corporate teams, and innovation labs are closed when they can't drive meaningful business growth.

A company's strategic vision encapsulates its core values, mission, and long-term objectives. It is a compass that guides all business activities, ensuring that they contribute to the company's overall goals.

As Professor Bill Barnett of Stanford Business Schools said,

"Developing an organizational strategy is not a one-time event. It is a process of discovery in which companies start with an initial strategy, learn from its successes and failures, and emerge with new insights."

Crafting a Vision That Inspires

A compelling strategic vision doesn't just articulate profit targets or market share goals; it galvanizes stakeholders by articulating why the company's existence matters and how it aspires to shape the future.

Communicating the Vision

Just as critical as crafting an inspiring vision is the ability to communicate it effectively and consistently. All members of the organization must understand and internalize the strategic vision to align their efforts effectively.

The Strategic Pillars of Innovation

Corporate innovation doesn't start with just blue-sky thinking or acting independently like a startup.

Instead, companies need to align every innovation with two strategic pillars, as explained by David Rogers in his book ‘The Digital Transformation RoadMap,’ a defined set of strategic priorities and a deep understanding of the firm's distinctive strengths.

1. What are the strategic priorities that matter most to our business?

To drive corporate innovation effectively, it's crucial to identify strategic priorities. One way is through the "problem lens," focusing on solving customer or business challenges without preconceived solutions.

Target delved into curbside pickup services to elevate customer satisfaction.

The "innovation perspective" explores avenues for growth, such as expanding into different regions or providing unique advantages. Target also launched a chatbot feature for tailored shopping experiences, striving to rival online giants.

2.? Define Your Unique Advantages

Identifying your business's distinct strengths over competitors is crucial for successful corporate innovation.

These advantages may include physical assets, data, network effects, intellectual property, brand reputation, or other unique qualities that set your business apart, enhance product value, and provide a competitive edge.

Leveraging these strengths helps create competitive barriers for new ventures and establishes your position as a leader in the market.

For example, Starbucks leverages the strategic placement of its coffee shops in high-traffic areas, ensuring easy access for customers. With around 80% of urban areas in the U.S. having a Starbucks within 1 mile, Starbucks maximizes this physical footprint by introducing mobile ordering and pick-up options, enhancing customer convenience and satisfaction.

Apple's introduction of the App Store, for instance, evolved from meeting users' demand for a centralized platform for mobile applications. Apple's success in this endeavor was supported by its loyal customer following and in-depth understanding of user preferences.

Not understanding your unique advantages is especially vital when established businesses seek to expand beyond their core operations.

Strategic Innovation Portfolio

Innovative projects are like investments; they require careful management and oversight to ensure they yield the desired returns.

A strategic innovation portfolio is a structured approach to managing the company’s innovation initiatives.

What is a Strategic Innovation Portfolio?

This model involves strategically planning and managing a company's projects — much like an investment portfolio — to balance risk and reward and ensure alignment.

Elements of Portfolio Management

The strategic innovation portfolio approach covers the entire lifecycle of an innovative endeavor, from identifying promising innovation projects to monitoring their progress and making decisions about resource allocation.

Balancing the Portfolio

Companies must balance their innovation portfolio, just like a financial portfolio.

This balance involves considering the risk level, resource requirements, and potential impact of each project to ensure a diverse and strategic mix.

The Role of Leadership

Leaders play a crucial role in championing strategic innovation.

Their commitment and involvement set the tone for the entire organization's approach to innovation.

Leading by Design

This approach involves leaders actively designing and shaping the business environment to encourage creativity and risk-taking.

Leaders foster an organizational culture that values innovation by embodying the mindset and behaviors they wish to see.

This proactive stance not only empowers employees but also sets a clear vision for innovation, aligning it with the company's strategic goals.

In essence, when leaders lead by design, they cultivate a fertile ground where innovative ideas can take root, grow, and transform the organization.

Leading by Example

When leaders actively support and engage in innovation efforts, it sends a powerful message throughout the company.

Empowering Innovation Teams

Providing autonomy and resources to innovation teams demonstrates leadership’s seriousness in pursuing strategic innovation.

Connecting Innovation to Business Objectives

Leaders must continually reinforce the link between innovation and the company's strategic growth objectives to ensure that all innovation efforts are purposeful and aligned.

Your Move

Going back to Sarah's challenge of filtering more than 500 ideas, the process should start from scratch by defining strategic priorities and the company's unique advantages.

Then, when proposing an innovative idea, whether in a startup accelerator or a regional marketing team, always start with a clear problem statement:

"What problem are we solving, and for whom?"

Evaluate each idea for strategic alignment. It's not about just proposing a "great idea" for a "disruptive" innovation with a huge market potential. Each idea must address two key questions:

• Does it align with a strategic priority?
• Can it leverage our unique advantages?

Only innovations aligning with your strategy should proceed — receiving initial funding and. support for the next steps of experimentation.

In this exploration of strategic innovation, we've seen how crucial it is for companies to adopt a holistic approach.

Understanding how to connect innovation efforts with strategy and nurture them within an inclusive culture becomes more than just an idea; it evolves into a sustainable competitive advantage.

Now is the moment to apply these insights within your organization.

• Start by assessing your current innovation strategies and considering how they align with your long-term objectives.
• Foster an environment where every team member feels empowered to contribute ideas.
• Remember, innovation is a continuous, iterative process.

Begin today and lay the foundation for a future where your organization leads through innovation.

??? Thank you for being a part of "Unleash Innovation ."

My purpose is to help you on your journey to Ideate, Accelerate, and Grow.

In our next edition, we will explore the importance of defining a clear problem statement and how to do it.

Just comment below or send me any questions you want me to answer in this newsletter.

Cheers ?? & #unleashinnovation

Juana-Catalina

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