Market leadership requires innovation which leads to a critical question: Does the organization have an innovation strategy? What should be included in the innovation strategy? This article aims to provide a practical and quick guide to these two questions.
Innovation is not the same as creativity. Being creative may result in the organization having a lot of great ideas but translating these into something of value requires effective process management. It may be defined as the transformation of creative ideas into innovative product, services, processes and business models that deliver superior value to customers. Thus effective innovation requires both creativity and process management. What should an innovation strategy contain? Essentially it should contain the following elements: the first is Innovation positioning, second, goals and process management & improvement action plans.
Positioning - just like any other strategy, innovation strategy needs to start with a clear target positioning goal in mind. Organizations innovate to either be the market leader or to keep up and stay relevant. The specific position the organization aims to achieve needs to be defined and agreed taking into consideration its resources and capabilities. This positioning goal may change as the organization grows and develops. Once the innovation position is defined goals need to be developed.
Goals - these need to be established to address innovation needs covering the long and short term. Innovation efforts may be directed toward areas such as products, processes, services and entire business models. Long term goals will aim at more breakthrough type developments, while short terms goals will focus more on modifications, improvements and adaptations aimed at delivering superior value to customers versus competitive alternatives. When establishing innovation goals a multi-dimensional and portfolio perspective should be adopted. Typical areas where goals are established include: new production development completion rates, revenue from new product sales, productivity improvements through process innovations; number of qualified innovation ideas generated, percentage of new products completed on time and innovation project portfolio mix. Innovation goals and results are delivered through innovation processes.
Process management and improvement - adopting a process perspective to innovation helps organizations manage and identify areas for improvement allowing the design of specific strategies and initiatives to improve the entire innovation value chain over time. Innovation as a process may be divided into three stages of: first is Idea generation to conceptualization, second development and verification and third commercialization. Sub-process steps for each of these three core innovation processes should be mapped out, managed and performance measured creating a mechanism to build the overall innovation capabilities of the organization and support the achievement of innovation goals defined prior.
Building innovation capabilities requires a clear strategy, goals and processes in place.The three components outlined in this article provides a disciplined approach more importantly will help leaders rally the entire organization around a key priority critical for the long term success of the business.
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