What Is an Innovation Strategy?
When undertaking an innovation audit, the auditor often looks at five principal areas, the first of which is around the innovation strategy. This article looks at innovation strategies and why they are important. When undertaking innovation, all to often companies get their people together and tell them that they are going to be innovative. What they often fail to do is to give their people guidance as to what areas they wish to be innovative in, and how this relates to their corporate strategy. Without such a strategy, and without copious amounts of luck, their innovation desires fail.
Companies need to create an innovation strategy. Such a strategy should be prepared taking into account both the corporate strategy and the marketing strategy. All three documents must cross relate and mutually support each other. If they do not, then people within the organisation will not understand where their efforts should be directed and confusion will reign. If they do, there will be a shared common purpose. This strategy should identify and prioritise the needs for innovation, by examining the ‘gap’ between the future as forecast and the desired future state.
To prepare the strategy, it is necessary to undertake the following steps:
– Understand where the organisation is going without any change – the baseline scenario. This should be taken from the corporate strategy;
– Identify where you want the organisation to be in, say, five years – again this should be taken from the corporate strategy;
– Having identified the ‘gap’, it is then necessary to understand how it will be filled – again broad outlines from the corporate strategy;
– Assuming that some of the ‘gap’ will be filled with product or service improvements, or business process improvements (i.e. innovation), an innovation strategy needs to be formulated to identify how this will be achieved.
What should it include?
In broad terms, I believe that it should include the following elements:
– Executive Summary – no explanation needed of this;
– Introduction – why is an innovation strategy necessary;
– A summary of the organisation’s goals and mission statement;
– Summary of the corporate strategy, and in particular, highlighting the elements which drive the need for an innovation strategy;
– An outline of the objectives of the innovation strategy;
– Details of the strategy, including a commentary regarding required research, timescales, accountabilities and responsibilities, and the identification of learning needs and skills gaps, in addition to details on what elements should be targeted;
– Details as to how projects should be prioritised;
– An action plan, timescales and agreed metrics by which to measure progress;
– Conclusion and future actions.
Why is it important?
As I have alluded to above, such a strategy is important as it helps everyone within an organisation understand and follow a shared common purpose. Furthermore, it provides senior management with a tool to communicate to external stakeholders to demonstrate that they have considered and assessed their growth options and how to go about achieving them. Such a strategy provides a formal framework within which all innovation management can be undertaken.