Why innovation and business strategy should go hand in hand
Much has been discussed about the tendency to silo innovation as though it is an entity in and of itself. While innovation of course has its own techniques and specialists, benefits and challenges, treating innovation as though it operates in a bubble can lead to disjoint in strategy and outlook. Business strategy and innovation should go hand in hand, and work best when seen as a symbiotic relationship between two complimentary fields.
WHY THE DISJOINT?
According to The PwC Innovation Benchmark, a survey of over 1200 global executives and business leaders which was discussed in a recent article by Enterprise Innovation, ‘most companies (54%) struggle to align their business and innovation strategies, leaving many companies flying blind as they place bets on innovation.’ With potentially billions of dollars on the line, staggering blindly into an innovation is not where organisations want to be.
Consultancy.uk also picked up on the report, suggesting that this non-alignment of innovation and strategy is ‘creating risks of lost revenue, market position and waste.’ While acknowledging that the hyper-competitive marketplace continues to put pressure on organisations to remain relevant through constant innovation, the article argues that ‘simply put, throwing money at the issue is not necessarily going to lead to successful innovation.’
WHY ALIGN THE TWO STRATEGIES?
While it seems that there is an issue in marrying innovation with business strategy, the reasons for taking the time and effort to align the two are not necessarily clear. If so many successful organisations have such a disjoint, why work to bring the two elements together?
Forbes contributor Tendayi Viki, a London based innovation consultant and author of The Corporate Startup, agrees with the argument put forward in Consultancy.uk’s article that ‘it is not about how much money a company spends but how the money is spent.’ Viki suggests given that ‘executives view sales growth as the most important metric for measuring the success of innovation,’ it is important to move away from “random acts of innovation” [which] do not always result in great returns.’ If innovation is not translating into growth and ultimately profitability, organisations must question its value to business strategy as a whole.
One challenge highlighted by Viki is that ‘there is often a lack of clarity from leadership on how they want to use innovation in the wider context of the company, with no real answers to the questions of “what are the key trends that are impacting our industry” and “how do we plan to use innovation to respond?” Here it is suggested that leaders need to assess whether their innovation is fulfilling a need their insights have shown to exist among consumers, focusing on incremental improvements to existing products or driving technology forwards, in order to better understand the impact of innovation on wider business strategy. Only by constantly asking what purpose do our innovation processes serve will organisations begin to narrow the gap between longer term goals.
PRACTICAL STEPS TO TAKE
- Build company culture – When integration between innovation and business strategy is seen as an ongoing process that requires a constructive ethos and constant reassessment, the two will more naturally align. This can include communicating business objectives from the top down so that all levels of an organisation are aware of the end goal, and allowing ideas to filter up the chain to inform broader strategy. This two-way communication channel can help build company culture and limit the disjoint between approaches.
- See innovation as multi-faceted – Innovation is not about reinventing the wheel or discovering the ‘next big thing’ which could change the course of the market. While such disruptive organisations do occur, understanding that innovation can take many forms is important for blending it seamlessly into strategy at multiple stages. From brand evolution to product redesign, increased efficiency to streamlined problem solving, innovation can be intricately woven into strategy.
- Take time to think – if you sit back and ask yourself the question ‘how does this idea or innovation align with my objectives’, and the answer is you’re not sure, this can be a clear indication that something has gone awry. Although the temptation to rush into innovations to keep up with the fast pace of change is tempting, taking time to sit back and assess the value of your innovation can work wonders in ensuring that it is always closely tied to overall strategy.