Today’s companies are more and more efficient, creative, and optimized, making the market more competitive. This means that managing a company in the traditional way is no longer enough to ensure survival among the competition. With this competitive scenario in mind, one way to keep from falling behind is, for sure, to invest in innovation.
Innovation is not just the creation of new technologies, services or products; it is also the emergence of new business models, new ways of meeting customer needs, cutting red tape, and developing innovative approaches to doing business.
Nevertheless, many companies that hope to gain an advantage in their market niche do not have a clearly defined innovation strategy at their organization to reach their goals. The most innovative companies in the market have already learned that big ideas do not appear out of nowhere, but rather come from well-structured environments and processes designed to promote their growth.
The lack of a clear innovation strategy is a continued problem at many organizations. Many people still associate innovation with a wave of management, as if it were nothing more than a passing management fad. However, innovation is much more than this and it should be as strategically important as any other key area of the organization.
Yet how can this level be reached? How can you be successful, stand out from the competition, and win over consumers by using an innovation strategy? Well, the answer to this question starts with effective planning. Goals around innovation should always be aligned with the organization’s general goals, making it so that different departments do not go down separate paths. It is therefore essential to include innovation in your organization’s business strategy.
Why should innovation be aligned with the company’s strategy?
For any organization, not only does an innovation strategy represent an opportunity to survive in a competitive environment, but it influences the direction the company wants to move in. By aligning innovation strategy with your strategic objectives, you are raising your chances of finding relevant opportunities for what your company intends to achieve.
Amidst the range of opportunities and threats that exist in the market, every company should establish a solid and consistent plan, with goals that are actually achievable. It is no use thinking too far ahead without having a good structural plan of everything that the organization needs to do immediately and how it intends to get there. So your innovation goals should not be separate from your general business goals, since a unified vision will help to eliminate silo effects and improve your operational efficiency.
What is an innovation strategy?
An innovation strategy is an organization of resources, processes, and people that facilitate short- and long-term innovative actions, making the company’s strategy and vision viable. An innovation strategy can be described as a clear guide toward the future an organization wants in terms of innovation, as a set of internal actions that can foster creation of solutions to set the company apart in its current market segment, with new products and/or new markets. The result is growth in profits, longevity and corporate consistency.
That means the innovation strategy is not the same as innovation tactics, such as creating an idea challenge; rather, it is a map of an organization’s mission, vision and value purpose for a definite market of customers. In other words, innovation strategy consists of fundamental policies and values geared toward achieving future organizational growth, which should also be supported by a clear view and a mission statement to be effective.
An effective innovation strategy can therefore make the organization’s innovation priorities and objectives clear, helping to concentrate efforts and resources to reaching these goals and promoting their alignment, since different teams within the organization will work together to reach common goals, instead of working according to their own individual priorities, helping the organization to attain long-term success.
How is an innovation strategy developed?
Below are some essential steps in developing an effective innovation strategy:
1. Define your vision
Whether for your business in general or for a specific initiative like innovation, to develop a strategic plan means you need to align plans with your vision of success. To establish your vision, you have to decide what needs to be prioritized and which specific targets you can and need to outline to reach your objectives.
2. Align innovation objectives with business strategy
After determining your vision and looking at where you are ow, you can start to form and align your priorities and specific goals in relation to your innovation objectives. However, aligning an innovation strategy with general business objectives can be one of the more difficult tasks for successful innovation.
As with any strategy, to achieve successful strategy alignment, the innovation strategy planning process starts by defining objectives: what do you expect to achieve with innovation?
It is also important to involve everyone, so that all interested parties understand the general objective and the role they will play in reaching it. To set up good bases for effective innovation, employees from across the organization should know and understand the company’s objectives.
To achieve successful strategic alignment, try to communicate the role of innovation throughout the portfolio, driving innovation in every area of the organization. This includes understanding the market where the company intends to operate. So think of your long-term business objectives and on those that would be likely to drive your business, even after some time.
3. Define tactics and responsibilities
What specific steps are needed to attain your objectives? Who will be responsible?
To define tactics and responsibilities, it is fundamental to:
- Develop a plan that has clear metrics of success.
- Ensure that your plan is adaptable to change.
- Clearly describe roles and responsibilities.
4. Be extremely knowledgeable about your market, customers, and competitors.
The second step in developing an effective innovation strategy is to define your target market and understand your customers’ needs. In order to innovate and meet your customers’ needs, you must listen to your customers and understand what they really want, which is why understanding market dynamics is essential.
This means you also need to know who your potential customers are and have a strategic plan to reach them. You then need to research, listen, and understand what their actual wants are. The most successful innovations will fulfill customer needs and, to develop these innovations, your company should comprehend these needs, oftentimes before customers notice them.
The organization’s employees can play an important part in its strategy, in order to discover these unmet needs. Consider their opinions in helping to find an understanding of customer needs. This can be one valuable way to collect information on innovation priorities.
Monitoring market trends and innovation by the competition can also help companies identify opportunities to innovate and stay ahead of competitors. You can also do this by doing research and analyses to understand existing demand and identify opportunities to develop new products or services.
5. Define your value proposal
Once you have a clear objective/strategic approach and you know who you are targeting, the next step is to define your value proposal, which is one of the most important steps in developing an innovation strategy.
You can define your value purpose yourself by asking the following strategic questions:
- What innovations let the company capture value and gain a competitive edge?
- What innovation strategy can be used to reach the highest level of competitive advantage?
- Can the company create value by saving time and money for customers? Does it offer a greater good to society?
- Can I make my product work better, be more convenient, last longer, or be more affordable than what is already on the market?
6. Promote a culture of innovation
Innovation doesn’t happen by chance. It requires an environment conducive to creativity and innovative thinking. This can be achieved by encouraging employees to share ideas and stay open to experimentation.
7. Have an effective product development process
A structured and well-defined product development process helps to ensure that new ideas are tested and enhanced before they go to market.
8. Be willing to take risks
Innovation requires taking risks, and oftentimes the companies that fail to take risks get left behind. Embracing failure as a part of the innovation process can help companies to learn from their mistakes and move toward success.
9. Communicate and integrate your strategy into work methods
Once you have chosen your innovation approach and formulated all of the most important elements related to it, it’s time to put your innovation strategy into action. To guarantee that innovation continues to be a strategic priority at the organization, everyone needs to stay focused on objectives and systematically execute them.
It doesn’t matter how good your innovation strategy is if you can’t get people to carry out your innovation management process. Nevertheless, the biggest challenge is oftentimes upper management. If the managers at the top do not communicate down, even the best strategy will not work; it has to be integrated with how things are really done. Prioritizing communication and engagement can help motivate people to be more positive. When employees are aware of targets and objectives, it makes long-term commitment easier.
To incorporate innovation into the way that your organization works, think of the possibility of collaborating with your key personnel and set personal goals that support your innovation strategy. Providing direction and clear guidance can help them to integrate innovation into their daily work.
10. Manage, measure, assess
To understand how your innovation strategy works in practice, you have to be capable of measuring it systematically. Choosing the right metrics and setting the right expectations will help you monitor your progress.
Systematic measurement is the only way to adapt to change and achieve better results in the future. So establish a way to measure the success or failure of innovation projects, so that everyone is aligned with progress and can regularly meet for assessment, making systematic measurement part of your innovation strategy.
Guaranteeing that innovation is fully integrated into your general business strategy is one of the only ways to let your organization innovate long-term. As we have seen, an effective innovation strategy is a continual process that starts with an understanding of customer needs and ends by implementing new solutions to meet these needs. Companies that adopt a systematic approach to innovation create value for customers, increasing their market share and driving long-term growth.
An effective innovation strategy is moreover not just limited to identifying and exploring opportunities. Innovation portfolios must be appropriately created and managed, assessing the risks and benefits of each project. When you have the right innovation strategy, the next step is to then establish a systematic process to manage, develop, assess, and implement new ideas. And you can start with SoftExpert ICM, a solution that helps you turn ideas into business results. This tool offers total control of the innovation process, with visibility of the progress of tasks, projects, responsibilities, deadlines, and metrics.
And if you want to learn more about innovation management, check out our content on the subject: