aligning innovation with strategy

Five Strategic Tools for Innovation

Innovation and Strategy

• Perhaps the most difficult aspect of innovation for many firms is the lack of clear strategic direction

• Without clear strategies and direction– Every opportunity or threat seems equally valid– Every idea has equal weight and value

5W1H• To adequately frame innovation within corporate

strategy, we need the 5W1H model• Five “W’s”– Why (innovate)– What (to create)– Where (which markets)– Who (is our customer or target)– When (the right timeframe)

• Once these are answered, then the last issue is:– How (what tools and techniques)

Tools

• We’ll examine a series of tools to help frame your innovation effort.

• These tools were developed by a range of noted management thinkers and innovators

Why Innovate

• First, understand the opportunity or challenge– Innovation can create new growth– Innovation can help differentiate– Innovation can disrupt another industry– Innovation can help cut costs or improve

efficiency

• What intent or strategy is improved through the use of innovation??

Why? Which leadership position?

Why - Intent

• As your team responds to this point, you gain insight into the important strategic goals– Growth– Differentiation– Disruption

• Does the firm want to be the innovator or a fast follower?

• Does it have a specific competitive place or position to “own” – product leadership, operational excellence, customer intimacy?

Where?

• Where do we have gaps? Where are the gaps in the market offerings, today and in the near future?

• To examine the gaps, examine the competitive portfolio of offerings

• Define your portfolioof ideas

PortfoliosSi

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Idea’s Impact to Market

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Shapes representIdeas underinvestigationin differentproduct groups

Portfolios

• Gaps in product and idea portfolios represent opportunities

• Are the gaps intentional? Do opportunities exist in these gaps?

• What opportunities exist in markets or customer segments outside of your defined portfolios?

When?

• What’s the time horizon? • Many firms use the concept of

horizons:– Horizon One – near term– Horizon Two – next generation– Horizon Three – Exploration

• Spreading investments in all three horizons on a 70% - 20% - 10% basis

Horizons

From Innovation Tournaments by Christian Terwiesch and Karl Ulrich

Timeframes

• It’s important to spread your innovation investments over several time and risk horizons

• Create clarity about the longer term goals and metrics and reinforce the need for short term and longer term ideas

What?

• What should we create?– New products– New services– New business models

• The chart on the following page helps define the different “kinds” or types of outcomes

Ten Types of Innovation

From Ten Types of Innovation by Larry Keeley of the Doblin Group

Types

• Detail the kinds of innovations and the types of innovation that the executive team expects

• Types– Product, Service, Business model

• Kinds– Incremental, Breakthrough, Disruptive

How?

• What tools and methods should we follow to implement the innovation strategy?

• How do we accomplish innovation in our business?

A defined innovation process

Innovation Process Map from OVO Innovation

Innovation Processes

• Once you understand the strategic frameworks, you need a consistent, repeatable innovation process

• In that way all ideas are managed, evaluated and developed in the same way

• Individuals and teams can learn their roles and exercise them with greater comfort and insight

Strategic Clarity

• Innovation is far more successful when the strategic goals and expectations are clear

• Using these frameworks, you can help your executive team define the outcomes they expect from innovation

• With that outcome in mind, you can construct the best teams and correct scope for your innovation effort.