Earlier, I talked about choosing the best innovation approach for your team.  Today, I'd like to continue that topic, and look at one approach that's available to you: Strategy-driven innovation.  This is innovation which is led by one or more executives, as opposed to intrapreneur-driven innovation, which is led by employees.  Strategy-driven innovation is a top-down approach, in which the executives define clear parameters which the organization will innovate within.  Today, we'll discuss when and how to use strategy-driven innovation.  In a future article, we'll investigate when intrapreneurs should take the lead.

What is Strategy-Driven Innovation?

One example of strategy-driven innovation was made popular in the book, Blue Ocean Strategy, by W. Chan Kim and Renée Mauborgne.  It is a deliberate approach that is guided by the executive team.  It supports a corporate decision to expand market share, to grow the current market, to enter a new market, or (as in the case of Blue Ocean) to create a new market altogether.

In this approach, the leaders determine how they want the company to grow, as part of the strategic plan.  They then decide how innovation will support that growth, how resources will be allocated, and what tasks derive from the plan.  Progress, and success or failure, is measured against the strategic plan.

As a really simplified example, using the Blue Ocean approach, the executive team may have decided that, by enhancing some factors of their offering and dropping other factors, they can target a new group of customers that have been previously ignored.  They know what they want to achieve and who they want to target.  They just don't know how it will be implemented yet.  They then assign resources to finding a way to implement the solution.  As the work progresses and new information is revealed, the plan may still need to change.  But the innovation investment is still targeted towards meeting a specific strategic objective.

What are the Advantages of Strategy-Driven Innovation?

It forces you to plan for innovation.  Previously, we touched on ten things required for successful innovation.  Implementing a strategy-driven innovation approach, as part of your strategic plan, forces you to think exactly how you will address those ten points.  What will you do to foster an innovation culture?  How will you create the necessary capacity for innovation?  These are easy things to overlook when simply talking about innovating.  But when you have to create a realistic plan to implement a strategy-driven innovation approach, you become motivated to put the systems in place to nurture and grow innovations and innovative behaviour.

It aligns innovation with your strategy.  One risk of intrapreneur-driven innovation is that employees may research ideas which are not consistent with the company's strategy.  When innovation is driven by the strategy, you no longer have to worry that your innovators are spending resources on ideas that are inconsistent with your plans.

It establishes a corporate commitment to innovation.  Why is this important?  When the executive team communicates and demonstrates its commitment to innovation, it encourages others in the organization to do the same.  It's the first necessary step in showing the rest of the company that the talk of innovation isn't just talk.  In turn, this starts to build an innovation culture within the company.  And since the activity is being led by an executive, that executive is also accountable for making sure it happens.  These are very valuable steps to encourage innovative behaviour in your staff.

In a later article, I'll discuss in greater depth why a strong culture is important for innovation.  For now, remember that your strategy defines what you want your people to do.  However, your culture defines what your people will do.  A positive business culture can motivate people to deliver successfully, even when faced with obstacles that initially seem insurmountable.

What are the Disadvantages of Strategy-Driven Innovation?

It could inhibit intrapreneurship and innovative behaviour in the organization.  This is a danger if the executive oversight is too restrictive.  Being too restrictive on exactly which problem to solve and exactly which market segment to target could motivate a small number of people who have the right skills and interests for that particular niche.  However, it could also discourage a much larger group of employees who may also have innovative ideas with strong growth potential, which don’t match that restricted niche.

Ensure that your strategy is expressed as high-level guidance, which directs the organization’s activities without stifling good ideas.  This way, you can guide your innovation investment without preventing innovative employees from further improving your plans.

It could reduce responsiveness.  One of the dangers of any plan-driven approach is the risk of inflexibility.  The innovation process must be able to respond quickly to new information (such as new knowledge about your target market).  But if your team adheres too rigidly to its preconceived plan, then it risks delivering something that the market won't buy.  The planning process is important, but once the plan is developed, recognize that it will probably need to change.

"Planning is everything.  Plans are nothing."
- Helmuth von Moltke (the Elder)

When to use Strategy-Driven Innovation?

When the company doesn't yet have a strong innovation culture.  This approach communicates the executives’ commitment to innovation, which is an excellent first step to building a culture of innovation in your company.  As well, since the organizational culture isn't yet in place to lead innovation on its own, this approach provides the guidance necessary to motivate and direct the team.

When the strategic plan identifies a strong growth opportunity to exploit.  If the executive team already knows where they want to invest their innovation dollars, it makes sense to act accordingly.  Focus your efforts where you know the market exists, instead of distributing scarce resources over a much larger field.  Identify the high-level problem you want to solve, the market you want to target, or the technology opportunity you want to exploit, and challenge your team to come up with novel ways to address it.

Lastly

I hope you're finding these articles to be helpful in strengthening your offerings.  In future articles, we'll continue to investigate these and other software management techniques in greater detail.

Let me know what you think!  How do you innovate?  We've already seen that there are many ways to innovate successfully, and I enjoy hearing how others do it.  If you have any questions, or if you would like more information on how to implement these or other software development processes in your organization, please feel free to contact me at Charles@CharlesConway.com.

If you know of someone who may find this article of interest, please forward it on!

Good luck!
Charles