Innovation and Strategy
These two words go together sickeningly often. Every buzz-word spouting bozo tends to refer to themselves as “inspiring strategic innovation” or “working on innovation strategy”. But these words have very specific meanings, and, when it comes to strategy, there is innovation that will be strategic, and innovation that will not be.
To begin with, innovation is partly derived from the Latin “novis”, or NEW. Doing things weirdly isn’t innovative, and putting fun colors on an old way of doing things is also not innovative. Innovative ideas absolutely break new ground – which means they may be weird, they may have fun colors, but most importantly, they are NEW.
Strategy, on the other hand, is a word that people often mis-use when they mean “important” or, even worse, “well-paid” (as in, for example, the title “strategic information officer”, which is often a fancy name for the IT guy). Strategic things always revolve around one or more of the three key strategic questions:
- What do we do?
- To whom do we sell?
- How do we beat (or better yet, avoid) the competition?
Put another way, if something doesn’t change the direction your business is going or get you there faster/better/cheaper, it’s probably not strategic. Strategy is about direction – and so, strategic innovation should be about either shifting direction, or refining your direction to make it more strategic in nature. Because strategy usually revolves around beating the competition, strategic innovation must, by necessity, create a distinct competitive advantage – and ideally one that is not easily copied.
Let’s look at some examples. One key innovation in the early years of cell phones involved making them smaller, thinner and lighter. These were incremental improvements in the existing design, and everyone was pushing them. As a result, while you could be very successful with a smaller, thinner, lighter phone (for example, the Motorola Droid, which was very sexy in its day), innovation in that direction wasn’t exactly going to make or break your strategy. On the other hand, adding new functions (camera, GPS, touchscreen, apps) did push strategy forward, since it re-defined the market in a way that the established players lacked advantages in. The camera, for example, was a high-end phone feature at first – which meant the players that had it were a step ahead of those who didn’t.
Real innovations in the cell phone market came from different players at different times. Research In Motion, for example, made their phones into personal information managers/email machines by adding software and a keyboard. Apple added GPS, touch screen, and app support. Each of these innovations could be called strategic, because they did not involve just pushing in the same direction as everyone else.
This brings out one of the most difficult but critical aspects of successful innovation in business – truly strategic innovation either enhances your leadership in the area you already dominate (the thin, sexy Droid Razr might be called that) OR it creates great distinction for your product or service by delivering something no existing product or service offers (the Apple iPhone is a great example). This suggests a two-step test for any innovation you consider:
- Does it make us better at something we are already the best at?
- Does it differentiate us from all other players in our market?
These questions can also serve as a great starting point for your innovation activities – either as a part of your strategic planning discussions, or as a separate activity before you sit down to design new products or services. Simply ask “How can we be even better?” and “How can we make our offering even more unique?”, and run with the answers. Or better yet, pretend you are a great customer – and then role-play about your use of the product or service. From that perspective, anything that looks like it would be awesome for the customer is a great starting point for your innovation efforts.
How do you innovate strategically? Where do your innovative ideas come from? To extend your strategic thinking about innovation, plan to attend our next public seminar today! Click here for more information.
For other ways to enhance your strategic planning process please watch our video: Why Isn’t My Strategic Planning Working? This video will give you tips for enhancing the strategic thinking during your next strategic plan update.