Tuesday, May 21, 2019

Five Core Elements in Innovation Strategy

A good innovation strategy with all these core elements helps to manage innovation systematically and build differentiated innovation competency by taking a step-wise approach.

Innovation is about gaining benefit by doing something different. Innovation is an exploration, production, adoption, assimilation, and exploitation of value-added novelty in business, economic and social spheres. Innovation should follow basic rules which are adapted depending on the company's situation and ambition. Innovation strategy as an integral component of the corporate strategy has a few core elements as the following:

Diagnosis: What is the problem? Innovation - the practical application of creativity is essentially about problem-solving at various levels; to solve a problem implies a wish to make things better. Innovation is the development of a new combination of available resource in a way that solves real-world problems in a suitable way. There are all sorts of problems, how should you get motivated to be innovative on a daily basis by solving problems large or small creatively? The first step of crafting a good innovation strategy is about diagnosing the problem - what are the problems which need to be fixed innovatively? It’s critical to look deeply into the future which can have a profound effect on where you go, and how you get there? looking uphill can help to identify the real problems that matter, and on a scale that can make a difference. There are large-scale problems which can be solved by planning and practices via structural innovation. There is also the intermediate and micro level of problems which should be taken care of timely via incremental innovation. A good innovation strategy allows you a number of things such as diagnosing critical problems, identifying interconnections and interdependencies, understanding flows or the lack of them, spotting business opportunities, and formulating creative or unconventional solutions to solve problems.

Source: Where do ideas come from? Good ideas nearly never emerge spontaneously. They need to seed and mature. Most good ideas emerge from interactions, not single individuals. Information nowadays is one of the most time-intense pieces of innovation puzzle. The insight abstracted from information not only fuels creativity but also makes creativity more tangible and embed creativity with other thought processes to produce new knowledge. Thus, an information-enriched organization has an open nature, can become the hotbed to nurture and incubate great ideas, and has access to the maximum number of potentially good ideas for developing innovative products, services, business models and solutions. This means having a very good internal program and it also means sourcing a lot of ideas from external partners as well. Good ideas and expertise are correlated. There is nothing most wasteful than ignorance in action. Innovation fails because people start the innovation process without proper sized, prioritized platforms based on consumer needs. A good innovation strategy helps to set the guidelines for streamlining idea flow, taking incentives to encourage idea-sharing, develop sourcing practices, building scalable idea management which means for sharing and managing ideas throughout the enterprise across silos and geographies, facilitating ease of idea evaluation, managing and monitoring the performance of creative activities for ensuring idea flow as well as idea management effectiveness.

Scope: What type of ideas would be considered relevant? Organizations are at a different stage of their business life cycle. Thus, they have different innovation appetite, attitude, and aptitude. A good innovation strategy helps to set the right priority by selecting the ideas which can have a better opportunity to implement and maximize business value; develop different innovation approaches, scope, and practice. Innovation management can further check by asking: Is it a strategy that is focused on innovation sensitive opportunities or is it an innovative way to weave together defined strategic initiatives, or all of the above. The digital age upon us is innovation, focus on meeting important customer needs, ensure that the results of an innovative approach will have some positive impact on the customers, partners, employees, and the marketplace. With a good innovation strategy, the management can leverage different approaches for broadening the scope of the innovation and building innovation competency. It requires at least some degree of a “hard-wired” innovation system with interdisciplinary knowledge such as technology, economy, psychology, sociology, law, etc, in order to achieve sustainable innovation results.

Sponsorship: Who are executive sponsors for innovation initiatives? Though innovation happens more often from bottom up, the spirit comes from the top. The important participants for innovation initiatives are the executive sponsor. Innovation is the most desired change, people at the top have to promote the initiative, fully engaged with the change, willing to be visible, willing to lead other senior stakeholders and ready to participate. The top management sponsorship is crucial to develop a good innovation strategy, discover the more hotspots of innovation and build the culture of innovation. A good innovation strategy helps to clarify: What should the innovation effort focus on - defending the core, penetrating the adjacencies, or entering the white space and how the resources will be balanced across these domains? How can the company make it - through internal development or organic growth? Sponsorship is critical to innovation success. Often innovation fails because many organizations lack real support by senior management; lack the balls to invest in risk, or because innovation leaders don’t know how to manage innovation or treat the decision in the same way as a capital decision.

Portfolio: How to build a balanced innovation portfolio? An implementable innovation strategy should directly support the overall business strategy by building a focused but balanced portfolio of projects that maximize the output from the innovation team, in terms of adding value to the organization by delivering solutions to the aforementioned attribute. You aren't ignoring specific types of innovation. Digital innovation has a broader spectrum with hybrid nature including incremental innovation, evolutionary innovation, and radical innovation. There are “hard innovations” such as products/service innovation, business model or process innovation, and “soft innovations” such as leadership innovation, communication innovation, and cultural innovation. A well-balanced innovation portfolio maintains a balance between exploration and exploitation; achieve coherence while allowing autonomy; a healthy amount of errors is tolerated and the bottom-up innovation would not be strangled; compensates short-term and short-range attention of daily operations, with a long-term broad-range vision that could steer the organization in the right direction.

Digital is the age of innovation. Innovation is similar to as "the sum is larger than its parts."  More fundamentally, being innovative is the state of mind to think and do things from a new angle. In today's modern organizations, variety, complexity, diversification, and collaboration are the characteristics of the digital innovation ecosystem. A good innovation strategy with all these core elements helps to manage innovation systematically and build differentiated innovation competency by taking a step-wise approach.

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