Top Tips To Integrate Innovation With Business Strategy
Innovation needs to be tied to business strategy in order to be valuable to the organization. In other words, innovation must achieve a relevant outcome.
In a visionary organization, innovation will be built into business objectives for growth in meeting an as-yet-unknown future. A powerful strategy to ensure this is when the CEO creates a mandate for growth through innovation and is prepared to invest in the people who can see solutions in new ways. Agility applies to not only technology but to keeping pace with – and ahead of – customer needs and wants. Which is why truly understanding your customers through an intimate dialogue is a sustainable competitive advantage.
Ideally, business targets are known throughout the organization, fostering a culture of innovation. In that case, innovators can align their actions to support those goals. To facilitate collaboration around innovation, create a team dedicated to innovation that is comprised of individuals from various business departments. This will help blend innovation into all aspects of the corporate culture as well as ensure various perspectives throughout the innovation process.
In any organization, resources are carefully allocated. Innovation, especially if it is unplanned, must be seen to yield a return either on par or greater than where the resources have already been allocated and / or beyond what it will take to see that innovation through to actualization. The more imminent the benefits, the more likely that funds will be allocated toward that innovation. Remember that, if the innovation will produce results significant enough, it may be possible to secure additional funding (through either investors or other means).
Understanding how innovation investments in the past affected the organization is vital to establish future innovation investments. All companies were founded by an entrepreneur (or entrepreneurs) who understand the risk balance in trying something new. However, most managers do not share that same quality. In either case, it will become necessary to ‘sell’ the innovation, which can be challenging if it is a ‘bottom up’ scenario (which is very common as ‘front line’ staff typically see the most action and, therefore, the most opportunities for positive change). The good news here is that even if not all managers are naturally inclined to break the status quo and innovate, shareholders, boards and executive leaders are usually all aligned on initiatives that provide positive net present value to the business (i.e., growth).
One of the most effective ways to gauge the return is to look at what will happen if this innovation is not implemented. Opportunity costs works both ways, meaning that there is a cost to pursuing the innovation and a cost to not pursuing the innovation. An effective question to surface opportunity cost is to ask, what if our competitor decided to do this and we did not? The answer to that question can surface unexpected issues (and support). Or, while it may be riskier, you can also wait to see what happens in the organization if the innovation is not adopted.
Present the potential innovation as a business plan with a clear, ‘tangible’ vision and with ROI (Return On Investment) or, even better, a Net Present Value of the investment, clearly articulated. Be sure to consider this idea for innovation through the lens of both long- and short-term benefits. Naturally, your plan should include establishing KPIs (Key Performance Indicators) to monitor the progress of the innovation once it has been implemented.
When pitching an idea for innovation, ask for help from leadership and senior management to not only frame it in terms of organizational goals but also to gain buy-in for the idea. This process may also result in new templates or workflows to support ideas for future innovation. Make sure your documentation creates a measurable bridge (which could be visionary, financial, functional) between the investment needed for the innovation to the gap in growth that the innovation would address for the organization.
The innovation (or project) will need to have a way to transition the work needed to support it in a ‘fast track’ way or it’s viability could be compromised. Also, be prepared to invest in sustaining the innovation (or project) as, once it is in play, you may find unexpected challenges, opportunities or environmental issues that need to be addressed.
Disruption of the status quo is a by-product of innovation. Current workflows and other aspects of operation may need to shift to accommodate the innovation. Be prepared to help colleagues understand the benefits by communicating on the first quick wins and depicting success of the final stage in a clear and positive way. When done well, there will be enduring and potentially significant change as the innovation becomes assimilated throughout your organization.