Why is innovation strategy so important to diversify your portfolio
When it comes to working in innovation and design it’s easy to fall prey to a silo mentality –all your departments are doing good work, but they’re doing it on their own. This fosters a culture of exclusivity and competitiveness that can hinder your company’s growth and performance.
But, what if instead of a silo mentality, you could shift to a connected, planned strategy with strong links to your current organisational objectives?
Here’s 3 ways to create a strong innovation strategy, and how it will help you diversify your portfolio.
1. Change the game
If you’re looking to beat the competition, it’s time to stop playing defence. We see this constantly in elite sports when talented athletes face off against each other. Just look at Wimbledon recently – Novak Djokovic doesn’t win by merely playing defensive, he wins by playing his best game of offence.
In organisational innovation you need to find your ‘game’, looking at your skill sets and competitive advantage(s). Some parts of the business may need improvement, some may need to change, and some may be radically new.
The trick is not to play the game better than the competition, but to develop and play an altogether different game. This happens when your innovation initiatives are linked to your innovation strategy.
and it doesn’t just become a priority after you have distributed all your resources and funds. Retrofitting an idea into strategy is less successful than strategically planning your innovation.
2. Fill the gaps
Coming up with new ideas does not guarantee success. It’s one thing to think of a new idea, but another to make it work. If you want your new ideas to take off, the whole organisation must be managed appropriately to give the new strategy a chance.
Strategic innovation occurs when a company identifies gap/ opportunities in their market decides to fill them. These could be:
- new, emerging customer segments or existing customer segments that other competitors have neglected
- new, emerging customer needs or existing customer needs not served well by other competitors
- new ways of producing, delivering, or distributing existing or new products or services to existing or new customer segments
Gaps appear for a number of reasons, such as changing consumer tastes and preferences, changing technologies, changing governmental policies, and so on. Gaps can be created by external changes or proactively by the company. If you want to own the market, you need a comprehensive plan on how to quickly fill gaps to meet consumer needs – remember, having the first solution is golden, but having the best solution will win your customers over.
3. Know the limits of your portfolio
Innovation is inherently risky, to be sure, and getting the most from a portfolio of innovation initiatives is more about managing risk than eliminating it. Since no one knows exactly where valuable innovations will emerge, and searching everywhere is impractical, executives must create some boundary conditions for the opportunity spaces they want to explore.
The process of identifying and bounding these spaces can run the gamut from intuitive visions of the future to carefully scrutinised strategic analyses. Thoughtfully prioritising these spaces also allows companies to assess whether they have enough investment behind their most valuable opportunities.
Look for insights by methodically and systematically scrutinising three areas: a valuable problem to solve, a technology that enables a solution, and a business model
that generates money from it. You could argue that nearly every successful innovation occurs at the intersection of these three elements. Companies that effectively collect, synthesise, and “collide” them stand the highest probability of success.
“If you get the sweet spot of what the customer is struggling with, and at the same time get a deeper knowledge of the new technologies coming along and find a mechanism for how these two things can come together, then you are going to get good returns,” – Alcoa Chairman and Chief Executive, Klaus Kleinfeld.
Interested in developing your innovation strategy? Get in touch.