Setting an Innovation Strategy

"Innovation is not just one more thing to get done - it's the heart and soul of the growth strategy.' _{Thomas D. Kuzmarski}

If we agree that the CEO is responsible for setting the strategic direction and guiding the future profitable growth of the company, then we also agree that the CEO is responsible for innovation.

This responsibility extends not only to creating a culture where innovation can bloom, but also to providing clear direction about the goals, scale and degree of innovation that is required to deliver the strategic and financial goals of the business.

This direction needs must be embedded in the corporate plan to ensure that it is resourced and managed with clear accountability for its success.

All too often, the responsibility for innovation is left to middle managers and becomes an opportunistic, haphazard activity rather than a well planned, purposeful and accountable process.

Creating Strategy

Cogentum works with senior management teams to develop innovation strategy to guide the innovation efforts of their organisation.

We view innovation strategy as the master plan which sets the goals and direction for innovation, allocates the resources and investment, specifies the measures for success and helps to coordinate all innovation initiatives.

Linked to the corporate plan and growth strategy, the innovation strategy is designed to:

• Define the Strategic Arena for innovation.
• Specify the goals and expectations of the innovation effort
• Reflect the degree of innovativeness desired
• Manage risk and reward over the Three Growth Horizons
• Allocate people and financial resources

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DEFINE THE STRATEGIC ARENA FOR INNOVATION

Clients often ask us "where should we innovate?" Or "where do we start?"

What they are really asking is which markets, technology platforms, customers, product class or "jobs" should they focus on to drive their innovation efforts.

The answer to this question often lies in the company's corporate plan and growth strategy. It intrinsically tied to the company's assessment of its existing capabilities, the importance of organic growth in its growth strategy and its appetite for risk.

We look to establish the right balance in the company's willingness to explore new horizons versus the opportunities to exploit existing markets and technologies.

SPECIFY GOALS AND EXPECTATIONS FOR INNOVATION

Articulating why you want to innovate and what you want innovation to achieve is critical to a successful innovation programme. It leaves no room for doubt as to the importance of innovation to the company and provides an important set of objectives by which to screen innovation proposals and new ideas.

There are many different goals for innovation depending on the company's growth strategy. Some of the more common financially oriented goals are:

• Profitability measures such as total dollars, ROI payback, % of new revenue from innovation over the last 2 years, etc
  
• Growth rate including rapid growth, controlled growth, maintenance or even controlled decline
• Market status goals including entering a market or achieving market dominance or reversing a share decline

However the goals can also be tied to diverse strategic, tactical and cultural imperatives such as:

• Achieve diversification
• Avoid being acquired
• Become IPO ready
• Increase employee satisfaction and retention
• Improve corporate image and reputation

REFLECT DEGREE OF INNOVATIVENESS REQUIRED

How innovative a company needs to be is determined by interplay between the company's innovation goals and the impact of market and competitive forces.

Cogentum addresses questions such as:

• What market position do you want to achieve?
• What will it take to accelerate ahead of competition?
• What will it take to attract and satisfy customers?

By doing so, we can help you choose the right level of innovativeness required. Examples include:

• Pioneering strategies aimed at state-of-the-art breakthroughs or leveraged creativity
• Adaptive strategies such as quick second or second but better
• Imitative strategies such as quick imitation or cheaper imitation
• Market disruption such as new platforms on new business models

ALLOCATE PEOPLE AND FINANCIAL RESOURCES

Allocating the right people and an appropriate level of financial resources is a key ingredient to ensuring a successful implementation of the innovation strategy.

Careful planning of who will be responsible for developing the innovation programmes and processes and who will contribute to the implementation of innovation helps to delineate these two important responsibilities. This in turn, ensures that innovation activities stay on track and become repeatable rather one-off successes.

When it comes to funding innovation activities, we look at all the other key areas of the strategy to ensure that there is alignment between the level of funding and the sources of funding to achieve short, medium and long term growth objectives.

Talk to us about putting in place an innovation strategy that will deliver the returns your stakeholders require