Innovate or Die! Have You Developed an Innovation Strategy?
“In war, there is no prize for runner-up.” - Omar Bradley, U.S. General
The last blog I wrote asked questions about how your company’s innovation engine was running and looked at some of the barriers. The whole reason for the blog was to get companies, particularly manufacturing companies, thinking about their level of investment in R & D and innovating new products and services. Once you know where you stand and are ready to commit resources, we can begin to look at some strategies or processes to put our innovation machine in gear.
There are many thought leaders when it comes to innovation. I have had the privilege to hear several of them speak and work with a couple directly. A few that come to mind are Robert Tucker, author of Driving Growth Through Innovation, Robert Cooper, author of Product Leadership, Don Brown, author of Invent Yourself Rich, and Doug Hall, author of Jump Start Your Business Brain.
One recommendation I believe all of the authors have in common is that you have to dedicate the time and resources and have a strategy and process to reach your innovation goals and grow profitably. This strategy also needs to align with your long-term business goals and BHAG.
Booz-Allen & Hamilton’s study of new product practices found that businesses are most likely to succeed in the development of new products and services if they have a defined product innovation strategy at their core. Let us look at the outline of the six ingredients that Robert Cooper created to develop a product innovation strategy with input from an American Productivity and Quality Center (APQC) benchmarking study.
1. Goals and role: Begin with goals that align with your business strategy and that help you reach your objectives. Take 3M’s revenue goal for instance, 30% of annual revenue must come from products introduced in the past 4 years. In addition, ensure that the goals are communicated to everyone in the organization.
2. Arenas and strategic thrust: Focus is key and your strategy will specify where you will attack and, just as importantly, where you will not. Remember, Jim Collins tells us “No is the new Yes.” This will help you determine what markets, industry sectors, applications, product types or technologies your business will focus on.
3. Attack strategy and entry strategy: Determine how to attack the market by being an innovator, fast follower, low cost provider, niche player, reactor or defender.
4. Deployment – spending commitments, priorities, and strategic buckets: Develop a budget and commit personnel resources while determining what areas you are gong to focus the innovation activities on. Google allows their employees to spend 20% of their time working on whatever they want to including new products and services.
5. The strategic product roadmap – the major initiatives and platform developments: The strategic roadmap is a project plan that maps out the major initiatives and their timing, like a project plan, to reach the desired objectives. This could be a flow chart, a critical path chart or some other means to monitor the progress. It is helpful to have Red-Yellow-Green success criteria clearly defined for each step.
6. Tactical decisions – individual project selection: Tactical decisions focus on individual projects while following the strategic decisions that have been made. These decisions determine what products should we focus on and what resources are we going to allocate while prioritizing. One important point is to ensure the chosen projects have a long-term thrust and focus to make them worth the time and investment.
Developing a strategy is not easy and only 38.1% of businesses do according to an APQC benchmarking study, while those that do make up 57.7% of the top performing companies.
Robert Cooper states that as in war, winning is everything and winning companies are engaged in product innovation warfare. “You must innovate or die. It is vital to the success, prosperity, and even survival of your organization.”
So, there you have it. Do you have a strategy to guide your innovation efforts? Please devote some strategic thinking time to the steps above and make this topic part of your “Think Rhythm” in your next monthly meeting. The dividends are rewarding.
Good luck and plan well, Alan