How important is innovation to your business strategy?
CEOs of large firms often state that innovation is of greater importance for growth than a strategy of merger or acquisition. Many also say they find it challenging. What can we learn from this?First, let’s recognise it as a business strategy rather than the spontaneous whim of an inventor. While innovation requires bright ideas, the process of developing new products or services must be aligned to an overall strategy for the business.
Different degrees of innovation bring varying levels of risk. How much investment is required? How will the market respond? How will it affect your bottom line? How will your employees react? The more ‘radical’ the innovation, the greater the change potentially required from staff. Change management has many implications for leadership and employee engagement.
Delegates on our innovation and competitive advantage program, GAIN™, explore the leadership of innovation within their businesses. In a masterclass, one of the UK’s leading researchers on the subject, Professor Keith Goffin, suggested guarding against these ‘innovation-killers’ that stifle success:
In or out of the box?Involving staff more widely, not just those in R&D, can capture insights from different parts of the customer journey. But simply asking people to ‘think outside the box’ is often ineffective. Some direction and clear goals are vital.
Beware focus groupsMarket insight is important but be wary of over-reliance on customer focus groups. Not only can unintended bias slip in to the facilitation process, but customers don’t always behave in the way that they say they will, or they may have ‘hidden needs’ that they don’t express. Try to use a mix of research methods.
Crunching the numbersWhen making investment decisions the Net Present Value (NPV) is a calculation of the income you expect to make in future from your innovations, compared to what you may earn from simply investing the R&D funds. Follow this too rigidly, however, and you may kill off the more radical breakthrough ideas before you’ve started.
It’s incumbent on leaders, whatever size or sector of business, to ensure that an innovation process is set within a clear strategy; that the culture is conducive to innovation; and leadership skills are supported throughout the business.
If you'd like to understand more about how having innovation in your business strategy can give you a competitive advantage, please get in touch with us here.
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