Lesson #4 of Turning Ideas into Market-Winning Products.
One of the most common frustrations shared by product developers, managers, and innovators are the roadblocks put up by senior leaders. Often the same senior leaders tell employees they need to be more innovative. Ouch! This is a complicated problem that requires courage and shrewdness to navigate, but all of your efforts will be in vain if the first step is not properly put in place – your innovation strategy aligned with business strategy and organization culture.
Why This Lesson is Important and What You Will Learn
After reading this lesson you will be able to identify the innovation strategy that should be used to align an organization’s strategy and culture. Being able to frame discussions with senior leaders in terms of strategy will help to remove roadblocks.
Setting the Stage for Strategy
A strategy is a plan of action or policy designed to achieve a major or overall aim.
This means that strategy is a plan with objectives:
S = P + O… strategy = plan + objectives
Another helpful analogy is to think of strategy as how you play to win. You rarely win a game like chess without a starting strategy. You consider what moves you can make, how your opponent may react, and what moves you can make to counter his actions and win the game. In an organization, “playing the game” is similar but more complicated because there are many competing objectives, multiple stakeholders, and likely numerous competitors. Even with those complexities, strategy is still about how you play the game.
There are a few approaches to innovation strategy. One popular framework uses definitions of “Need Seekers, Market Leaders, and Technology Drivers.” A Global 1000 Report defines these categories (Booz & Co, 2012, p. 20. Available here ):
1. Need Seekers: “actively and directly engage both current and potential customers to help shape new products and services based on superior end-user understanding. These companies often address unarticulated needs and then work to be first to market with the resulting new products and services.”
2. Market Readers: “closely monitor both their customers and competitors, but they maintain a more cautious approach. They focus largely on creating value through incremental innovations to their products and being ‘fast followers’ in the marketplace.”
3. Technology Drivers: “follow the direction suggested by their technological capabilities, leveraging their sustained investments in R&D to drive both breakthrough innovation and incremental change. They often seek to solve the unarticulated needs of their customers through leading-edge new technology.”
How many companies use these strategies? The Global 1000 Report found the following percentages among the largest 1000 R&D spending companies:
|Strategy||% of Companies Using||Example Company|
Need Seekers, like 3M, often have large research and development activities, close customer relationships, and a mission of creating products that customers have not seen before.
Market Readers such as Visteon, a provider of products for car manufacturers, bring new products to their customers but they tend to tread lightly into new markets; instead, offering revisions to previous products and incremental improvements based on what the market wants.
Technology Drivers are more focused on technology development than responding to markets (compared to Need Seekers and Market Readers). Like Google, they leverage their core competencies to develop new products. Sometimes, this takes the form of new technology development that anticipates, predicts, or even drives the market, before verifying whether a market exists for the product. An example is Google’s former “Google Labs” webpage. Intended as a playground of prototypes, Google developed it to test which products were viable and could serve a market.
Seek Alignment – Use This Tool
While this may appear to be a bit of a simplification, an organization’s culture and overall strategy will dictate its innovation strategy when all the elements are properly aligned. The importance of alignment is underscored in many studies, including “The Study of Product Team Performance” by Actuation Consulting in 2013, which found that a significant factor in successful high-performing product teams is…
An aligned strategy: the significance of the product team aligning with the company’s overall goals and objectives.
To make this concept of alignment concrete, use the innovation strategy profiler tool to consider what the innovation strategy in your group or organization should be.
Many of the best innovation efforts collapse because they’re not framed in the context of organizational strategy or because they pursue a strategy that is at odds with the organization’s objectives. As innovation means doing something new and in a new way, it can be hard to get support from senior leaders, but finding common ground and aligning to the business strategy increases your success.
The next lesson, arriving in your email box in a few days, explores the too-frequently misunderstood Voice of the Customer.
The Everyday Innovator™