Peter Drucker famously said that "Culture eats strategy for breakfast."
I say, "Without strategy, culture goes hungry."
We talk about strategy a lot in business. There’s a growth strategy, a marketing strategy, an HR, finance and IT strategy. So of course, if your business is serious about innovation, it needs an innovation strategy.
For the unaffiliated, strategy is your plan of action. It’s designed to achieve a long-term aim. I often think of strategy as the Major General’s military line of attack. His strategy might be: reach the top of that hill and put a flag in it. His process is how he gets to that hill and his culture is what he does to motivate his troops to get there. But it’s his strategy that fuels the vision, that feeds the culture and determines the process.
Strategy in innovation can be done in two ways: You can play not to lose. And you can play to win.
When you play not to lose, you are minimising risk. There’s a ‘never fail’ mentality among your troops. It’s efficient, there are short term gains and all your eggs are in one very safe basket. You make a thorough analysis before acting – before taking the hill. You make incremental developments and adjacent developments to your products or services, in line with the competition (the enemy).
Incremental innovation targets an existing market that you currently serve and uses existing technology that you currently use or deploy. This is the world of ‘improvements’, ‘extensions’, ‘variants’ and ‘cost reduction’.
Adjacent innovation targets an existing market that you do not serve and/or uses existing technology that you do not use or deploy. This is the world of ‘next generation products’.
When you play to win, you’re trying to out-innovate your competition in new areas. In battle speak you are trying to out-manoeuvre the enemy. There’s a focus on breakthrough developments. You’ll have your eggs in many baskets and sure, you’ll fail often but you’ll also succeed sooner. There are longer term gains, you’re effective rather than efficient, and you learn by doing and optimise reward over risk. You are making radical developments to your products and services ahead of the competition.
Radical innovation targets completely new markets and/or uses completely new technologies.
There are dozens of examples that can help us bring to this to life.
Take razors. Add a blade, change the colour, include a strip of aloe vera and you have incrementally improved a product. How many times have we seen the beauty industry pull this one out of the bag?
Look at Dyson. On first glance you might think he’s radical but on closer inspection you see he is serving an existing market (one that buys vacuum cleaners) and is using an existing technology that had not previously been used in vacuum cleaners (he was inspired by industrial saw mill extraction systems).
For radical, let's look at Apple. Although the iPod itself was inspired by existing technologies – existing MP3 players, developments in new battery technologies, advancement in lightweight micro hard disks, improvements in sense technologies for “touch” buttons, as well as in microprocessors and high-end audio processing – the radical innovation was in the combined sales and delivery method.
The iPod solved a consumer problem. ‘Ripping’ existing music collections was time consuming; hardcopy music collections were cumbersome and difficult to store. There was a niche demographic of people who actually spent time in music stores, pouring over records and albums - but it was not the masses. The holy grail of the music shop was intimidating and music sales were declining.
But people like music. And they like choice and maybe they didn’t want to buy the entire album. Maybe they wanted just three songs. And so, with the internet advancing and the increasing popularity of online shopping, Steve Jobs gave us iTunes – a unique delivery method that gave us purchasing opportunities like no other. Which strategy wins? Which type of innovation should you prioritise in order to drive innovation? Which battle field plan of action beats the enemy and gets you to the top of that hill?
If our market was a battlefield, we avoid risking all our troops with a radical strategy that might not work. Motivating the troops while failing often with no other successes to call on is tough going – culture might not go hungry with this strategy but it’s not exactly nourishing.
However, the gains of a radical strategy bring us so much closer to the top of that hill, we might be willing to risk a proportion of our battalion to chance it. Battalion R, let’s say.
And while that’s going on, Battalion I can incrementally encroach on enemy land and Battalion A can adjacently take it over, continually impacting on the enemy, bringing us one step closer to the hill but never risking the life of the entire regiment.
Motivating our troops to take these risks, come up with new ideas, sustain the momentum and never lose sight of the top of that hill is essential if we want to deliver the strategy – and this is why culture cannot be dismissed in the innovation process.
Major General, you may have the most motivated, creative, inspired troops in the world, but if you deploy them in the wrong formation you’re sunk. Spread your risk, balance your portfolio and your strategy will feed your culture and focus your troops. Soon you'll be planting your flag on the top of Mount Innovation.
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