Most Companies Don’t Have an Innovation Strategy. Here’s Why.

December 15, 2020

A few years ago, I was involved in a two-day boardroom session at a respected company – let’s call them Acme Corporation. They’d asked for help with their innovation strategy.

Despite being widely considered an innovator in their industry, they struggled to make sense of their own ambitions. Two days of presentations, breakouts, and vigorous debate left Acme Corp at a crossroads. The Executive Leadership Team still couldn’t agree on how to define “innovation,” much less craft a workable innovation strategy.

On the surface, this may sound ridiculous. So, it took me awhile to realize that Acme’s struggles were in fact a positive sign – essentially a validation of their reputation as an innovator.

That’s because, unlike Acme Corp, most leaders never bother to stress-test their innovation strategy – or even ask if one exists. They merely assume the company already has an innovation strategy, which in 90%+ of cases is dead wrong.

This kind of passive breakdown is surprisingly common. In fact, it’s probably happening inside your company, right now.

Your one-question sniff test

Imagine asking five different leaders at your company the same question.

“What is our innovation strategy?”

On the surface, you may get roughly the same answer from each, for example “maintain our category leadership” or “find growth in new markets.” But if you press for specificity, you’re likely to get a restatement of the overall company strategy, which is not remotely the same thing as an innovation strategy. Or you may get five completely different answers.

Most leadership teams make the collective assumption that “innovation” means doing what you already do, just somehow better or bolder. That works fine for incremental steps such as product extensions or operational tweaks. But for anything more ambitious, it makes no sense. By definition, innovation means deliberately doing things different than the norm.

The best innovation programs exist partially alongside a company’s strategy, not wholly within it. Innovation is uniquely suited to explore novel opportunities – technologies, markets, value chains – which may push the company’s strategy in new, evolved directions. Fully realized, there is a productive push-and-pull between corporate strategy and innovation strategy. They inform one another, making each better and stronger.

If top executives can’t articulate the innovation strategy, then you don’t have one. And if you’re trying to innovate without a strategy, you’re not likely to accomplish much. Instead, efforts at instituting an “innovation management” discipline – no matter how forceful or well-intentioned – will fall victim to operating pressures, reduced and reshaped according to the current corporate strategy.

How to ride a glacier

Although many leaders remain ignorant, I’ve met plenty of others who are aware of these simmering issues. Their problem is that “becoming an innovative company” happens not through sizzle as much as persistent effort. Brilliant innovations are sometimes born as an avalanche of ideas, sudden and breathtaking. But the organizational capacity for innovation is more like a glacier, flowing quietly in the background yet carving the landscape in its wake.

Stop me if you’ve heard this before. At company meetings, your CEO begins telling everyone that innovation is a top priority. A new Chief Innovation Officer is hired (or promoted from within). Quarterly shareholder reports include rhetorical flourishes about pushing the industry forward, embracing disruption, fostering a culture of innovation.

So far, so good. Except, somewhere along the way, the execution doesn’t quite materialize. Although the activities continue and projects keep moving forward, but they don’t disrupt much of anything. Over time, programs are either dismantled or ground into dust.

Often, these problems start with the lack of an innovation strategy. It’s much harder than it looks.

Unlike other planning exercises, you can’t extrapolate an innovation strategy directly from existing trends or data. By definition, you’ll be wading into uncharted waters. This flies in the face of most corporate planning cycles, and tends to cause an allergic reaction that leads to inaction – an abdication of innovation planning altogether. Leadership attitudes drift into a subconscious trap: “We’ll know it when we see it.”

Most innovation “strategies” are paper tigers, whereas a true innovation strategy is likely to be controversial. Instead of confronting thorny issues head-on, executives retreat into their respective camps. Each group proceeds to interpret the innovation mission on their own terms, creating a variety of presumed innovation strategies, none of them official.

Think your company is different? Maybe. But first, consider Acme Corporation’s experience. Their executive team had been working together for years. They were professional and disciplined, with high levels of interpersonal trust. The company was riding a track record of recent successes – indeed, over the past decade Acme had been responsible for multiple groundbreaking innovations. They agreed that innovation was critical to the company’s future, yet they fought bitterly over what that meant in practice.

In the boardroom sessions, two competing factions emerged. One group insisted that innovation “must be everyone’s job” and that its goals should be written into employee incentives across the company. The other faction argued that innovation was a strategic function that needed independence and autonomy. Both represented passionate, deeply-held convictions. In a sense, both views were fundamentally correct. Still, they disagreed on nearly everything: what innovation’s priorities should be; how innovation efforts should be structured; whether innovation should exist as a named function.

Such conversations can be difficult, even demoralizing. But those challenges are also a testament to their importance. If your executive team isn’t willing to engage in the tough stuff, they were never really serious about innovation.

Plenty of companies manage to innovate without an explicit innovation strategy, much like Acme had done over the previous decade. But they could have done far better. Similarly, it would be a mistake for any other company to rush an innovation strategy into existence immediately. But you should be aware that, without one, you will always contend with an innovation ceiling, limiting what is possible. Lifting that ceiling tends to happen step-by-step over time, at whatever pace leadership attitudes toward innovation are able to evolve and mature.

Acme Corporation ended that year without an innovation strategy. But they kept re-visiting the topic, each time chipping away at underlying blockers. That’s a real accomplishment. Even though there is still work to be done, Acme has managed to extend their innovation lead over industry peers.

In the gradual work of making innovation an institutional priority, there’s no better time to get started than now. Change may be glacial, and the initial steps may be uncomfortable. But once the glacier starts flowing downhill, continued progress is natural.



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