As difficult as it is to get a group of people to agree on a definition of innovation, it is even more complicated to get people to agree on what constitutes strategy.
Strategy is about positioning for sustainable competitive advantage, making choices about which industries, products, services to deliver, and allocating resources to achieve the unique competitive position an organization is aiming for. Ultimately the goal of strategy is to achieve long term, sustainable, superior performance. Strategy’s focus is on creating value by satisfying customer needs and wants better than anyone else. The execution of strategy is driven by creating a set of options in which to invest the company’s resources, be it products or services, business models or brand development. Doesn’t this sound a lot like what innovation is trying to achieve?
In order to focus the resources of an organization on developing the most effective innovations possible, i.e. those innovations that will generate the most customer value and create new things that will serve customers better than anyone else, the efforts of the company’s people need to be closely tied to achieving business strategy, achieving the vision of what the company can be in the future. In the process of discovering what customers are doing, innovators create new options to meet unarticulated needs. By generating new options, the process allows a company’s leaders to see new opportunities to grow that their existing strategy has not taken into consideration. New opportunities then lead to a new vision for what a company can become.
Strategy and innovation are tied so closely together that it is hard to know where one stops and the other begins. What matters most is that the processes for developing strategy and the processes for uncovering and meeting customer opportunities are combined in a systemic manner. Strategy development is not just setting next year’s budget no more than innovation is just focused on the next product extension.
The business imperative is to help a company’s senior leadership to see and understand the link between these two, iterative processes. When these two elements are combined, executives will have a better mechanism for focusing their growth efforts and ultimately minimize their business risk.
Roy Luebke is an innovation expert focused on discovering new, customer-driven opportunity areas to help define the future of a company. He is inspired by knowledge and learning, and applying structured tools and methods at the crossroads of strategy and innovation to achieve business growth.