- October 27, 2019
- Posted by: Ramkumar
- Category: Digital Transformation
Why innovation led strategy is important?
Innovation led strategy is imperative for every enterprise today because technology is disrupting everything from operating models to supply chain.Hence in the current dynamic and global nature of the business, Innovation is now the nexus of Strategy.
Successful companies view innovation not as a task or project but envision it as a permanent state of evolution and exploration.
Characteristics of Innovation Leaders
- Innovative companies have rapidly increased their market value and market share relative to their competitors.
- This is because innovative companies have an ambitious portfolio approach combining internal programs that ideate new ideas with external ecosystems of partners and sources of innovation.
- Innovative companies reward risk taking ability and they look for these characteristics in their leaders.
How Digital leaders approach Innovation led strategy?
- Digital leaders use variety of approaches to incorporate innovation in their companies.These include using Corporate venture capital, Business accelerators, incubators and partnerships with the broader ecosystems.
- Internal programs like hackathons and allocating time for experimentation complement external programs like Corporate Venture capital funds to help the company reach outside and expand access to fresh ideas.Incorporating multiple approaches to innovation help companies experiment multiple ideas to finalize on a truly important innovative concept.
- Innovative approaches should complement and strengthen each other.Hence it is important that companies are deliberate and thoughtful about how they construct and operate their portfolios. For instance an hackathon program needs to connect/complement an early stage incubator/accelerator program.Every innovation approach should serve a purpose and companies must be clear what they try to realize from each approach.
- Having a portfolio of approaches makes it easier to accept uncertainty. Some approaches will succeed where as some would fail, some would have a longer payoff period than others.Over time, this approach builds institutional learning and foster the kind of corporate courage that innovation requires.
Mapping the path to Innovation led strategy
- Hackathons and Innovation summit requires protecting employees time to experiment inhouse so that it can encourage employees to pursue their ideas freely. If employees have new ideas which are worth experimenting, then they should be relieved of their daily duties to focus on their ideas.This way the innovative ideas will emerge.Facebook like buttons which has become so famous and useful was a result of an internal hackathon exercise.
- If generating ideas is the first challenge,then paring them down and managing the portfolio is the next.Companies must apply three filters to further move the innovative ideas to the next step.They need to check if the idea is desirable for the user, whether it is feasible technically and if it is economically viable.Further it is also important that the innovation idea is aligned to the long term strategic plan of the company and the executive team should sponsor the idea and staff appropriate resources to work on the innovative idea.
Charting a successful innovation journey
- To chart out a successful innovation journey, companies must do three things. First they need to be open to multiple sources of new ideas and also be engaged with a broader ecosystem.This will be helpful when setting strategic goals.
- Second, companies must rewire their culture and norms to tolerate and value risk, thereby challenging any bias towards efficiency and incremental improvement.
- Thirdly, companies must have an explorer mindset marked by constant search for new ideas to solve fundamental problems for company’s employees and customers.
Setting up the right innovation led strategy
- Highly innovative companies leverage their internal capabilities and further collaborate with an ecosystem of external organizations.
- Benefits of partnership include the chance to tap into specialized expertise and broader talent pools, building tools and solutions without bearing the complete costs and to gain exposure to new ideas and business models.
Rewire corporate culture
- Innovative companies reward employees for trying new things and acknowledge their efforts even when their efforts do not translate to success.
- Companies reward risk takers with faster promotions, greater equity and bonus compensation along with improved performance reviews.They encourage employees who are passionate about solving new problems, show dedication and commitment.
Having an innovation mindset
- Innovation mindset requires people who can handle uncertainty.Traditional leaders need to not only learn new skills but also overcome the instincts developed over years of working in traditional operations.
- It is also important that companies connect leaders to one another and integrate them across the organization. It is necessary that different leaders of each group interact with each other to share ideas, learnings and issues which inturn can foster innovation.
Digital leaders understand the importance of an innovative mindset to be successful. They inculcate the following traits.
- Digital leaders encourage employees to pursue new ideas and opportunities.
- They use multiple approaches from Corporate Venture capital to accelerators to propel their innovation Strategy.
- The innovative approaches followed is aligned with long term strategy.
- Digital leaders have enthusiastic, prominent, influential and consistent leaders who catalyze innovation within the organization.