Alignment of Strategy and Innovation | Paul4innovating Innovation Views

The Essential Connection Between Strategy and Innovation

Most organizations are seeking solutions to the necessary connections between Strategy and Innovation. The connection between the two are often broken.

Often it is within the strategies that should be outlined, lies the potential new spaces to play for innovation’s design. Yet how often do we fail to connect the innovation’s we design and execute specifically aligned to the strategic need?

We somehow seem to stay locked in the ‘here and now’ constantly repeating and refining the known and established within our domain of responsibility. Is this because innovation is not at the core of the business as it should be? Often we are inherently resisting to exploring change as it becomes risky and far more demanding. A good strategy, well outlined should encourage innovation and gain engagement but it can equally determine how we break down our imposed boundaries by its strategic intent, to encourage exploring and extending on what we know into the what we need to know. Strategic intent informs innovation.

If you have a clear strategic understanding of the needs of the business you are getting more of the understanding of where-to-play and how-to-win in your innovation activities and market investment. It is making these strategic connections that is giving innovators a better chance to deliver back concepts that offer alignment to this strategic need. Investing in this understanding and alignment should never be understated. The time invested, allows for the innovation investments to do their part in supporting the business and feeding it with the growth options required, or highlighting where the possible gaps might be, for additional investment or M&A activity, to accelerate this and bring-in fresh innovating momentum.

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Possibly a Significant Shift in the Innovation Consulting World?

It always catches you by surprise when one of the leading players within the innovation space makes a change. In this case, Innosight has been acquired by Huron, a fellow professional services firm, one that has the vast majority of their business in the United States. Huron focuses specifically on Healthcare, Education, and Life Sciences and has been to-date far more operationally driven in its delivery solutions.

Being fairly curious you search for the fit and its meaning to both parties as Innosight has been continually shaping their offering to focus more on the strategic positioning of innovation over the past few years as the market has been undergoing a significant change in client demands and innovation solutions. I wanted to work through all of what this might mean and some more.

The transaction overview is ” Huron will purchase Innosight Holdings, LLC for $100 million upon closing, consisting of $90 million in cash and $10 million in Huron common stock, plus contingent consideration of up to $35 million if specific financial performance targets are met over a four-year period”

This time last year we saw another acquiring of a pure innovation firm Continue reading “Possibly a Significant Shift in the Innovation Consulting World?”

Balancing Our Innovation Understanding

Recently I have been hearing a lot about different innovation equations that will deliver value on the efforts you put in.

I think the activity behind all of this is actually very encouraging, it shows the current dissatisfaction with what we have and the quest for providing a formula for overcoming this ‘present state’.

I think they are all contributing to a promising future. Yet we need to consider the balance within any innovation understanding or equation to derive its real value.
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One really big issue is aligning strategy and innovation, right?

Achieving innovation alignment always needs clear framing.

I would argue most problems or disappointment with our innovation efforts can be attributed to a lack of alignment to the organizations strategy and/or its poor governance with our end results.

Here I am suggesting a way to overcome this constant frustration.
Poor strategic alignment can be overcome by working through a comprehensive approach to addressing all areas that impact innovation. One such framework I believe can help, as explained here, through the work mat approach.

I believe this work mat approach does moderate and organize innovation for greater alignment. It allows for the senior management to become engaged and shape the direction as it takes a more holistic approach. The work mat contains governance as a specific part of its framing as this can do far more in driving the conditions to innovate.

The intent with developing this work mat approach has been to clearly set out that much-needed ‘greater’ strategic connection through engagement at a senior level, they drive the outcomes, they provide understanding beyond the vision to make the necessary connections, they fuel the engine and ignite the energy that innovation needs.
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I wonder who is withering on the innovation vine?

This week I tuned into the Pipeline virtual conference for product development practitioners and gained an encouraging feeling that innovation is progressing along nicely.

Packed all within a day there was plenty of material ‘fodder’ to feed off of and learn from.
A really good conference but what quickly followed was a strong dose of that withering on the innovation vine.

I read two consulting surveys on innovation

I’ve been suddenly pulled out of my virtual bubble back into the harsh realities of where innovation really is. Just simply how innovation is struggling and that lies far more at the top of our organizations than below, those below who are simply trying to ‘get on with the job’ but with at least one hand (or even two) tied behind their backs.

I have been reading two sets of observations, one from Fahrenheit 212, the other from Innosight and my mood began to change. I’m suddenly back in reality where we have this huge gap between those ‘working’ innovation and those at the top simply not engaging with innovation or still failing to understand it or even failing to connect the dots.
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Alignment is needed everywhere

Alignment of Innovation to Organization's Strategic Goals — Alignment of Innovation to Organization’s Strategic Goals

Working in most organizations you spend a disproportional amount of time on looking to achieve alignment. This can range from aligning your meeting schedules to the bigger strategic issues by gaining agreement on the way forward.

I would bet you that working on alignment is certainly one of the main tasks that is sucking up a large part of your working day. Interesting enough the higher up in the organization you go, the more you have to seek alignment. Gaining alignment is actually very hard.

In corporate life we are constantly attempting to also link organizational goals with our own personal goals. To make this alignment, it requires the difficult aspect of achieving common understanding of all the parties for the specific purpose you are requiring, so as to achieve a consistency between ‘agreed’ objectives and the implementation of these across those involved.

In pursuit of alignment

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Framing innovation around four management dimensions

Julian Birkinshaw, the London Business School Professor for Strategy and Entrepreneurship wrote in his book “Reinvention Management” about the failure of management. He is a strong advocate of reinventing and broadening out the awareness and need for a more disciplined and up to date practice of management

Working through a kind of contingency theory of management

Julian points out different situations demand different kinds of management. To be effective, a manager needs to adapt to the demands of the situation. Managerial behaviour is mapped on four dimensions: bureaucracy-to-emergence, hierarchy-to-collective wisdom, alignment-to-obliquity, and extrinsic-to-intrinsic motivation.

The principles of emergence, collective wisdom, obliquity and intrinsic are newer ways of thinking about management. I must say I like these as I do his framework as a really good way to think about the approach we need to explore that fits with the strategy and the way we want to develop a business and its environment.

Innovation needs to exploit all the ‘opposing’ principles across the four dimensions

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Figuring out a different strategic alignment with innovation being central.

Strategy as we have previously known it is officially dead. Strategy is stuck! Competitive advantages have become transient. We are facing situations where advantages are copied quickly, technology is just one constant change, and our customers seek other alternatives and things move on faster and faster.

In a new book written by Rita Gunther McGrath, a professor at Columbia Business School in New York and one of the world’s leading experts on strategy, she has been exploring the changes rapidly taking place called “ The End of Competitive Advantage: How to Keep Your Strategy Moving as Fast as Your Business”

“Strategy (in the past) was all about finding a favourable position in a well-defined industry and then exploiting a long-term competitive advantage. Innovation was about creating new businesses and was seen as something separate from the business’s core set of activities.” “Sustainable competitive is not just ineffective, it’s actually counterproductive” says Professor McGrath.

She rightly states:“Think about it: the presumption of stability creates all the wrong reflexes. It allows for inertia and power to build up along the lines of an existing business model. It allows people to fall into routines and habits of mind. It creates the conditions for turf wars and organizational rigidity. It inhibits innovation.

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Traversing different horizons for transformational innovation

Irrespective of the organization, we all struggle with transformational innovation. So often we are simply comfortable in our ‘business as usual’. We gear performance to the short-term, we put the emphasis on the current fiscal year, and we support the core business in numerous ways, usually with lots and lots of incremental innovation, so the results are realizable in this year.

We are sometimes comfortable or confident enough to move into adjacent areas, to expand and feed off the core but these are less than transformational in most cases. This space is the one we are the most comfortable to work within, this is the horizon one of the three horizon model approach outlined to manage innovation across a more balanced portfolio of investment.

In summary, the three horizon model for innovation is actually a reasonably simple idea: with Horizon One (h1) being the current business focus, Horizon Two (h2) being more the related emerging business opportunities and Horizon Three (h3) being those that are moving towards a completely new business that can have the potential to disrupt the existing one.

The complexity lies underneath this simple idea, you need to manage these different horizons with completely different mindsets. You need clear well-structured ways to extract the real return from managing a comprehensive innovation portfolio based on knowledge, experience, intelligence but exploring plenty of the unknowns about the future and openness to get you there, as ready as you can be . Its necessary today.

The seeds of destruction lie in horizon one

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Innovation failure starts at the top

So who do you think form the group that are the most likely candidates for innovations consistent failure? It may surprise you to know that most fingers point straight to the top of the organization as the main cause for its enduring failure.

I don’t think this is sour grapes of the people working away on innovation daily, that the ‘finger of failure’ is well and truly pointing upwards. There is more of an innovation knowledge gap at board room level or even just below this, than many can imagine, that is the plain reality.

They often simply have no real clue on how innovation really works and what their essential role is in connecting all the different parts necessary to align this into the organizations overarching goals, objectives and strategies.

Let’s simply select the top common causes of innovation failure.

In a recent survey I was reading*, it provided a set of results about the common cause of innovation failure. The survey was asking participants to check all that applied and although there were 30-odd possible reasons the top ten that stand out as head and shoulders above all the others are nearly all down to the simple failure of innovation engagement in its leadership.

Failure lies at the very top on why innovation fails.
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