What does innovation have to do with strategy, anyway?

In our work with clients, we stress the importance of linking the innovation agenda to strategy ­ and we bring a variety of tools and techniques that companies can use to do just that.

More than you think, though, clients (surprisingly enough, often the leaders of internal innovation teams) push back ­ with questions and objections that point to some myths about the relationship between strategy and innovation:

“We already have a strategy, so we don’t need to think about it” ­ the key question to ask yourself here is “has our strategy been translated into terms that describe our aspirations for a future that is different from our past?”   If our strategy only applies to how to improve what we do today and doesn’t make it clear what we hope to become, why would we expect that it would inspire employees to search for breakthrough innovations?   Too often, stated strategies are either so vague that they don’t give a clue as to where to innovate or so rooted in the status quo that they don’t give a clue as to why we should even try.

“Can’t we just innovate?” ­ The myth here is that strategic aiming ­ that is, making choices about where we will focus ­ reduces innovation success.  The evidence tells us otherwise ­ creativity within constraints works better than absolute freedom, leading to ideas that relate to each other and drive natural conversations about how small ideas in a given domain can be combined or linked to create big results.  In most innovation process maps you see, the first step is either “discovery” or “ideation” ­ when in reality it ought to be “aiming.”

“Innovation is one thing ­ strategy is another”  ­ often, the underlying myth here is that strategy should be developed by doing lots and lots of hard-core financial analytics, and that innovation is that fuzzy, touchy-feely stuff that might cook up some great new product ideas but could never help us set the direction of the enterprise ­ so they have nothing in common.  In reality, the same front-end factual discovery process that creates the diverse stimuli to feed product, service, and business model innovation also does a fabulous job in helping to identify the dimensions of highly differentiated strategies.  Think about it:  if you invest in building insights about unarticulated customer needs, likely step changes in the external environment, and your deep competences, why wouldn’t you use those to create strategic options as well as new business ideas?

“Isn’t it dangerous to start applying innovation techniques to strategy?” ­ the concern here seems to be that, like the person scared of heights, if we expose ourselves to some strategic alternatives that are outside of our comfort zone we will somehow feel compelled to throw ourselves off the cliff.  Good news ­ we get to choose what we will, and won’t, do!   As a colleague is fond of saying, just because we talk about something doesn’t mean that we have to do it ­ but if we never consider a range of truly different ­ yes, innovative! ­ strategic directions the risk of getting blind-sided as we trudge along within our current paradigms is always there.

“Won’t we have to get the executives involved?” ­ Sometimes the concern seems to be “geez ­ we just now seem to have gotten the permission to work on this ‘innovation thing,’ and if we don’t keep under the radar there’s a chance that the executives will make us change direction or meddle in our work.”  Here, the trick is to acknowledge that innovation efforts that are supported by an aligned top team do better ­ much  better ­ than those that creep along hoping that no one notices.  If our executives have debated ­ at a fundamental level ­ and agreed upon their key assumptions about the future world and the company’s role in it, support for innovation ­ and the coherence of the guidance that innovators receive from above ­ only grows.

Strategy and innovation should go hand in hand – In our experience, strategy and innovation can, and should, work together in a virtuous cycle ­ strategic direction guides the search for ideas, and the patterns in our ideas inform and shape the evolution of strategic direction.  Take advantage of the inextricable link between direction and opportunities ­ and reap the results.

Gary Getz, CEO and Partner


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