AframeworkforStrategicInnovationBlendingforesight,insight,strategyandcreativeexplorationtodrivebreakthroughgrowth

Paris - Silicon Valley - Eindhoven - Beijing - Moscow - Tel Aviv - Washington D.C.

IncludesMini-Diagnostictoassessifyouinnovatestrategically

TableofContents

1.TheArtandDisciplineofStrategicInnovation 4.....................................................1.1.TraditionalstrategyversusStrategicInnovation 5................................................................

1.2.SerendipitousversusStrategicInnovation 6.........................................................................

2.TheSevenDimensionsofStrategicInnovation 7....................................................2.1AManagedInnovationProcess–CombiningNon-TraditionalandTraditionalApproachestoBusinessStrategy 9.................................................................................................................

2.2StrategicAlignment–BuildingSupport 11.............................................................................

2.3IndustryForesight–UnderstandingEmergingTrends 13.....................................................

2.4Consumer/CustomerInsight–UnderstandingArticulatedandUnarticulatedNeeds 15....

2.5CoreTechnologiesandCompetencies–LeveragingandExtendingCorporateAssets 16..

2.6OrganizationalReadiness–AssessingTheAbilitytoTakeAction 17....................................

2.7DisciplinedImplementation–ManagingthePathfromInspirationtoBusinessImpact18

3.SustainableInnovation–BuildingaFoundationforOngoingCompetitiveAdvantage 22................................................................................................................

3.1ThePathtoStrategicInnovation 22........................................................................................

3.2InnovationAssessmentandBenchmarking 23......................................................................

3.3EndNote 23.............................................................................................................................

4.Mini-diagnostic:DoesyourorganizationpracticeStrategicInnovation? 25.........

! �2

CoverphotobyJOHNTOWNERonUnsplash

AuthorsDerrickPalmer,DirectorofINOMERatSiliconValley,consultsonstrategicinnovationwith

global, Fortune 1000 and medium-sized businesses, including Visa, Colgate-Palmolive,

Roche,Disney,Philips,PepsiCo,Medtronic,Cisco,NBC,ArcelorMittal,Hershey’s,Frito-Lay,Kimberly-Clark, and numerous other global firms. His areas of focus include corporate

strategy, consumer-inspired new product innovation, designing best-in-class innovationprocesses,andstrategicinnovationtraining.

With25yearsof linemanagementandconsultingexperience,Derrickbringsawealthof

traditionalandnon-traditionalconsultingapproaches.Hehasextensiveexperience leadingcross-functional and multi-cultural teams ‘from chaos to clarity’, and in fostering collaboration across

organizationallines,brokeringbusinessrelationshipsandfacilitatingdecision-making.

Derrickistheco-founderofSiliconValley-basedInnovationPoint,sitsontheAdvisoryBoardofIdeaCrossingand

is a final-round judge for its annual Innovation Challenge, the largest business innovation competition in the

world. Prior to co-founding InnovationPoint, he served as Vice President, Business Strategy with NOVO/GiantStep, an Internet Professional Services consulting firmwhere he established and grew the Business Strategy

practice.Previously,hewasaSeniorDirectorwithIdeaScopeAssociates,aninnovationmanagementconsultingfirm,whereheworkedwithglobalcompaniestoidentifynewrevenueopportunities,developinnovativebusiness

strategies,createnewlinesofbusinessanddevelopnewproducts/services.

AtransplantedEuropean,Derrickhaslivedinsixcountriesandisattunedtotheculturalsensitivitiesofworkingwithglobalteams.FluentinseveralEuropeanlanguages,notablyFrench,GermanandDutch,heholdsaBachelor

ofArtsinLinguisticsfromtheUniversityofYork,England,andaMastersdegreeinMarketingManagementfromLancasterUniversity,England.

Soren Kaplan is the author of Leapfrogging and a Managing Principal at

InnovationPoint,whereheworkswithorganizationsincludingVisa,Colgate-Palmolive,Medtronic,Disney,Philips,PepsiCo,andnumerousotherglobalfirms.Sorenpreviously

led the internal strategy and innovation group at Hewlett-Packard (HP) during theroaring 1990’s inSiliconValleyandwasa co-founderof iCohere,oneof thefirstweb

collaboration platforms for online learning and communities of practice. He is an

Adjunct Professor within the Imagineering Academy at NHTV Breda University ofApplied Sciences in The Netherlands. He holds Master’s and Ph.D. degrees in

Organizational Psychology and resides in the San Francisco BayAreawith hiswife, two daughters, and hypo-allergeniccat.

! �3

INOMERisaninternationalconsultancyspecializinginbusinessandeconomicgrowththroughinnovation.OurbusinessgrowthservicesfocusonthepracticeofStrategicInnovation.Wehaveover20yearsofcross-industryexperienceworkingwithglobalandFortune1000organizations.Oureconomicgrowthpracticeiscommittedtobuildandnurtureinnovationecosystems.

Contactusat:info@inomer.fr Formoreinformation:www.inomer.fr

1.TheArtandDisciplineofStrategicInnovation

StrategicInnovationisthecreationofgrowthstrategies,newproductcategories,servicesorbusinessmodels that change the game and generate significant new value for consumers,customersandthecorporation.

Thispaperdescribesaholistic,multidisciplinaryframeworkthatenablesorganizationstotakeastrategicapproachtoinnovation.

The framework combines non-traditional, creative approaches to business innovation withconventionalstrategydevelopmentmodels.Itbringstogetherperspectivesfromanumberofcomplementarydisciplines:thenon-traditionalapproachestoinnovationfoundinthebusinesscreativity movement; traditional strategy consulting; the new product developmentperspective of industrial design firms; qualitative consumer/customer research; futuresresearch found in think tanks and traditional scenario planning; and organizationaldevelopmentpracticesthatexaminetheeffectivenessofanorganization’sculture,processesandstructures.

Theframeworkconsistsofacohesivesetofpracticesthat inspire imaginativeteamsto lookbeyond the obvious, explore a broad range ofpossibilities, identify significant opportunities, makeinformeddecisionsaboutthemostpromisingpathstopursue, create a shared vision for growth, definepragmatic action plans that “bridge from the futureback to the present” and align the organizationaroundtherequirementsforsuccess.

Strategic Innovation takes the road less traveled –itchallenges an organization to look beyond its established business boundaries and mentalmodelsandtoparticipateinanopen-minded,creativeexplorationoftherealmofpossibilities.

Someorganizationsmayfeelthatseekingbreakthroughsistoograndioseagoal,andthattheywould be content with “simply growing the business”. Experience shows, however, thatfocusingon the short-term typically yields only short-term results –while teams aspiring toseek significant breakthroughs will both identify “big ideas” and also generate closer-in,incrementalideas.

Strategic Innovation is not characterized bymundane, incremental product extensions, the“me-too” businessmodels of close followers, or band-aids for inefficient processes. It doesnot consist of simple “facilitated creativity sessions andbrainstorming new ideas”. It is notbasedonthelinearprinciplesoftraditionalstrategicplanningwhichextrapolatethepastinan

! �4

“AllmencanseethetacticswherebyIconquer,butwhat

nonecanseeisthestrategyoutofwhichvictoryisevolved.”

–SunTzu

attempt to predict the future. It does not result in “blue sky” dreams. Instead, it spans ajourneyofinquiryandactivity–fromcreativeinspirationattheambiguous“fuzzyfrontend”through the detailed requirements of successful implementation that lead to measurablebusinessimpact.

Strategic Innovation calls for a holistic approach that operates onmultiple levels. First, itblendsnon-traditionalandtraditionalapproachestobusinessstrategy,deployingthepracticesof “Industry Foresight”, “Consumer/Customer Insight” and “Strategic Alignment” as afoundation, and supplementing them with more conventional approaches and models.Second, it combines two seemingly paradoxicalmindsets: expansive, visionary thinking thatembraces ambiguity, looks externally at emerging trends and marketplace needs, andimaginatively explores long-termpossibilities; andpragmatic, down-to-earth implementationactivitiesthatleadtoshort-term,measurablebusinessimpact.

1.1.TraditionalstrategyversusStrategicInnovation

Differences between traditional approaches to strategy and Strategic Innovation aresummarizedinthefollowingtable:

! �5

Traditionalapproaches StrategicInnovationapproach

〈 Adoptsa“presenttofuture”orientation–takestodayasthestartingpoint

〈 “Startswiththeendinmind”–identifieslong-termopportunitiesandthen“bridgesbacktothepresent”

〈 Assumesarule-maker/taker(defensive/follower)posture

〈 Assumesarule-breaker(revolutionary)posture

〈 Acceptsestablishedbusinessboundaries/productcategories

〈 Seekstocreatenewcompetitivespace/playingfields

〈 Focusonincrementalinnovation 〈 Seeksbreakthrough,disruptiveinnovation–whilecontinuingtoexpandcorebusinesses

〈 Followstraditional,linearbusinessplanningmodels

〈 Marriescreativeinspirationatthefrontendwithprocessdisciplineatthebackend

〈 Seeksinputfromobvious,traditionalsources

〈 Seeksinspirationfromunconventionalsources

〈 Isbasedonarticulatedconsumerneeds

〈 Seeksunarticulatedandemergingconsumerneeds

〈 Istechnology-driven(seekconsumersatisfaction)

〈 Isconsumer-inspired(seeksconsumersurpriseanddelight)

〈 Mayhavea“one-size-fits-all”organizationalmodel

〈 Mayexperimentwithentrepreneurialnewventure,skunkworksorotherorganizationalstructures

1.2.SerendipitousversusStrategicInnovation

Manyorganizationsrelyonserendipitousactsofcreativitytofosterinnovation.Otherstakeanad hoc, unstructured approach,which often results in only incremental improvements thatdelivermediocreresults.

Strategic Innovation is a holistic, systematic approach focused on delivering beyond-incrementalinnovations.Innovationbecomes“strategic”whenitisanintentional,repeatableprocessthatcreatesasignificant,step-changedifferenceinthevaluedeliveredtoconsumers,customers, partners and the corporation. A Strategic Innovation initiative generates aportfolioofgrowthopportunitiesusingadisciplinedyetcreativeprocess.

! �6

IncrementalInnovation

Breakthrough

SerendipitousBreakthroughs

-Disruptivechange

-Med/highrevenuepotential

-Accidentel/Uncontrolled

StrategicInnovation-Disruptivechange-Med/highrevenue

potential-Initiatedbyorganization

UnplannedImprovements

-Incrementalchange

-Low-medrevenuepotential

-Accidentel/Uncontrolled

Incrementatlinnovation

-Incrementalchange-Low-medrevenue

potential-Initiatedbyorganization

IntentionalSeredipitous

2.TheSevenDimensionsofStrategicInnovation

TheStrategicInnovationframeworkweavestogethersevendimensionstoproduceaportfolioofoutcomesthatdrivegrowth.Thesedimensionsarethefollowing:

• AManagedInnovationProcess–CombiningNon-TraditionalandTraditionalApproachestoBusinessStrategy

• StrategicAlignment–BuildingSupport

• IndustryForesight–UnderstandingEmergingTrends

• Consumer/CustomerInsight–UnderstandingArticulatedandUnarticulatedNeeds

• CoreTechnologiesandCompetencies–LeveragingandExtendingCorporateAssets

• OrganizationalReadiness–TheAbilitytoTakeAction

• DisciplinedImplementation–ManagingthePathFromInspirationToBusinessImpact

AManaged InnovationProcess lies at the creative coreof the approach. By facilitating theinterplaybetweenexternalperspectivesandanorganization’sinternalcapabilities/practices–and by looking beyond the obvious – it is possible to inspire the corporate imagination toexploreadiversearrayofnewpossibilities.

TheprocessisdesignedandmanagedtocreateStrategicAlignment–theenthusiasticinternalsupportamongkeystakeholdersrequiredtogalvanizeanorganizationaroundsharedvisions,goals,actionsandresourceallocation.

IndustryForesightprovidesa“top-down”perspectivethatseekstounderstandthecomplexforces driving change, including emerging and converging trends, new technologies,competitivedynamics,potentialdislocationsandalternativescenarios.

Consumer/Customer Insight provides a “bottom-up” perspective, a deep understanding ofboth the articulated (explicitly stated) and unarticulated (latent or unrecognized) needs ofexistingandpotentialconsumers/customers. Italsoseeksoutemergingneeds–not justtheneedsoftoday.

Core Technologies and Competencies is the set of internal capabilities, organizationalcompetencies and assets that could potentially be leveraged to deliver value to customers,includingtechnologies,intellectualproperty,brandequityandstrategicrelationships.

! �7

A company’s Organizational Readiness may drive or inhibit its ability to act upon andimplement new ideas and strategies, and to successfully manage the operational, political,culturalandfinancialdemandsthatwillfollow.

Lastly,successwillbeenabledorlimitedbyanorganization’scapacityforeffective,DisciplinedImplementation.

Anorganizationmovesbeyondanadhocapproachto innovationwhen itbeginstodevelopand institutionalize a cultural mindset and a set of processes that support repeatable,SustainableInnovation. Thisthenbecomesafoundationforongoingcompetitiveadvantage.Visually,theStrategicInnovationframeworkisdescribedasfollows:

! �8

Consumer/Customer

InsightArticulatedand

Unarticulatedneeds,Inspiredsolutions

Disciplinedimplementation

MomentumSupport,

Strategicprojectmanagement

IndustryForesightFuture-orientedsuccessdrivers

StrategicAlignmentRapiddecisions,effectiveimplementation

CoretechnologiesandcompetenciesCapabilitiesandassets

Organizationalreadiness

Culturestructure,processes

Managedinnovationprocess

Creativemethodology,

strategicthinking

Newproductsandservices

Newmarkets

Newgrowthstrategies

Newpartnership

Newbusinessmodels

NewBusinesspractices

Newventures

Results

SustainableInnovation

2.1AManagedInnovationProcess–CombiningNon-TraditionalandTraditionalApproachestoBusinessStrategy

TheManagedInnovationProcesscoversthesequenceofactivitiesfromthebeginningofaninitiative through implementation. It goes far beyond conducting a simple brainstormingsession.Theprocesscombinesbothunconventionalandtraditionalelements. It includestheusualconsumer,markettrendandcompetitiveanalyses,butquicklylooksbeyondthem.Asaninspirationalcatalystforbreakthroughgrowth,itismaverickandentrepreneurial,rootedinaprovocative,“all-things-possible”perspectivethatdemandsradicalrethinking,challengesthestatus quo and calls for both left and right brain thinking from an organization’s keystakeholders.

As a team-based framework the approach includes facilitated workshop sessions: partinformation exchange, part exploration, part mediation, part creative invention and partimprovetheater.Thesesessionsstimulatecross-functionalteamstolookbeyondtheobviousandtoexploreandspeculateaboutfuturepossibilities.Theworkshopsintentionallyjuxtaposeunlikely, contradictory perspectiveswhich inspire new thinking and force a creative tensionthatstretchesthemindtonewlevelsofimaginationandinventiveness. Theresultingviewofthe future is then supplemented with the usual methodologies and analysis found intraditionalfuturesplanning.

2.1.1Divergentandconvergentthinking

The innovation process is divided into two broad modes of thinking: “Divergent” and“Convergent”.The“Divergent”modeliesattheheartoftheStrategic Innovationapproach.Itisopen-ended,exploratory,andinquisitive,deployingnon-traditional,creativethinkingandfuture visioning techniques. It includes “exploratory” consumer/customer insight research,qualitative exploration of industry/market trends, and speculates on possible industrydiscontinuities,etc.

It is here, with the notion of “Divergent thinking” that organizations often fail in theirattemptstoinnovate.Believingthatitisfrivolous,“bluesky”,timeconsumingandslowstimetomarket,theychoosetominimizeorneglectit.

Impatient for short-term success, driven by quarterly scorecards, or constrained by acorporatemindset that has to demonstrate activity and quickly “get to the answer”,manyorganizations find it hard to step back and diverge. This often results in predictable,uninspired, incremental innovations thatclog thepipelineand takeagreatdealof timeandresourcestomanage.

Inrealitytheycouldhavefargreaterimpacthadtheytakenthetimetodivergeattheoutset,acknowledgetheir“blindspots”andexplorepotentiallyfruitfulareas,andfillthepipelinewithwell-grounded,“biggerideas”thatoffergreaterpotential.

! �9

It is “Divergent” thinking, then, that opens the door to the possibility of identifyingbreakthroughs.Mostcompanieshavenodifficultygeneratingideasfornewproducts.Duringthis“Divergent”modeitisimportanttoexploreotherareas for innovation, such as solutions, services orbusiness models, new ways to work with externalpartners, communicate with consumers or enablefastertime-to-market. Thisistrueeveniftheeffortisfocused on new products, since these other factorsdirectly impact the success or failure of the newproductconcepts.

Subsequently, potential opportunities move through through a series of “Convergent”processes inwhichtheyareprioritizedagainstasetofcriteria.Organizationsoftenfindthisstepespeciallychallenging.Theentireprocessdeliversaprioritizedportfolioofopportunities– from short-term (low hanging fruit) to mid-term (expanding the core and beyond) andlonger-term (potentially disruptive) breakthroughs. The leading ideas are thenoftenmovedthrough a formal decision-based Stage Gate™ process until the most promising ones areimplemented.

While theelementsof theprocessgenerallyoccur inaparticular sequence there isnotonesingle,rigidroadmap–thepathisnon-linear,modular,iterative,andresponsivetotheneedsofthemoment.Itisflexibleandcreative,providingtheglue,thesparkandtheartisticmagicthatweavestogetherthedimensionsofStrategicInnovationinreal-time.

TheelementsoftheManaged InnovationProcessvarydependingonthebusinesschallenge(growth strategy, product/service innovation, businessmodel innovation, etc.), but broadlyspeakingareasfollows:

! �10

“Creativityisaboutdivergentthinking.Innovationisaboutconvergentthinking.”

–IkujiroNonaka

DivergentModeDiscoveryandexploration

ConvergentModeEvaluationandimplementation

Business&Product

Definition/Design Consumerand

CustomerValidation

ImplementationPlanning

• Defineprojectdevelopment/implementationplan&metrics

•  Identifythecriticalsuccessfactorsandsupportrequirements

• Validatewithconsumers,customersandstakeholders

• Prototyperandrefine,

• Defineportfolioroadmap

• Makestrategicdecisions

• Createbusinessvision

• Define/prioritizeopportunityplatforms/concepts

• Refine

IdentificationofOpportunities

•  Identifyopportunityareas(nearandlong-term)

• Definestrategicalternatives

IndustryForesight

• Understandemergingmarket/industrytrends,bestpractices

Consumer/CustomerInsight

• Exploreconsumer/customerneeds,motivationsandbehaviors

Scopingand

Planning

• Definefocusandscope

• Discovery,researchandanalytics

• Kick-offsession• Stagingsession

StrategicAlignment

•  Takeshort-termaction

•  Createfoundationforsustainableinnovationpractice•  Engagekeystakeholders(interviews,surveys,ongoingcommunications)

• Orchestratenewinsightsandvisionarythinking

•  Createfoundationforimplementation

2.2StrategicAlignment–BuildingSupport

“StrategicAlignment”istheprocessofengagingtheseniorleadershipteam,across-sectionoftheorganizationandkeyexternalstakeholdersinthedevelopmentofasharedvision,specificopportunityidentification,andthepathforward.

Innovationinitiatives–likeothertypesofchangeeffort–oftenfailbecausetheoutcomesare"Not Invented Here", silver bullet solutions imposed by senior management, “pet ideas”pushedthroughby individualswith loudvoices,seniorityorpolitical influence,ordevelopedoutside the organization in some sort of consultant think tank and handed down forimplementationafterafinalpresentation.Bycontrast,activecross-functionalparticipationintheinnovationprocessbuilds“StrategicAlignment”amongkeystakeholdersbothwithintheorganizationandamongkeyexternalstakeholders.

This kind of alignment galvanizes the organization, creates ownership, enthusiasm andcommitment, accelerating fundingdecisionsandbuildinga strong foundation for successfulimplementation. Buildingalignmentismorethanjustawaytoensurethatkeystakeholdersare“intellectuallyonboardandexcited”.It iscriticalforoperationalsuccess,enablingcross-functionaldecisionsandagreementonthetoughissuesaroundimplementationactivitiessuchas competencies or assets that will need to be leveraged, resource allocation, stoppingexistingprojects,rolesandresponsibilitiesornewwaysinwhichvariousfunctionswillneedtoworktogether.

Withthatinmindit isessentialtoensurethatstakeholdersareengagedinappropriatewaysandwith suitable frequency–not just invited toabrainstormingsessionasa courtesyoranafterthought.

2.1.1InternalAlignment

There are several considerations when assembling the internal team that will drive aninnovationinitiative. First, it is importanttoselectacross-functionalCoreTeamofvisionary,energeticchangeagentsandfuture leaders– inspiredand inspiring individualswhowant tomakeadifference.Seconditiscriticaltochooseamixofsenioritylevels–typicallyfromseniorto middle management to lower level employees that are often closer to the consumer/customer. Third,asuccessfulCoreTeamconsistsoffourdifferentcategories:subjectmatterexperts, decisionmakers, implementers and not least, “naïve” perspectives –maverick free-thinkerswhoseroleistochallengetheteam’sincomingbeliefsandassumptions. Fourth,theteam will need a balanced combination of thinking and problem-solving styles –includingmindsetssuitableforexploratorythinking inambiguous,speculative“frontend”settings,aswellasthemoreanalyticalmindsetsrequiredduringimplementation.

Fifth,theteamcaptainshouldconsiderincludingteam1–2membersfromdifferentbusinessunits,geographiesorsistercompanies. InadditiontotheCoreTeam,anExtendedTeamof

! �11

internalopinionleaders,supportersandevangelistsshouldbeappointedtoactas“functionalambassadors” to represent the interests of (andprovide information to) their respective areas inadvanceoftheimplementationphase.

To ensure ongoing support, it is imperative at thebeginning to establish executive-level sponsorshipideallyfrommorethanonefunctionalarea.

2.2.2ExternalAlignment

Insomecases itmaybe importanttobuildexternalalignmentwith–andtogather insightsand ideas from --partner organizations by formally making them part of this co-creationprocess. Thiswould call forbuilding aCoreor ExtendedTeam that includes representativesfromtheorganization’ssupplier,channel,manufacturingorpackagingpartnersoradvertisingorbrandingagency.

2.2.3ParticipantsintheStrategicInnovationprocess

InordertoenableIndustryForesight,CustomerInsightandStrategicAlignment,theStrategicInnovationprocessengagesabroad rangeofparticipantsandperspectives fromwithinandoutsidetheorganization,asfollows:

! �12

“PeopleSupportWhatTheyHelpCreate.”

–Anonymous

ProcessLeader

InternalStakeholders

ExternalParticipantsInternalParticipants

ExtendedteamLiaisontointernalstakeholders–

functions,levels,geographies,busines

units

ConsumersCurrent,emergingand

potential

CoreteamCross-functionalteamofchange

agents

ExternalstakeholdersCustomers,retailpartners,strategicalliances,suppliers

ExternalthoughtleadersVisionaries,practitioners,academics

2.3IndustryForesight–UnderstandingEmergingTrendsSurprisingly, many organizations do not seriously develop a point of view on where theirindustryisheading,rarelylookingbeyondtheirownboundaries,toobusyfightingtoday’sfirestotakethetimetotrulyunderstandwhat isdrivingtheiroperatingenvironmentandhow itmightevolve. Whilemanagersarebusymanaging,nobodyisbusy“envisioning.”Itisakintosittinginasmallsailboatunawareoftheweatherconditionsanddangersthatlieahead.

“IndustryForesight”isa“top-down”approachthatexploresthedrivers,trends,enablersanddislocationswithinoneormoreindustries. Theworldofmeteorologyprovidesacompellinganalogy. The ongoing monitoring of a complex, intertwined set of meteorological forcesallowsus todevelopaviewpointhow theymaycollide to impactourworld in termsof theweather. Similarly, visionary organizations establish a process for monitoring the complexinterplayofkeytrendsthatmaypotentiallyimpacttheirbusiness.Itisinlookingattheforcesof deregulation, industry convergence and emerging markets, and in exploring theintersectionsofsocial,demographic,technical,environmental,political,competitiveandothertrends that potential “white space” opportunities are revealed. Since today’sworld is notlinear,wecannotextrapolatethepasttopredictthefuture.IndustryForesightthereforegoesbeyond traditional market trend research by taking a speculative, “what if” perspective,seekingout–andinsomecasesevenintentionallycreating–industrydisruptions.

Monitoring emerging trends enables an organizationboth to avert threats to the existing business and toidentifypotentialmarketopportunitiesthatmayarisewhen industry trends converge. Forward-lookingorganizations have a curiosity and a thirst to engagewithfreshperspectivesfromtheoutside.

They actively seek out opportunities to stretch theirthinking and tomove beyond their own set of inbuilt

experiences, beliefs and “blind spots.” This is central to the Strategic Innovation approach.When an organization looks beyond its own orthodoxies, technical capabilities, businessboundaries and historical operating practices it dramatically raises its ability to identifyplatformsforbreakthroughgrowth.Forexample,anorganizationisbeginningtotakeamorefuture-orientedviewoftheworld–andthepossibilitiesitmayoffer–whenitstartstobringunfamiliar, emerging technologies onto its radar screen, rather than relying on thetechnologiesithasusedinthepast.Similarly,itmaybeawareofseveralinterestingexternaltechnologiesbutmaynothavedonemuchtoactivelyexplorethepossibilitiesof integratingthem.

! �13

“Iskatetowherethepuckisgoingtobe,notwhereithas

been."

–WayneGretzky

2.3.1Lookingbeyondtheobvious

Thepossibilitiesstarttobecomeinterestingwhenanorganizationlooksoutsideitshistorical,core business(es) and starts thinking about “adjacent worlds.” For example, a foodmanufacturerwithastrongretailchannelinfrastructuremaymovebeyonditsfocuson“newproducts thatwill dowell in existing segments and channels”, and start thinking about thepotentialnewtargetsandchannelssuchasschoolsormedical institutions. Therearemanykinds of adjacency moves, such as new categories, new geographies, new channels, newbenefitsandnewproducts.

While itmightbe easy todismiss ideas that are “toofuturistic”theopportunitiesforlong-termgrowtharecompellingwhenanorganizationstarts tothinkevenmore expansively and explore less obvious, “non-adjacent worlds”. For example, that same foodmanufacturer may think about blurring productcategories or industry boundaries by looking intoopportunities at the intersections of aromatherapy,information technology, social media, and consumer electronics, fashion, the arts,nanotechnology,theHipHopcommunityorwaystoapplyemergingnon-foodtechnologies.Breakthroughs often come from making non-obvious connections that spark imaginativethinking. This is not to suggest that the food manufacturer move into the consumerelectronics industry–yet it isentirelyfeasibleto learnfromanalogiesfromthatworld,ortoenterintounusualpartnershipsinawaythatopensupnewpossibilities.Sincecompetitorsareprobablynotthinkinginthisway–andcertainlynotjuxtaposingthissamesetof“worlds”–theresultingviewpointisproprietary.

Organizationstodayhavenotolerancefor“bluesky”dreamsthatarenotactionable.Thekeyis to create a long-termvision for the future and to thenpragmatically “bridgeback to thepresent”bydefiningshort-termprojects thatgenerate revenue (lowhanging fruit). Internalsponsorsaremuchmorewillingtoengageinvisionarythinkingwhentheyareassuredthatitwillbeaccompaniedbydemonstrableshort-termvalue,aswellastightdescriptionsofrolesandresponsibilities,projectplans,milestones,metricsandbusinesscasesforthelongerterm.

Onecompellingforumforvisionaryexplorationthat“looksoutsideandahead”isacarefullyorchestrated “Thought Leader Panel” in which an organization’s change agents andinnovators are brought face-to-facewith external industry “Thought Leaders” to challenge,speculateandcollaborateinashirt-sleevesworkingenvironment.

This non-traditional panel process brings together a team of forward-looking externalprovocateurs and experts –visionaries in their respective fields –to introduce freshperspectives and insights, challenge the organization’s thinking, and collaboratively explorepotential growth opportunities, new businesses, new products/services, and innovative

! �14

“Aproblemcannotbesolvedbythesameconsciousness

thatcreatedit.”

–AlbertEinstein

businessmodels thatmaybe revealed at the intersectionof differentworlds and emergingtrends.

Whiletheobviousapproachistomanagethiskindofforumasatraditional“paneldiscussion”,suchanapproachfailstodeliverinseveralways.Oneexampleisthatitdoesnotfullyexploitthepotentialinteractionsbetweenexternalparticipants.Thesparkofinspirationcomeswhendifferent perspectives on the future are vociferously debated, and when a variety of non-traditionaltechniqueshelpparticipantsmovebeyondfactsandspeculateandvisualizeradicalpossibilities. Clearly, selecting and combining an imaginative and provocative set ofperspectivesiscriticaltosuccess.

ThroughIndustryForesight,then,anorganizationcandevelopacompelling,proprietaryviewofthefuture,enablingittothendefineawell-groundedandpragmaticparticipationstrategy.

2.4Consumer/CustomerInsight–UnderstandingArticulatedandUnarticulatedNeeds

Most organizations would like to see themselves as consumer-driven, and aspire to createproducts,servicesandsolutionsthataregroundedinconsumerneeds.Inrealityorganizationsoften have scant understanding of consumers’ deep-seated values, motivations, behaviors, perceptionsand their emerging needs. Technology-drivencompanies in particular could benefit greatly from a‘design thinking’ approach that thinks first aboutconsumer/customerneedsandsecondaboutenablingtechnologies.

“Consumer/Customer Insight” is a qualitative,“bottom-up”approachthatleveragesinsightsintothebehaviors, perceptions and needs of current andpotential consumers/customers by involving them astrue partners in the innovation process. It is a non-traditional, imaginative approach to research thatseeksadeepunderstandingofneedsand thedriversof behavior at a level well beyond what theyconsumers/customers are able to articulatethemselves.

While it is important to include traditional consumerdataintheinnovationprocess,manyorganizationsareuncomfortable experimenting with approaches theyseeas lessblackandwhite.Consumer/customer involvement inproductdevelopmentoftenconsists of traditional focus groups, panels or web-based surveys, and frequently goes no

! �15

“Marketsareconversations.”–ClueNo.1,Cluetrain

Manifesto

“Marketsconsistofhumanbeings,notdemographic

sectors.”–ClueNo.2,Cluetrain

Manifesto

“Therearetwoconversationsgoingon.Oneinsidethecompany.Onewiththe

market.”–ClueNo.53,Cluetrain

Manifesto

further thanaskingconsumers/customers tovalidate internally-generatedproductconcepts,orspecificexecutionssuchasfeaturepreferences,packagingoradvertisingdirections.

While engaging consumers at the back end to validate ideas with is essential, limitingconsumerinteractionstothislatestageintheprocessisamissedopportunity.TheStrategicInnovation approach uses conventional consumer forums (focus groups, interviews, panels,etc.) –but in far more imaginative ways, and much earlier in the process. The goal of this“exploratory” consumerwork is to spark fresh thinking about future possibilities that thentranslate into growth strategy and new product categories, etc. Experimenting with lesscommon ‘design thinking’ techniques such as ethnographic research, or deep motivationalwork will help gain stronger insights and identify opportunities and concepts that have agreaterdegreeofemotionalresonancewithconsumers.

Equally,manyconsumerresearchprogramsarecontentwithhearingwhatcustomersactuallysay,butdonotexplorethefertilegroundoftheirunarticulated(latent)needs.The“VoiceoftheConsumer”hasbecomeastandardpartofthetoolkitofmarketersandresearchersacrossmostindustries,butworkingwiththespokenwordisobviousandrelativelystraightforward.Furthermore,sincecompetitorsaredoingittooitprovideslittlecompetitiveedge.

Thepracticeofethnographicresearchisgainingground–morerapidlyinsomeindustriesthaninothers.Ifconductedpoorlytheoutputmaybehighlyambiguousandtheimplicationsmaynot be clear or actionable. Despite the opportunity ethnographic research offers forbreakthroughinsights,manyenterprisesarestillreluctanttoconsideritasaviableapproach.

Consumer/customerparticipationincorporatestrategydevelopmentispracticallyunheardof.Thereisatremendousopportunityininvolvingconsumers/customers(andsuppliersandotherexternal stakeholders, etc.) as true partners in the innovation process by adopting aConsumer/customerInsightapproach.

Theapproach isnot limited toconsumers/customers,butcanbeextended toglean insightsfrom many other types of stakeholders –examples include: channel partners, suppliers,employees,investors,earlyadopternon-users,etc.

2.5CoreTechnologiesandCompetencies–LeveragingandExtendingCorporateAssets

A solid understanding of a company’s core technologies and competencies provides apragmatic filter against which imaginative ideas can be assessed and shaped into practicalinvestment-worthy opportunities. Even when an organization possesses deep insight intoconsumer/customerneedsandfuturetrends,transformingideasintoactionisanuphillbattleunlessthereisakeensenseoftheorganization’sinherentstrengthsandabilitytoleverageitscoreassets.

! �16

It is essential to not just consider an organization's technologies but also other capabilitiesthatareintegraltosuccess. Suchcompetenciesmayincludeintellectualpropertyorpatents,uniquerelationshipswithsuppliersandpartners,brandequity,speedandoperationalagilityoruniquebusinesspractices. In largeorganizationswithmultiplebusinessunitsonegroupmayhave developed its own operational processes and have valuable competencies and bestpracticestosharewithotherpartsoftheenterprise.

In order to be viable, therefore, any innovations must possess a tight link to corecompetencies. This does not only mean technologies and competencies the organizationpossessestoday.Itwouldbeshortsightedtoignorethesignificantopportunitiesthatcouldbepursuedbypartnering,outsourcingoracquiringnewtechnologiesandcompetencies. Manyorganizationsinadvertently limittheirgrowthoptionsbytryingtobeself-sufficientorbynotbeingopentoexpandingtheirbaseofestablishedexternalpartners.

2.6OrganizationalReadiness–AssessingTheAbilitytoTakeAction

Thereisatimeforinspireddreamingandhigh-mindedvision development and opportunity identification(during“Divergent”thinking)andatimefordown-to-earthpragmatism(during“Convergentthinking”).Itiscriticaltodrawuponeachmindsetattheappropriatetime.

During the pragmatic (“Convergent”) stage it isessentialtohaveaclearunderstandingofacompany’s“OrganizationalReadiness”–itsabilitytoactuponandimplementinnovativeideasandstrategies,andtosuccessfullycometogripswiththeoperational,political,culturalandfinancialdemandsthatwillfollow. Evenwiththemostinspiredvisionandinnovativeproductsanorganizationmaysimplynotbeinaposition

toeffectivelyimplement.Theapproachthereforecallsforanassessmentof"OrganizationalReadiness"alongthreedimensions:

•Cultural readiness. Some organizations havedevelopeda“cultureof innovation”,whilemosthavenot.Thisreferstothebehaviors,mindsetsandnormsthatallowindividualsandteamstothinkimaginatively,to take prudent risks, and to seek out, create andintroduceinnovativesolutions.Itincludessuchfactorsas: senior leadership’s operating styles and directives

(bothspokenandunspoken),long-versusshort-termfocus,employeeprofilesandthinkingstyles,corporatevalues(especiallyontheroleofinnovation),mentalmodelsaboutbusinessboundariesand“thewaywedothings,here”,biasforcollaboration,decision-makingstyles,

! �17

“Everyonewantstogrow;mostpeoplearejust

unwillingtochangeinordertodoso.”

–Anonymous

“Therealdifficultyinchangingthecourseofany

enterpriseliesnotindevelopingnewideas,butin

escapingoldones.”

–JohnMaynardKeynes

bureaucracy levels, internal power struggles, political agendas, willingness to embracechangeandpenchantforaction.

• Processreadiness.Thisreferstothebusinessprocessesandpracticesthatenablefunctionalgroupstooperateeffectivelyandcollaboratetowardacommongoal–aswellasarobustsetofmethodologiesandtoolsspecificallydesignedtodriveinnovation.

• Structural readiness. This refers to the organizational structures and technologies thatsupport innovation aswell as levels of flexibility to assign available and qualified staff tohigh-priorityprojects–withoutquestiononeoftheleadingbarrierstoimplementation.

Understanding an organization’s readiness to act informs initial decisions about projectscoping,timehorizonsandthedesiredlevelofbreakthrough,setsexpectationsabouthowtoeffectivelyworkwiththeCoreTeamandotherstakeholders,andenablesarealisticapproachtoimplementation.

2.7DisciplinedImplementation–ManagingthePathfromInspirationtoBusinessImpact

While it is not easy to produce creative, visionary thinking, it is equally challenging tosuccessfully implement that thinking in a way that creates meaningful business results.Generatingideasisnotdifficult.Itisintheactofexecution–wheretherubbermeetstheroad–that innovationeffortsfrequentlyfail. It isherethatanorganizationmustdemonstrate itsability to translate a Power Point presentation full of good ideas to the bottom line, bytenaciouslynegotiatingtheobstacle-riddenpathtobusinessimpact.

In the context of Strategic Innovation, the term “implementation” includes a broad set of‘socialization’activitiestobuildinvolvementsupportandacrosstheorganization. Thesemayinclude:engagingotherstakeholderfunctionsorbusinesses;transitioningtospecificprojectsor programs; technical product development and design; developing a relevant valuepropositionthroughconsumer-basedrapidprototyping;buildingabusinesscase;developingbranding,marketingand channel strategies; definingevaluation criteria and successmetricsappropriate for a new venture (avoiding overreliance on traditional financial metrics),developingnewbusinessprocessesorcreatingorganizationalstructuresrequiredtosupportthe opportunity; hiring and training; and establishing feedback loops for continuousimprovementtotheinnovationprocess.

The work of Strategic Innovation often has profound implications in terms of operational,structuralandbusinessprocesschange.Forexample,arelativelystraightforwardnewproductdevelopmenteffortmaynotbeasclearcutasitwouldseem,sinceitmayraiselarger,systemicissuesandcallforthedevelopmentofsupportstrategiesthatwillenablethesenewproductsto make their way through the commercialization process (such as brand strategy review,channelrationalization,etc.).Insomecasesaninnovationeffortmaycallforthecreationofa

! �18

new “business-within-a-business” (e.g., an entrepreneurial, new venture-type structure thatstandsapartfromtheprincipalbusiness).

Whenanorganizationhasput thefinishing touches toits roster of innovative ideas – for potential newproducts, growth strategies, new “white space”opportunities to pursue, new markets to enter, newprograms to launch or new business processes tocreate–itfindsitselfnowatthecriticaltransitionpointfrom “idea generation” or “strategy development” to“project management.” This is where the innovation

processtransitionsfromambiguousandexploratorytoconcreteandoperational.

2.7.1KeyconsiderationsforimplementingStrategicInnovationinitiatives

Key considerations for implementing Strategic Innovation initiatives are: implementationskillsets andmindsets,maintainingmomentum, a formal projectmanagement approach, anunderstanding of organizational priorities and decision making processes, and a practicalStageGate™process.

2.7.1.1Implementationskillsetsandmindsets

Different individual skillsets and mindsets are needed at different stages of the StrategicInnovation process.Whilemany of the early teammemberswill play a role throughout aninitiative, additional individuals will join the team as the process unfolds. The task of“Disciplined Implementation”calls forpragmaticoperationalskills,exemplified in individualswhoareadeptatworkingcloselywithotherstotenaciouslygetthejobdone,andwhohavethe energy, tenacity, persuasion and communications skills, political savvy, personalrelationshipsandcredibilitytoovercomeorganizationalroadblocks.

2.7.1.2Maintainingmomentum

Attheendofthe“Divergent”phasethereisasignificantriskoftheeffortgrindingtoahalt.There are numerous causes: organizational inertia, higher priorities, political agendas andcompeting demands for personnel or financial resources. There are several strategies formaintainingmomentum,which include: building Strategic Alignment throughout the earlierstages; leveraging the organization’s implemention-related Best Practices; demonstratingearly successes through pilot efforts;maintaining internal visibility through awell-executedcommunicationsstrategythatkeepsseniormanagementandkeystakeholdersinformedand

! �19

“Geniusisonepercentinspirationandninetynine

percentperspiration.”

–ThomasEdison

committed;candidlystatingthecriticalsuccessfactorsandrequirementstosupporttheeffortandobtainingseniormanagement’searlycommitment.

2.7.1.3Aformalprojectmanagementapproach

At the end of the “Divergent” phase the Strategic Innovation effort changes from being asinglethreadofactivityandtakestheformofmultipleconcurrent“daughter”projects.TheseneedtobetightlymanagedbypayingattentiontoestablishedProjectManagementpractices,including: realistic expectations in timing and performance goals; appropriate resourceallocation –staffing, budgets and access to information consistent with the scope of thedesiredbusinessimpact;andaccountability,progressmeasurementandstatusreporting,bothbeforeandduringthepilot/roll-outphasesandthroughoutthein-marketactivities.

Theareaofhumanresourceallocationinparticulariswhereimplementationeffortsoftenfail,withstaffexpectedto fulfil their regular“day job”responsibilitieswhilealsobeingaskedtocontribute toa strategiceffort.Thechallenge raisesorganizational issues such theneed forredesignedpersonalperformancemeasurementprogramsandassociatedrewardsystems.

2.7.1.4Anunderstandingoforganizationalprioritiesanddecisionmakingprocesses

It isessential tobeawareof thewayanorganizationprioritizes,approvesandcontinues tosupportnewinitiatives.Anyinitiativeispotentiallyatriskasmarketconditionschange,ifnewopportunities or threats trigger a shift in priorities, if budget or other constraints suddenlycometotheforefront,or if thedecisionmakingprocess lacksrigor.Withmuchatstake it isclearlyimportanttofindwaystobeawareofandtoproactivelyreducetheserisks.

2.7.1.5ApracticalStageGate™process

Asoundend-to-endinnovationinitiativeistypicallycomprisedofanexploratory,“fuzzyfrontend” process followed by some kind of Stage Gate™process.Itisimportanttorecognizethedifferentrolesofthesetwodistinctprocesses.

Amajorpurposeofthefrontendprocessistoidentifygood,well-groundedbusinessopportunitiesandideas–rangingfromincrementaltobreakthrough.Thefront-end process can be applied to identifying a widespectrum of opportunities including products andservices,newventures,businessmodels,partnershipsand operational practices. Its other purposes are tobuild alignment and create momentum aroundopportunities,tonarrowthefunnelofpossibilitiesand

! �20

“Today’ssuccessfulbusinessleaderswillbethosewhoaremostflexibleofmind.They

willhavetheabilitytoembracenewideasand

routinelychallengeoldones.Theywillbealerttolearning

fromothersandquicklyadaptfromthebest.”

–TomPeters

todefinethestrategicroadmapandhigh-levelimplementationplan.

Bycontrast,theStageGate™processmostoftenfocusesonnewproducts/services. Itcomesinto play once new product/service concepts have been identified, and provides anoperationalroadmapfordrivingtheseprojectsfromidea/concepttolaunch,withtheintentionofimprovingdecision-makingandefficiency.However,inmanyorganizationstheStageGate™process is filledwithmediocre ideas that create ‘busywork’ andmake poor use of humanresources. In short there are too many ideas, and not enough ‘big ideas.’ To derive thegreatestbenefitfromaStageGate™processitiscriticaltoensurethatthefrontendprocesshasbeenrobust,strategicanddivergentenoughtodeliverhighqualityideas,ideallygroundedinwell-conceivedplatforms.

Stage Gate™ processes have brought much-needed rigor to the concept evaluation phase,particularly toorganizations thatpreviously lackeddisciplinearoundgo/nogodecisionsandimplementation. However, these processes may have significant limitations, frequentlybecauseofhumanfactorsandinflexibilityarounddecisionpoints. InstitutingandapplyingaStageGate™processwithoutacriticaleyecanactuallycreatesignificantissues.

! �21

3.SustainableInnovation–BuildingaFoundationforOngoingCompetitiveAdvantage

Anorganizationcannotcountonbuildingasecurefuture inthemyopicbeliefthatwhathasworked in the past will continue to work in a rapidly changing and increasingly uncertainworld. It would be foolish to rely on “innovation by accidental good fortune or occasionalinspiration”.Equally,itmakesnosenseto“callinthecreativityconsultants”onceayearforafiredrillwhensomeoneintheorganizationfeelsitistimefor“anotherroundofinnovation.”Theseapproachesareneitherpragmaticnorsustainable.

To succeed in the long term, it is necessary to move beyond an ad hoc or unstructuredapproach to innovation. An organizationwill need to intentionally and deliberately foster acultureofinnovationandtodevelopandinstituteappropriateprocesses,methodologiesandsupporting technologies. There are many ways to approach this including: executiveeducation/leadership development; immersion visits to Silicon Valley; small- or large-scaleinnovation projects that take an ‘Action Learning’ approach; and the development of acollaboration-based knowledgemanagement infrastructure – an “Innovation Community ofPractice” that supports the sharing of innovation best practices, consumer and marketresearch and potential opportunity platforms, and facilitates collaboration and imaginativethinkingacrosstheorganization.

This “learning focus”will result in deep-seated change throughout the organization. It willtakeasignificanttimecommitment,willrequireimpassionedinternalchampions,andmustbesupported at the top and throughout the organization, both in theory and in day-to-daypractice. Itwillbenecessarytocontinuouslymonitor, improveandevangelizetheseefforts.Therewillbeaneedtoregularlycommunicatethelabors,thetrials,thefailuresandthefruits.ThoughitmayseemadauntingtasktherewardsofsustainableStrategicInnovationaregreat.

Thefuturebelongstothoseorganizationsthatpassionatelyembraceaninnovationmindsetasembodieddailyintheheartsandmindsandactionsofitschangeagentsandfutureleaders.

3.1ThePathtoStrategicInnovation

Manyorganizationswantto“becomemoreinnovative”butdon’tknowwheretostart.Whileanobviousfirstthoughtistointroduce“creativitytraining”,theeffectsareusuallyshort-lived.Returnoninvestmentisalmostimpossibletomeasureandthereislittleimpactonthebroadcorporateconsciousness.Frequently,anorganization’sinternalstructures,policiesandcultureinhibitinnovation.

! �22

Most organizations are already implementing at least some dimensions of the StrategicInnovationapproach,thoughoften inanadhocmannerwithoutanoverarchingframework.Sohowcananorganizationadvanceitscurrent innovationpracticesandmovefartheralongthepathtowardsustainable,StrategicInnovation?

3.2InnovationAssessmentandBenchmarking

ThestartingpointistoconductfocusedInnovationAssessmentandBenchmarkingactivities.This process has four-steps: an internal innovationdiagnostic that looks at theorganizationandassessesthecurrentstatealongseveraldimensions;externalbenchmarking(bothinsideandoutsideyour industry);developmentandadaptation thatdefinesnewpracticessuitablefor your organization; institutionalization – shepherding new practices into operation andcontinuouslyimprovingthem.

An Innovation Diagnostic provides a baseline that describes existing “InnovationCompetenciesandChangeReadiness”–anorganization’sabilitytoeffectivelyinnovateandtoembracenewpractices.Theprocesstypicallylooksatthreetypesofinnovationcapability:

• Cultural –Do the organization’smindset and norms allow individuals and teams to thinkimaginatively, to take prudent risks, and to seek out, create and introduce innovativesolutions?

• Process –Does the organization have the general business processes and practices thatenablefunctionalgroupstooperateeffectivelyandcollaboratetowardacommongoal–aswellasarobustsetofmethodologiesandtoolsspecificallydesignedtodriveinnovation?

• Structural–Istheorganizationdesignedtoallowsmart,flexibledecisionsabouthumanandfinancialresourceallocation?Dosupportingtechnologieshelporgetintheway?Howeasyis collaboration and communication across functional silos? Should the organizationconsider piloting different kinds of structures to support innovation? Examples of suchstructuresincludeinnovationprojectteams,expertnetworks,sharedservicesorganizations,innovationcommunitiesofpractice,ambidextrousorganizationsandinnovationcouncils.

3.3EndNote

Strategic Innovation isnotanend-state. Rather, it isa journeyofopen-mindedexploration,experimentation, thinking, decision-making, action, results and learning,with the cycle thenrepeating.

While therearenumerouswayseffectively tomeasure thebusiness impact resulting fromaStrategicInnovationinitiative,anorganization’sabilitytosuccessfullyinnovateislesstangible,measuredintermsofprogressovertimeratherthaninabsolutes.

! �23

The journey of Strategic Innovation calls for learningby doing – if an organization approaches a businessissue and adopts the framework as its set of guidingprinciples, the business impact will be evident andthere will be an opportunity to incorporate thelearningasthefirststeptowardbuildingafoundationforsustainableinnovation.

! �24

“Ajourneyofathousandmilesmustbeginwitha

singlestep.”

–LaoTzu

4.Mini-diagnostic:DoesyourorganizationpracticeStrategicInnovation?

Isyourorganizationsetupto innovatestrategically?Thefollowingbriefassessment isnotasubstituteforanin-depthInnovationDiagnostic.However,itwillprovidea“gutfeel”ofhowyou rate your organization along several critical dimensions. More importantly, it maychallenge your assumptions about what it takes to create the culture, processes andstructuresthatsupport innovation,and inspireyouto lookatyourorganizationwithamorediscerningeye.

Rateyourorganizationonthefollowingquestionsusingtheseguidelines:1=StronglyDisagree

2=Disagree

3=Agree

4=StronglyAgree

Score (1-4)

1.ManagedInnovationProcess

Myorganization’sapproachtostrategy,newproductdevelopmentandprocessimprovementgoesbeyondtraditionalplanningmethodsandtakeanexternally-focused,exploratoryapproachthatchallengesthestatusquoandcreativelyinspiresnewthinking

2.StrategicAlignment

Our leadershipsupports (andactivelydrives)acollaborativeculture thatencouragesdifferent departments working cross-functionally to identify and develop innovativesolutions

3.IndustryForesight

My organization has a systematic process for actively monitoring and exploringemergingtrendsanddevelopingalternativescenariosthatrepresenteitherthreatsoropportunities

! �25

4.Consumer/CustomerInsight

Myorganizationdirectly involves consumers/customers (bothexistingandpotential)asanintegralpartoftheinnovationprocessasameansofidentifyingbotharticulatedandunarticulatedcustomerneeds

5.CoreTechnologiesandCompetencies

Myorganizationclearlyunderstandsitscorecompetenciesandhasexplicitlyoutlinedthelinkagebetweenitslong-termstrategicgoalsanditsshort-andmedium-termR&Dinvestmentsandtechnologystrategies. Myorganizationactivelyexploresnewwaystoextendbeyondourexistingcompetencies

6.CulturalReadiness

My organization demonstrates an innovative mindset, a bias for collaboration, aninclusive, non-bureaucratic decision-making style, a willingness to embrace change,andapenchantforaction

7.ProcessandStructuralReadiness

Myorganizationhas(ordemonstratesamindsetthatiswillingtodevelop)appropriateoperational processes and functional structures and allocates adequate staffing,fundingandmanagementsupporttohighpriorityinnovationinitiatives

8.DisciplinedImplementation

My organization consistently demonstrates its ability to createmeasurable businessimpactbytakingadisciplinedapproachtotheimplementationofstrategicthinking

9.InnovationGoalsandMetrics

Myorganizationhasestablishedinnovation-relatedgoalsandmeasures(forexample:“X%ofrevenuesmustcomefromproducts/servicesintroducedoverthepastYyears”)

10.CapacityforSustainableInnovation

Myorganizationtakesthetimetolearnfromitsinnovationeffortsandiscommittedtodeliberately building an innovation-based culture and instituting a set of innovation-focusedmethodologies

Scoretotal(maximum=40)

! �26

ScoringKey35-40:StrategicInnovator

Your organization understands the core elements of strategic innovation and is wellpositionedtoremainaleadinginnovator.StrategicInnovationisinherentinyourcultureandyoumaybefeelingconfidentaboutyourcurrentgrowthstrategies.

What to do next? Ensure your organization continues to seek breakthrough opportunities“beyond the leading edge”, anticipates consumer/customer needs, cannibalizes its ownproductsandservicesanddrives industry standards. Continue to incorporateyour learningandrefineyourprocessesforsustainableinnovation.

29-34:InspiredInnovator

Your organization demonstrates some solid innovation practices but there are areas ofweakness.Your“opportunitypipeline”mayberelativelyfull,thoughyoumaybefocusingonincrementalinnovations.

Whattodonext?Focusontheareasofweaknessandbegintodefineaprocessforsustainableinnovation. Assesstheratioof“big ideas”to“small ideas”tosee ifyouhavebeen lookingbroadlyenough.

24-28:AspiringInnovator

Sparks of innovation exist, though your results may be skewed toward incrementalimprovementsratherthangame-changinginnovations.Equally,yourapproachmaybeadhocandunstructured.

What todonext? Takea systematic viewof the core strategic, consumer/customer-focusedandorganizationalfactorsnecessaryforStrategicInnovationandseekout“lowhangingfruit”opportunities. Take the time to incorporate your learning and start to define a process forsustainableinnovation.Assesstheratioof“bigideas”to“smallideas”toseeifyouhavebeenlookingbroadlyenough.

<23:ChallengedInnovator

Whileyoumayrecognizethatinnovationisimportant,yourorganization’sculture,structuresandprocessesdonotsupportStrategicInnovation.Innovationisadhocandunstructuredandyourresultsmaybeuninspiring.

What to do next? Dedicate resources to a small-scale, focused innovation initiative withmeasurable deliverables. Take the time to incorporate your learning and start to define aprocessforsustainableinnovation.

! �27