Why Is It Critical To Align Innovation Strategy With Business Strategy?
Because of how quickly the world is evolving, nearly every well-established business realizes it must constantly pursue new forms of innovation to survive. Executives, managers, and workers all over the world are putting in extra effort to learn the secrets of successful innovation.
Oftentimes, the lessons that are surfacing from this work are counter-intuitive and question many commonly held beliefs. Strategy Analysis reveals that money spent on research and development (R&D) does not necessarily translate into financial benefits from new innovations. Spending patterns are more important than total budgets when evaluating businesses.
Another thing we’ve learned is that it takes more than just teaching workers the lean startup and design thinking methodologies to be successful. Leaders must adjust the way they handle innovation in the workplace to better fit the needs of their creative employees.
Collaborative forms of innovation, such as open innovation and design thinking, are becoming increasingly popular among businesses. Businesses that encourage employee participation in the innovation process are twice as likely to anticipate higher annual growth rates.
We no longer see technology as a tool for keeping up with the latest industry developments and our rivals. Today, it is recognized as a major factor in fostering creative breakthroughs. Executives are also coming to the realization that it is crucial to create novel business models in addition to advancing technological capabilities.
Why Is Aligning Innovation Strategy With Business Strategy Crucial?
Big investment companies aren’t throwing money at innovation projects out of boredom. Their investments are made with a long-term view, with the intention of ensuring the company’s continued viability and expansion. The fact that executives prioritize revenue growth as the primary indicator of innovation success is indicative of this drive.
While it may be required for businesses to set up R&D labs or corporate accelerators, this is not enough to guarantee success. Some of the most successful leaders in the field of innovation have the mindset that new ideas can spring up anywhere.
However, “random acts of creativity” do not always pay off. Companies shouldn’t just throw money at a bunch of unrelated ideas. There needs to be synergy between our approach to innovation and the company’s larger goals.
What Are The Strategic Options?
But how can businesses create a plan for innovative growth? Is there a range of tactics at their disposal? Tech giants like Apple use their unparalleled understanding of consumer wants and needs to inspire groundbreaking new products. On the other hand, companies like Samsung aim to innovate by enhancing their previously successful offerings.
Business leaders should be transparent about the strategy they’ve settled on. Further, business leaders must link their innovation strategy to the company’s overarching business objectives. They need to offer explicit direction on how innovation fits into the larger portfolio of products and services offered by the organization. Long-term innovation is impossible for businesses until they attain this kind of strategic alignment.
Reason For The Misalignment Of Innovation And Business Strategy
1. Shift in leadership
A leader’s own agenda can have a positive or negative impact on the organization as a whole. There have been numerous cases where a company’s leadership decided to shelve a product or scrap an idea because of disagreements over where the company’s resources were best put to use. Then, a new leader comes in a year or two later, notices the inconsistencies, and decides to roll back the prior leadership’s actions. As a result of this shift in leadership’s priorities, ongoing innovation projects are no longer in line with the business’s overall goals.
2. Deficiencies in sharing the company’s vision and goals
Deficiency in sharing the company’s goals and visions could be among the most common reasons for alignment. It’s highly likely that the innovation teams will stray from the intended track when the business strategy is not made apparent to them. Organizational leadership must have a firm grasp on the company’s long-term goals and objectives, and be able to effectively convey those objectives to workers at all levels. Without this direction from on high, teams are more likely to stagnate, lose focus, and waste time and money.
3. Failure to share innovation strategy
In terms of running a business, strategy is just one facet. If teams don’t receive clear instructions on how to innovate, they may struggle to produce work that contributes to the company’s overall objectives. While the corporate strategy is crystal obvious, the desired results and expected outcomes from an innovative standpoint are not. Every business owner understands the importance of innovation, but what does it actually entail? The issue emerges when businesses don’t make deliberate choices about where they want innovation to reside.