Innovation strategy... that sounds good! Every child knows that without a strategy, you're just bumbling along without a plan, so every self-respecting company and organization gives itself a strategic orientation - the corporate strategy. And what again was the difference between this and an innovation strategy?
Let's consult the good old Merriam Webster dictionary and find out that the ancient Greek “Strategia” stands for "The Art of the Commander" and describes a general plan for achieving an overall goal under conditions of uncertainty. Today, the term is found mainly in military operations, in sports, and in games and business.
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But always, strategy defines a larger plan supported by tactical maneuvers with the goal of implementing a vision despite a high number of unknowns. By this definition, business strategy and innovation strategy are identical for now. However, if we go into detail, we see that corporate strategy sets a larger goal to be realized through the specific behavior of the company in the market. The innovation strategy, in turn, aims to support the corporate strategy through a larger plan for innovation and improvement in the company. Both are designed to move the company forward.
Unfortunately, it's not enough to come up with a pretty strategy, define milestones and then wait for the result, because we remember there was something about "conditions of uncertainty" and a "high number of unknowns". And that brings us to the top 5 strategy mistakes, compiled by Jesse Nieminen at the software company Viima in Finland.
Modified after Nieminen / Viima
1) Daydreaming. This is the classic case where management has a big, bold vision, but neither a clear idea nor any concrete plans of how it will achieve that goal. It's immediately clear to employees and front-line management that this strategy is not grounded in reality (but mostly in cloud cuckoo land).
2) Alignment. It is a related but more nuanced challenge that almost every large organization struggles with. Again, management provides a bold vision and a differentiated strategy, but it has no connection points to, and is not aligned with, day-to-day operations.
3) Hoping for the best. This is a classic mistake of executives who believe it is their job to communicate the big picture, but then leave the execution to others, while also ignoring continuous alignment and hoping for the best.
4) Avoiding decisions. Avoiding decisions is probably the second most common reason, next to lack of focus, for running blindly into disaster. "We do everything for everyone because this is where the biggest market is" is a strategy characterized by a lack of focus, and its implementation quickly leads to failure because resources are wasted to the maximum. Growth in all areas at the same time is not a sensible decision. However, growth can become an effective strategy if it focuses on a very specific area. The strategy should include the tradeoffs that management is willing to make to achieve that growth, such as profitability.
5) The 5-Year Plan. This is the ironic nickname for conducting an extremely intensive one-time strategy process that creates a detailed roadmap for, say, the next five years. The problem is that no one can predict the future, no matter how well you know the business and how well you research it. And even if you theoretically could, there are very few markets that are so stagnant that nothing significant will change in the next five years. Good strategies are always the result of an iterative, ongoing process.
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In short, innovators plan for the long term and toward specific goals - but remain flexible about how to get there, turning strategy into an iterative learning process that focuses on continuously moving in the right direction. There are many good frameworks for this. Whether it's Future-Back, Discovery-Driven Planning, or Blue Ocean Strategy, they all basically deal with variations of the same theme.
The real challenge is implementation
Developing a strategy can be very quick because, after all, it only describes the plan from A to B, or the plan from the current state to the goal, whatever the vision specifies here and, as is well known, there are no limits to visions. However, the implementation of the vision is the difficult part and that makes all the difference. Because a bad strategy, even if it is perfectly implemented, still leads to a bad result. Unfortunately, the same is true for a perfect strategy if it is poorly implemented. After all, any company can claim to want to change the world or become a world leader in something, but few can actually make it happen.
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A really good strategy (e.g., corporate or innovation strategy) is based on a nuanced understanding of an organization's operating environment and decisions that give the organization the best possible chance of success. It is critical that implementation and day-to-day realities are at the forefront of every phase of strategy work, although the details will vary by company and industry.
To illustrate, the Carthaginian commander and strategist Hannibal repeatedly succeeded in crushing outnumbered Roman legions because he had an excellent understanding of the formation and fighting styles of Roman legions and tended to avoid battle if, in his opinion, the prospects for success were not complete. Furthermore, he knew the strengths and weaknesses of the enemy, but also the capabilities of his resources, which he repeatedly positioned to win. The same applies to the Germanic Armenius, who used his training in the Roman army to exploit this knowledge against Varus' legions. He was the first to unite the disparate Germanic barbarian tribes and lure the common Roman foe into an ambush, where the terrain gave him a decisive advantage to destroy the superior Roman legions in a guerrilla-style attack battle that lasted several days. The lore of the battles of Hannibal and Armenius is still taught today in various military academies around the world.
Translated into the business world, this means that you need a good knowledge or understanding of the markets in which you want to operate, and you need to deploy your resources, in the form of employees and capital, in a targeted and continuously adjusted manner if you want to successfully implement your strategy.
The successful implementation
There are three essential points that should be considered when implementing a strategy in order to execute it successfully (loosely based on Braden Kelley's blog):
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The first thing to learn and understand as a leader is that you don't have all the answers. Whatever plan you come up with, it needs to be continuously adjusted because as we all know, "Man makes plans, life thwarts them." The important thing is to clearly communicate the goal and vision (the "what"), never lose sight of the real reason behind it (the "why"), and leave room for employees in the right positions to figure out what the best methods are for achieving the goals (the "how"). The strategy, as well as the tactical measures and their constant adjustments, should be available for all employees to recall the reasons behind important decisions, which can have far-reaching consequences for the entire company. Get this right and alignment and implementation will be much easier.
As has already been mentioned, implementing an innovative strategy is an iterative learning process. The faster this is gone through, the higher the returns will be, because the pace of innovation is an ultimate competitive advantage. There are a number of actions that can help make a company more agile, innovative and faster. But ultimately, it comes down to systematically seeking out and removing all internal and external obstacles to moving innovation forward and toward its strategic goal.
A company or an organization is not a "one-man show" - at least it shouldn't be. Unfortunately, it has become apparent that, especially in Germany, the landlord model is often still retained, particularly in medium-sized companies. As long as the "strong man" (yes, often a despotic man, hence the landlord model) still has things firmly under control, this can still work, but at the latest when he shows weaknesses or leaves the company, things will get out of hand if the skills and responsibilities are not distributed across the entire company. Smart leaders therefore concentrate on controlled decentralization and capability building from the outset. The same principle applies to strategy implementation and innovation. Simply put, decentralization helps the company make more informed decisions and move faster.
Conclusion
Strategies play a major role in the survival of companies. They set the direction in the fairway of the markets, and the worse the strategy, i.e. the more often a company approaches the crests of the waves crosswise in a stormy swell instead of taking them head-on, the greater the chance that it will sink quickly.
Orlando Rosu / 123RF
Whether one is successful in one's industry with the respective strategy does not depend on the formulation of the strategy and the vision to be realized, but on the implementation of the strategy under the condition that the vision is realizable at all. A strategy is supported by various tactical maneuvers and these must be continuously adapted to the respective situation. If this does not happen, one's own vision of reality will be shattered by reality.