1. So what is Strategic Alignment?

    August 19, 2018 by ahmed

    Originally posted by Harry Hertz on Blogrige

    Vacation
    I recently returned from a family vacation to Hawaii. Our family vacations involve nine people: my wife and I, my two sons and their wives, and my three granddaughters. While we have downtime, we generally plan our days for activities we all enjoy and in which we can all participate (ages 6 through, ah-hem, senior citizens). I know there are also families who plan their vacations differently, for example independent activities during the day and then a communal dinner.

    Strategic Alignment
    By now you are probably asking, what could this possibly have to do with strategic alignment? Well, I recently read a blog about strategic alignment, in which Dennis Miller discusses the importance of strategic alignment in nonprofit organizations. He defines strategic alignment as, “the process of aligning all stakeholders, internal and external, so that all are focused and committed to achieving a shared organizational vision.” Well, our family had a shared vision of having a great, once-in-a-lifetime, vacation in Hawaii. And we had to align all our individual desires and gain cooperation of external partners, like the luau providers. Was that strategic alignment? It was challenging at times and strategic alignment is difficult. However, I began to wonder, isn’t there more to true organizational strategic alignment than the alignment of people, although that alone can certainly be a challenge.

    I did some literature searching to see if there was general agreement on the definition of strategic alignment. I found two articles in the Houston Chronicle about strategic alignment, with a focus on for-profit companies. The first article, by Steven Symes, defines strategic alignment as, “what matters most to the organization and then create a road map to achieving the organization’s purpose.” The article goes on to indicate that alignment requires planning, a willingness to make adjustments, and an involved workforce. So this definition focused on the planning process. The second article, by Flora Richards-Gustafson, defines strategic alignment as, “lining up a business’ strategy with its culture.” The approach according to Richards-Gustafson is a process that requires management to change and align its vision with leadership goals, organizational culture, and individual staff members. So, maybe our family wasn’t in strategic alignment, since there were no “leadership” goals that others had to align with?

    Finally, I went to the source of all knowledge, Wikipedia, which defines strategic alignment as, “the process and the result of linking an organization’s structure and resources with its strategy and business environment (regulatory, physical, etc)”. So, is strategic alignment about use of SWOT or PEST analysis?

    Systems Perspective
    In the end, I think all of these concepts are important to strategic alignment. But, in my opinion (and I am biased), the critical organizational concept is one of a systems perspective. It is the first of the 11 Baldrige Core Values and Concepts.

    A systems perspective means, “managing all components of your organization as a unified whole to achieve your mission, ongoing success, and performance excellence.”

    You need to view the organization as a system with interdependent operations that need to operate in a unified and mutually beneficial manner. It incorporates key business attributes, including core competencies, strategic objectives, action plans, work systems, and workforce needs.

    How does your organization operate? With a systems perspective or a more narrow approach of (choose your definition!) strategic alignment ?


  2. Automobiles, Blind Spots, and Organizational Strategy

    December 8, 2017 by ahmed

    rear-view-mirror

    Originally posted on Blogrige by Harry Hertz

    Fall 2017
    How does an organization identify its potential blind spots? This is one of the most common questions I hear from people conducting strategic planning processes.

    To begin answering the question, I have a simple analogy that can be used as a springboard to organizational strategy. That is, today’s cars are equipped with three rearview mirrors and often a backup camera. The mirrors and camera let you visualize what is behind you, a place you have already been. They identify “competitors” from within your clear line of sight, but they do not tell you much about them. They are your “in-industry” competitors. Some cars have an embedded blind spot mirror in the outside mirrors. The blind spot mirrors allow a view of those close to you, potentially ready to overtake you. This is an important piece of trend data that puts you on the alert and identifies competitors from within your industry who might be ready to speed ahead and overtake your leadership position. However, what you really want to know is what lies ahead!You can look out your front windshield and see the road immediately ahead or use GPS to see the road a few miles or even hours ahead (the short-term horizon). This is all helpful information, but you really want to be able to look a year or two ahead and know what road you should be on and what the traffic (competition) will look like. Will you be on the same old roads or a new road (new products and services)? As a driver today, you want to know if you will be driving a car or using another mode of transportation entirely (deriving from new industry competitors or new travel modes within your industry). Will your competition be driverless cars or a hyperloop? Can you predict those new competitors today and plan accordingly? Can you even identify those non-industry competitors? These are the real blind spots you want to know as part of strategic planning, not the extrapolated data from a “rearview mirror.”At each stage of this blind spot analogy, you were broadening your view, eventually redefining your industry from personally driven automobiles to people moving. This could lead your organization to a major shift in “product line” and services, if you want to sustain the organization and its competitive position.

    The 2017-2018 Baldrige Excellence Framework describes blind spots as arising from incorrect, incomplete, obsolete, or biased assumptions or conclusions that cause gaps, vulnerabilities, risks, or weaknesses in your understanding of the competitive environment and strategic challenges your organization faces. Blind spots may arise from new or replacement offerings or business models coming from inside or outside your industry (as you currently define it). To conclude the analogy, competition could come from driverless cars or driverless car services that take you from chosen point to point (a new business model) or from outside your industry (significant changes in mass transport or hyperloops, for example).

    Where do we find the wisdom to recognize that our industry is people moving, not automobile manufacturing? How do we find what Donald Rumsfeld, the former Secretary of Defense, called the “unknown unknowns”? Kodak invented the digital camera but believed it was in the film industry/printing business, not the business to create memories that could best be shared online, digitally. It even realized that a “Kodak moment” was worth sharing but did not see far enough ahead to predict the business model for future sharing.

    In the remainder of this column, I will explore common traps that lead to blind spots, then explore some don’t do’s, and finally, how to look for blind spots.

    Blind Spot Traps
    I have identified seven common traps that lead to blind spots. Many of the traps arise from the work of Professor Bettina Büchel at IMD.

    1. Seeing what we expect to see: This is the theory of incongruence. We don’t see what is incongruent with our current beliefs and frame of reference. I remember seeing a video in which we were asked to count the number of times a basketball was passed; none of us noticed that a gorilla was walking among the players because we were so focused on basketball. We pay selective attention to our area of focus.
    2. Misjudging industry boundaries: We narrowly define our industry based on our current products or services and how they are used today.
    3. Failing to identify emerging competition: We don’t see emerging competition because they do not do things exactly as we do. They are tackling a different problem from our “blinders-on” perspective.
    4. Falling out of touch with customers: We think we know what our customers need and want. We have been serving them for many years and believe in their loyalty. We do not seek their input on changing needs or unmet desires.
    5. Overemphasizing competitors’ visible competence: We focus on our competitors’ current offerings and assume they will continue unchanged. We do not think about the research and development they may be doing on a disruptive product, service, or business model.
    6. Allowing organizational taboos or prohibitions to limit our thoughts: Our practices or policies can limit our thinking. We fail to question practices and policies that may be outdated or incongruent with current technology or regulation.
    7. Relying on history: This is the way we have always done things. We let our historical patterns guide our future.

    In essence, we fall into rigidity traps, rather than questioning the status quo.

    Blind Spot “Don’t Do’s”
    Before discussing what you should do to identify blind spots, let’s look at some “don’t do’s” that organizations engage in.

    1. Don’t be a slave to strategy: In a world where technology, business models, economics, and global political environments are in a constant state of evolution, organizations need to be agile. Slavishly adhering to a strategy created several years ago can take an organization down a path toward obsolescence. An organization can devote years to an outdated strategy, achieve it, and fail as an organization. And if the organization does not fail, achieving an outdated strategy could lead to the conclusion that developing strategy is useless. Today, strategic plans need to be regularly reviewed and modified as conditions and opportunities warrant. The approach should be toward strategic thinking, not strategic planning as a periodic event.
    2. Don’t focus on fear: While a healthy respect for all sources of competition is important, fear should be turned into opportunity. Fear can stifle breakthrough thinking. Confront organizational challenges and seek to capitalize on them through disruptive ideas and new solutions, not extensions of old ideas. Explore new capabilities needed to pursue opportunities. As suggested by Clark in an HBR blog, war-game your potential failures. Perform a pre-mortem. Assume the idea will fail and look for options to avoid the failure.
    3. Don’t trust: Don’t rely on sources that we tend to give undue weight. Don’t trust the wisdom of the crowd. Group-think can lead to consensing on a safe path, rather than expressing bold ideas. Brainstorm with all opinions valued. Don’t trust instincts, seek data and careful analysis of implications. Perceptions can be clouded by personal biases. Don’t trust minimizers. It is easy to deny problems and assume things will get better. It is also easy to assume things are better than they appear. Don’t trust individual experts. Experts can get it wrong and different experts have different opinions and ideas. Seek the thoughts of multiple experts.

    Blind Spot Identification
    Finally, let’s explore the processes you should use to seek and identify potential blind spots.

    1. Explore upcoming technologies: Are any emerging technologies capable of being exploited for your next generation products or services? Are there emerging technologies that could create new industries that challenge yours? Are there new technologies that could generate add-ons to your existing offerings? If yes, would it be an intelligent risk for you to invest early and capitalize on your brand recognition to be a first entrant.
    2. Assess global trends: Investigate global changes in demographics, political environments, regulation, production and purchasing capabilities, and markets. Are there any major shifts likely that could impact your marketplace positively or negatively?
    3. Get out of your comfort zone: Break tradition. Shake up the norm. Try to identify and test your implicit assumptions. Take your leadership team to totally different surroundings. Get you news from a different source that has a different focus than your normal channel. Talk to people that you wouldn’t normally interact with. For example, if you are a physicist, talk to an economist or social scientist or industrial engineer. Ask probing questions. Try to talk to someone new on a regular basis.
    4. Seek employee input broadly: Discuss potential game-changing ideas with employees at all levels of the organization. Solicit and listen to their reactions. Solicit other ideas from them. Bring people together from different parts of the organization and different job functions to brainstorm together and to share what they are hearing or reading outside the confines of their workplace.
    5. Talk to your customers: Ask your customers about their unmet needs and desires. Talk to your customers’ customers to gain additional insight. Observe your customers in action to understand their behaviors and frustrations. Look for creative solutions.
    6. Broaden your field of view: Don’t assume companies or organizations will remain in current industry boundaries. Look at adjacent industries and benchmark what they are doing. Ask yourself what business are you really in (e.g. automobile manufacturing or people moving)? What is the ultimate goal or impact of your product or service for the user? Given global and technology trends is there a new business model you should pursue?

    Final Thoughts
    To find blind spots you need to look broadly and not be constrained by current biases and boundaries. You need to trust instincts less because they harbor your current biases. You need to seek new and different sources of information and synthesize what you learn. Verify your conclusions. Plan a specific course of action. Continue monitoring trends and your progress. Stay agile. Look not just straight ahead, but around corners.


  3. A systems perspective to leadership and strategy

    November 25, 2016 by ahmed

    Originally posted on Blogrige by Harry Hertz

    I recently read a summary of an interview with Wharton Professors Harbir Singh and Mike Useem. The interview relates to their new book, The strategic leaders roadmap. In the book they contend that successful senior executives must be capable of integrating strategic thinking with strong leadership skills.Leaders who adopt the Baldrige excellence framework have already successfully addressed this integrative need because of the questions in the Leadership and Strategy categories of the Baldrige criteria. Indeed, the key considerations that Singh and Useem outline are contained in item 1.1 on Senior Leadership and item 2.1 on Strategy Development and are systemically interrelated in the criteria.

    Here are the key points I gleaned from the interview and how they relate to the relevant Baldrige criteria:

    • Leaders must inspire the workforce, and must also deliver strategic inspiration and discipline: The Baldrige criteria (item 1.1) ask how senior leaders create a focus on action that will achieve innovation and intelligent risk taking, and attain the organization’s vision. Item 2.1 asks how the organization seeks out potential blind spots in its strategy to avoid a senior leader’s bias or potential lack of realization that there is a changing external or competitive environment. Such bias may cause a disciplined approach to a poor strategy.
    • Leaders may be good at strategic thinking, but thin on making things happen, driving strategy and change through the organization: This is the very reason that starting with the Baldrige excellence builder, the criteria ask (item 1.1) how senior leaders set an overall focus on action and, in specific, in item 2.1 ask about the ability to execute the strategic plan and to achieve transformational change.
    • Leaders must realize that execution is not just about the workforce following orders, but that it is about creating and enhancing the value proposition to the client and getting ideas from the entire workforce: In item 1.1, customers and the workforce receive significant attention. At the Excellence builder level the criteria ask: “How do senior leaders communicate with and engage the entire workforce and key customers?” In the more detailed Baldrige criteria there are questions about senior leaders’ two-way communication with the workforce, and their actions to reinforce a customer focus, foster customer engagement, and create customer value.
    • Leaders must balance quarterly results with setting the tone of an ethical climate and a policy of integrity first: Here too, item 1.1 of the Baldrige criteria sends a clear message by asking how senior leaders’ actions demonstrate their commitment to ethical behavior and how they promote an organizational environment that requires it.
    • Leaders must create agility and adaptability in the organization: Item 2.1 specifically asks how the strategic planning process addresses the potential need for organizational agility and operational flexibility.

    While I have given some very specific examples from the Baldrige criteria, these are just examples. The systems perspective of Baldrige means these topics are addressed at appropriate places throughout all seven categories of the criteria to cause linkages wherever valuable.

    Professors Singh and Useem summarize their treatise by saying that senior leaders must be strategic in thought and lead well. I would assert that you can simply operationalize this unified concept (and more) by following the advice given in items 1.1 and 2.1 of the Baldrige criteria. And in the process, gain a systems perspective of all that is important in leadership and strategy.


  4. How Target built a world-class digital marketing team: Tips from CMO Jeff Jones

    May 7, 2016 by ahmed

     

    Originally posted on Linkedin by Kyle Wong

    Brands create elaborate marketing strategy plans in hopes of attaining that elusive goal: to deliver a great experience that reels customers in and keeps them coming back. Unfortunately, there’s a wide gulf between what brands want to do with digital and what they actually do — because they simply can’t hire enough top-tier digital marketing talent to execute on their visions.

    For example, brands know they should embrace social, visual storytelling, and experiential marketing to connect with Millennials, but they aren’t able to hire the talent who can execute on these emerging trends. Competition for superstar digital marketers is fierce, with companies such as Facebook and Google, as well as deep-pocketed startups, snatching up the best and brightest.

    So how can brands attract the kind of talent they need to stay relevant? Target is a prime example of an established retail brand that does digital marketing well. Target’s stock is trading near its record high and the company has strong revenue growth – and that’s in large part due to a talented marketing team. Target spends well over $1 billion a year on marketing and has over 1,000 team members on its global marketing team. I recently sat down with Target CMO Jeff Jones to find out how his company attracts – and keeps – the best digital marketing talent.

    What’s unique about Target?

    There are four main reasons top digital marketers choose to join Target, according to Jones. First, they know “marketing has a seat at the table.” In other words, marketers at Target feel their work is valuable and their voices will be heard. Second, they know Target is willing to try experimental digital marketing trends – from sponsoring Gwen Stefani’s performance of a live commercial video at the Grammy Awards to the company’s billion-dollar mobile coupon app business, Cartwheel, to the Target Media Network that lets brands connect with Target shoppers online, on mobile, and in-store via creative marketing content. All of these initiatives were conceived and built entirely in-house. Third, at Target, digital marketing isn’t just a cost center. Every program must meet specific revenue goals, making the digital marketing team a strategic part of company growth. Fourth, they know the work they do will reach millions of consumers; more than 30 million people visit Target stores, and 20 million make purchases online, each week.

    Of course, not every company has the pull of Target. So what can you do to attract top digital marketing talent if you aren’t already a multibillion-dollar brand beloved by hundreds of millions of consumers? Jeff has a few tips for any organization looking to snag great marketers.

    Tell your unique marketing story

    You can’t attract great marketing talent if you don’t have a great marketing story. Target is well-known for launching cool campaigns, trying cutting-edge techniques, and building a cohesive brand message. If you’re a small company, you’ll have to work harder to “tell your story” to potential candidates. First, get your CMO involved directly in hiring, sending him or her out on the road to meet potential candidates, give talks, and connect with aspiring marketers at top universities. Use every communications strategy possible to share your company’s passion for cutting-edge marketing – from articles and content, to speeches, videos, and more. Showcase your marketing wins, but also be honest about challenges. The best talent loves to tackle big challenges through new marketing methods. Most important, articulate your company’s vision for the future. Talented, ambitious people want to work at companies with a clear vision to change the world.

    Understand the barriers keeping talent away

    Sometimes, top talent isn’t interested in working for your company for an easy-to-fix reason. Target, for example, realized some go-getters weren’t willing to relocate to the company’s headquarters in Minneapolis, so they opened offices in San Francisco and New York. Other times, marketers stay away because of a deeper problem. For example, one common issue is that companies “silo” their marketing teams into groups such as social, video/TV, online, traditional, etc. But the best marketers don’t want to work in vacuums. They want to work on teams that cross-pollinate ideas, contributing directly to the company’s overall growth. If your marketing teams are fractured, consider bringing everyone together under one division, allowing team members to interact with one another on a daily basis. Jones is convinced Target’s “one big marketing team” is a fundamental reason the company has been so successful in telling a cohesive brand story.

    Think ahead to retention

    Attracting top talent is only the first step – retention is even more important, and far more difficult. Target deals with potential poaching of its top talent on a regular basis, so the company puts a focus on retention. Jones points out that retention can’t be tackled in broad strokes; leaders must take time to truly understand the individual aspirations of each person and help them achieve these goals over time. Always try to spot signs of discontent early, and then work with the individual to create a path forward that makes her feel appreciated, valued, and supported. Of course, what the best talent values is outlined above: a seat at the executive table, being part of a cross-pollinating team, and proof their work contributes directly to the bottom line. Make sure you don’t just promise these “golden tickets,” but actually deliver on them every day.

    Only brands that embrace the newest marketing methods will survive in the next decade. Thus, those companies unable to hire top digital talent will be the first to fail. Even the best digital strategy is moot unless you have digital talent to execute on your vision. Make sure your company is a fantastic place to work for digital marketers and you’ll have a good shot at building a successful marketing organization like Target.


  5. Five key points to consider when developing an innovation strategy

    May 5, 2016 by ahmed

     

    Originally posted on Innovation Management by Wouter Koetzier & Christopher Schorling

    From our talks with innovation management practitioners and business executives it seems that not many organizations have a well-defined and integrated innovation strategy. To find out more about how to go about creating and executing such a strategy, we spoke to Wouter Koetzier and Christopher Schorling at Acceture who encourage a very pragmatic and execution-oriented approach.

    1. When an organization realizes that they need an innovation strategy, what are the five key things they need to consider very carefully when starting to develop it?

    The innovation strategy defines the role of innovation and sets the direction for innovation execution. However, the role of innovation in helping organizations achieve growth targets is often unclear and the revenue growth from innovation is insufficient, unless managed with great rigor. While there is lots of theory about and many good (and not so good) books on innovation strategy, many companies fail to develop and execute an innovation strategy.We work with clients to help them take a very pragmatic and execution-oriented view on this.

    Once we start to work with a client to develop an innovation strategy, we seek to develop a common understanding of the definition of the innovation strategy’s purpose. When we speak about innovation at Accenture, we speak about successfully commercializing new ideas, i.e. inventions with market impact or in other words the notion of innovation = invention x scaling. However, ‘new’ can have different meanings, ranging from new on the world market to new in one specific industry, but already established in another industry, to new to a company or maybe even just new to some of us. The word ‘strategy’ implies that we are talking about something with a potentially large impact on the company, i.e. does not include just a series of incremental product line extensions.

    Based on this understanding, the following are five things that we believe make up a good innovation strategy:

    First, an innovation strategy needs to be truly inspiring and should describe a desirable future state for the company.
    This is a high bar as it rules out a single-minded focus on incremental add-ons to the business. Rather, it requires the organization to aim higher. You have probably often read in literature that the innovation strategy should be derived from the corporate strategy to clearly define how the organization sees opportunities for growth and makes explicit choices about the role of innovation, which is absolutely not wrong. Still, we think that to some extent it should be the other way around. Opportunities and possibilities formulated in an innovation strategy should actually provide input and shape the overall corporate strategy. Invention is done everywhere. In fact, the value that is derived for many large companies by scouting inventions, connecting the dots between many singular ideas and inventions into one big platform innovation and fully scaling it to maximize potential benefits.

    Second, the innovation strategy needs to be ambitious in terms of providing the basis to break away from the competition, beat the competition, and create new spaces.
    Too many innovation strategies that we have seen tend to be “me too” (and mostly incremental). Even if executed according to plan, they fail to deliver the truly sustainable competitive advantages that can only be derived by performing above the overall market growth level and exceeding average profit margins.

    Again, the innovation strategy should aim higher and help the company outpace anybody else in a contested space. If the so-called strategy does not seek to push those boundaries, the strategy in all practicality is probably just a product roadmap of business extensions, not an innovation strategy.

    Third, the process of developing the strategy needs to be open
    Open means bringing the outside in and working under the assumption that the other seven billion people on our planet may have insights that do not exist within a particular company’s boundaries. Even today this is something that many people find hard to accept. One client once joked: “We actually invented the not-invented-here-syndrome in our company.” Companies are settled into the way they innovate.

    The statement above gives you a good idea of how hard it is for companies to open up and avoid merely settling. At the same time, this should not be mistaken as an excuse for failing to come up with a great innovation strategy based on internal ideas and conviction. Being open is just a great way to raise the bar in terms of ambition and to more quickly get to more mature plans. By the way, as opening up the innovation pipeline is not just a matter of mindset, new technologies play an important role in making openness commercially feasible.

    Fourth, an innovation strategy must also be specific to the time in which it is developed
    As it is grounded in the reality of a company’s environment, and it reflects the available capabilities, technologies and gaps that may need to be filled. What do we mean by this? It is important to describe with great precision which specific innovation initiatives should be pursued, and where to invest and compete.
    The strategy should answer a number of questions like: What growth platforms represent the best chances for the company to win in the market? And, what is the rough business case per growth platform? This is the step where the overall risk related to the execution of the innovation strategy should be assessed in the context of the overall company situation. It is not by coincidence but due to the inherent uncertainty that venture capital funds place a portfolio of bets. Still, a corporation should carefully consider how many eggs to put in a single basket. But bear in mind – Mark Zuckerberg recently put it nicely: “The riskiest thing is to take no risks.” (Accompanying Letter to Investors to the United States Securities and Exchange Commission Registration Statement, 2012).

    The innovation strategy also needs to explore possible market developments and scenarios while defining the most attractive market opportunities.

    Finally, an innovation strategy needs to be adaptive and to evolve over time
    Incorporate learning, allow adjustments to the desired course and maybe even allow an organization to cut its losses if required. This typically does not fit with the classic annual corporate planning cycle. An innovation strategy and the respective execution should be capable of adapting the moment there are new insights, even if that requires moving in multiple directions to raise the aspiration you had at the beginning. After all, Rome was not built in a day. Likewise, innovation sometimes requires more time than originally estimated.

    2. How should organizations use an innovation strategy to avoid it just collecting dust on a shelf or simply filling memory on a computer? For example, what can you tell us about steps an organization can take to create the required momentum for executing on the innovation strategy?

    This question may actually imply an approach for developing an innovation strategy that we believe would not be very promising. Sorry for breaking this up, but to some extent it seems to indicate a sequential approach consisting of a strategy development phase decoupled from the execution of the strategy. The criteria associated with a strong innovation strategy as we outlined above consists of being inspirational, ambitious, grounded in reality and adaptive. We like to think of innovation strategy development and execution as a highly overlapping if not integrated process. So, if the innovation strategy meets the criteria above, we believe the strategy is not likely to collect dust on a shelf. But of course, it is not that simple. There are more steps a company should take to create the required momentum.

    The first one is about innovation leadership
    This may sound obvious, but in our experience it is the number one reason for success or failure. The leadership should come from the top – at the very least in the form of active top management sponsorship but better in form of active personal involvement, guidance and inspiration for the respective innovation teams. But, leadership, which can come in different shapes and forms, also is supposed to come from all key members of the innovation team. Not even the most brilliantly articulated innovation idea or plan can compensate the active involvement of a dedicated innovation team. Innovation strategy has to be more than just empty phrases of confession to innovation. It needs high-level commitment of someone who is obsessed with innovation.

    Second, the execution of an innovation strategy needs a home in or outside the organization
    Many believe that innovation is better done in a start-up environment, rather than in a corporation. Indeed, there are many reasons why innovation is not easily executed within a corporate environment, but entrepreneurs know that it is not easy in a start-up either. There are great success stories of corporate innovators (e.g. Apple and Proctor & Gamble) and for every successful startup there are probably five to ten that failed. So, we should not be too simplistic about this. Multiple considerations drive the decision about the optimal home. For example, proximity to the core business, availability of critical talent, and cost synergies should all be considered.

    We recommend following two simple rules: The higher the risk of conflict with the current core business, the more separated your innovation should be from the parent organization; and the more your innovation requires access to existing corporate assets, the less separated it should be from the parent organization. Also, corporations should face the reality that innovating in the context of running an important daily business is virtually impossible. In contrast, management is strongly focused on today’s sales targets and this quarter’s financial results. But, making innovation happen is a full-time job and mostly even a lifetime obsession.

    Corporations should face the reality that innovating in the context of running an important daily business is virtually impossible.

    The third step is about focus and being realistic about how many and which kind of innovation initiatives a company can drive simultaneously
    Even though we recommend paying particular attention to big ideas, we know that the success of disruptive innovations is highly uncertain and understand that it is important for companies, especially large organizations, to have a clear picture of predictable outcomes. No automotive supplier will develop a new product out-of-the-box without already having the demand of an automotive OEM. Overcoming this reality may be the most difficult step an organization must take to successfully execute the innovation strategy.

    Organizations should differentiate between innovations that are developed for existing products; those sold on existing channels to well-known customers with a highly-predictable payoff; and those (disruptive) innovations with an uncertain future and yet the potential for massive payoffs. When Apple developed the first iPhone, they were enthusiastic and obsessed with the idea of how they could transform the mobile phone market, even if they could not predict how successful the product could be. But, what they did is focus and put the effort on one project, the iPhone (‘Steve Jobs’ by Isaacson, 2011).

    We often see companies with too many projects that are too incremental in nature. Leading innovators run a focused portfolio of innovation projects with a conscious risk-growth potential trade-off decision. You need to find a way forward and determine how to avoid the Innovation Death Spiral.

    To do that, companies need to decide which innovation to follow, how to significantly increase their technology success rate and reduce their time to market. One way to achieve that is to open up the innovation process, i.e. embrace open innovation. The opportunity cost of closed innovation is low access to brain power, expertise, existing solutions and problem solving capacity. By contrast, a paradigm shift to open innovation, where companies invite external experts to participate in the innovation process, accelerates and de-risks innovation programs and creates innovation at much lower costs and with a higher probability of finding the right solution.

    Once the context for execution is set up, the focus should be on building the right team. The mix of people required strongly depends on the specifics of the strategy to be executed, but there are a few common requirements – next to the leadership profile already mentioned. The people involved need to find a certain level of excitement and thrill in taking a risk to achieve something big. When one of our clients tried to form a team to go after a substantial technology innovation opportunity in a separate organization the main concern among some of the internal researchers interviewed was, how would the newly created entity pay contributions to their retirement plan. It was easy to see that this mindset would not fit with a highly ambiguous environment. Another interesting question in this context is: How much experience should such a team have? Too much “relevant experience” sometimes stands in the way of approaching something in a new way. So it may be more advantageous to place more experienced people in advisory roles so that the innovation team can take what it believes it needs but is not slowed down in its zeal to explore new paths.

    To conclude, we do not want to create the impression that successfully executing an innovation strategy is deterministically plannable. However, adhering to the principles described above increases the odds of success, even if it does not guarantee success. Smart hard work needs to come together with a bit of luck. Steve Jobs, one of the most gifted innovators of our time, put it like this: “You have to trust in something. Your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life” (Stanford Commencement Speech, 2005). So, place your bets, tilt your odds, and make your luck.

    We often see companies with too many projects that are too incremental in nature.