How to develop a strategy for innovation in the fast- moving digital world

Having a clear strategy for innovation seems like an obvious priority for any large company. However, the classical “top-down” analytical approach, which starts with business objectives and cascades down perfectly through to a series of narrowly defined innovation projects, is seen by many as too rigid for the post- digital “lean start-up” world. So has innovation strategy had its day? Should companies instead just focus on capturing new opportunities and working with start-ups? In this article we argue that there is still a place for innovation strategy, provided that it incorporates the right features to keep it dynamic.

The end of innovation strategy?

Digitalization is pervading almost every aspect of the business world, disrupting established business models and transforming the way companies operate. As technological clock speeds have increased, getting a new product to market fast and gaining rapid feedback may be more effective than spending a long time perfecting it in-house. And in an “open system” world, where customers, partners and the world at large can influence the course of innovation in often unpredictable ways, having a set of rigid strategic “rules” may not be helpful. In this environment, large corporates have needed to rethink how they go about innovation. What’s the point of spending six months crafting a perfectly structured hierarchical innovation strategy, when by the time it’s finished, it’s already superseded? Isn’t it better just to set up the best-possible way of scouting for opportunities, pick the best ones and get them to market as quickly as possible?

Why innovation strategy still has a place

Based on our work with many large companies, at ADL we believe that there is still a place for a formal innovation strategy. For example, in today’s world, an effective innovation strategy can: n Provide guiding principles to make the right decisions when the innovation landscape changes unexpectedly n Put in place the means to anticipate disruptions and develop a suitable response in terms of exploitation or defense n Enable the return-on-innovation investment to be properly managed and communicated n Help to allocate valuable resources optimally across different innovation domains, and provide a framework of stability for longer-term innovation investments n Define clear pathways for how to create business value from different types of innovation activities In most companies of reasonable size and scale, the ability to do all these things has to be developed and maintained.