Innovation & strategy

Formulating a strategy is still useful in an increasingly disruptive and unpredictable environment? Is innovation a strategic activity in companies and organizations? How to merge innovation and strategy?

Of course, strategic plans, or the concept of strategic planning, entered a certain decline since the beginning of the 21st century. The planning processes implicitly associated with strategy development have been questioned and their validity and usefulness have been questioned.

Today’s managers are forced to make decisions related to continuous changes, sometimes abrupt, in the environment and markets and must face reengineering, cost reduction, complex processes of delegation of power, adaptation of new technologies, integration, etc. Strategy is set aside and focuses on two areas: integration and execution, for short-term results.

But “strategy” is not planning, that is, the elaboration of a “strategic plan”, the kind that tends to grow old on the shelves. It is more a qualitative formulation, of orientation, direction, action and commitment towards obtaining an expected result.

Despite the turbulence and confusion of the times, there is a certain agreement in favor of finding new strategic formulations that guide organizations in how to face the future.

And the way to do it is with a closer union between strategy and innovation. For this reason, innovation currently has more strategic weight than ever. In other words, the strategy must be more innovative every day.

Building a strategy? There are some alternative routes:

  • Stand for each organisation, company, or activity, what we may call ‘principles’: the mission and values of the organization, and analysis of the current situation, with a value proposition to clients and stakeholders).
  • The vision for a specific term. Define for each activity, where we would like to go, our position in a given future.
  • Focus on the outside, customers and interested parties, and try to find out future trends, to explore different scenarios that may arise and our relationship, favourable or not, with them.
  • Be aware of the increasingly rapid changes in our entire environment and prepare to adapt as quickly as possible.

That’s nothing new, only aims to clarify already existing concepts that are widely used, but in a certain order that makes it easier to formulate our strategy.

Why has the name of this website changed from “agile innovation” to “Innovation and strategy”?

“Agile Innovation” as a concept refers to the innovation “process”, to the methodology that accelerates and makes it agile, with all its benefits. Therefore, it focuses on the “HOW”.
“Innovation & strategy” aims to reinforce the “strategic” concept of innovation, that’s to say “WHAT” do we innovate and “WHERE” are we going, out of the “strategic planning” more bureaucratic approach.
I believe that an innovative strategy is key to ensuring the future of any organization. Planning, in any case, will come later, specifying and quantifying the objectives and projects.

Every organization has a purpose.

Whether it is a private company, belongs to the public sector, or it’s a third sector entity, all organizations, large or small, have a purpose and therefore a mission to fulfill.

The definitions of “Mission” and “Values”

MISSION: What moves us. The raison d’être of our organization, the purpose of its constitution. It is its reason for existing.[1]

Its validity would be almost timeless, that is, it will vary little or not at all over time. In any case, it is a permanent or long-term statement that can change rarely.

VALUES: They explain how we are. what makes up the culture of the organization. Fruit of its sedimentation in time and that is manifested as a set of shared behaviors. They indicate what we can and cannot do.

Value statements emanate first from the behavior of the founders or owners. More frequently from senior managers, and sometimes from those responsible for communication or perhaps marketing of the company. In reality they should be a consequence and a real and clear expression of the ‘created’ and ‘desired’ culture of the organization.

They can be for purely external use (customer focus or ‘stakeholders’), internal (create a team spirit), or mixed.

The truth is that we will find many definitions of Mission and Values, prepared by communication experts and aimed especially at the expected audiences. From these definitions, it costs a little more to arrive at the true values that are not so easily made explicit, the true motors of the action and the

The truth is that we will find many definitions of Mission and Values, prepared by communication experts and aimed especially at the expected audiences. Based on these definitions, it is a little more difficult to arrive at the true values that are not so easily made explicit, the true drivers of action and those that are really ‘practiced’ by the organization.

In any case, what is not made explicit and openly shared can cause confusion at critical moments, or when making decisions, and often tensions in the face of fait accompli that seem to be explained only by different and unshared ideas of mission and values.

Vision. A clear and motivating formulation of where we want to go.

VISION: It is a statement, an image, of where we want to arrive in the future or on a specific date. It is partly a qualitative statement and partly contains quantifiable elements.

The “Vision” is considered as the realization of an aspiration to a concrete future. From there comes a certain strategy to reach him. Both things exist, either explicitly and documented, or implicitly in someone’s mind.

This indicates that in one way or another, someone has set medium-term goals or objectives. But who has them or knows them? The fact of existing only implicitly, without having been made explicit, communicated or shared, without the validation of partners, employees, clients or other interested parties, causes confusion and sometimes misunderstandings.

On the other hand, what is the content of this vision and objectives? Is it about economic performance? Is it focused on customers, for differentiation or for the quality of the products or services offered? Is it perhaps to convince or reassure investors, shareholders or banks? Or is it a manifestation for the exterior and to improve the image? Is it something intended for social benefit, job creation or better conditions for employees?

Every organization, company or activity requires a clear and shared “Vision”. It is a motivating factor to push action and it is important that each and every one of the employees can understand, explain and share it.

The vision generates objectives whose essence is to give “meaning”, to mobilize and guide action, to quantify resources and benefits.

All strategic processes, innovation, marketing and with-it communication will benefit from the knowledge of a clear vision, for the management of priorities, decision making and success in all projects.

Who should create or be the author of the vision? What is the process to build it?

If the vision is important and essential, how is it built? And who is responsible for doing it?

There is no absolute answer to this, but we can provide real experience on the ground.

In SMEs, the question does not even arise, the vision is created by the entrepreneur, who is often the owner and main manager.

In a large company, the creator of the vision is usually at the same time the top manager or leader. It can also be the result of a work process by the management team, at the highest level.

If it comes from the head of a single author, from the leader, above all it should be shared by his first circle of collaborators, who will be co-responsible before all the rest, both shareholders, interested parties, and the rest of the staff, external etc.

In this process, often guided by an external expert, tools are used, among which I would highlight the SWOT model, Pestel’s analysis, Michel Porter’s five forces, Mckinsey’s 3 horizons, or the Michael Doyle model that is developed in seven successive steps. They can all be useful, one or the other, depending on each case, but the most important thing is the participation and analysis of those who know the organization at all levels, internal and external, and the activity at a local and global level.

[i] In some publications and in some organizations the definition of “vision” and “mission” is different from what is expressed here, almost inverted. I have preferred this form because I believe that it is more general and better expresses the concepts.

And the strategy?

Strategy is a statement of what we are going to do to achieve the vision. It contains alternatives and the definition of some strategic axes that should lead us to where we want to go.

In the image: The key questions in four areas:

  • What remains or has long term validity: Mission and values
  • The present. Know where we are today. Our dissatisfactions and ambitions. We can use analysis tools such as SWOT, Michael Doyle etc.
  • Our customers and interested parties (stakeholders). Who are they, how are they going to evolve and who are they going to be? That indicates our knowledge and relationship with them. What are your projects
  • Analyze our current value proposition to both. See if it will continue to be valid in the future according to your projects and foreseeable changes. What are we going to innovate?
  • Between the present and the future there is a “gap”, a leap to take, a difference that marks the possible strategic alternatives. There are also some barriers and obstacles that will come from the environment or from within and from the different scenarios of change that we can foresee.
  • Future What do we want to be? How we want to see our organization or company in a specific term. Defining the vision has to do with defining where we want to go.
  • Redefine the future value proposition. In a scenario that is not today. For our clients and stakeholders of the future.
  • Integrate innovation. What are we going to innovate? Our innovation process. And our portfolio.
  • Define the strategic axes.

The concept of strategic axes could be visualized, as an example, with three vectors that mark a point of arrival, in a three-dimensional space. The representation is complicated to represent spaces with 4 or more strategic axes, but they do exist.

The strategy makes it possible to organize the action, establish objectives and distribute responsibilities, organize resources, anticipate obstacles and trace some intermediate milestones as well as measures and indicators to know if we are on the desired path.

The visualization of common objectives is extremely powerful both in the field of the organization and in all those areas that require team coordination. In the end, it makes it possible to have a framework that frames everyone’s actions, a management team and defined responsibilities.

It is necessary to anticipate or identify the “obstacles”, “barriers” or major difficulties that the strategy will encounter in order to become a reality. It serves to elaborate some alternative plans.

Without a clear strategy, the company can be difficult to manage, it will lurch and each one will interpret the path to follow and the priorities as best they can. Worse still, it may be that without a clear strategy, there are different particular agendas, even contradictory ones, that tend to come out of departmental compartmentalization or different units of the company.

The strategy contains a customer value proposition.

The strategy, as we already stated, is going to be closely linked to innovation.

Definition of the strategic axes:

The image model clearly presents vision and strategic axes. It is framed by the definition of the Mission and Values on the left. The major strategic axes are presented in columns, headed by one or some strategic objectives that are pursued in each axis, mainly facing the interior.

The strategic axes are generally oriented to the client, and can be shared externally while the strategic objectives are generally oriented to the interior and it is not always necessary to show them abroad. Finally, in each axis the necessary actions to be carried out are specified. Action plans that are also external or internal in each axis and variables according to the objective pursued and the times to be achieved in each case.

In this way we align the innovation process with the strategy.

Indeed, the visibility of the project portfolio and its distribution is immediate. We have a true map that positions each project or action in the strategic axes of the company and we can immediately see if the different axes are well covered and at what level. This should allow the immediate initiation of a new project or action where a deficit is detected. It will also be easier to assess the priorities based on their suitability for the strategic objectives and the level of contribution of each one to the shared vision.

The same thing happens and it is also necessary to establish the bases of the marketing and communication plan.

The financial adjustment and planning criteria, with the forecast financial plans and statements, calculation of the expected EBIT and ROI and of the needs and returns are subsequent to this year and rather its numerical confirmation. But it shouldn’t start with them.

The advantage of cohesion and integration in the innovation process is, moreover, evident: any member or actor in a project will be able to see the direct link that unites their project with the vision of the company and at the same time understand their contribution. .

On clear bases, the objectives of the company and the performance measures that must accompany them, can be formulated in a coherent way and adapted to the different levels to which they are addressed:

  • Strategic objectives. Those who lead what we have called strategic axes. They are collective, shared by the entire company, and focus on the medium and long term. They will influence the creation of an innovative culture.
  • Strategic axes, common to an entire process, focused on performance and in the medium term. They have been designed with the strategy.
  • Operational objectives. Common to a process, project, or department. They focus on short-term performance.
  • Individual objectives. Integrated to the objectives by process or project and contribute to the operational objectives, in each area or department.
  • Intermediate milestones with indicators, compliance or deviation analysis and corrective actions.

The objectives of the projects and the teams in charge of them will respect this hierarchy of objectives and measures as well as the characteristics of tension, ambition and realism, necessary in any objective to ensure performance.

Formalizing vision and strategy is not enough, it still needs to communicate.

Communication and achieving alignment and enthusiasm is essential, and especially the understanding and motivation of three main actors:

  • The shareholders, owners and/or the board of directors. They must be participants and share the strategy to be willing to finance development and new resources and investments.
  • Customers, who must clearly perceive the orientation towards them and the ability to satisfy their needs and expectations. It is good that they also perceive their participation from the beginning in new innovation projects.
  • The staff, who must identify themselves and clearly understand how they can contribute to its realization and what is expected of each one.

These are basic actors but there are others, “stakeholders” to whom it is necessary taking into account, analyze their needs and expectations to conduct the company in a harmony with people, institutions and organizations directly or indirectly related, be it administration, neighborhood, environment, unions, suppliers, banks, etc.

That is why efforts to communicate effectively are necessary, seeking maximum synthesis without losing content. In most cases it is possible, and this is done in multiple companies, in what is called presenting the vision and strategy on a single page.

The one page strategy [2]is a way to do all this in a short time and in a way that will be easy to communicate.

[1] In some publications and in some organizations the definition of “vision” and “mission” is different from what is expressed here, almost inverted. I have preferred this form because I believe that it is more general and better expresses the concepts.


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