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Why do you need an innovation strategy?

A little reflection on a great company such as Xerox and how it missed some major opportunities highlights the importance … >>>

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Why do you need an innovation strategy?

A little reflection on a great company such as Xerox and how it missed some major opportunities highlights the importance of an innovation strategy for an organization. Xerox failed to make money from its two major innovations – computer mouse and GUI (graphical user interface). Could it be that Xerox failed to take advantage of such opportunities because it didn’t use the right methods for fostering innovation? Did it not use methods that 3M and Google follow to foster innovation – allowing employees to work on their favorite projects for a percent of their time? Absolutely not! Even a well planned method to foster creativity and invention can lead to misses that Xerox faced because such methods do not automatically ensure that the inventions would pass the organizational filters to attract resources.

Allowing employees to work on projects that they are passionate about is only one part of the innovation puzzle. Having a deliberate innovation strategy is the other part of the puzzle and without such a strategy it is likely that several great inventions will not see the light of the day.

Some people may believe that the best ideas would automatically bubble to the surface and become visible to the top management. However, what this argument misses is the fact that each company has its own favorite class of ideas and its own institutional filters. New ideas that do not adhere to the institutional logic, no matter how promising, face a likely death. Polaroid had the institutional logic of making money from the film rather than the camera and when the digital division came up with a digital camera early on, the idea was systematically stifled. One reason for this behavior was that the idea didn’t fit with the existing institutional logic. Furthermore, later on when it became clear that it would be a rogue innovation, the internal resistance to the idea was even greater.

In absence of a deliberate innovation strategy, an organization is at the mercy of an emergent innovation strategy which may or may not work effectively. In the best case scenario, one could have the next CT scanner in an organization which actually sees the light of the day (the way it did in EMI). However it is likely that the organization misses opportunities, fails to make money from its inventions, and worst goes into a reactive mode rather than a proactive mode.

In the end, there is no alternative to a well planned innovation strategy that enables a firm to innovate not just in product but across the entire gamut of innovation space. Such a strategy must take into account a pipeline of innovation and encompass a capability development plan. Furthermore, such strategies need to have an inbuilt mechanism to improvise on an existing strategy. This is what would take a firm beyond a myopic focus on just a handful of possible innovations to begin an innovation journey in earnest.