Innovation strategy is different than company strategy
In the face of market, regulatory and political uncertainty, the ability to react, respond and innovate quickly is critical. While most organizations (93%) surveyed believe innovation is important to driving their growth agenda, many (70% )still struggle to articulate a clearly defined and separate innovation strategy.
Unsurprisingly, respondents in the technology sector are the most likely (67%) to have innovation strategies that are defined and partially separated from their business strategy. Organizations with more than 10,000 employees are also more likely to have defined and separate innovation strategies, due partly to their size and scale and the available resources to dedicate to such a strategy and focus.
Organizations have a broad range of reasons for innovating, with the largest number (24%) doing so to increase profitability. Reducing costs and increasing process efficiency are the next most common reasons cited, at 19%.
However, the primary driver for innovation differs by sector:
- Government and public sector organizations place a premium on increasing process efficiency (72.7%) because they are not driven primarily by profitability, but by being lean and optimized.
- Mining and oil and gas respondents look to innovation as a way to increase profitability (28.9%) and reduce costs (22.8%). Reducing environmental impact is a primary driver for only 2.6%.
- Technology companies emphasize innovation as a way to move into new markets and increase existing market share.
- Power and utility organizations innovate with a focus on cost reduction (41.6%) as a result of heavy regulations.
As organizations grow in size, there is an increased focus on reducing cost and increasing profitability.
Organizations with ambidextrous or exploration capabilities typically view capital projects, product development, and operations maintenance as the most important areas for innovation. They’re also more apt to have a partially defined, but not separate, innovation strategy.
Conversely, those without these capabilities largely view operations and maintenance as most important, and they do not have a defined or separated strategy. Many construction companies (60%) fall into this category. There seems to be a perception that there is less need to innovate the business model due to protections in place. Indeed, 64% of power and utility respondents reported that they have no defined or separated innovation strategies. For technology companies, which are the most likely to have strategies, innovation offers a vital competitive advantage.
Does your organization have a defined innovation strategy “separate” from the corporate strategy?
What is the primary reason for innovation at your organization?
Strategy: key success factors
- Set a clear, specific innovation strategy linked to the organization’s strategy, with a well-articulated scope and objectives.
- Create a plan to innovate upon ideas that spur growth, enhance experience, protect the organization and optimize the existing business.
- Assign metrics to measure success and drive accountability for delivery. The strategy should identify the organization’s risk appetite for innovation.