Aspire and drive towards innovation-led growth

Aspiring and driving towards innovation-led growth requires the systematic application of an innovation strategy across the company. (De Jong et al, 2013) Effort towards aligning employees to both business goals and the innovation strategy is required. Alignment to business goals can often be evidenced by employee engagement surveys, which in our experience, can commonly indicate staff can be unsure how their roles contribute to a firm’s broader business plans. In order to maximise alignment to innovation strategy a top-down approach to its creation should be avoided and expanding the number of people that contribute to business planning and innovation strategy creation may assist in avoiding this problem. (Kastelle, 2014)

If the organisation is to view innovation-led growth as being critical there should be cascaded targets across the organisation. (De Jong et al, 2013) Indeed, innovation may work best when everyone in the firm has some involvement in creating and executing the ideas that will drive the firm to success. (Kastelle, 2014) Often organisations will describe a desire and drive to innovate but many firms will lack cascaded targets for innovation growth. Most, if not all, organisations will set financial targets, for example, an organisation may have a 12% growth target in total revenue annually; but it what can remain unclear is how much innovation is needed to meet this growth. In order to determine the ‘innovation growth gap’ the company should quantify and total all non-innovation growth levers (e.g. organic growth in traditional revenue/funding streams, expense efficiencies, and other increases unrelated to innovation initiatives) and subtract this from the planned performance target. (De Jong et al., 2013) The remaining result is the value the company needs to create through innovation. (De Jong et al., 2013) For example, assuming a 12% revenue growth target annually, if all non-innovation growth levers totaled to 8% then the innovation growth target is 4%; that is a financial target of 8% growth in the current core and 4% growth in new ventures. Once this is known, it can then be determined whether current innovation projects are substantial enough to fill the innovation growth gap.

Consideration should also be given to under-performing or failing investment in key innovation projects. (De Jong et al., 2013) Leaders should be committed to these key projects as well as the innovation growth targets and able to allocate targets across business units, budgeting and through performance appraisals. (De Jong et al., 2013) This inevitably means choosing where to invest in innovation across the company.

In our next blog we will discuss how to choose where to invest in innovation…

#innovation #strategy #innovationstrategy #growth #aspire #EdgeBig #alignment

References

De Jong, M., Marston, N., & Roth, E. (2013). The eight essentials of innovation. McKinsey Quarterly, Strategy(2), 36–47. https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-eight-essentials-of-innovation

Kastelle, T. (2014). Is Your Innovation Problem Really a Strategy Problem? Harvard Business Review Digital Articles, February 2014, 1–5. https://1drv.ms/b/s!ApP6O-xMYmZ6iq5F5Rn01d1tf7U-fA%0Ahttp://blogs.hbr.org/2014/02/is-your-innovation-problem-really-a-strategy-problem/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%253A+harvardbusiness+%2528HBR.org%2529&cm_ite=DailyAlert-021214