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Creating an Innovation Strategy

Updated: Nov 2, 2021

If we accept that startups create environments that enable Innovation rather than just happening, it stands to reason bigger organizations can innovate too.

Gary Pisano explored this concept and discovered that the root cause for the lack of Innovation at bigger companies is often due to the management practice and leadership. There can be an argument with the right management practices, and the leadership scale can be leveraged because larger organizations have scale.

One way to explore this is to deconstruct the organisation into smaller units that replicate the autonomous nature of startups and potentially their culture. The approach to risk-taking, the action orientation, and accountability are, in effect, mindsets, which can be 'tuned.'

Gary explores the opposite idea of the deconstruction of a large organisation to a Creative Construction process that sustains and rejuvenates and existing organization's capabilities to innovate.

Creative construction has three essential leadership tasks present. These are:

  1. Creating an innovation strategy;

  2. Designing an innovation system; and

  3. Building an innovation culture.

So if we accept Innovation is as much mindset and culture, how would one go about creating an 'Innovation Strategy".

A good strategy is critical in helping a company understand the balance between short term gains and unlocking long term opportunities.

Pisano outlines the link between the innovation strategy and what is required. He identified four types of Innovation;

  1. Routine;

  2. Disruptive;

  3. Architectural; and

  4. Radical.

Pisano determined each innovation type requires a different system for execution.

However, whatever the Innovation, "the right way to assess the value of an innovation strategy is the value created and captured." That is an absolute. One question though is over what time frame.

Of course companies do not operate in a vacuum. There is of course competition. When faced with a potential threat of disruption, consideration of two elements needs to be understood.

  1. The nature of the threat. How certain is the threat, and is it imminent or distant? And,

  2. What impact does it have on your profitability?