The term strategy is frequently misunderstood. The term actually comes from the Greek word ‘strategia’, which means ‘the art of the general’. The general's job is to look at future challenges ahead and develop a plan for overcoming these challenges. We then develop a series of objectives, but importantly, what is our plan to achieve them? At this point, the plan it's a quite broad and we'll refine it as we move forward. We'll find areas of opportunity and our plan will get refined as we gain knowledge and as we reduce uncertainty. Going back to the art of the general, a strategy has to be flexible and adaptable. And there's a famous saying ‘no battle plan ever survives first contact with the enemy’. Innovation strategy is looking for unmet need in the marketplace and as Plato famously said ‘necessity is the mother of invention.’
So this is where we are initiating our innovation strategy. Good organizations regularly scan the context of their organization and they look for areas of opportunity. They look at trends, trends in the market, social trends, new trends in technology. They want to know the impact of these trends. What's the speed of change that's going on? What are the new threats that are coming at us? We will also find there are certain organisations and individuals that we want to engage with to leverage the opportunities we have found.
We also look internally what are our capabilities, how adaptable are we? What are the skills and competences that we have? How mature are our current offerings and are they coming to the end of Life? What are the Knowledge levels that we have, the technologies we have, the partnerships we already have in place. This is a very thorough analysis.
This is what good companies do. They look into the future, they see trends and they ride the wave. They capture the opportunity.
We typically do this with a SWOT analysis which is a tool initiated by Albert Humphrey at Stanford University when he was running a project looking at why corporate planning fails so often. A SWOT is fairly straightforward, it simply asks 4 questions. First of all, strengths. What do you do best, what are your unique competences, your unique resources? Give this some thought. Then weaknesses. Where do you do a poor job? Where are you being beaten in the marketplace? Threats, what worries you, and where is the competition attacking you? And then opportunities.
The areas of opportunity we've gained from SWOT analysis, we feed into our strategy development.
Clearly, strategy is a leadership task. Innovation leaders challenge the status quo. They set an ambition level and need to explain why innovation is important to your organization. You need a document that's going to be flexible because as you move forward, you're going to be adapting your strategy, but also your strategy needs to be understood by everybody in the organization. You probably want a short version which engages people and specifies the roles that people have in deploying strategy.
Your strategy is going to balance assumptions in the early stages and later you're going to be making decisions based on hard evidence. Strategy is a high level plan to achieve goals, but we do this under conditions of uncertainty, so we're constantly pivoting.
strategy needs support and that's a critical part of the strategy. In a large organization, we will align the innovation strategy with the core strategy. In a start up, the innovation strategy is probably the entire story.
A key part of innovation strategy, is the development of an innovation culture, behaviors which are probably different from those traditionally experienced in an organization. This is where leaders need to be conscious that their own behaviours define the culture. Culture is very much top-down, especially in times of crisis. The way that leaders behave then defines the way that people will behave moving forward. The core behaviors that that are needed in are creativity and delivery and they need to coexist. At this point you must analyze your current culture. How good are we at exploration, collaboration, experimentation, ideation and commercialization? I will talk more about culture in a later post.
Another key element of strategy is the portfolio tool. The portfolio lists the various opportunities we have and the risks which attach to them and of course as we advance, those risks will change. The portfolio is where we assign the responsibilities for the various opportunities.
A good example of a company that looked well into the future was Netflix. It was back in 2007 when they started developing streaming movies. If you recall back then, we were only just into 3G. We're now in 5G, but Netflix could see that development coming.
Strategy does not stand still. We're constantly seeing new opportunities and new problems to solve. We're constantly facing uncertainty. We're working in a world of complexity. Information will be ambiguous.