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10 Steps to Define an Innovation Strategy

Many clients come to us when their senior leaders are asking for innovation—but what they really need is innovation strategy. (For more on this, check out “The Innovation Charter: Defining Your Innovation Strategy.”)

In this post, we share the 10 steps (okay, 11 steps) we take our clients through to define their approach to innovation. This process helps them focus their innovation efforts, better align their stakeholders, and create the conditions for more effective and efficient innovation.

Before you dig in, it’s important to note that these steps build on each other. Do not proceed to the next step until you’ve clarified and aligned on the existing step. If you’re not aligned, slow down and put your energy into that step before moving on. We promise this investment of time now will pay dividends down the road—and protect your reputation and influence as a guiding leader along the way.

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0) Know Who You Aren’t

Maybe it’s cheating to start at step zero, but this part is important: not all innovative companies are disruptive companies. Being an “industry disrupter” is a very specific Innovation Philosophy and it’s not well suited for the vast majority of organizations. It is far better to be an organization who is deeply committed and aligned around incremental efficiency than to be an organization who wants to be an “industry disrupter” but refuses to invest in the resources, technology, and leadership to achieve it.

The gap between who an organization aspires to be and how it operationalizes everyday is what we call an Innovation Identity Crisis, and we’re seeing more and more organizations experiencing them. Leadership teams are demanding big innovation, agility, and transformation to drive growth, but without the operational, strategic, and investment support to actually realize those results. Budgets, headcount, and permissions decreased while expectations for results continue to rise. These types of Innovation Identity Crises quickly result in inefficient spending, leadership burnout, employee retention issues.

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1) Rigorously onboard into your leader’s growth strategy and perspective on innovation.

If your organization’s leader doesn’t yet have a growth strategy, or if it’s not well defined, then helping them to clarify one becomes your #1 priority. Think of the growth strategy as the compass needle for your innovation strategy. All efforts you put forth should support your advancement in the direction the business would like to pursue. Without a North Star vision to orient, your innovation efforts will likely fail.

In addition, it’s critical to understand how your leader sees the role of innovation. Do they value sustaining innovation that serves to reinforce the current market position with iterations to existing products and services? Are they supportive of investing in R&D or disruptive solutions? Based on their point of view, you may need to adjust some aspects of your personal vision for innovation, but the result will be a shared perspective that reduces friction in alignment, prioritization, and resource allocation for your future innovation initiatives.

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2) Engage your executive team to learn what influences change.

Senior leaders have sight lines into more areas of the business and are excellent sources to understand what works—and what doesn’t—at the org-wide level. Even if your innovation strategy focuses on a specific team, region, or product, their intel on the macro level culture will improve your approach.

In our innovation strategy projects, we lead 1:1 interviews with each member of the executive team to understand how aware and aligned the leadership team is with the CEO’s growth strategy and unpack any existing biases or perspectives on the role of innovation. This helps to understand both sponsors and skeptics, and—trust us—there are always a few of each. Our aim is to quickly recognize who they are and the role they’ll play in supporting or hindering the innovation strategy so we can engage them accordingly.

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3) Listen to your employees to understand the root cause of current cultural conditions.

In addition to learning from executives, it’s crucial to spend time engaging employees to understand the capabilities, systems, and permissions to innovate. This takes the form of listening to, whenever possible, observing employees’ current ways of working. Generally, people will be honest in conversation, but actually witnessing how dynamics play out or teams navigate obstacles reveals far more about the culture.

This early engagement with employees allows our team to do a root cause assessment to understand the underlying beliefs, behaviors, and mindsets that will either support or stifle the innovation strategy.

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4) Listen to the customers and market to identify where to play.

Reviewing existing customer data, market trends, and competitive assessments is a critical step in defining an innovation strategy. In addition to reviewing desk research, we always advocate for conducting some primary research or, more simply, spending time with customers.

Integrating market research and the customer voice allows our team to better understand the current state of the landscape and customers needs and aspirations. From there, we can begin to identify opportunities for the innovation strategy to “play” where it can have the greatest impact.

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5) Use co-creation to define the innovation charter and innovation philosophy.

Co-creation is imperative to the success and durability of an innovation strategy. Incorporating a diversity of thought not only helps with creating better ideas, but it also ensures your key stakeholders/sponsors to see their perspectives reflected in the final outcome. This stakeholder management will pay dividends for you as budget requests, accountability structures, and experimentation start to unfold.

Prior to a co-creation session, we often draft prototypes of the innovation charter and innovation philosophy. Even if we have a strong point of view, we try not to be too precious about these prototypes, as they ultimately serve as starting points for the team to build on. Then, we’ll get the executive team together and playback the key insights from the research before refining the prototypes together. This can take several co-creation sessions to finalize, but each one gets us closer to an aligned strategy.

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6) Distill the innovation priorities.

Once you’ve got the charter finalized, your efforts will shift towards putting it into action and building momentum as quickly as possible. You must give people a reason to believe before they start questioning how your efforts are adding value to the organization.

We do this by taking the insights from our research and distilling them into 3-5 innovation priorities. These are the specific opportunities the team will pursue in support of the organization’s growth strategy. We like to use Objectives and Key Results (OKRs) at this stage as a simple framework for aligning folks on where we’re going and how we’ll know if we’re on the right track.

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7) Invite employees and customers to explore solutions, but refine them with a smaller, more experienced team.

As with co-creating the strategy, co-creating the solutions will help you get to better outcomes and navigate the change management. However, for these brainstorms, rather than inviting top executives, we focus instead on folks who have deep subject matter expertise, are closer to the customers (or are customers themselves), or have spent more time thinking about the specific challenges. We also time-box these sessions to generate a broad base of ideas quickly.

Although broader company-wide engagement is fun and great for capturing lots of options, it rarely works well for decision making. Therefore, we take the outcomes of the brainstorming sessions and ultimately advance the more rigorous concepting and business building with a leaner team of experienced innovation team members.

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8) Build momentum through experimentation.

Your goal during this step is to accelerate organizational learning, not perfect the solution. Embrace a “minimum viable experiment” or MVE mindset to rapidly test your riskiest assumptions.

We start by identifying the most critical assumptions—the ones that, if we get wrong, will cause the whole idea to fall apart. Then, we set out to test those assumptions through MVEs as quickly as possible. There are lots of intricacies to how to structure these experiments and design your teams, but we’ll have to save that for a separate blog post (or book).

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9) Assess your metrics, capture the learnings, tell the story, repeat.

If you haven’t picked up on it yet, change management is a critical piece of innovation success in most large organizations. Leaders can quickly forget all the input they gave you just a few weeks before, so you need to start owning the narrative.

We help our clients establish stakeholder communication plans, structures and systems to keep everyone updated on where innovation is going and how it’s supporting the growth strategy, as well as how the innovation priorities are performing against the OKRs everyone agreed to (or learning and pivoting accordingly). Sharing these stories will help build confidence, represent what’s possible, and invite folks into the process.

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10) Take a breath, reflect, and celebrate.

Innovation is never a linear journey. If you find yourself at Step 8 one day and needing to go back to Step 3 the next, then you’re probably doing it right. In most organizations, we find that stakeholder management requires just as much time and investment as the actual innovation management. That can feel exhausting, but over time you’ll slowly improve those inner workings.

Be willing and eager to pivot alongside the pivots in your organization. Whenever leadership changes, markets shift, pandemics happen, or competitors emerge, we consider those great opportunities to zoom out and reassess the impacts to your strategy.

Interested in developing an Innovation Strategy for your team or organization? There’s a lot more to share behind each of these steps. Send us a note and we’ll set up a discovery call to talk through how it could be applied to your unique team and situation.

Andy Hagerman
[email protected]

Andy Hagerman is one of the co-founders and partners at The Design Gym, a strategy and innovation consultancy helping leaders to grow their business by fully unlocking the power of their most important advantage: their people. We work at the intersection of business strategy, experience design, and change management to engage the people that matter most to your work: your customers, your leaders, and your employees. See something that resonates with a project or challenge you're working on? Shoot him a note at [email protected].

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