A lot of people think that innovation goes hand in hand with chaos and confusion. It doesn’t have to be. In his Harvard Business Review article, Innosight’s Scott Anthony suggests that companies begin innovation efforts by creating an innovation strategy that details clear targets and tactics.
To create an innovation strategy for your organization, follow the steps below:
1. Set a clear financial target for your business several years into the future, for many companies setting targets in a five-year horizon is reasonable.
2. Determine how much your core business will contribute to your business. In some industries your five-year contribution might be below today’s contribution, and that’s OK.
3. Think about what’s in your development pipeline and how much revenue, realistically, these projects will fetch in five years.
4. Calculate the growth gap between where your projections suggest you will be and where you want to be, i.e. 1 - (2 + 3). This gap is your target for new innovation efforts.
5. Finally, plug the gap by thinking of the tactics that are on and off the table. A great way to structure this step is to use the Goals & Bounds template as shown below.
To begin a Goals & Bounds exercise with your company, first determine key dimensions for your new growth efforts. Goals & Bounds can be defined along many dimensions to ensure the best fit for your organization. Example dimensions could be customer type (e.g. existing, non-existing); geography (e.g. core market; non-core market); brand positioning (e.g. high-end, mass market); financial return (e.g. 3%, 10%). We suggest interviewing top management to determine important dimensions for your organization. Following this, complete the specific parameters (Desirable, Discussable, Unthinkable) across each key dimension.
Well-defined Goals & Bounds offer clear benefits to any organization aiming to pursue new growth efforts. It helps inspires thinking beyond the organization’s core business, aligns growth initiatives with the organization’s overall strategy, avoids wasted efforts on fruitless pursuits, and optimizes allocation of scarce resources. Formalizing these parameters is a great way to kick-start your innovation efforts.
Want to apply these tools to help your organization plug its growth gap? Dive into the Future Strategy Sprint.