Your Roadmap to Technology and Innovation Mastery: How to become more innovative (Part 1)

Reading time 9 minutes.

Questions you ask:

  • How do I increase our innovation performance?
  • How do I become more innovative?
  • What do the best innovators do to succeed?
  • What are the barriers to innovation?

PART 1: The Roots of the Strategy Problem

Summary – what’s this article about?

For business and R&D leaders, making sense of new technologies and potential innovations effectively and at speed is crucial. A technology and innovation strategy that is well-aligned to corporate and product goals gives leaders the ability to make sharper, more informed decisions, and to better account for crucial investment choices.

But companies can find that the organisation is held back by critical weaknesses in the approach to technology and innovation management. These barriers slow down progress, create missed opportunities and reduce the potential return on innovation investment.

This article comes from a series of workshops for senior business and innovation leaders and covers quite a lot of ground very quickly. We assert the premise that most strategy for technology and innovation is weakly designed and or poorly executed.

And yet, we can all name companies out there at the so-called productivity frontier that are reshaping markets.  These are the true and undisputed title winners; the Masters.

However, all companies do not need to be Masters or achieve mastery.  It is almost certainly the case that many firms can and indeed must do better, to improve innovation and the consequent business results.

Contents: What’s in the article?

Discover how to develop an approach to strategic technology and innovation improvement that addresses;

  1. The strategic planning problem: Why technology and innovation planning so often fails to launch.
  2. The innovation imperative: what is it that companies MUST do to deliver on their innovation objectives.
  3. How to establish your current innovation bench strength as a way to inform your innovation mission and improvement agenda.
  4. How innovation management workshops rapidly develop more robust answers to technology and capability investments and so reduce risk.
  5. The steps a complex technology-intensive firm can take to move up the innovation maturity ladder to enjoy better business results.
  6. Insights into what high-performing businesses do in this space and strategies for improvement.

The Strategy Problem

I’d like to continue in this conversation about what it takes to succeed in Technology and Innovation for technology-intensive companies are almost two sides of the same coin. Yet one does not necessarily require the other.

Innovations are the source of new and value that a customer or user will appreciate and are usually products, services, processes or some other value-adding solution.  Technologies are the enablers; the science, engineering, capabilities, know-how that allow the innovation to work and deliver its value.

Yet for established large companies through to technology start-ups, a pervasive set of questions nags in the minds of R&D managers;

  • What’s driving change and what is the nature of our response?
  • What innovations will create value in future?
  • How do we leverage associated with technologies?
  • When do we need to act?

And now the ongoing global health, supply chain and geopolitical emergencies have created new levels of uncertainty for companies. Markets may have been disrupted and companies may have responded with a reduction in development efforts. Or perhaps they may have increased or possibly refocussed efforts.

For business leaders, concerns relate to where will innovative growth come from. More specifically, “how will my company increase the success rate of new products and services and deal with radical challenges to the business model?” 

Who is doing innovation and what drives their pain?

Innovation can all too often be a heroic activity.  A visionary R&D manager sees and drives a new opportunity despite resistance in the organisation. Through to maverick entrepreneurs wanting to reach another planet.

Meet our innovation heroes…

Daniel is a VP of innovation for a large power tool manufacturer and is charged with building new momentum into the product pipeline in the next 3 years. But the link between new technologies and commercial gains are unclear and the portfolio is dominated by short term incremental projects.

Claude is a commercial director in a growing SME in the FMCG sector and is seeking new growth options, new packaging technologies and applications. Being able to clearly articulate the commercial gains of R&D programmes will help create buy-in from the board.

Ana runs a corporate innovation centre looking into white space opportunities that are emerging. To engage existing and potentially new users of the centre she needs to describe the vision and opportunities to boost new signings and realise the potential.

Jamey runs an R&D in a national standards agency responsible for the stimulation of health and well-being in consumers. He needs to work out where the best return on investment can be made and which are the right projects to fund.

Organisations, by which I mean companies, large and small, agencies, associations can also have similar challenges.

Markets and technologies can be complex and in many cases, fast-changing.

You might see that all these people and roles have similar challenges

  1. How to effectively identify needs for change.
  2. How to offer sources of true value creation in time. And,
  3. How to know what resources are needed to support value creation opportunities; products, processes, services, knowledge for example.

The commonality between our innovation heroes and their organisations is that they have to decide what innovations and technologies to back and create a better story to tell their stakeholders.

What’s your innovation imperative?

We’ve probably read some innovation state of nation reports by McKinsey, BCG and PwC for example. Many organisations say they want to innovate and set up a programme to improve and yet the results frequently disappoint.

Reasons to innovate are several, but is what we might call your innovation imperative resonant? Test this by answering the question – does it provide sufficient motive force and personal security to make the change?

Countless studies, surveys and reports tell us about our desires to be more innovative.  But the usual stories are usually ones about companies and innovation leaders saying one thing but doing another.

  • PRIORITY: The Boston Consulting Group’s Innovation survey consistently identified innovation to be a Top 3 strategic priority with 80% of CEOs yet 94% are companies fall short in impact (McKinsey, Innosight).
  • FEAR: The IBM Global CEO survey sees leaders fearful of falling behind in the innovation arms race.
  • BEHAVIOUR: 68% of new ideas are treated with downright hostility. Only 25% of companies say that they are excellent both in idea creation as well as in idea execution.
  • DELAY: Slowing products to market by 9 -12 months reduce returns by 50% of anticipated revenues and 15 to 35% of the Net Present Value. Product delay announcements decrease the market value of the firm by 5.25%.
  • RETURN: 47% of senior executives describe their company’s various innovation activities as a ‘costly failure’. Yet, the best performers enjoy a 3-year Total Shareholder Return above peers of 6%pa and higher operating margins compared with the average.

The Innovation Imperative

The relationship between business, innovation and technology strategy

Consider how an organisation plans its purpose, goals and objectives; strategy for short.

At the enterprise level, the Business strategy is about the overall venture and what it is in business to do.  Innovation objectives can be part of this; for technology-intensive firms, this is essential and it’s where the innovation imperative is articulated.  The board should keep this imperative up to date and enable the organisation to respond with new solutions. Decisions are made about what it uses its resources such as people, facilities and finances to deliver those objectives. The portfolio of resources will be split between maintaining the operation and growth.

A key decision is the Golden Ratio which for innovation spending, is the split between incremental innovations, adjacencies (new markets, technologies) and radical new markets, business models and solutions. On an extreme a split of 100:0:0 only delivers increment tweaks to products and services and, apart from being rather boring, is not future-proofing the firm.

The Innovation Ambition Matrix

A split of 70:20:10 is something a future-fit industrial innovator would deploy.  The main thing about the Golden Ratio is to be explicit about what it is for your firm.

Related to this set of decisions, is the innovation strategy. The plan responds to the business objectives in identifying what innovation will be needed and when. In the jargon, “Where to play and how to win”. The innovation strategy also describes the innovation vision and mission in satisfying the chosen Imperative and determines what kind of innovation will be delivered and the means to do so.

The innovation strategy also alludes to the technology strategy; the plans for the innovation-enabling technologies – the science base, the engineering, the knowledge base, the facilities and the partnerships that make the innovations a reality.

Each layer to strategy supports the next.

Strategic Hierarchy

To develop this strategy cake, strategy can come top-down or come from the lower layers, upwards.  For example, new technology can be so impactful and important as to redesign the very purpose of a business.

This is the strategic importance of technology and why is it, for technology-intensive firms an important item of the board room agenda.

Definition technology strategy

“Technology strategy is a key aspect of innovation strategy, since innovation strategy, among other things, determines how technology is used to meet the aims of the organisation” (Goffin & Mitchel, 2010)

Technology strategy is about good decision support for technology investments covering these main questions: Why, What, How and When.

What innovators need to do

You have a strategy problem

Assume that the business strategy is sound. However, could it be that your innovation and technology strategy is weakly designed, poorly executed, or both. Paul Leinwand’s 2015 HBR article tell us that 90% of leaders are failing in their creation and delivery of strategy; a rather grim statistic. READ MORE.

Companies may have decided to do the right things but poorly executed. Or do the wrong things, but deliver them well. Or do the wrong things and do them poorly.  Not a sustainable position.

In R&D and innovation management, Bob Cooper looked at the question: what drives higher levels of performance and that firms ranked in the higher levels of performance have better strategy processes, more regular routines and more aligned functions. Those firms using strategic roadmapping outperformed the laggards.

Roadmapping and the link to firm performance

As a final piece of evidence before moving on, we can access another recent meta-study by George et al that reviewed the link between doing strategic planning and organisational results. In summary,

  1. Strategic planning has a positive, moderate, and significant impact on organizational performance in the private and public sectors, across international settings. And,
  2. Strategic planning is particularly potent in enhancing organizational effectiveness (i.e., whether organizations successfully achieve their goals)

Root causes of failure to launch

So at the strategy layer – specifically innovation and technology strategy – what’s going wrong?

For developing effective plans for technology, I’ll describe three main problems;

  1. FIRST, technology is too often left to the technologists.

Either because of top management being uncomfortable with technology, or a perception that it’s for lower management to do. It Isn’t giving its vitality to the future of the firm.

  1. SECOND, the feeling that strategy needs to be large and complex to pull the different aspects together – “no time for strategy, I’ve got a business to run” to borrow the famous cartoon.
  2. And THIRD, we would say that the common approaches – the pass-me-down ways of managing technology used by many R&D managers often don’t provide sufficient rigour or the basis of good decision-making for investments in technologies.

This leads to to the problem identified by Leinwand: Weak unfocussed strategy and below-par delivery.

In the NEXT PART, I’ll continue to use “roadmap” as a metaphor as a guide to our improvement.

 

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Rob Munro delivers strategic innovation services to companies, universities and government agencies giving business and innovation leaders the practices, tools and confidence to achieve best in class innovation results. Please contact me to discuss ways to bring greater effectiveness to your innovation processes. This article is partly drawn via his association with IfM Engage at the University of Cambridge

Read more about my service to organisations for innovation planning in improving innovation results.

 

Further Reading

  1. Roadmapping for Strategy and Innovation, Rob Phaal, Clare Farrukh, David Probert, University of Cambridge, 2011
  2. Cogitate, articulate, communicate: the psychosocial reality of technology roadmapping and roadmaps, Clive Kerr, Robert Phaal, David Probert, R&D Management, 2012
  3. Leinwand P, Mainardi C, Kleiner A (2015), Only 8% of Leaders and Good at Both Strategy and Execution, HBR Blog
  4. Cooper, R. G., & Edgett, S. J. (2010). Developing a product innovation and technology strategy for your business. Research-Technology Management, 53(3), 33-40.
  5. George B, Walker R M, Monster J, (2019), Does Strategic Planning Improve Organizational Performance? A Meta-Analysis, Public Administration Review, 79 (6) 810-819
  6. Dasgupta, M., Gupta, R., Sahay A. (2011). Linking Technological Innovation, Technology Strategy and Organizational Factors: A review. Global Business Review 12 (2) 257 – 277
  7. Kerr, C., Phaal, R., Thams, K. (2016). Customising and deploying roadmapping in an organisational setting: The LEGO Group experience, R&D Management Conference July 2016, Cambridge, UK
  8. Ilevbare, I. (2016). Business-aligned technology strategy – why, what and how? Report for Strategic Technology & Innovation Management Programme 2016.Centre for Technology Management, Institute for Manufacturing, Department of Engineering, University of Cambridge.