Connecting Product Innovation Strategy with Business Operations

Research shows that 95% of the workforce in a company doesn’t understand the business strategy1. That’s a staggering statistic that should concern every executive and manager, but is this problem really recognized, and more importantly, what should you do about it?

What typically happens is that every year the corporate management team goes through a business planning process that produces the annual operating plan (AOP), key objectives for functional areas, and some strategic initiatives. But these plans are typically produced in presentations and spreadsheets that don’t make it past the planning team into the organization. Research consistently demonstrates that strategic plans frequently don’t get translated into operational action plans. Additionally, and more importantly, the innovation strategy and new product development initiatives, which drive the future of the company, aren’t sufficiently connected or aligned with the corporate strategic plans. The product innovation strategy tends to continue with what is already in process and in the pipeline.

The primary reasons for the breakdown in the strategic planning process that fails to connect strategy with operations are:

  • A disconnect exists between corporate strategic plans, which typically define the company’s targets for growth, and their day-to-day execution activities.
  • The annual operating plans are quickly out of date due to constant changes in market, product, technology and competitive situations.
  • The connection between corporate plans and the innovation strategy for new product development and product innovation strategy doesn’t exist in most companies – this is the critical gap.
  • The operational side of the organization frequently doesn’t understand the strategy or how its execution connects to business objectives.
To achieve consistent, sustainable long-term growth and profitability in your company, you must have systems and processes in place to close this gap and connect your corporate plans with innovation strategy and operational activities.
The operational areas in an organization have their own functional execution systems which are not connected to planning or innovation systems and processes. This is illustrated in the diagram on the right.

Without the processes and supporting solution to connect strategic plans and annual operating plan objectives, the execution areas of the company will typically continue what they’re currently doing. Not because they’re contrary or obstructive, but because there is no process to connect and interpret strategic plans to execution plans and priorities.

Closing the Gap
The strategic planning gap.
The best way to close this gap is to by improving Enterprise Innovation Performance, which is a system of cross-functional decision-making to define and manage your product innovation strategy and innovation investments. Our experience demonstrates that companies with effective enterprise innovation management systems and processes consistently generate more innovative products and initiatives, which leads to sustainable, profitable revenue growth.

Our customers have demonstrated the impact of doing this by objectively measuring business metrics such as increases in the success rate (actual versus planned performance); reduction in the time-to-market using the same investments and resources; and increased portfolio value, typically measured as NPV. Take a look at some of our customer case studies in the media center for actual achievements.

Enterprise Innovation Performance
The role of Enterprise Innovation Performance to fill the strategic planning gap.

For more information and to learn more about how you can improve Enterprise Innovation Performance for your product innovation strategy and sustainable, profitable revenue growth:

1 David Norton & Robert Kaplan – The Execution Premium: Linking Strategy to Operations for Competitive Advantage

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