Link Innovation Initiatives to the Strategic Planning Process

/Link Innovation Initiatives to the Strategic Planning Process
  • link-innovation-to-strategy

Link Innovation Initiatives to the Strategic Planning Process

For innovation initiatives to have the most impact, they must be tied to the strategic objectives of the company. Too often, I've seen R&D managers working in the dark, not knowing what is important to the company or to the customer. If R&D managers don't know their company's priorities, they can't be proactive in suggesting initiatives that could have a strong business impact and can’t manage their R&D portfolio to support business needs.

Instead, the most effective companies create a multidisciplinary process that brings together representatives from different parts of the company to collaborate on the strategic plan.

Typically, strategic planning occurs yearly. Then, each quarter the achievement to plan is monitored and reviewed. In a corporation with different divisions or business units, the leadership of the business unit of R&D work together to define the direction and plans for the coming year.  From the business side, product managers, marketing and sales managers define the potential of different market segments. R&D managers or Innovation Excellence managers can propose different programs of research and development as needed to meet strategic objectives and innovation initiatives.

In this way, strategic planning is both top-down and bottom-up. It is top-down in that the long-term vision is set at the Leadership level.  But it's also bottom-up, in that different projects in the portfolio are reviewed to understand their financial value and timeline.  For example, the strategic planning team can look at the company's portfolio of projects and see that it has ten projects with a value of $X and a budget of $Y. From that, the team can determine whether the existing set of projects addresses the strategic needs of the company, or whether new ideas are needed to close the gaps.

Let's look at how innovation initiatives support business objectives during the planning process.  Say you're a company that sells paint to the construction industries.  Your company's strategic plan calls for entering Southeast Asia, and your existing products does not have a product aimed specifically at that market.  You bring together a team of marketing and R&D to define what a product for this market should be. The marketers begin describing characteristics of this new region, such as the typical applications, types of construction and materials used in the region. The R&D people take this fact and propose developing a new kind of exterior paint for buildings that reflects heat based on the applications and the climate. Specifically, the new paint would reflect heat not just by being light in color, but through its heat reflective chemical properties as well. This notion thus leads to a new product initiative: changing the formulation of existing paints such that they will reflect heat.

In short, the company’s strategic plans for geographic expansion drove the targeted development of a new innovation: a new type of building paint aimed at the Southeast Asian market. Further, R&D understands the priority that this initiative must have when it is asked to review its own portfolio and prioritize the new development against other new developments.

2016-10-06T15:06:25-05:00May 14th, 2013|

About the Author:

Zahra Manshande
Zahra is an expert in best practices for innovation management. She is experienced with helping organizations implement these best practices to ultimately enable these companies to improve revenue and customer value from innovation and NPD. . They need new ways of working and need to know how software can improve the work and results of their R&D teams, Executives, Product Mgt, Marketing as well as related functions such as Finance, IT, Sales, the PMO and members of Supply/Operations. Together they strive to improve revenue and customer value from innovation and NPD. Together we look for implementing new and efficient ways to enable this. Access to information, transparency and insight are key themes.

8 Comments

  1. Zahra Manshande
    Zahra Manshande July 23, 2013 at 6:55 PM - Reply

    Dear Mr. Wisnoski,

    Thank you for giving me the opportunity to elaborate some more on this topic.

    We both agree in that having and describing a long term vision is essential for high innovation performance. It links people together who have different expertise, functions or management responsibility. Our recommendation at Sopheon is to translate the management vision on innovation into several time horizons: today – tomorrow – and beyond. The timeline is different depending on your new product development time. For the upcoming years (today’s plan) the innovation plan is often quite detailed and tied into the launch calendar of the project portfolio. I agree this is not long term innovation and certainly not enough to achieve long term sustainable market differentiation. This is executing on a plan!

    We do recommend at Sopheon to tie all plans and programs to one of these three time horizons. This improves the business result from innovation because, as you agree, it allows a company to classify projects in clear portfolio’s. This increases visibility, predictability and clarifies to the innovation workers where they contribute with their work (short term or longer term). This is not only highly motivational to them, it also ensures they are not working on projects or research that will not contribute to the success of the company. Again, however, this cannot be enough for top-innovators. They will not lead the way only by focusing on projects that have direct proven business value from innovation. They also should focus on the long term. But in the real world, let’s agree: for many companies this is already a big step forward – as they generally lack the vision and plan if they struggle to get good results from their innovation dollars.

    How to describe then the long-term vision?
    Describing the vision of consumer needs and wants in the future is one example you give. In my work I see companies translate mega-trends and long-term market trends, demographics and include world bank statistics. They look beyond their customer base.

    The point we did not touch is that of independent research work. Breakthrough, blue-sky, explorative and not tied into the business planning cycle. The latter being so much results and plan driven – for good reasons. True, this type of research is done almost separate from the planning process. And this is where the “real” innovation comes from.

    Many thanks for your reply,

    Zahra

  2. Avatar
    John Wisnoski July 11, 2013 at 9:47 AM - Reply

    This article screams “short-term” innovation, from my perspective. I agree R&D should be directly tied to the strategic goals of the organization, but you won’t have a very sustainable long-term portfolio. What I mean is; by just bounding your R&D team to next year programs, ie; paint for a new region, you leave yourself vulnerable for another competitor to leap frog your new formula with a portfolio of paint formulas.

    Innovation is not a one-off, but should be tied to a long-term vision. And is the reason why R&D should be able to function in the dark playing with emerging technologies or paint formulas relating to your example. A good process to connect your R&D team with the long-term strategy, beyond 10 years, is to align your organizations strategy of today with a vision of tomorrow. Take risk in predicting the future! By visually predicting the future of consumer needs/wants, don’t think that you are not giving specific direction but allowing yourself to take a journey through the innovation cycle, you are able to establish a transparent portfolio. This type of long-term strategy will help your organization see; portfolio gaps, knowledge gaps, market/brand gaps, resource gaps and a variety of other strategy insights you wouldn’t receive by being incremental or having a ‘one-off’ innovation portfolio.

  3. Zahra Manshande
    Zahra Manshande July 9, 2013 at 9:13 PM - Reply

    Dear Jag,

    Good to hear from you again. May I ask, can you clarify your comment? Are you asking the question about which dashboards to use to effectively support the strategic planning process? We recommend you first agree which deliverables are key in helping your management define the strategic plan (is it the market outlook, the competitive analysis, the gap-versus plan in your portfolio)? Let me know.

    Best,
    Zahra

  4. Zahra Manshande
    Zahra Manshande July 9, 2013 at 10:17 AM - Reply

    Dear sir Machado,

    Thank you for your comment. Yes, I totally agree. In my work as Business Consultant I see different companies, with different cultures and I meet people who have preferences or experience with different methodologies. There are indeed software packages to support methodologies like Balanced Scorecard, Collaborative Strategic Roadmapping, Innovation Planning, Budget Planning, Product Roadmaps etc. In Sopheon we have offer our best-of breed innovation software that is tightly integrated with MS Office, E-mail and has built-in intelligence do to calculations, optimizations, linkages and notifications to identify bottlenecks, budget increases etc. We acknowledge that not all processes are alike and the software to support the different parts of the circle (front end ideation, stage gate execution, portfolio optimization and innovation planning) require a different set of functionalities and data to be managed. Also, the people that work in each process are different and the interaction throughout the year with the software is different. The software must be tailored to their specific needs to be really effective in supporting their day to day job. For some people this means only touching the software twice a year intensively during the strategic planning meetings – so the online innovation planning board needs to be very intuitive. Do contact us if you want to know more.

    Best regards,
    Zahra

  5. Avatar
    Fernando Machado July 9, 2013 at 10:16 AM - Reply

    Zhara,

    You touched the innovation step stone, the area callled frontend innovation.
    There are specific methodologies to jointly define the enterprise competitive and collaboration strategies and innovation strategies.
    Are you aware of any software packages involved in that?
    rgds

  6. Zahra Manshande
    Zahra Manshande July 9, 2013 at 10:04 AM - Reply

    Dear Ronald,

    Thanks for your comment. The purpose of my article was to clarify how a multidisciplinary planning process within the company can take shape. Too often I still see the traditional silos and the sheer absence of interaction between sales, product management, R&D and marketing. Especially in low-performing low-innovation companies who are looking for ways to change that to improve performance from innovation. Your comment about the competency of the R&D people being able to bring outside-in is absolutely valid. This process again cannot rely on those personal competencies (research skills) alone – because that is not repeatable. Any company that wants to improve performance from innovation needs to developed policies through HR (hiring the right people with the right mindset, relation building skills and outward looking), through software systems connecting people across the world, and by using tools like long-term innovation roadmaps that force Marketing-R&D and the Business to develop the right priorities and mapping these against events in the environment (competitive offerings, market trends, mega trends etc).

    Best regards,
    Zahra

  7. Avatar
    Ronald G. Havelock, Ph.D. July 7, 2013 at 10:03 AM - Reply

    Good post but important to think outside the box, the box in this case is the company. For example, goal setting at the top management level needs periodic re-evaluation to consider other areas to consider branching into along with associated risks. At the other end, R&D needs to be thought of in distinct segments, idea generation, search for potential new markets for existing products, existing product line enhancements and reengineering, patent search and competition evaluation, and alliance opportunities with other developers or suppliers. It is very important to know what else is out there. That means that the R&D team needs to include people with strong information research skills to be on top of the research (think universities) as well as parallel or associated activities around the world. My book “Planning for Innovation” spelled out a number of these issues as they appeared in the 1960,s and 70′s, and the basics haven’t changed all that much since then.

  8. Avatar
    Jag Shelkay July 5, 2013 at 10:09 AM - Reply

    Zahra

    I like this article, any good example on how this could be implemented using APC

    Thanks
    JS

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