Is Your Innovation Strategy Commercially Viable?
Anish Srivastava is the founder and CEO of Vinaj Ventures, an innovation and investment services firm based in the San Francisco Bay area.
Most company leaders understand that innovation is essential to maintain competitiveness and advance growth opportunities. To make a tangible difference to the overall success of the organization, however, innovation alone is not enough. Instead, it is important to embrace commercially viable innovation.
Commercially viable innovation is an organizational endeavor to improve or create new products, services and/or capabilities for either internal purposes or for end customers. It involves a deliberate and methodical focus to ensure business leaders assess the commercial viability of an innovation activity and deliver demonstrable and measurable results in the form of business value, revenues and/or cost reduction. The term organizational endeavor implies that the corporation is allocating resources and management support to innovation.
This approach requires your organization’s innovation groups to ignore — or at least treat with a healthy dose of skepticism — the technology eye candy that often distracts from the big picture. Tie your innovation practice to bringing tangible business value, such as reducing time, money or effort, to something that is important to the organization. As the CEO of a company that provides innovation consulting, I’ve seen how all too often innovation groups are distracted by the shiny object, and after a year or two of not delivering any real benefit to the health and success of the organization, projects are either scrapped altogether or need to undergo a complete overhaul.
The Strategic Value Of Innovation
A critical element of commercially viable innovation is to understand where you should innovate. Initiate the practice of anticipation and the study of technology, market and business model trends and customer experience. Examine what is happening in the market, the pain points both the company and the industry are facing currently and what they are likely to face over the next couple of years.
Use these insights to help draw a landscape analysis to further your innovation practice. A landscape analysis is used to formulate an innovation strategy and assess competitive threats and opportunities for a corporation around a specific sector or sub-sector, toward the goal of building a new revenue stream based on new expertise or products. It acts as a combination compass and map — it shows where you should be heading and offers a pathway to get you there.
Outcomes from this analysis may include developing proof of concepts internally, incubating innovative ideas and solutions to help the corporation and identifying unique and interesting startups to partner with, invest in and even acquire.
To understand the strategic value of commercially viable innovation, understand that technology corporations and startups often deliver quicker and more significant impact to established industries than older, more established entities.
This trend is impacting how large, established organizations approach innovation. For one, innovation endeavors are gaining more executive and CEO level sponsorship, resulting in a greater number of chief innovation officers and VP of innovation roles. Secondly, there is greater synergy between corporate strategy groups and innovation groups. Some corporations have combined the functions and created positions such as chief strategy and innovation officer.
For example, corporate strategy groups in large health systems previously focused on expanding their patient volume. More recently, large health care systems are placing an increasing amount of emphasis on expanding remote or telehealth opportunities and adopting a value-based care approach to the patient experience. Some large health care systems are also pursuing strategic partnerships, vendor relationships and M&A opportunities with startups. As a result, corporate strategy groups and innovation organizations have more of an overlap than in the past, which may lead to greater internal collaboration or to some level of co-opetition — collaboration between business competitors in the hope of mutually beneficial results.
Approaches To Innovation
What does innovation mean to your organization? Is it a disruptor to current practices, such as Uber’s role in upending the taxi industry? Or is it simply a new and improved approach, such as the use of apps in mobile banking?
It’s critical the innovation team — the group driving innovation inside your organization — has a clearly defined set of objectives. Defining clear objectives helps drive the most suitable approaches, programs, budget and the makeup of the organization to support these objectives. More importantly, it provides clarity and motivation for the innovation organization team members.
As an innovation organization matures, I’ve found a multi-pronged approach to innovation is helpful. There aren’t any silver bullets and quick approaches that will yield big results in a short amount of time. It’s possible to achieve some wins in a short amount of time, but to have a sustainable and repeatable process, it’s important to lay some groundwork to foster experimentation and to double down on the ones that show promise.
Elements For A Successful Innovation Organization
Setting up the right conditions for success in an innovation organization can affect its ability to function effectively and to deliver the desired results. There are four important elements for a successful innovation organization:
1. Sponsorship, governance and structure.
2. Resources and talent.
4. Processes for experimentation through to commercial deployment.
5. Programs for engaging internal and external ecosystems.
In subsequent articles, we will cover in detail these four elements, beginning with sponsorship, governance and structure. Along with establishing a solid understanding of innovation and clear set of objectives, each of these elements plays a critical role toward enabling a sustainable and repeatable process for commercially viable innovation.
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