10 Things I Learned About Building and Maintaining the Capacity to Innovate

Why is it so hard to build and maintain the capacity to innovate?

We need to create an innovation strategy. Here are 10 things I learned:

1. Firms have to align innovation efforts with their business strategies.
2. Innovation strategy is necessary, otherwise, we will rely on “best practices” to come up with approach that may not apply to our business.
3. Organization’s capacity for innovation has to come from innovation system.
4. The innovation system is set of processes that dictates how the company

• Positions ideas into business concepts
• Which business concepts get funded

So, how do we create a good innovation strategy?

5. Have clear understanding of objectives related to helping the business maintain competitive advantage.

6. Ask how your innovation will create value for your customers. For example, will it save money for consumers, will product / service perform better, etc. It is necessary to obtain diverse perspectives, but a strategy to integrate these perspectives around priorities is critical.

7. Choose what kind of value your innovation will create, and then executing on that is critical. It is necessary to have a very tight connection between business strategy and innovation. Your approach to innovation has to make good business sense.

8. If your innovation creates value, there will be imitators. You can’t just rely on intellectual property regulations to deter imitators. You need to come up with ways to stop your customers from defecting to other rivals. Therefore, continuous investment / funding of innovation is necessary.

9. Routine innovation builds on company’s existing technological competence and fits in with existing business model. Research has also shown that routine innovation generates the most profits (HBR, The Innovation Landscape Map). 

10. But this does not mean other innovation methods are less important. Disruptive, Architectural, Radical innovation methods are all applicable depending on how much to focus on technological innovation and how to focus on business model innovation. Different kinds of innovation can be applied to the business over time.

There is no magic formula.