Agile Strategy: Connecting Innovation To Business Strategy

Aligning your company’s innovation initiatives with the overall corporate strategy requires a clear strategy and, above all, a commitment to communication, a clear framework and well-tailored KPIs.

In conversation with Paul Hobcraft, innovation strategist Marc Sniukas shares his expertise on how companies can move forward with confidence to innovate in a rapidly changing marketplace.

Make a game plan

A strategic approach to innovation involves applying a holistic perspective to the innovation process. That means going beyond what Marc calls “innovation theatre”: building a startup garage, running hackathons or “app-ifying” your offering. Instead, look for tangible opportunities to innovate in two arenas:

• External innovation could include your product or service offering, customer experience, business models, resources, partnerships and revenue models.
• Internal innovation could include new ways of defining strategy, new ways of working, or organizing.

Once you’ve explored different areas of potential improvement that align with your company’s core strategy, organization-wide clarity become king. First, be certain that everyone shares the same company-specific understanding of common innovation terms and buzzwords like “agile,” “lean” “job to be done,” “customer-first,” and “iteration.”

Next, create a clear framework for implementation and evaluation upfront, so as to avoid later confusion. Here are a few questions you could ask yourself to kick things off.

How will the project be governed and steered?
Why is a specific technology or methodology the best option for this project?
How will upper management provide oversight or be involved?
At what frequency will we re-evaluate results and objectives?
What will this tangibly look like once it’s implemented?
How do we involve the larger organization?
How can we see this integrating or aligning with our core strategy down the line?
What new metrics will we use to evaluate our success?

Profitability is still the bottom line

When evaluating the ROI on a piece of equipment, traditional KPIs work just fine – but they do little to help us measure innovation. By shifting from indicators like Product Market Fit and Industry Analysis to qualitative metrics like Customer Experience and Customer Needs, you’re giving new ideas more room to breathe and develop. Here are examples of simple, strategy-driven metrics you can monitor as your idea gains traction.

Customer adoption
Proportion of validated assumptions
Perceived value to customers
Value added for partners, suppliers, and others embedded in the same ecosystem

The more of those boxes that are ticked, says Marc, the better the odds of success. That information in turn allows organizations to reduce investment risk by listing all of the assumptions that need to be proven and iteratively increasing funding with every new assumption proven. This provides a measurable, systematic way to allocate resources.

Innovation doesn’t need to be particularly risky to your bottom line, says Marc, especially if you’re making changes to the customer experience, revenue model or business model, where small investments can yield big impact.

“At the end of the day, profitability and cashflow are going to be very important. You’re going to have a hard time if after 5 years, you still can’t prove that customers buy it and you can profitably do it. ”

Work in structured sprints

If innovation is about letting go of a few key elements of traditional corporate structures and processes, it certainly doesn’t mean forgoing structure all together. But figuring out a structured process to hone in on your innovation strategy can seem daunting. To help, Marc has developed a SCRUM-inspired methodology that organically boils down broader, long-term objectives and goals into smaller, more actionable steps.

While your list of questions and assumptions may seem huge at the beginning, this funnelled process naturally filters out low-priority tasks and forges a clear path ahead.

Structuring Strategy Sprints

Step 1: Flesh out your strategy backlog. Draft an exhaustive list of strategy questions that to be answered, opportunities to be explored, assumptions to be tested and previously identified strategic landmarks to be integrated.

Step 2: Select tasks that can be tackled in the short to medium term and craft them into clear deliverables to be reached within a 2–4 week sprint.

Step 3: Get to work researching, testing and validating.

Step 4: At the end of the sprint, evaluate the results, determine their impact on the rest of the backlog and repeat with the next set of deliverables.