If you don't know where you're going, how will you know when you get there?

You won't get results from your innovation programs, processes and projects if the fundamentals are lacking.

It may sound obvious, but in most if not all organizations there's still quite big gap between aspirations and actuals.

From setting a proper strategy and structuring and organization the function, to having clarity about who makes what type of decisions when, to understanding how to align with and involve business leaders - there's a lot of variables at play. And it's your role as innovation leader, for your company as a whole, or for your department or region, to get them right.

We dive into getting the fundamentals right during this month’s Learning Lab on Innovation Strategy, Leadership, Governance & Portfolio Management. As a taster, find an overview of some of the topics we'll discuss below.

Open Strategy

Formulating and executing sound organizational strategy is difficult work. Strategy is often made by elite teams and thus can be limited by their biases about competitors, customer needs, and market forces. And it can be an uphill battle convincing stakeholders across the company to channel money, time, and energy in a new and unproven direction.

According to Christian Stadler and colleagues, the solution to both the strategy formulation and execution challenges is radical: Open up your strategy process.

Open strategy offers leadership teams access to diverse sources of external knowledge they wouldn’t otherwise have, while also making individual leaders aware of their biases and helping them build the buy-in needed to speed up execution.

This approach is particularly valuable when companies face disruptive threats and contemplate transformational change. It’s much easier to master disruptions when you’re forging strategy in concert with others who view the world through a different lens than you do.

Involving people from outside the C-suite — and outside your company — in strategy-making not only provides a wellspring of fresh ideas but also mobilizes and galvanizes everyone involved. Thus, execution becomes an integral part of strategy. The best part: All this can happen without a loss of control over the strategy-making process.

👉 Read more here 
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From Innovation Theater To Growth Engine

It takes time and investment to create a sustainable innovation ecosystem, one that enables repeatable innovation outcomes in a large organization, be it new products, services or businesses. And it requires many decisions along the way.

The right ecosystem makes innovation success repeatable and scalable. A system that doesn’t rely on luck makes innovation predictable and reduces risk. Post Covid-19, leaders need to develop innovation as a key organizational muscle. By the time a crisis arrives, it is too late to start exercising. Building strong innovation capabilities needs strong buy-in and involvement at the C-suite level.

An innovation ecosystem consists of three pillars: portfolio, programs and culture. To bridge the gap between innovation theater and tangible growth results, here’s what Strategyzer’s Tendayi Viki suggests you do:

  1. Analyze and shift your innovation portfolio from a focus on becoming irrelevant efficiently (an innovation portfolio dominated by few large-scale bets on efficiency innovation projects and occasional sustaining innovations) to growing for decades (a diversified portfolio with many bets that systematically produces winners from efficiency to transformative growth innovation).Assess your current innovation portfolio and how you make investment decisions. Where do you focus your innovation efforts? Are you mainly focused on efficiency innovation and sustaining innovation? Do you sufficiently invest in transformative innovation? Do you make evidence-based investments that reduce risk and uncertainty? Or is it still unclear which ideas get resources and which ones don’t?
  2. Analyze and redesign your innovation programs to move them from producing innovation theater (an ecosystem with many loosely connected or disconnected innovation activities, programs, and investments) to tangible results (strategically integrated and companywide innovation activities, programs and investments that are optimized to collaborate and produce innovation results).Assess whether your innovation programs create substantial value for your company. How strong are your innovation results in terms of growth or cost savings? Evaluate if your innovation programs change mindsets and create a true innovation culture. Make sure that your programs reinforce each other and align with company strategy.
  3. Assess and boost innovation culture by blockers of innovation (a culture in which innovation lacks status and legitimacy and faces many blockers) to enablers of innovation (a culture in which innovation has power and influence and enables initiatives).Assess your innovation culture in terms of leadership support, organization design, and innovation practice. Ask if they enable or block the establishment of a true innovation culture?

👉 Read more here
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Organizing Innovation Decentrally

To be a top performing innovator, you need to achieve both scale and maturity in your innovation work.

A fully centralized ownership of innovation and idea management naturally makes it easier to achieve “maturity”, since that one team can manage everything in a controlled manner, often with the same exact process for every idea and innovation. That, however, is where the problem lies.

This central team won’t have the capacity to make sure that the process actually performs well, let alone maintain and develop multiple processes for different kinds of innovations for different parts of the organization. Also, it won’t work to take a “one size fits all” approach of having a single standardized innovation process for everything in the organization.

Different kinds of innovations need different kinds of processes, resources and expertise. You simply can’t have incremental marketing innovations go through the same process as would-be breakthrough innovations, and expect the process to work well.

To reach scale, you need business units and other parts of the organization to take ownership for their own innovation and ideation work, including control over the processes they choose to use in their own work.

Obviously, you can’t expect the business units to disrupt themselves if they still need to hit their normal goals, but they absolutely can, and should, take full ownership for continuous innovation, which is the vast majority of innovation any organization should be doing in the first place.

According to Jesse Nieminen, a decentralized approach leads to better decisions, more speed, a more supportive culture, and clear focus on results for everyone involved.

👉 Read more here
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The Evolving Role of The Chief Innovation Officer

Until 20 years ago, the chief innovation officer (CINO) was a position virtually unheard of. Today, most large companies have appointed one, although the actual job specs can vary.

Unlike more established C-suite roles, whose job specs are relatively standardized, the chief Innovation officer’s role varies significantly depending on the organization, business context, and the individual themselves. The role is divided into two main categories: managing the innovation funnel (e.g., identifying new market spaces, funding and supporting early-stage initiatives, and managing the experiment portfolio) and building innovation capabilities (e.g., developing internal skillsets and disseminating best practices).

Today, greater focus is given to the roles leaning towards “facilitation”: supporting methods for innovation; helping and coaching projects, rather than “owning” them; and developing capabilities in the wider organization.

In our view, such a shift is determined by two aspects. First of all, in some cases, the appointment of a CINO gives the unproductive and negative message that innovation is somebody else’s responsibility, rather than a task to be shared across all functions. The CINO should be regarded as the enabler and facilitator, in which case the cognitive bias (“it’s not my job”) will be eliminated.

The second and more fundamental factor is related to the broadening scope of innovation (see insert) towards the reinvention of management models to promote a sustainable stakeholder capitalism.

Innovation will become more pervasive, being applied well beyond technology and products into new business models, new supply chain paradigms, new management styles, and innovative cultures.

As such, according to Elisa Farri & Gabriele Rosani, the CINO will act as a catalyst of change, helping CXOs step out of their comfort zone, explore new territories, and learn from a trial-and-error approach.

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Portfolio Management: Linking Strategy to Resources and Execution

Portfolio management bridges the gap between strategy development, budgeting and resource allocation, and the management/governance of individual innovation projects.

Crises like the COVID-19 pandemic force businesses to reset their portfolio to reassess their strategy and investment focus, and to make urgent, often dramatic choices.

This kind of portfolio reset is critical in times of crisis; but it’s important in normal times as well. In particular, top leadership needs to regularly review their current innovation bets and ask three questions:

  • Are we doing too much, too little or the right amount of innovation?
  • Are we doing the right kinds of innovation?
  • Have we optimized how resources are allocated to innovation?

Answering these questions takes work, but if done right, it can unlock enormous near-term value while keeping options open for the long term. For example, one leading global enterprise software company was able to free up 40% of its total investment in new growth innovation projects after the leadership team undertook a systematic portfolio review. Much of the value came from identifying projects that were no longer strategic, that focused on subscale opportunities, or that had subsisted in a “zombie” state for so long that chances of success were low.

Such portfolio views often allow leaders to make immediate, no-regrets decisions about projects to stop or put on hold — crucial during a crisis when there is a need to free up resources. But they can guide other important decisions as well, such as the selection of promising initiatives to accelerate or new strategic projects to launch.

Innosight’s Alasdair Trotter warns that for such a review to be effective, leaders must prepare for and engage in a different conversation than business as usual, informed by the right “portfolio views” that visualize the portfolio from a number of different perspectives to reveal actionable insights.

👉 Read more here 
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Innovation Project Governance Do's & Don'ts

Innovation project governance is a decision-making discipline where corporate leaders determine which ideas to pursue, how innovation budget is allocated to projects, and how resources are assigned. Through this process, senior management leads innovation, implements strategy, and empowers teams to create new sources of growth. As such it is one of the most important elements of any organization’s innovation system.

Despite its importance, the governance process is often ineffective and may even slow down rather than drive innovation.

Large upfront investments made when risk and uncertainty are high wastes precious resources. Decisions based on ivory tower judgement, opinions, or politics result in solutions customers don’t want. Indecision leads to too many dormant projects that seem to languish without visible progress.

When poor decisions are made, most people conclude that leadership is at fault. In most cases, the challenge is not the capability of senior management but the decision-making process itself, argues Noel Sobelman.

Here are some practical do's and don’ts to consider when it comes to innovation project governance.

Membership & Structure

  • Do: Establish a Growth Board with cross-functional membership that is dedicated to governing the pipeline of exploratory innovation projects.
  • Don’t: Combine exploratory innovation project governance with core business project governance.

Linking Decisions to Portfolio Objectives

  • Do: Link individual project funding decisions to aggregate portfolio objectives and say “no” to free up capacity for your most promising projects.
  • Don’t: Avoid tough decisions to cancel projects. A high cancellation rate in the early stages, while investment is low, is a good thing. It’s a funnel not a tunnel.

Review Cadence

  • Do: Whether you choose an event-based or schedule-based approach, make sure the Growth Board Review has a clear objective and outcome (i.e., a decision), teams come prepared with a recommendation supported by customer evidence, and leaders ask questions appropriate for the project’s stage.
  • Don’t: Hold Growth Board Reviews too frequently. Doing so makes the team feel obligated to provide a project update or status on what has transpired since the last review which is not the intended purpose. Frequent reviews also open the door for well-meaning Growth Board members to tinker with day-to-day project details and micromanage project teams.

Project Funding

  • Do: Invest in tranches as new opportunities are validated, risk and uncertainty are reduced, and confidence builds.
  • Don’t: Invest ahead of learning or through the annual budget process.

Project Evaluation Criteria

  • Do: Use strength of evidence across desirability, viability, feasibility, and adaptability dimensions to evaluate highly uncertain, transformative innovation projects. Create guidelines or a simple scoring model to level set expectations for evidence strength thresholds at key milestones as projects move from problem confirmation to solution validation, market introduction, and scale up.
  • Don’t: Use traditional financial metrics for innovation projects that are going into brand new territory with no history to draw from. Projecting an ROI in the early stages of a new-growth innovation is guesswork at best.

Resource Allocation

  • Do: Identify potential resource constraints and confirm resource availability in advance of the Growth Board Review.
  • Don’t: Approve a project to continue without first making sure the resources needed for the next series of experiments are available. Especially those resources that are shared with the core business.

Ground Rules

  • Do: Agree on a set of Growth Board decision-making ground rules and hold each other accountable.
  • Don’t: Revert to decision-making behaviors used when managing the execution-oriented core business. Your behaviors will send the wrong message to project teams who are building the skills to de-risk uncertain new ventures.

👉 Read more here
👉 Participate in the session with Noel? Join this Learning Lab

If you are working on and interested in themes and questions like this, join other cross-industry innovation leaders and professionals for 20+ in-depth conversations and interactive sessions as part of this month's Learning Lab on Innovation Strategy, Leadership, Governance & Portfolio Management.

For more info and to apply to join go to https://innov8rs.co/learning-labs/innovation-strategy-leadership-governance-portfolio/