How To Align Innovation Projects With Corporate Strategy

From our experience, nowadays most companies perform some sort of innovation activities. Unfortunately, we only rarely see a clear alignment between strategy and innovation. This results in innovation projects that inevitably fail to gain traction and support from leaders within the business. Steve Blank, founder of the Lean Startup movement, calls this “innovation theatre”. A bunch of innovation activities that do not produce any tangible outcomes.

Strategic Guidance

For this reason, we developed the Strategic Guidance Framework. To help senior leaders communicate, how they would like innovation to align with the company's strategic goals. Our framework helps leaders define where to play, what is in, and what is out. Ideally, innovation projects should show they fit the vision, culture, and image of the company. To ensure they get leadership support and the resources required to do their work.

The strategic guidance that leaders provide consists of two main components:

Corporate Identity: Leaders can use this to make who we are an organization explicit. To define corporate identity, outline your strategic direction, the required organizational culture, and the corporate image you would like to project to the outside world. This defines who you want to be as an organization and sets the context for the portfolio guidance. The Corporate Identity was adapted from The VCI (Vision-Culture-Image) model by M.J. Hatch and M. Schultz (2003).
Portfolio Guidance. Leaders can use this to define the kinds of innovation projects they want the company to pursue. This makes it very clear to the rest of the organization what is “in” and what is “out”. The guidance sets explicit boundaries by providing clear answers to the questions below:

What is your financial performance philosophy? (e.g. safe dividends, growth performance, etc.)
What arenas do you want to play in the long term? (e.g. markets, geographies, technologies, etc.)
What strategic key resources and capabilities do you want to develop? (e.g. tech resources, business model foundations, etc.)

What’s Next

After developing your strategic guidance, it is important to try and share it widely within the organization. In our experience, companies that do this well have leaders who communicate the strategy on a regular basis. Whether it be during important meetings or communications throughout the whole organization. In these companies, innovation guidance is widely understood across the organization. When leaders set clear strategic guidance, the innovation engine becomes institutionalized at the corporate level. This means that innovation always has resources and budgets, even in times of crisis.