The Innovation Strategy: Companies Don’t Have It
I believe innovation can only work to its full potential if it is aligned with an overall corporate strategy. Many companies mess up here. They simply do not have an innovation strategy. Companies have marketing or sales strategies, but only very few have an innovation strategy.
What should an innovation strategy look like? It can come in many different forms as it needs to reflect the company itself. Due the obvious reason mentioned above, I have a hard time finding cases on this, but I definitely like the Innovation Intent created by Grundfos, one of the world’s leading pump manufacturers.
Check out this description:
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At Grundfos we have successfully achieved many of our targets and therefore we have recently reviewed our long-term business perspective by trying to look 15-20 years ahead.
This led to the statement of the Grundfos Innovation Intent. It represents a guiding star that will bring focus to our long-term innovation efforts and make sure the company is heading in the right direction. The Innovation Intent embraces three challenges, all of which every major concept, Grundfos launches over the next 20-30 years should meet:
CONCERN: Put sustainability first
CARE: Be there for a growing world
CREATE: Pioneer New Technologies
In other words, Grundfos will establish a substantial position in the growing markets by delivering superior sustainable solutions and offerings based on technology, the world has not yet seen. Perfectly aligned with our core values – being responsible, thinking ahead, and innovating – the Innovation Intent is a clear and bold statement of where and how Grundfos wants to develop its business. It is the ambition, that in 2025:
• Grundfos employs 75.000 people globally – today the number is 18.000
• 50% of our growth is coming from technology platforms that were not invented in 2007
• 1/3 of our turnover comes from other products than pumps
• We are still no. 1 in circulators and a specialist in sustainable solutions for housing.
• We are specialists in selling directly to end-users within selected industrial segments and utilities
• We gravitate around local centres of excellence tapping into knowledge bases wherever they are
• We have become experts in translating user needs into new products and business concepts
• We are the first-choice workplace for the best and the brightest
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Besides innovation work at the core, the company test new possibilities in Grundfos New Business which develops projects aimed at ensuring the limited resources of the earth will suffice for a rapidly growing population with increasing spending power, without destroying the environment.
I like this link between the overall corporate strategy and innovation and I definitely look forward to following Grundfos in the future. What do you think?
It would be great if you can share other cases on innovation strategies…
Lars Kolind wrote an interesting blog posting here: http://kolindkuren.dk/2009/10/07/there-is-more-to-business-than-profit/
You are right – corporate strategy & innovation are interlinked. The urge to differentiate, lead and compete in marketplace drives the innovation work – but harnessing it in a right manner through comprehensive mesh of corporate strategy is required. A company that uses a unqiue ingredient along with innovation to distinguish itself from competition is Mastek (http://www.mastek.com) to quote them-”…at Mastek, we create innovation through intellectual property and passion”
Hi Stefan.
It is very unusual to see such a well defined innovation intent and linkage to corporate strategy. I look forward to using this as an example for some of our clients. Linking innovation to corporate strategy, goals and outcomes is especially important, to ensure that innovation doesn’t become “interesting” but irrelevant.
Thanks for finding and posting this.
Great post. Innovation is all about starting something and a clear statement of intent is a great way to kick start innovation in an organization. Many companies recognize the need for innovation and the stock market certainly does (60% and more of market cap is often intangible value, value connected to future growth through new products, now business models, etc.) but few get started. Here is a post that describes some ways to get going If Innovation Generates Revenue Growth – What’s Stopping You?.
Excellent example of Innovation’s linking with Corporate strategy! I haven’t seen such clear vision of what an organization expects from their innovation efforts. Thanks for sharing as this certainly is a great example to share.
Interesting post. I agree that corporate innovation needs to have a direction – but does it necessarily need to be portrayed in a mission-statement like the one in this post? I don’t consider this a strategy but more a regurgitation that innovation will support corporate objectives/targets.
Truly, innovation is the process that takes ideas from discovery to measurable results – and clearly those results should support specific business objectives.
I think an innovation strategy should be a roadmap for how to methodically work to obtain innovative solutions to business problems. For example, we intend to tack problem x using campaign based innovation initiatives, we plan to solve market problem y by arranging 4 supplier workshops, etc, etc.
My .0002 cents,
James
I agree with all the positive comments about this strategic vision, it is very aspirational. The trick is to translate this even further, firstly projecting forward on the quantifiable aspects of this then working backwards to find all the innovation gaps.
They certainly look like candidates for technology roadmapping as they see certain platforms as the primary areas of focus- pumps, other (related) products, specialists in sustainable solutions for housing.
Equally moving to direct end-users, tapping into knowledge bases and becoming experts in translating the user needs has significant implications for a sizeable shift in present to future operations.
Products ‘the world has not seen’ has such an exciting aspect to it and my mind tends to think of Philips here and how they set about the shifting of their business to give some learning parallels.
Mapping the global pump and related technology markets becomes crucial and how Grundfos tap into the open community will give another clue to this intent moving into an actionable business road map.
The “perfectly aligned to our core values” seems to link well to this ambition.
This offers much to instil ‘passion’ into the business I feel
Appreciate the nice example of an innovation strategy. It’s a bit “sprawling” but as long as it works for them. Might like to see some more specifics / objectives related to innovation. The “roadmap” suggested by James is necessary as well but not what I would expect from a strategy statement. And other necessary components include organization, goals and metrics, rewards, roles, skills, process (roadmap), leadership, culture, etc. I am starting to cull innovation websites and blog posts for examples under each of these elements. Has anyone seen such a “best practices compilation” already available?
Andy
Hi Andy,
Designing an innovation performance strategy is an interesting process and the trouble is there aren’t many innovation strategy frameworks out there. I have developed an HR Innovation Performance Strategy whose components can be adopted for a corporate innovation strategy.
i agree with james keane: the quoted text is not an innovation strategy at all – it’s more what is often called a “vision statement”.
a strategy must have (at least) two components:
- a statement of a goal
- a statement of how that goal is be to achieved
i am trying to imagine how a client would react if they were paying us to help them formulate an innovation strategy and we suggested to them a text similar to the one above!
Grundfos calls this an innovation intent and a guiding star that will bring focus to their long-term innovation efforts and make sure the company is heading in the right direction. Does this qualify as a strategy? Perhaps. Perhaps not.
I think the key point is that they have set some direction for their long-term innovation. I am pretty sure this intent has been developed into more actionable goals and suggestions on how to achieve these goals. Paul provides some ideas in his comments.
Whether this intent was done by themselves or with the help of consultants, it seems to work for them which has to be the most important thing.
I think many companies value consultants who deliver a “text” that fits their needs rather than something that needs to fit into a certain academic description.
Thus, I also believe the intent can serve as inspiration to others on how to craft an innovation intent/strategy/vision.
Still missing other great examples of innovation strategies? Is it really so hard to find them?
Stefan