Why you need an innovation strategy ASAP (with tips to get started)

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Product development

Innovation without a strategy is like driving a car without a clear destination or a map to get there.

At best, you may eventually end up somewhere nice, but you’ll waste a lot of gas and time along the way. At worst, you’ll run out of gas in the middle of nowhere while your competitors take the innovation freeway and leave you in the dust.

Most organizations know they need to invest in innovation to remain competitive, drive growth, and foster long-term sustainability. Yet, too many businesses pursue innovation without an innovation strategy behind it.

If you wish to drive consistent and reliable innovation across your organization, you need an innovation strategy. Keep reading to uncover the key benefits of an innovation strategy and how to get started building one.

What is an innovation strategy?

An innovation strategy is a systematic approach to identifying, fostering, and implementing innovative ideas aligned with organizational goals.

Your strategy should answer the following questions:

1. How will our organization's innovation efforts create value for our customers?

People often confuse creativity and innovation. Creativity is the generation of something new and original. Innovation takes that a step further to generate tangible business value from that idea or product. In other words, a fancy new product that no one wants isn’t innovative–it’s just a misdirected creative effort.

True innovation has three key components:

There’s a market for it. People want it.
It has business value.
It’s feasible to implement.

An innovation strategy helps you answer how your organization will create that value and provide the touchpoints to direct your business strategy and innovation efforts toward these outcomes.

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2. How can we communicate that value to our audience on a regular basis?

Innovation won’t benefit you if you can’t translate that value to your intended audience. Your innovation strategy should help you answer how your company will capture the value of an innovative project in a way that’s enticing and easy for the customer to understand.

For example, when Apple first launched the iPod—a breakthrough innovation in music storage technology—they communicated its value strategically to their target audience. Instead of simply saying it had lots of storage, they said, “You can fit 1,000 songs in your pocket.”

3. What kind of innovative projects will we take on, and how will we allocate resources between them?

Innovation isn’t always about cutting-edge, disruptive breakthroughs. In fact, the majority of your innovative efforts likely won’t be. But that doesn’t mean they won’t be valuable to your organization. So it’s important to determine what types of innovative projects you’ll focus on—and how you’ll allocate your investments accordingly.

Harvard Business Review defines innovation at three levels:

Core innovation: Optimizing existing products for existing customers in a consistent, iterative manner
Adjacent innovation: Expanding into new areas of focus for the company
Transformational innovation: Developing breakthroughs and inventing things for markets that don’t exist yet

Most people think of transformational innovation when talking about innovation. However, for some of the most famous innovators—the Apples and the Googles of the world—70% of their investments were in core innovations.

“We so quickly discount how much spending really does go into the core innovation work that people do. If we only pay attention to the big, glorious transformational pieces, then we’re telling our people that 70% of our work isn’t valuable. But in fact, there's huge value that we create in this space.”

—Christopher Bailey, principal professional services consultant, Lucid

A robust innovation strategy can help you identify how and where to direct those resources going forward to ensure you’re optimizing your efforts.

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Why you need an innovation strategy yesterday

Between uncertainty in the markets and rapid technological disruption sweeping the globe (the AI market alone is projected to reach a staggering $407 billion by 2027), the threat—and promise—of change looms.

In the wake of these advancements, we see increased globalization and new and rapid shifts in consumer behaviors and attitudes.

For example:

Half of U.S. mobile users now use voice search every day.
The wearable AI market is expected to reach $230 billion by 2033.
24% of business owners are concerned about AI impacting website traffic.
Consumers are less brand loyal, with 38% of shoppers trying a different brand in the last three months.

Rapid advancements are driving every industry forward, so consistent and effective innovation is essential for staying ahead. That’s why developing an innovation strategy is key to organizational success.

Below are three key reasons to start developing your innovation strategy ASAP:

A proactive strategy helps you navigate disruption. An innovation strategy sets organizations up with the right systems and processes in place to navigate disruption, whether that’s new tech or a growing list of competitors.
Strategic innovation can help build business resilience. Organizations with an innovation strategy are more agile and able to respond intentionally to frequent market changes.
Being proactive allows you to capitalize on opportunities. If there’s a significant (or subtle) change in consumer behavior or the way your audience is interacting with your brand, you want to be able to turn that into an opportunity. A robust innovation strategy will help you put processes in place to monitor and identify these opportunities.

What you need to create a proactive innovation strategy

Okay, so you know you need an innovation strategy. But how do you actually create one?

Get clear on the vision

Like any good strategy, developing an innovation strategy should begin with a clear vision. This means going beyond vague and general phrases like, “We have to innovate to stay ahead of the competition” or “We should work on innovation to make better products.”

Instead, ask yourself: What, who, why, and how? This is also known as the 3W1H framework, and it is a helpful exercise for describing your current strategic position.

Start by identifying your strategic goals (e.g., growth), then work your way through the 3W1H.

What are your product lines/services?
Who is your target audience(s)?
Why do you need to innovate? What competitive advantage will you gain?
How will you achieve these goals?

Then, consider one more question: What needs to change? This question dives deeper to uncover what isn’t working as well as internal weaknesses, vulnerabilities, or threats to the business. The changes that you identify will become your innovation goals. From there, you can identify projects to pursue that will support your overarching strategy.

This iterative exercise is important for creating strategic alignment across your organization. As you innovate, you’ll need to revisit this process continually to adapt and build on it.

As part of this process, you’ll also want to define what a “good idea” looks like. Some ideas may seem like good ideas, but do they support the goals and growth you’ve identified above?

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Reach a unified decision about your innovation strategy

The last thing you want is to have a management team with differing views of the strategy because that will trickle down to every team member in the organization, creating mass confusion.

Instead, take the time to practice strategic decision-making to reach a consensus. This practice will also allow leaders to share what they believe they (or the consumer) need from this strategy. Getting buy-in from all stakeholders is essential for adopting an effective innovation strategy and ultimately implementing an efficient innovation process.

Create accountability

Innovation is a team sport, but you need to ensure it’s clear who will be accountable for ensuring your investments are successful. At some organizations, this could be a Chief Innovation Officer, but for many, it may also involve individuals within your business's different profit and loss centers.

Once you know who is accountable for what, you can set goals and identify innovation metrics to ensure you're making progress on your objectives. When setting metrics, try to measure rates or percentages rather than counts, as these will give you a clearer picture of progress toward your innovation and strategy goals.

Click on the template to set up metrics for your innovation strategy.

Create an innovation portfolio

Decide what projects will be core to your innovation strategy. The strategic innovation framework we started with should surface key innovation opportunities to focus on first. Review these potential projects and determine what types of innovation projects you want to engage with regularly—core, adjacent, or transformational.

Develop an innovation process

An innovation strategy won’t help you if you don’t have a clear process for implementing it. An innovation process is simply the steps you take to turn innovative ideas into viable products or services. Your innovation process will be unique to your organization and teams, but the basic flow will look something like this:

Conception: Start with your innovative idea or solution. Identify the problem you want to solve and how you plan to solve it.
Validation: Confirm that your proposed innovation has market value and demand. This step may require testing and refining your original idea.
Growth: Plan how you will position your solution in the market and set it up for success.

With the right innovation process in place, you can ensure your innovative efforts are focused and efficient.

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Take the next steps in creating an innovation strategy

Change can be hard. That’s why it’s important to bring stakeholders together early on in the strategy development process to ensure there is buy-in and consensus. Use the innovation strategy framework to help build alignment and clarity around your organizational goals and strategic vision.

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About Lucid

Lucid Software is the leader in visual collaboration and work acceleration, helping teams see and build the future by turning ideas into reality. Its products include the Lucid Visual Collaboration Suite (Lucidchart and Lucidspark) and airfocus. The Lucid Visual Collaboration Suite, combined with powerful accelerators for cloud and process transformation, empowers organizations to streamline work, foster alignment, and drive business transformation at scale. airfocus, an AI-powered product management and roadmapping platform, extends these capabilities by helping teams prioritize work, define product strategy, and align execution with business goals. The most used work acceleration platform by the Fortune 500, Lucid's solutions are trusted by more than 100 million users across enterprises worldwide, including Google, GE, and NBC Universal. Lucid partners with leaders such as Google, Atlassian, and Microsoft, and has received numerous awards for its products, growth, and workplace culture.

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Why you need an innovation strategy ASAP (with tips to get started)

What is an innovation strategy?