The innovation bandwagon appears to be rolling on at pace. Many organisations now include innovation in their strategies or at least as one of their strategic or cultural pillars. This enthusiasm for innovation is hugely encouraging given the government focus on making Australia a more innovative economy. But is this innovation focus appropriate for all organisations, or is it more of a knee-jerk reaction to a growing trend rather than a considered move that reflects each organisation’s growth objectives.
Therein lies the rub. Innovation is not an end to itself; it is merely a means to achieving something else; and typically, that something else is addressing a growth gap. This, of course begs the question: “what is a growth gap”?
Every organisation is on a trajectory relative to growth: the trajectory could be upward, downward or flat – it is the current growth path of the business assuming it carries on doing what it’s doing. Most organisations usually have a bunch of initiatives in the pipeline aimed at lifting this growth trajectory and these will typically be improvements to the current business model e.g. better marketing/sales, increased customer retention, process efficiency gains, better asset utilisation etc.
The important additional overlay to the organisation’s current trajectory (in terms of growth) is the growth aspiration of the business – the growth path that the leadership team would like to be on. An organisation’s growth aspiration is often driven by shareholder pressures but it can also be a response to competition or the threat of disruption. The degree to which the growth aspiration diverges from the expected growth trajectory is the size of the growth gap. This growth gap requires the business to do something different and it is this growth gap that should be driving a significant focus of the innovation agenda.
Depending on the size and competitive context of the growth gap, organisations must decide whether they should focus on incremental innovation (squeezing more juice out of the current business model) or more radical innovation (exploring new business models) or perhaps, a healthy dose of both.
So if you want a place to start with your innovation initiatives, our advice would be to:
- Clearly define your growth gap and the competitive context within which you are having to address this gap
- Flesh out your innovation strategy in terms of your relative focus on incremental vs radical innovation
- Define some clear innovation goals that provide focus and measurable outcomes.
Don’t forget that your trajectory to this point might not be reflective of the future of the trajectory so try to be as realistic about expected performance as you can!
If you would like to talk about defining your growth gap and how it drives your innovation strategy, this is the stuff we love to talk about so it would be great to hear from you! email@example.com