Getting Ready to Innovate: How to Define Your Innovation Priorities
When it comes to innovation, you might feel a little like a mosquito in a nudist colony: you know what you’re here for, but where do you begin? In this post, we provide a simple process for clarifying your innovation priorities that will result in a clear and concise answer to the question: “What type(s) of innovation do I seek?”
At a summary level, this process consists of three simple steps:
- Define your key strategic objectives
- Identify your innovation project options
- Determine the value of each innovation project by assessing its impact on your strategic objectives.
While most organizations can easily identify their strategic objectives (e.g. increase market share, increase customer satisfaction, increase employee engagement, etc.), few are aware of their innovation project options, so let’s drill down into step 2 of the process to see exactly how it’s done.
Let’s begin with the observation that most business innovation falls into three broad categories:
- Creating new revenue streams (e.g. new product or new service),
- Improving the business performance of existing revenue streams, and
- Improving the quality and/or efficiency of core processes (e.g. the talent management process, the customer acquisition process, the product development process, etc.).
In light of this observation, your innovation project options will consist of:
- Creating one or more new revenue streams
- Improving the business performance of . . .
a. Product Line A
b. Product Line B
- Improving the quality and/or efficiency of . . .
a. Process A
b. Process B
Once you have a list of your strategic objectives and innovation project options, your third step is to evaluate the potential value of an innovation project. This is a basic process of scoring the innovation option by weighing its impact on the strategic objectives. With a prioritized ranking of your objectives, you can further use this process to decide on an order for engaging innovation projects and for designating resources which we will cover in a future post.
In the following sample, the strategic objectives have been listed in order of priority, and each innovation option has been scored on a simple -2 (very negative impact) to +2 (very positive impact) scale. In this case, we have a tie. Since increasing revenue is this company’s highest priority and customer satisfaction is next, the CEO has decided that the first innovation project will be to add a new revenue stream, followed by tuning up “existing stream two.”
I hope this has helped you get clarity on your innovation options and how to prioritize them. If you need a little help, just send us a message at firstname.lastname@example.org, and I will follow up to schedule a free consultation.