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Innovation Strategy by Peter Fisk


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Extract from "Creative Genius: The Innovation Handbook for Business Leaders" by Peter Fisk ... Find out more about the book at and support in making innovation happen in your business at

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Innovation Strategy by Peter Fisk

  1. 1. +genius Innovation Strategy In an extract from his book “Creative Genius: The Innovation Handbook for Business Leaders” Peter Fisk looks at the attributes of an innovation strategy. Innovation is at the top of the business agenda, the most important source of competitive advantage, driver of profitable growth. It gives an organisation energy and purpose. It creates new interest and relevance for customers. It adds trust and hope to investors. And it results in a maelstrom of creative actions, some focused and others dispersed. Yet few companies have an innovation strategy, one which aligns, integrates and focuses innovation efforts across the organisation to deliver short and long-term business results. Most businesses have a multitude of innovative projects going on, but most of them are within functions, within categories, within markets. They are dispersed, often tactical, and with limited support Whilst everyone wants a piece of innovation, many of different views as to what it means    For some it is about new product launches, and improving market share Others are more interested in ways to work smarter and improve margins Some see innovation as hugely technical, with tangible, patentable outputs
  2. 2. +genius    Others focus on the creativity, generating better ideas, and intellectual capital Some see innovation as human progress, making people’s lives better Others simply as a way of improving ROI, growth and value creation Innovative companies have some common factors. They see innovation as their primary source of competitive differentiation in their markets, the sustained driving force behind distinctive products and approaches. They know how to improve the return on investments and assets, doing more with them in more places, focused and prioritised as a primary component of business strategy. They focus innovation on the best market opportunities, and areas of best commercial return long-term. Intel, for example, have a relentless focus on the future - driving its business focus and cultural mindset. This strategy is based on a deep understanding of their markets, current and future, customers and non-customers. Most companies have huge amounts of research, databases and trend analysis, but few can effectively synthesise and apply it. Innovative companies put particular focus on how they interpret and exploit insights. P&G’s ability to “sense and connect” was the symbol and tangible action that shifted the consumer goods leader from product to customercentric. An innovation strategy should have the following components  Alignment to business and market strategy – a clear definition of the business purpose and direction, meaning the reason the company exists, what it does for people, and the long-term priorities for the business. This might also be articulated as a vision, how the world will be in the future, and a mission, what the business wants to achieve itself long-term. Whilst this strategy will cover 3-10 years depending on industry, innovation should also recognise the business plan, with specific performance targets over 1-3 years, although innovation should be careful not to become too driven by this shorter-term perspective  Optimising the business and product portfolios – ensuring that there is a good balance of categories and geographies, products and services to achieve short and long-term objectives. Whilst most businesses think through their product portfolio (for example using the BSG growth/share matrix – identifying their dogs, cash cows, rising stars and question marks), fewer companies look more strategically (using Ansoff’s matrix to prioritise new and existing markets), and indeed at the broader business categories which they are in (avoiding the mistakes of Kodak in missing the digital market, or Microsoft being slow to see the power of the internet).  Defining the innovation priorities – specifying the priorities for innovation, the markets and categories where innovation is most important, and the more specific customer segment and product ranges to focus on. More strategically, it is about getting a balance between “incremental” and “next generation and “game changing” projects, recognising that a
  3. 3. +genius mixture of each, with different levels of risk and reward is required. It might include platform strategies to optimise ranges of products developed with a similar underlying specification over time. “Horizon planning” is particularly useful in defining the priorities in short, medium and longer terms. The strategy also defines the capabilities and resources to achieve these. Innovation strategies are often more difficult that other strategies, as they work across functions, rather like customer or sustainability strategies, and so have many stakeholders, and often no outright functional owner. They might be “fixed” or “emergent” in their nature, the former having little uncertainty, and is driven top down, the latter having more flexibility, evolving bottom up and top down in response to new insights and opportunities. “Emergent” strategies are more suited to a fast changing market, like most are today. Technology businesses are notorious for their “product roadmaps” which are very definitive, fixed plans of when new technologies will be available to market. Typically driven by R&D and engineers they encourage a “product push” mentality in the business, without much thought for whether markets actually want a endlessly higher performance product, or whether other factors matter. Philips is an example of a company which slowly realised that this macho “push” was one of its biggest problems, and introduced a more customer-centric approach to its business, and innovation, and a “pull” driven by a customer roadmap based on customer motivations and aspirations. The capabilities and resources to make these innovations happen do not have to come from within. Innovative companies recognise that they can be much more successful with partners than alone, fusing capabilities and expertise to do things which other cannot, delivering products and services which are not just components of solutions, but really solve customer problems. Partners are often for unusual but related areas. An example of innovative collaborations includes H&M’s celebrity partnerships with the likes of Roberto Cavalli, Kylie Minogue, and Victor & Rolf. They have simple yet effective processes and systems for turning the best ideas into commercial applications, the ability to develop and launch new solutions fast and effectively. This sounds obvious, but innovation is typically a non-functional, cross-business challenge, and sits outside business as usual, and its supporting processes. Apple realises that organisational boundaries and beaurocracies are the biggest killers of innovation. Lego ... innovation is much more than creative play Lego, “toy of the century”, is reinventing how it innovates through D4B, Design for Business. In Danish “leg godt” means “play well”, and that remains the inspiration for the brand. Since the creation of the timeless plastic building blocks in 1932 by Ole Kirk Kristiansen, Lego has been one of the world’s most popular toys. It has come
  4. 4. +genius a long way from a small carpenter’s workshop to become the fifth largest toy manufacturer in the world. Indeed the bricks were initially made of wood, and it was not until 1958 that they became plastic and colourful – acquiring its unique interlocking tubes that offer the opportunity to build houses and cities, dinosaurs and robots only limited by your imagination. The Lego Group, based in Billund in Denmark and with 4500 employees, is now led by the founder’s grandchild, Kjeld Kirk Kristiansen. Its purpose is “to inspire children to explore and challenge their own creative potential”. It does this by helping children to “learn through play” – developing their creative and structured problem-solving, curiosity and imagination, interpersonal skills and physical motor skills. However, in 2005, Lego started to run into trouble. It was struggling against the high-technology and computer-based games, the power of fashionable personalities from the likes of Disney, and low cost producers of other plastic bricks. It responded by diversifying, creating more and more different products which only made things worse. After three years of headless creativity, leading to more than 14,000 branded components, the Danes realised that they needed more focus, they needed to return to “classic” Lego, with fewer better products, engaging its 20 million customers more deeply. Aligning business and innovation Lego’s new design system, D4B is redefining how its whole innovation process is run. Key elements of the approach are a stronger alignment between business strategy and design strategy, more collaboration between functions, more challenge and rigour in the creativity and analysis, a more consistent approach which is easy to share, and better innovation that drives profitable growth There are more than 120 Lego designers, drawn from 15 nationalities, small youthful others deeply experienced, most based in Billund, Denmark. A number of others work in satellite offices around the world, adapting ideas to local tastes and tracking new trends and technologies, particularly in Japan. Whilst people were previously chosen most for their creativity, they are now drawn as much for their passion for the Lego brand, and wanting to create its future. The team also collaborates with many universities, and especially with MIT Media Lab, from which the Mindstorms system emerged. The D4B process seeks to create a more holistic, creative and commercial approach to innovation. There is more stretch and stimulus, but also more rigour and evaluation. It embraces new language and tools which form an innovation “DNA” and new computer-based simulators for rapid prototyping allow quick iterations. Time to market has also reduced, from 24 months to 9 months. It moved from a focus on products to customers, and how all aspects of the business and customer experience could be part of the innovation.
  5. 5. +genius There are three components to D4B    Lego innovation model – more collaborative in the early stages, more aligned to objectives and resources, more tested and focused on results delivery. Lego innovation roadmap – clearly structured phases of development, bringing a consistency of steps and evaluation gates, and strong links between phases. Lego foundation overview – a simple way of visualising the outputs through posters rather than lengthy documents, enabling more engagement, comparison, and better decisions. The process is separated into “P” stages for prototyping, and “M” phases for manufacturing. The focus is much more on making ideas tangible quickly, and thereby making more evaluation and focus possible in later stages, so that all resources can be focused on the best opportunities. The stages within the phases are     P0 (portfolio kick-off): defining the business objectives, and focusing on then key issues to be resolved across the business and portfolio P1 (opportunity freeze):: exploring what opportunities would solve the issues identified, approving the business and financial case for doing the project P2 (concept freeze): making sense of the emerging concepts, and how they apply to each function, from communication to customer service. P3 (portfolio freeze): deciding which concepts should be turned into projects, specifying all the requirements for development, and the business case. The P cycle can take up to 6 months, after which there is a go/no-go decision as to whether the project enters M cycle in which there are 5 more stages      M1 (project kick-off): designers and product managers work together to refine the concept specification, and the plan to take it to market M2 (business freeze): the business case is finalised and the product design is completed to meet the business requirements M3 (product freeze): product design evolves into packaging, marketing and communication, aligning the product concept with the overall brand proposition. M4 (communication freeze): packaging and communication materials are finalised, and the supply chain is specified ready for manufacturing M5 (procurement freeze): the supply chain is developed, manufacturing begins and the product is launched. Designers were initially concerned whether such a structured process, dependent on commercial objectives, would stifle creativity. What they found was that they no longer need to think about how they go about establishing the
  6. 6. +genius project and gaining approval, and their creativity is more focused on the design itself. Whilst the D4B process has accelerated a more focused set of innovative products to market, Lego has not lost sight of the future. Lego’s “Concept Lab” works separately from the mainstream innovation process, with a team of 15 designers focused on more stretching opportunities – more radical products that will redefine its markets. It works on a different cycle, with more intuitive evaluations of novel ideas that Lego hopes will delight our children’s children one day. Did you know that there are more than 915,103,765 ways of combining six eightstud Lego bricks of the same colour? © Peter Fisk 2013 Peter Fisk is a global branding, marketing and innovation expert. He is founder and CEO of the Genius Works, the accelerated innovation firm. He is a business advisor, speaker, and best-selling author of six books including People Planet Profit, Creative Genius, and Gamechangers to be published in 2014. For more about this book, explore For more about Peter, go to