This document discusses how organizations can build innovation into their strategy using a balanced scorecard approach. It defines two types of innovation - breakthrough innovation which creates new products/services, and sustaining innovation which improves existing offerings. A balanced scorecard looks at organizational strategy from four perspectives: financial, customer, internal processes, and organizational capacity. This allows an organization to link creative ideas with efficient processes and customer value to financial outcomes. Innovation can be a strategic theme addressed across all four perspectives. The balanced scorecard provides a framework to integrate innovation fully into strategic planning and management.
The best preforming companies know they have to translate the abstract into concrete every day principles relying on their own uniquely developed talent and competencies. These organisations design and build their own specific skills to set them apart from competitors. They then bring those capabilities to scale.
Estado de la Transformación Digital 2018-2019José Luis Casal
Interesante presentación de Brian Solis & Altimeter sobre el estado de la Transformación Digital y los pasos a seguir para lograr el éxito en este proceso.
THE STATE OF DIGITAL TRANSFORMATION 2018-2019 editionAmérico Roque
Agora em seu quinto ano, a pesquisa anual sobre o “Estado da transformação digital” continua documentando a constante evolução, à medida que as tecnologias disruptivas e seu impacto nas organizações e mercados continuam progredindo.
A pesquisa visa capturar as mudanças e tendências que estão moldando a transformação digital moderna.
Em 2019, a transformação digital estratégica está se tornando cada vez mais difusa, indo além da TI, para impactar a competitividade em toda a organização. Os investimentos estão subindo.
A experiência dos funcionários e a cultura organizacional também estão aumentando em importância para capacitar e acelerar mudanças, crescimento e inovação.
A hedge fund just bought 5 percent of your company. The fund partners clearly see value in what you’re doing, and, as a member of the management team, you take heart in that assessment. But you also know life is about to get more difficult. The fund partners are well-known activists. They have already asked for board seats. Now they’re proposing some dramatic strategic and financial changes, confidently assuring you and your shareholders that these moves will drive the company’s stock price higher. If you don’t comply and boost margins in a timely fashion, they will quickly bring in a management team that will.
For many company leaders, this is not a scary hypothetical — it is reality. It may also be an opportunity. In any case, activist shareholder campaigns are proliferating. According to the journal Activist Insight, 300 companies around the world were publicly targeted by activist investors between January and June 2015, about 25 percent more than in the same months the previous year. Since 2013, hedge fund managers have demanded change at hundreds of companies. The most widely publicized have included Apple, DuPont, General Motors, Microsoft, PepsiCo, Sony, Sotheby’s, and Yahoo.
One reason activism is growing is the rich rewards it earns for investors. On average, hedge funds with an activist approach have outperformed most other types of investment funds since 2010. The data analysis firm Hedge Fund Research reported recently that activist funds returned 12.5 percent a year between August 2012 and August 2015, while other funds, on average, earned returns in the single digits. No wonder investors increasingly demand activist funds in their portfolios, while the managers of those funds search diligently for new targets. No one can assume his or her company is immune.
We've distilled 10 principles for cost transformation that can help companies play the role of gadfly investor for themselves.
The best preforming companies know they have to translate the abstract into concrete every day principles relying on their own uniquely developed talent and competencies. These organisations design and build their own specific skills to set them apart from competitors. They then bring those capabilities to scale.
Estado de la Transformación Digital 2018-2019José Luis Casal
Interesante presentación de Brian Solis & Altimeter sobre el estado de la Transformación Digital y los pasos a seguir para lograr el éxito en este proceso.
THE STATE OF DIGITAL TRANSFORMATION 2018-2019 editionAmérico Roque
Agora em seu quinto ano, a pesquisa anual sobre o “Estado da transformação digital” continua documentando a constante evolução, à medida que as tecnologias disruptivas e seu impacto nas organizações e mercados continuam progredindo.
A pesquisa visa capturar as mudanças e tendências que estão moldando a transformação digital moderna.
Em 2019, a transformação digital estratégica está se tornando cada vez mais difusa, indo além da TI, para impactar a competitividade em toda a organização. Os investimentos estão subindo.
A experiência dos funcionários e a cultura organizacional também estão aumentando em importância para capacitar e acelerar mudanças, crescimento e inovação.
A hedge fund just bought 5 percent of your company. The fund partners clearly see value in what you’re doing, and, as a member of the management team, you take heart in that assessment. But you also know life is about to get more difficult. The fund partners are well-known activists. They have already asked for board seats. Now they’re proposing some dramatic strategic and financial changes, confidently assuring you and your shareholders that these moves will drive the company’s stock price higher. If you don’t comply and boost margins in a timely fashion, they will quickly bring in a management team that will.
For many company leaders, this is not a scary hypothetical — it is reality. It may also be an opportunity. In any case, activist shareholder campaigns are proliferating. According to the journal Activist Insight, 300 companies around the world were publicly targeted by activist investors between January and June 2015, about 25 percent more than in the same months the previous year. Since 2013, hedge fund managers have demanded change at hundreds of companies. The most widely publicized have included Apple, DuPont, General Motors, Microsoft, PepsiCo, Sony, Sotheby’s, and Yahoo.
One reason activism is growing is the rich rewards it earns for investors. On average, hedge funds with an activist approach have outperformed most other types of investment funds since 2010. The data analysis firm Hedge Fund Research reported recently that activist funds returned 12.5 percent a year between August 2012 and August 2015, while other funds, on average, earned returns in the single digits. No wonder investors increasingly demand activist funds in their portfolios, while the managers of those funds search diligently for new targets. No one can assume his or her company is immune.
We've distilled 10 principles for cost transformation that can help companies play the role of gadfly investor for themselves.
Adaptive handling and flow of financials are an important ingredient to business agility. Essentially what we want to achieve is, to have the money in a company flow to where it creates most value. In the modern dynamic business environment this is an increasing challenge as we on one side see the need to be very adaptive throughout the year to cope with the changes in the business and on the other side people in enterprises as well as suppliers and partners would like to have sufficient financial stability to plan their work. On top of that come regulatory requirements.
For ICAgile I led an international team of professionals in 2018 to create a learning curriculum outlining the most important things you need to know about finance in an agile enterprise. This curriculum is published under creative commons license. In this talk you will get an overview of finance agility based on the professional knowledge of this team.
More details:
https://confengine.com/agile-india-2019/proposal/8181/agile-finance-enabling-business-agility
Conference link: https://2019.agileindia.org
The CIO's role in operationalizing IT innovation Manik Aryapadi
Today more than ever, technology-driven innovation is contributing to growth. The leading innovators "Operationalize" their innovation programs to create lasting success
We’ve worked with Executives and IT leaders for over 30 years, and the single most common complaint we hear from them is their profound frustration with the lack of results and transparency from their never-ending IT investments.
To add further complexity, the demand for digital products and services has made it increasingly difficult for organizations to make ongoing investments and balance the need for innovation with optimization.
The latest data, combined from global enterprises, big consulting and research firms, makes the case that companies need to urgently act to address the digital disruption of their business and their related skills gaps. The data shows that 70% of digital business initiatives are likely to fail to deliver business growth, due to lack of business process and product innovation, as well as poor organizational adaptability.
Poor governance and legacy product management processes to align business and IT initiatives, coupled with insufficient leadership engagement across the organization, are the main reason most companies are wasting money on IT.
This thought paper speaks to these challenges and how optimizing both technology innovation and cross-organizational engagement will accelerate the positive business outcomes that organizations are looking to achieve especially in lieu of increasing digital disruption.
Authors - Alex Adamopoulos and Bob Kantor
Transformational deals have become desirable, but business leaders agree that they are the most difficult transactions in M&A today. This article lists seven fundamental tenets of M&A integration that can help your company shift its business model and maybe reshape its industry.
Consulting start-ups provide tremendous support to companies and assist them across various fields such as business strategy, manufacturing and supply chain, sales and marketing, human resources, and so on. These companies have to tackle many challenges, since they cater to a variety of fields.
Pioneering companies in mature economies are learning from emerging market companies a new way to expand their businesses. For more insights from s+b, visit strategy-business.com.
AIT Group is a global management consulting firm that has over 10 years experience in Lean Six Sigma Training, Coacing, and Certification as well as Supply Chain using the SCOR model to transform business processes to standardized and streamlined value streams.
Adaptive handling and flow of financials are an important ingredient to business agility. Essentially what we want to achieve is, to have the money in a company flow to where it creates most value. In the modern dynamic business environment this is an increasing challenge as we on one side see the need to be very adaptive throughout the year to cope with the changes in the business and on the other side people in enterprises as well as suppliers and partners would like to have sufficient financial stability to plan their work. On top of that come regulatory requirements.
For ICAgile I led an international team of professionals in 2018 to create a learning curriculum outlining the most important things you need to know about finance in an agile enterprise. This curriculum is published under creative commons license. In this talk you will get an overview of finance agility based on the professional knowledge of this team.
More details:
https://confengine.com/agile-india-2019/proposal/8181/agile-finance-enabling-business-agility
Conference link: https://2019.agileindia.org
The CIO's role in operationalizing IT innovation Manik Aryapadi
Today more than ever, technology-driven innovation is contributing to growth. The leading innovators "Operationalize" their innovation programs to create lasting success
We’ve worked with Executives and IT leaders for over 30 years, and the single most common complaint we hear from them is their profound frustration with the lack of results and transparency from their never-ending IT investments.
To add further complexity, the demand for digital products and services has made it increasingly difficult for organizations to make ongoing investments and balance the need for innovation with optimization.
The latest data, combined from global enterprises, big consulting and research firms, makes the case that companies need to urgently act to address the digital disruption of their business and their related skills gaps. The data shows that 70% of digital business initiatives are likely to fail to deliver business growth, due to lack of business process and product innovation, as well as poor organizational adaptability.
Poor governance and legacy product management processes to align business and IT initiatives, coupled with insufficient leadership engagement across the organization, are the main reason most companies are wasting money on IT.
This thought paper speaks to these challenges and how optimizing both technology innovation and cross-organizational engagement will accelerate the positive business outcomes that organizations are looking to achieve especially in lieu of increasing digital disruption.
Authors - Alex Adamopoulos and Bob Kantor
Transformational deals have become desirable, but business leaders agree that they are the most difficult transactions in M&A today. This article lists seven fundamental tenets of M&A integration that can help your company shift its business model and maybe reshape its industry.
Consulting start-ups provide tremendous support to companies and assist them across various fields such as business strategy, manufacturing and supply chain, sales and marketing, human resources, and so on. These companies have to tackle many challenges, since they cater to a variety of fields.
Pioneering companies in mature economies are learning from emerging market companies a new way to expand their businesses. For more insights from s+b, visit strategy-business.com.
AIT Group is a global management consulting firm that has over 10 years experience in Lean Six Sigma Training, Coacing, and Certification as well as Supply Chain using the SCOR model to transform business processes to standardized and streamlined value streams.
AIT Group is a global management consulting firm that has over 10 years experience in Lean Six Sigma Training, Coacing, and Certification as well as Supply Chain using the SCOR model to transform business processes to standardized and streamlined value streams.
AIT Group is a global management consulting firm that has over 10 years experience in Lean Six Sigma Training, Coacing, and Certification as well as Supply Chain using the SCOR model to transform business processes to standardized and streamlined value streams.
AIT Group is a global management consulting firm that has over 10 years experience in Lean Six Sigma Training, Coacing, and Certification as well as Supply Chain using the SCOR model to transform business processes to standardized and streamlined value streams.
Pareto Charts provides and overview of the Lean Six Sigma Tool. Lean Six Sigma Article by Master Black Belt, Steven Bonacorsi, Vice President at the AIT Group.
Cause & Effect Diagrams provides and overview of the Lean Six Sigma Tool. Lean Six Sigma Article by Master Black Belt, Steven Bonacorsi, Vice President at the AIT Group.
Run Charts provides and overview of the Lean Six Sigma Tool. Lean Six Sigma Article by Master Black Belt, Steven Bonacorsi, Vice President at the AIT Group.
Affinity Diagrams provides and overview of the Lean Six Sigma Tool. Lean Six Sigma Article by Master Black Belt, Steven Bonacorsi, Vice President at the AIT Group.
Histograms provides and overview of the Lean Six Sigma Tool. Lean Six Sigma Article by Master Black Belt, Steven Bonacorsi, Vice President at the AIT Group.
Scatter Diagram provides and overview of the Lean Six Sigma Tool. Lean Six Sigma Article by Master Black Belt, Steven Bonacorsi, Vice President at the AIT Group.
Six Sigma Project Case Study Overview, from the General Electric "At the Customer, For the Customer" Six Sigma Program, led by Lean Six Sigma Master Black Belt and President of the International Standard for Lean Six Sigma (ISLSS) and Owner of the Lean Six Sigma Group
Closing the gap between innovation intent and reality (corporate governance)Guy Pearce
As published in Directorship.
Bright and glamourous on the outside, innovation is pretty messy on the inside. In spite of high profile news that makes it seem like most organizations are successful and even disruptive innovators, the reality is that only a fraction of innovation efforts ever reach the market. This article shows how innovation governance increases the rate of successful innovation.
How any organisation can drive culture and design systems to pursue practical...Toby Farren
This whitepaper will provide an insight into the different elements of modern innovation fostering,
including the various factors determining the capability of organisations to innovate internally;
the differences between frontend and backend innovation; and a focus on the relatively new
‘open’ innovation methods (including the advantages of utilizing sandboxes in the frontend
innovation process as well as collaborating with external bodies).
Innomantra Viewpoint - Getting Bold innovation Right v1.0 Innomantra
Getting ‘BOLD INNOVATION’ Right
By Neelima Joseph & Lokesh Venkataswamy
The element ‘SUPPORT’ finds relevance in the innovation management system. To manage innovation effectively, the organization should jump in and facilitate the required resources for establishing, implementing, maintaining, and continual improvement of the innovation management system. The resources come in different forms such as Time, Knowledge, Financial resources, Infrastructure, and Human resources. For effective implementation of the standard, organizations are responsible for determining, providing, and managing the right people. Organizations must identify and develop teams with diverse backgrounds, to enhance cross-pollination and leverage the collective competence of the organization (ISO 56002:2019).
The element 'SUPPORT' encompasses the following sub-clauses, which are the different ways in which support could be extended:
Digital strategies, digital agendas, digital business all are becoming the norm but how do you know if your organisation has taken all the right steps to leverage the digital technologies available. Here we look at the key dimensions to measure to get a picture of your digital maturity
Agility boosts performance: Guide for your agile transformation journeySebastian Olbert
ORGANIZATIONAL AGILITY AS A COMPETITIVE FACTOR
The Agile Performer Index
In the Agile Performer Index, goetzpartners and the NEOMA Business School clearly demonstrate the correlation between agility and entrepreneurial success. The more agile the company, the better it performs financially. The purpose of the study was to investigate what agility can really do for organizations. Is it just a temporary trend? With the right methodology, can agility deliver sustainable success?
Resulting from a broad survey among 285 leading European companies, the Agile Performer Index documents that agility programs are a suitable way for organizations to achieve lasting performance and competitive advantage.
Selected key findings:
Agile companies perform ~ 2.7 times better than non-agile companies
CxOs rate their company’s agility higher than do middle managers.
Sector check: Digital maturity doesn’t guarantee agility
With a fundamental shift in the CFO mission, the finance function has become a critical change agent across organizations. The role of financial leaders such as CFOs is evolving, from a traditional financial controller, to one that drives performance improvements across the organization.
Where is your corporate focus; cost cutting or value proposition? Sustainable future growth must come not only from a cost-obsession, but a value-obsession. Check out this white paper from Northpoint Advisors.
What is innovation? The term "innovation" can be defined as something original and more effective and, as a consequence, new, that "breaks into" the market or society.
Innovation is generally considered to be the result of a process that brings together various novel ideas in a way that they have an impact on society.
What is competition? An innovation competition is a method or process of the industrial process, product or business development. It is a form of social engineering, which focuses to the creation and elaboration of the best and sustainable ideas, coming from the best innovators.
Competition is not just another business that might take money away from you. It can be another product or service that's being developed and which you ought to be selling or looking to license before somebody else takes it up.
Check out: www.eleaderstochange.com
Follow: #eleaders2change
Similar to Build Innovation Into Your Strategy (20)
Our Contract Staffing Solutions can help your firm scale up quickly for planned or unexpected growth due to End-of-Year Budget Planning, Hiring Slow Downs or Continuous Improvement - Project Expansion/Extension. With no overhead, no payroll burdens and the benefits of specialized project-by-project hiring, Contract Staffing offers immediate solutions for your business needs, including Mid- to Long-Term Contract and Temp-to-Perm options.
https://benevagroup.com/clients
A proven way to maximize the achievement of strategic goalsSteven Bonacorsi
Many organizations have a strategic plan. Sadly, whilst almost all these organizations will invest significant amount of leadership effort in defining and deploying their strategy, only a fraction of them will get the results they hoped for. However, there is a proven way that guarantees the achievement of strategic goals
How and why to use strategy execution technology to deploy your 5 sSteven Bonacorsi
Do you want to run your 5S deployment faster, easier and more effectively?
Are you tired of wasting your time on non-value adding admin work aggregating spreadsheets, MS-Project, and presentation slides?
Then you will be pleased to know there is a better way to deploy your 5S program. With i-nexus Strategy Execution software you can easily deploy and execute your strategy and effectively run your 5S projects.
St John is the largest primary care provider in New Zealand and provides emergency ambulance service to nearly 90% of New Zealanders. They also provide a range of care-related community and commercial services, including medical alarms and an emergency telephone response service to at-risk individuals nationally through their Telecare and Home Health
division. St John has contact with over one million New Zealanders a year.
The Telecare division is charged with installing thousands of medical alarms in the homes of clients who have a diverse range of medical and other needs across the country. It then
monitors the alarm through a 24-hour telephone service staffed by consultants who triage distress calls to ensure an appropriate response.
Toyota Financial Services Corporation, the finance division of Toyota Motor Corporation in Japan, provides vehicle finance and leasing for individuals and business across 32 countries. Since 2001 their mission has been to: "Improve processes throughout the global network of sales finance companies by promoting a culture of best practices in the spirit of the Toyota Way."
Taupo District Council has three main towns, Taupo, Turangi and Mangakino.Population is 32,500 (Taupo town 22,000). Taupo town is nestled on the shores of Great Lake Taupo from which the mighty Waikato River flows.
SAI Global provides organizations around the world with information services and solutions for managing risk, achieving
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They provide aggregated access services to Standards, Handbooks, Legislative and Property publications; they audit, certify and register products, systems or supply chains; they facilitate good governance and awareness of compliance, ethics and policy issues and provide training and improvement solutions to help individuals and organizations succeed
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1. Build Innovation into Your Strategy
“Genius is 1% inspiration and 99% perspiration.” – Thomas Edison
Abstract
Innovation can include both paradigm-busting breakthroughs and
incremental improvements in existing products or services. In either
case, an organization can articulate, align, and communicate how
innovation fits into its overall strategy through the use of an integrated
strategic planning and performance management system featuring a
strategy map and balanced scorecard. This ensures that innovation
efforts are given the right focus and support, and that innovation truly
becomes integrated with the rest of the organization’s activities.
Why Innovate? By Dan Montgomery
Every organization, whether a business, non-profit, or government Senior Associate
agency, must innovate. The need to innovate is a well-documented Balanced Scorecard Institute
factor in private industries, such as technology, consumer goods and
services. But in fact, we see the same dynamic across our entire client
&
base. Non-profits must address growing client needs, while dealing Gail S. Perry
with cutbacks in funding and competition for philanthropic dollars. And Vice President
many government organizations, whether civilian or military, from the Strategic Solutions
federal to the local level, are facing what one of our clients referred to Balanced Scorecard Institute
as the imperative to “Transform or Die.” Every organization we work
with is increasingly in a mode of “white-water” change.
What is Innovation?
Innovation has become one of those words that mean very different things to different people. The experts define
two main categories of innovation:
Breakthrough Innovation – truly new products, services or business models that fundamentally disrupt customer
buying patterns and competition in the industry or operating environment. Personal computers, the internet, and
nanotechnology are good examples of breakthrough innovation. The mythology of breakthrough innovations usually
includes images of the lone inventor working away in a garage, or “skunk works” separated from the politics of a
parent corporation. But, in fact, many everyday products we use today – such as the Internet - were originally
breakthrough innovations generated through public-private collaborations in federal agencies such as NASA and the
Department of Defense.
Sustaining Innovation – incremental improvements in products or services that extend the life of or build upon what
was once a breakthrough. The introduction of a new version of Windows would be an example of sustaining
2000 Regency Parkway Street, Suite 425 . Cary, North Carolina 27518 USA . Phone: 919.460.8180 . www.balancedscorecard.org
2. Build Innovation into Your Strategy Page 2 of 6
innovation, and, before that, the annual introduction of new models in the auto industry. In the government sector,
examples would include automating services such as driver’s license renewals or Social Security applications using the
Web – to use new technology to deliver mandated services more efficiently and effectively.
Sustaining innovation is a much more “manageable” process, and many large corporations like Microsoft and Procter
& Gamble excel at it. Breakthrough innovation, on the other hand, is often messy, unpredictable, and may even
create conflicts within an organization as the breakthrough disrupts entrenched interests and ways of doing things.
Many argue that “sustaining innovation” shouldn’t even be termed ‘innovation” at all. In any case, there’s a
distinction to be made between the “Eureka” moments that produce the big, breakthrough ideas, and the more
tedious process of implementing them. Call it “inspiration” versus “perspiration”.
But does the distinction between inspiration and perspiration mean the two definitions of innovation have to be in
conflict? We believe that a strategy-based balanced scorecard offers a way to value and encourage both.
Why Balanced Scorecard?
A strategy-based balanced scorecard system involves the collaborative development of a firm’s “Story of the
Strategy” and identifies the connection between creative capacity, efficient product development processes,
improved customer and stakeholder value, and financial outcomes.
The balanced scorecard uses four strategic perspectives, shown in Figure 1, below – complementary but distinct
lenses for looking at organizational strategy and performance. The use of perspectives allows the organization to
build a model of how the “intangible” factors – creativity, talent, new ideas, collaborative interaction with customers
– interact with the more “tangible” factors – well defined processes, dollars invested, sales results - to create an
innovative, sustainable organization that can adapt resiliently to change.
FINANCE: In a business, owners, investors and analysts view the organization as a financial system that
provides return on investment. In a non-profit, donors see the benefit to others from their support of the
organization’s mission. In government, taxpayers and their representatives see value for money spent on the
public good.
CUSTOMER/STAKEHOLDER: In a business, customers see the business’ products and services as a way to
satisfy needs and desires at an appropriate price, and stakeholders may act as advocates for other issues,
such as the environment and the community. Non-profit and government agencies work within a complex
network of impacted clients and stakeholders, any or all of whom may exercise influence on the
organization’s funding or license to operate.
INTERNAL PROCESS: The activities at which the organization must excel in order to provide value for
customers, stakeholders, and ultimately, those who foot the bill. Internal management and staff (including
contractors, volunteers and others) work to improve business processes to efficiently turn resources into
outputs (products and services) that will satisfy customer and client needs. In the case of innovation,
effective processes include the procedures for evaluating new ideas, testing them, funding them for further
development, or discarding them – the “perspiration”.
ORGANIZATIONAL CAPACITY: The foundation of the other perspectives – the physical infrastructure, culture,
tools and technology, knowledge and skills, and information systems required to create, plan, design, and
deliver products and services to customers and stakeholders. Organizational capacity is a mix of tangible
(people, tools, systems, structures) and intangible assets (ideas, culture) that allow the “inspiration” to
bloom.
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3. Build Innovation into Your Strategy Page 3 of 6
Figure 1: The Four Balanced Scorecard Perspectives
Bringing Strategy Down to Earth
In a balanced scorecard-based approach to planning and performance management, we always start with strategy.
We are not innovating for the sake of innovating, but building a core capability that allows us to provide value for a
defined customer value proposition.
Figure 2, below, shows the logic of how a strategy-based balanced scorecard is developed, starting at the high-
altitude of mission and vision and linking strategy, step-by-step, to operations on the ground.
Figure 2: Strategic Planning and Thinking Using the Balanced Scorecard
Innovation as a Theme
A strategic theme is a major “pillar” of the strategy that directly supports achievement of the vision and mission of
the organization. A good theme contains a linked set of strategic objectives that touch on all four of the scorecard
perspectives. These linked objectives tell the story of how innovation contributes to the Mission and Vision of the
organization, and forms the basis for communicating the strategy story to everyone in a consistent manner.
2000 Regency Parkway, Suite 425 . Cary, North Carolina 27518 USA . Phone: 919.460.8180 . www.balancedscorecard.org
4. Build Innovation into Your Strategy Page 4 of 6
Innovation becomes strategic when it is fully integrated into the fabric of the organizational planning and
management process.
Organizations typically have several strategic themes or focus areas, such as: Operational Excellence, Sustainability, or
Strategic Partnering. Innovation can be a strategic theme, as well. As a theme, Innovation can be viewed through
each of the four perspectives of the balanced scorecard, for example:
From a financial standpoint, innovation means the organization is continuing to provide value – expressed in
financial terms – for owners, donors, or taxpayers, depending on the type of organization.
From a customer and stakeholder standpoint, innovation means developing and deploying new products,
services, or business models that create increased value for customers or clients, and address the concerns of
other stakeholders.
From a process standpoint, innovation means creating and managing a well-understood process for
evaluating, fostering, and deploying promising ideas.
From an organizational capacity standpoint, innovation requires a blend of leadership and culture, skills, and
organizational structures that allow new ideas to be generated.
An Example Innovation Theme Map
A strategic theme map visually depicts how objectives work together in an integrated, cause and effect sequence to
build innovative culture, behavior, processes and results into the core of your organization. Figure 3 is a typical
strategy map for an “Innovation” theme.
Figure 3: Generic Innovation Theme Map
Here is the story the strategy map tells:
“We will build an innovative culture in which new ideas and collaborative thinking are encouraged among our
employees. In addition, we will work with outside partners, such as academic researchers, to evaluate how
new technologies can be used to improve our products. We will develop a better way to evaluate, prioritize,
and develop new concepts, and will integrate these new ideas into our product portfolio so that we always
have new ideas in the pipeline ready to be turned into products/services. This will be supported by better
2000 Regency Parkway, Suite 425 . Cary, North Carolina 27518 USA . Phone: 919.460.8180 . www.balancedscorecard.org
5. Build Innovation into Your Strategy Page 5 of 6
intelligence about the markets we operate in. We will co-develop products/services with customers in order
to ensure that we are meeting their needs and providing enhanced value for them. This will lead directly to
increased sales. We will manage our product development budget in such a way that we are able to
determine the return we receive on product/service development expenses. By managing this process and
generating increased sales of new products/services, we will sustain the profitability of our organization.”
We typically recommend that you develop 3-4 theme maps, and then combine them to create an overall strategy
map for the organization. All of the themes, including Innovation, are merged into a powerful, mutually reinforcing
business strategy. To learn more about how strategic themes are used in developing an overall strategic balanced
scorecard: Strategic Themes: How Are They Used and WHY?
Measuring Innovation
In a strategy-based balanced scorecard system, measures are a means, not an end. Meaningful, strategically
important measures can only be developed once strategic objectives have been developed and linked together on the
strategy map. And, understanding what measures are truly strategic will help you to identify and prioritize
organizational initiatives that will “move the needle” on your strategic performance. Figure 4, below, shows how
performance measures and initiatives are developed in service of these objectives.
Figure 4: A Complete Strategy Based Balanced Scorecard
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