So the challenge also is having a clear, focused direction for our innovation activity. That’S also important, because even the largest organization doesn’t have infinite resources. We can’t do everything. Resources are limited in a start up, they only get one shot, but for any organization, it’s really important to be clear. Where are we going, what we’re doing and why and there’s another reason why it’s important to have an innovation strategy, basically it’s all about learning organizations, have the chance to learn and grow through what they know from the first startup learning some new tricks that he can Apply next time around through to giant corporations who are continually reusing their knowledge, so there are at least three elements of this learning that are strategic and need strategic management. The first is growing our knowledge base, building our competences, the things we can use to make something happen. An organization like 3m has been around 100 years, not by accident. It draws on a deep knowledge base. It understands hugely about coating surfaces from the early days of sandpaper, where little pieces of grit were coated on paper through magnetic oxide coated onto computer tapes and audio tapes through to today’s nanoparticles. Much of what 3m is able to do draws on a deep knowledge base and strategically managing the accumulation of working with that base is a key task, but it’s also about capabilities. As we’ve seen, innovation doesn’t happen by accident, we need patterns of behavior.

We need to construct the way an organization works, so it can repeat the trick and learning and building these capabilities is another key part of innovation strategy, but there’s also the ability to step back and reset to cope with different conditions, to extend and develop our capabilities. Sometimes, to revise them entirely when we enter new markets, perhaps go to a new geographical area when we take on board new technologies in a completely different field. When we launch completely new ventures when we change the organization, all of these are extending and developing our capabilities. So there’s a great deal of innovation strategy that has to do with strategic learning so what’s in an innovation strategy, if it’s so important, well, there’s a number of components. The first thing, of course, is we need a vision. We need to know where we’re going and we need to build commitment in the organization to get there that’s, particularly true in the case of a startup. We also need some degree of analysis of all the things we might do, just which ones are going to be important. We need, then some selection from all those things we might do, which ones are we going to do and why we also need to think strategically about whether we’re going to be able to make this actually happen. Can we see this through there’s, something about the style? The position or the posture we take in taking our strategy forward and there’s something else about making sure that other people come with us, getting the strategy deployed and getting buy in, and support for that strategy.

So let’s look at these very briefly the vision thing. Well. Yes, of course, we need to know where we’re going, but the evidence is clear. Innovation strategy needs a clear, compelling and motivating vision and one which would stretch the organization take it further. It needs a clear mission, a sense of specific purpose, a key target. It needs to build on who we are relate to the values of the organization, what we believe in and the behaviors we want to follow. There needs to be alignment, making sure that vision does engage and compel people, and there are plenty of examples – famous one. Of course was john kennedy’s challenge to the united states. We are going to put a man on the moon and bring him home safely. That’S. A huge innovation challenge very focused, compelling mission for an innovation strategy, but lockheed skunk works way back in the second world. War began life. It still is a key part of the lockheed organization, essentially the part of the organization which is characterized by very high performing teams. Achieving what might seem impossible to others enormously stretching compelling visions that challenge the organization or the teams to deliver what about strategic analysis? Well, innovation is all about the future, so we need to make use of tools to explore that future inside the organization and outside and put this information together. The good news is, we have many different, powerful tools to help us, for example, something called pest political, economic, social technology.

What are the drivers in the kind of world we’re? Moving into that? We might need to respond to now they could be threats or they could be opportunities, so another powerful tool to use alongside pest is swot strengths and weaknesses, opportunities and threats. How do we build on our strengths? How do we develop and worry about our weaknesses so that we’re in a position to respond effectively to those potential drivers in the world outside and particularly how we might pick up opportunities? Another start, another tool which is enormously powerful, michael porter, an american industrial economist. Basically distilled much of what we know about competitive behavior, in which innovation plays a key part into five forces. The competitive rivalry between firms is partly shaped by the relative power of suppliers and of customers and the possibility of new entrants and the possibility of the entry barriers to substitutes. Now that set of five things to consider gives us quite a powerful strategic roadmap for thinking about where we might play in the future and how we might use innovation to create opportunity. We might find ourselves looking for blue oceans, a metaphor here very much developed by a couple of professors from the insead business school. The blue ocean takes his idea from the situation. If you imagine throwing a piece of meat into a shark infested sea very, very quickly, all the sharks gather they scrabble trying to get it. I mean very quickly. The water is running red with blood it’s, a violent, difficult place to compete.

By contrast, a blue ocean has nothing going on it’s, completely clear and clean full of opportunity, and the notion of a blue ocean strategy is to use different tools to think about where we are and what’s coming to find blue oceans rather than try and struggle to Compete in red oceans now many of those are tools that are about looking outside and bringing messages in the reverse is equally true. Something called the resource based view essentially says: what do we know and how could we deploy it so if we’re 3m back to that example, we know about coaching surfaces. How could we deploy that in all sorts of interesting and new markets? Now, all of these strategic analysis tools – and there are many others – identify a set of possibilities that still poses a big question. How do we choose? How do we decide where we’re going to get advantage from innovation and particularly how we prioritize the things we can do, because we can’t do everything so the idea, particularly apart from a startup where there is only one strategy, one choice for one big new venture idea. But as we move to organizations which are growing so we need to think about a portfolio, one which balances the risks and the rewards one which allows us to do both. Do better incremental innovation and more radical exploratory innovation do different and balancing the two and what we’re, trying also to do is not just invest in things that bring immediate benefits, immediate rewards, but also building our capability and competence for the long term.

We may choose to do something which, in itself, doesn’t get us very far, except it builds a foundation for the future. We’Ve also got to think in our strategy for innovation, about whether we can actually do this. Can we make it happen? Have we got the capabilities? If not do we know where they might come from so much of innovation strategy, isn’t about a master plan which we create and then hope will come true, but rather being agile planning but then adapting in agile fashion, again a cornerstone of the lean startup approach. The idea that we have an idea we test it and we pivot, we adapt around the feedback we get from the world outside from the market from other changing situations, and this principle of agile strategy is a key one. It also raises the question and implementation of how we’re actually going to affect our strategy what’s the style we’re going to adopt. If we’re going to be a first mover exploiting some new technological opportunity, then we need some quite deep pockets to fund the kind of research and development that allows us to be a first mover equally, if we’re going to be a fast follower. If we’re going to imitate and improve that’s fine, but we need the capacity to find out quickly to sense what’s going on and then react and move fast, and we also need to think in implementation downstream. How will we get other people to buy into the strategy? How can we break down our overall big target into where we’re going toyota, as we’ve already mentioned, is an organization which specializes in getting many many ideas from its employees, millions of them every year? But if those millions of ideas are shooting off in random directions, this doesn’t necessarily help the organization move forward.

One of the keys to toyota’s success is strategy deployment having key strategic objectives, which then shape the work that employees do to create ideas to provide a whole stream of innovations, but they fit they’re aligned with that overall strategy. So let’s summarize, where we’ve been in this overview of innovation strategy. First of all strategy matters, we need a framework to guide the commitment of our scarce resources. We have to have a clear sense of direction. A road map for the future it’s based around having a clear vision, a focused, clear mission and something which is consistent with our values. What we believe in the way we would like to behave. It needs powerful analysis, it’s exploring thoroughly the future and where we might play that raises the question of selection, because we can’t do everything and strategic selection is about building a balanced portfolio, and we need to think hard about implementation.