Innovation Strategy and its challenges.

As we move toward the second part of 2024, with the peak in demands that some SMEs may experience across the sector due to the many events and festivities, embedding technological innovation, no matter how minor it may sound, becomes important for competitive advantage and financial sustainability.

Innovation flourishes when you align it with a clear and well-defined strategy. While strategy outlines the path to creating value, innovation identifies the value you need to create to follow that path successfully.

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The clearer your strategy, the easier it is to focus on the problems that need solving, the opportunities worth pursuing, the customers you aim to serve, and the outcomes you want to achieve. Strategy and innovation are interdependent—neither can succeed without the other. A well-crafted strategy is essential for guiding your innovation efforts and ensuring they meet your organization’s goals.

However, it’s not uncommon for business leaders to craft a compelling vision but fail to identify the specific mechanisms necessary to achieve that vision. This often leaves the organization unsure about key priorities, resource allocation, what to measure, and the desired outcomes.

Questions like “What products are we developing?” “What services are we offering?” “What value are we creating for our customers?” and “What does the future look like for our company?” become difficult to answer if strategy and innovation do not align.

Here are five common strategic missteps that can hinder innovation. Addressing these issues will help you achieve greater success in both your innovation initiatives and overall strategic efforts.

Unclear or undefined Vision

We have been supporting many companies throughout the years that misinterpreted the meaning of innovation from a strategy perspective. Innovation is part of the strategy; it is not a tactic to make more sales on Christmas or Black Friday. As a consequence, it requires evaluation and clear objectives.

Firstly, it is important to have a vision. Vision is what the company aspires to become. However, one may argue, SMEs have already enough of their plate so why ‘waste time’ thinking of a mission and a vision?

The answer is very simple: stakeholders need to know what a company stands for.

We can all infer that Disney’s vision is to entertain. Their mission better details what this means: […] to entertain, inform and inspire people around the globe through the power of unparalleled storytelling […].

Defining a clear vision and mission for an SME may be difficult. Especially for those that, for example, operate in the freights and distribution industry. Why would a vision that states “Carrying the Future Everywhere” be of importance? A well-crafted vision helps you and your stakeholders understand who you are and what you aspire to be. In the example of the freight and distribution company, it would communicate ambition,forward-looking, and conveying a sense of responsibility and ambition.

So, how do you define your vision? Start by thinking about what you want your business to become. Your vision can be ambitious, encapsulating everything you aim to achieve in the medium to long term.

Just like a five-mile journey requires different preparation than a 500-mile trek, your team needs to understand the resources to gather and the innovative strategies to pursue.

Lack of Creative Options

Many companies fail to dedicate sufficient time to brainstorming and exploring creative options, leading to predictable and uninspired strategies.

However, SME owners often face the reality of a 40-hour workweek, where operational and repetitive tasks consume most of their time, leaving little room for brainstorming, blue-sky thinking, and creative discussions.

This is why, as of 2024, we often see similar strategies across different companies. Innovation doesn’t happen by simply reading bullet points; it thrives through the sharing and exchanging of knowledge and ideas. This principle applies not just to product development but across all areas of a business—inventory management, marketing, data analysis, and even technical infrastructure.

Every moment spent discussing ideas is an opportunity for growth. We’ve seen SMEs forced into reactive innovation because they delayed prioritizing creative processes. Great strategies challenge the status quo, pushing organizations to explore new possibilities. This requires meaningful stakeholder engagement and dedicated brainstorming sessions. Without taking risks and dreaming up creative solutions, businesses will struggle to grow and achieve their long-term goals.

Inadequate Decision-Making Processes

Even when a strategy is based on a clear vision and includes the right options, poor decision-making can hinder execution.

Prioritising initiatives, operations, and resources ineffectively can create barriers to innovation. Often, this is due to a culture that discourages innovation, particularly when the focus is on standardising operations.

To avoid this pitfall, ensure that your operational model supports an innovative environment. Innovation inherently challenges traditional decision-making processes and requires collaboration.

You may need to develop a new decision-making framework or reorganize teams to foster a culture of innovation. While innovation doesn’t guarantee immediate success, it promotes learning, experimentation, and growth, all of which enhance your organization’s decision-making capabilities.

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Unclear Measurements and Metrics

One of NorthStar’s objectives is to clarify the world of metrics, and make it accessible and -more importantly- connected to business vision and brand strategy.

Successful innovation and effective strategy rely on clear, accountable measurements and metrics.

For instance, if your strategy involves launching a new product, innovation efforts should be guided by specific leading and lagging indicators. Questions like “What does the product do?” “Which customers does it serve?” and “How will we measure success?” help focus the team on solving customer problems and measuring market impact.

However, when a strategy is vague and metrics are not clearly defined, innovation teams are left to create their own measurements, which may not align with the organization’s goals.

To prevent this, establish clear metrics and measurements at the outset, ensuring that innovation efforts remain aligned with your overall strategy.

Failing to Monitor and Learn

The most valuable outcome of innovation is learning.

The path of strategy execution is never straightforward, so it’s crucial to learn and adapt quickly.

Embedding monitoring and learning into your strategy and daily operations is essential for creating value efficiently. When overlooked, innovation can become more of an experiment without purpose rather than a disciplined value-creation process.

Making monitoring and learning key components of your strategy, you enhance both your organisation’s intellectual capacity and its ability to deliver results.

If your innovation efforts aren’t yielding the desired outcomes, it might be time to reassess your strategy. Ensure you’re not making these five common strategy mistakes that can derail innovation.

Get in Touch with NorthStar Consulting

If you’re looking to enhance your innovation efforts and avoid these common pitfalls, NorthStar Consulting is here to help.

Our experts can guide you in aligning your strategy with your innovation goals, ensuring long-term success. Contact us today to learn more about how we can support your journey towards a more innovative and strategically sound future.