Managing Innovation - Innovation Strategy: Part 2

This post outlines the two key purposes of an innovation strategy.

The first of these is to connect the high level company strategy (x% of revenue from products less than y years old) to the decision criteria required to manage a portfolio of projects developing new products. The important thing to understand is that a good strategy requires a portfolio approach. At the most basic level, the process of managing product development is to a large degree a process of managing risk. Product development has a lot in common with investing. Diversification is the key and high return often comes with high risk.

The second key purpose of an innovation strategy is to focus effort. Companies have limited resources and therefore need to select what that expend effort on. Also, the innovation strategy helps to focus effort but creating a sense of direction for those people within the company charged with implementing the strategy.

The next post will explain the components that an Innovation Strategy may cover.