Generate Higher Returns from Your Innovation Investments: 2 of 10

By introducing innovative new products to market, a company can establish market differentiation. While a company can establish differentiation, maintaining that differentiation may prove more difficult. Here we have put together a ten part series of articles that provides insight to companies looking to generate higher returns from their innovation investments.

From our series of highly informational articles, companies will learn: how to treat innovation as a cross-functional business process, how to align innovation execution and business strategy; how to create sustainable innovation; how to train your senior executives to successfully execute innovation initiatives; how to effectively manage process and project management; how to measure performance of your processes; how to ensure broad stakeholder buy-in; how to understand the importance of product roadmaps; how to provide the tools necessary for successful product innovation; and finally, how to ensure that portfolio management coincides with process management.

Here is one of the ten practices that leading innovators use to increase the payback from innovation spending: Aligning Innovation Execution and Business Strategy.

Connecting the Dots: How to Align Innovation Execution and Business Strategy

To successfully manage innovation and garner significant improvements in your organization’s top and bottom line, the goals and activities of cross-functional innovation project teams and the business objectives and strategies defined by your senior executives must be tightly aligned. One way to ensure such alignment is to use scorecard criteria as benchmarks against which to evaluate new product ideas. Project teams should rate prospective products by analyzing the following:

• Anticipated capacity to leverage core technologies
• The likelihood that they will provide high-growth or new market opportunities
• Their ability to support the achievement of the company’s strategic objectives

With an understanding of how each prospective product will inevitably contribute to the company’s top and bottom line, aligning business objectives and strategies with overall goals become more evident. Should the prospective product not rate well according to the above criteria, then that particular product may be abandoned so that additional spending on innovation can be funneled into a more promising product. If the objectives for a particular product line up with the goals expected of that product, then innovation teams as well as senior executives may confidently pursue that product knowing that what is spent on innovation is well deserved.

Since a recent study indicated that more than half of senior corporate executives are not satisfied with their organizations returns from investments in innovation, it becomes even more apparent that higher returns on innovation spending is a crucial component in creating a successful business strategy. At the same time, some organizations are realizing as much as forty to sixty percent more revenue and profit from new products than their industry peers. So, how do businesses such as this latter example differ from those that are dissatisfied with their organizations returns from innovation investments?

For more information on the top practices that leading innovators use to increase their returns on innovation spending, look for the next part to our ten-part series: Creating Sustainable Innovation by Looking beyond the Financial Data.