DEVELOP YOUR ANNUAL INNOVATION STRATEGY IDEASCALE WHITE PAPER

DEVELOP YOUR ANNUAL INNOVATION STRATEGY IDEASCALE WHITE PAPER

Develop Your Annual Innovation Strategy 3 3 5 6 8 9 10 12 13 15 16 Develop Your Annual Innovation Strategy Review the Past Review the Past Worksheet Set the Founda=on for the New Year Set the Founda=on Worksheet Planning for Different Horizons Preparing for Roadblocks Preparing for Roadblocks Worksheet The Structure of a Solid Innova=on System Conclusion Related Reading

3 Develop Your Annual Innovation Strategy Are you one of the many organizations that does little planning for the new year before January? Or, if you do have an annual planning session, do you remember to include innovation strategies? It's vital to create a comprehensive annual innovation strategy well before the new year starts. In fact, the best option is to have the annual innovation strategy included in your overall annual planning so that all the stakeholders can be involved and all resources needed can be allocated in advance. A written, well-thought-out innovation strategy is much more than a list of best practices you try in order to see what sticks. When you have an end-to-end innovation strategy for each year, you ensure that mistakes of the past aren't repeated and plan carefully for the future. In the end, this type of planning makes innovation projects far more effective and helps ensure ongoing support from leadership. This paper covers: The importance of reviewing the past to prepare for the future How to set the foundation by starting with customer value Why planning and preparing for roadblocks is critical The structure of a solid system Review the Past The first thing to do when preparing an annual innovation strategy is to carefully review what you did in the past year. It s said that those who don t learn from the past are destined to repeat it, and you don t want your organization going through that year after year. Start by looking at how results matched expectations for this past year. How many innovation strategies were planned last year? How many were completed? Next, look at what obstacles and roadblocks you encountered. Be sure not to get tunnel vision and focus on one single breakdown. There are many levels to consider: Organizational Challenges. What occurred at the organizational or company level that impeded the business ability to innovate as desired?

4 External Challenges. What happened in the industry and outside world that impeded the company s ability to carry out innovation projects? Project Level Challenges. What happened within the project teams and the projects themselves that slowed progress or impeded innovation? Don t stop with the negative. The next thing to review is what went right last year. Again, examine this on the same levels: Organizational Progress. What went right within your company that allowed innovation to happen? External Progress. What went right in the industry and outside world that helped you carry out innovation projects? Project Level Success. What went right within the project teams and the projects themselves that encouraged progress and sped up innovation? Finally, take a look at the impact that the completed innovation projects from last year had on your organization and beyond. Examine the following impact areas and quantify them as much as possible: Industry Impact. What impact did the innovation project(s) have in your industry? Organizational Impact. What impact did the innovation project(s) have on your company? Career Impact. What impact did the innovation project(s) have on the careers of team members and key stakeholders? With this information, you ll be able to look back on the previous year and gain information that will be vital to creating your next successful innovation plan. You ll understand what obstacles may hinder progress. You ll know what went right so you can plan to make that happen again. And, you ll fully understand the impact of innovation, which will help you sell additional innovation projects to leadership and make it easier to recruit quality team members.

5 Review the Past Worksheet Look back on the previous year and assess the following: How many innovation strategies were planned last year? How many were completed? What roadblocks did you encounter? Organizational Roadblocks: External Roadblocks: Project Roadblocks: What impact did completed innovation projects have on your organization and beyond? Industry Impact: Organization Impact: Team Member or Career Impact:

6 Set the Foundation for the New Year Now that you've reviewed the past, it's time to lay the foundation for continued innovation success in the new year. The first step is to set goals. However, not just any goals work. You have to set the right goals. Consider these three factors: Customer Impact. The best goals focus on customer impact. You should focus on innovation projects that improve customer experience in some way to have the biggest effect on your company's bottom line. Be sure your innovations add value to customers or provide a larger social benefit. Alignment. Finally, set goals that align with the overall strategy of the company. Don t just grab a list of goals from an influential publication and assume they will work for your organization. What works for Apple may not work for your company, and there s nothing wrong with that! Maintain Last Year s Innovations. It's important to plan ahead to maintain the innovative changes you made last year. Be mindful of the resources required to maintain the effectiveness of those changes. Next, determine the right allocation of innovation within your organization. How much will you invest in your company's technical competency or business model? How much should be invested in new technical skills or business processes? This decision will have a lot to do with the company's overall arc of success and profit.

7 The general environment within your industry is also important to consider. Most of all, don t limit your innovation to one way or one department. You should have at least one innovation project that leverages your company s existing strengths, and at least one project that pushes your organization beyond its normal mode of operation. Set goals not only for innovations you want to complete, but also for what you predict those innovations will accomplish. Having an idea of the intended consequences and improvements your organization will reap from the projects is important. Set goals in areas such as revenue, customer acquisition, and customer service improvement. In addition, think ahead about ways to protect yourself from the impact of imitators who can blunt the impact of your innovations. Once goals are set, determine what personnel and funding are needed and who will need to approve those expenses. Set a timeframe that starts at the intended completion date and work backwards. Consider the following: Team. When do you need to have a team assembled by? Platform. When will the crowdsourcing or data-gathering platform need to be approved? Funding. When will the funding need to be approved in order to ensure the project can start on time? Setting a timetable for each project can help you determine in advance if you are putting too much strain on the company's resources or if you are putting projects too close together on the calendar. In the context of overall annual planning, you'll also be able to see if you're competing too closely with other initiatives and whether a shift is needed. Having a bit of buffer in the schedule might be worth considering as well.

8 Set the Foundation Worksheet List innovation goals you want to accomplish and classify the impact they ll have: Revenue Goals: Customer Acquisition Goals: Customer Service Improvement Goals: Classify their impact: Goals Customer Impact Alignment Maintenance Be sure to download the Innovation Academy workbook for an in-depth project-level workbook. Visit the best-practices section of the IdeaScale resources webpage to receive your copy.

9 Planning for Different Horizons As you set up your innovation strategy, you want to plan for different types of horizons. As mentioned earlier, many organizations focus the majority of their efforts on incremental changes within their existing framework. They focus very little time on transformative changes. According to Harvard Business Review, 70% of all innovation efforts focus on core/incremental change and only 10% on transformative change 1. However, the return on investment is exactly the opposite. You only get a 10% return on incremental change, but you get a 70% return on transformative change. Your incremental changes pay off, but not nearly as much as transformative change. Regardless, you'll likely need both to keep existing customers happy and to entice new ones to buy. Allocate resources based on your product roadmap, but don't forget to look beyond it. One of the best ways to do this is to use incremental changes to create momentum and progress that can be used to invest in a transformative, long-term change. Too often, in search of big returns, leadership will demand transformative change that the organization's structure and processes are not prepared to execute. By using incremental change to prepare your processes and structure, you can avoid this pitfall.

10 Preparing for Roadblocks As you plan for future success, it s also vital to avoid known problems. In step one, you examined the obstacles that came up last year that hindered or limited innovation. Now, you can make plans to work around those obstacles for next year. First, examine the external obstacles you reviewed. It can be difficult to know what will happen in your industry in advance. However, there are certain types of external factors that are more predictable or known 2. Which of the following have the possibility of disrupting one or more of your projects this year? A competitor s upgrade or new release? Seasonal impact on your company s business? Economic changes in your country or around the world? Local, national, or international political or news events? Local, national, or international sporting or entertainment events? Something similar to one or more of the external obstacles you had last year? This is not an exhaustive list. However, it pays to be as prepared for external challenges as much as possible. Next, take a look at organizational challenges. You and your leadership team have more control over these types of hindrances. That doesn t always mean they are easier to avoid, just that they may be easier to predict. Consider the following types of problems: Any organizational challenges you had last year are an important starting point. Key stakeholders who are resistant to change. Other projects already planned for next year. Key departments that have higher-priority focuses that conflict with the innovation projects and resources needed. Some of these internal situations can become personal and messy. It s important to have support from the right leadership and to make sure that any correction or difficult discussions are handled through the appropriate chain of command.

11 Finally, take a look at project level challenges from last year. There are always difficulties within any project. Based on your previous experiences you can predict and work around them. Here are some ideas to consider: Did you have a hard time recruiting team members? Was the crowdsourcing or data-gathering platform that you used in the past effective? Did team members communicate well and respect each other? Did specific departments have a hard time providing representatives? Is more advanced notice required? Was everyone held accountable? Would a software solution help make that happen? As much as possible, build on your experience from previous problems to give more notice to team members, improve communication, and choose the best tools for your innovation projects. You'll also want to use your previous experience to overcome common objections that potential team members may have. It might be easier to prepare documents that will help them clearly understand their role.

12 Prepare for Roadblocks Worksheet You ve assessed roadblocks that occurred last year. Given your goals for this year, what roadblocks do you predict will you ll encounter? Organizational Roadblocks: External Roadblocks: Project Roadblocks: Other: What project level challenges can you anticipate and mitigate today? Team Challenges: Communication Challenges: System Challenges: Other:

13 The Structure of a Solid Innovation System In order to properly plan how many innovation projects you want to have next year and when they should occur, it s vital to know what each project entails. Each innovation project has several stages. By estimating and planning how and when each project stages will occur, you ll have a better idea how many resources and team members you ll need. This will allow you to plan in advance to make sure they are available. Stage One: The Ideate Stage In this stage, you are collecting ideas from your source community. This can be your internal staff, external customers, a crowdsourcing universe, or any combination of the these. It s important to have the following elements in place before you start the Ideate Stage: Proper software to collect and evaluate ideas An easy way for participants to share new ideas A way for participants to vote on ideas, if that s part of the evaluation Clear communication with participants and stakeholders on expectations, timeframes, rewards, and implementation Stage Two: The Build Team Stage In this stage, you assemble team members to evaluate and champion the most promising ideas. These should be cross-functional teams that include multiple departments. You will likely need people from marketing to customer support, and everything in between. It s best to have these people pre-selected if possible. If you have trouble recruiting, point to the positive impact that previous projects have had on team members careers and success. This can make a big difference both in getting enough team members and in the positive attitude they bring to the project. Stage Three: The Refine Stage This stage is where you start to refine the most promising ideas and get additional details. You should define what is required for each idea to be implemented. It's vital to ask a lot of questions at this stage. Key stakeholders can hold friendly "cross-examinations" of your team about each idea to help everyone fully understand what's required. When this understanding is gained, everyone benefits. It may become obvious that one or more ideas are too flawed to use, which is fine. It's better to know than to waste resources. On the other hand, you may find that with a little more research the idea is revolutionary and not as difficult to implement as you originally estimated.

14 Stage Four: The Estimate Stage Once you have the details of the top ideas mapped out, you can start to estimate the cost involved. Make sure that your team estimates not just money, but also time, employees, and resources that are required to sustain the idea long-term. Knowing the full cost will help your teams as they present cost-benefit analysis. Without researched estimates, their ideas won t make it through to the next stage. In addition, this analysis helps your leadership team decide whether the funding can come from an existing budget or whether the project needs a budget of its own. Stage Five: The Review Stage In the Review Stage, key stakeholders make the final decisions on which ideas "win" and will move on to be implemented. This can be done with a straight majority vote, through full consensus, or based on a rating scale. Make sure to include key stakeholders in the decision-making. You don't want to lose buy-in of a department head that can derail project implementation. Everyone who has a stake in the innovation project, whether it involves benefit, personnel, funding, or something else, should have a say in what ideas move forward. Stage Six: The Fund Stage This is where the winning project is implemented and funded. You'll need approval from financing and accounting, and your leadership team will have to decide if the money will come from an existing departmental budget or if a new budget will be created. An innovation project can be implemented permanently, on a trial, or on a pilot basis. Regardless, it's important to use the Fund Stage to secure funding for the long-term implementation of the idea, not just the initial rollout. Stage Seven: The Archive Stage Too many project managers forget about this important stage. The project is no longer active, but all of the ideas, progress, obstacles, and lessons should be recorded. This will save you significant time during your annual strategy planning. Having the archive of the project will allow you to use the lessons learned from this innovation project to help you do better on future projects and plan for future innovation strategies.

15 Conclusion If you don't have a comprehensive innovation strategy, it's unlikely that your organization will get into the habit of continuously innovating. Despite your best intentions, you won't have access to the people, resources, and funding you need simply because you didn't plan ahead. Writing down your personal goals makes you more likely to achieve them. This is also true for goals that require buy-in from others. Without having a written plan, you can't get the buy-in you need from management and other key stakeholders, and you're much less likely to be successful in implementing innovation projects next year. It s time to develop your annual innovation strategy. Tie it in with your company s existing annual planning session. By the time January comes around, you ll be ready to go!

16 Related Reading Blogs: IdeaScale Blog Innovation Management The Daily Crowdsource https://ideascale.com/blog/ www.innovation.se www.thedailycrowdsource.com Workbooks: IdeaScale Innovation Academy www.ideascale.com/resource/innovation-academy/ Books: The Wisdom of Crowds Crowdsourcing by James S by Jeff Howe A Guide to Open Innovation and Crowdsourcing: Advice From Leading Experts edited by Paul Sloane (First published in Great Britain and the United States by Kogan Page Limited 2011) 1. Nagji, B., & Tuff, G. (2012, May 19). Managing Your Innovation Portfolio. Retrieved November 21, 2016, from https://hbr.org/ 2012/05/managing-your-innovation-portfolio 2. Ray, L. (n.d.). Seven External Factors of Business. Retrieved November 21, 2016, from http://smallbusiness.chron.com/sevenexternal-factors-business-21960.html FOR MORE INFORMATION sales@ideascale.com Global / Americas +1 800-549-9198 New Zealand +64-080-099-5088 Australia +61-02-9037-8414 United Kingdom +44-0-808-189-1476