Eric Bartsch – Keynote speaker for the University of Illinois Annual SWE Professional and Alumni Brunch – Dec 1st

Eric Bartsch at Chanute Consulting Group will be delivering the keynote presentation at the upcoming Society of Women Engineers Professional and Alumni Brunch on December 1st. The theme of the brunch is: “A Lifetime of Innovation” and the topic of Eric’s presentation is: “Innovation Leadership Principles – Why They Matter in a Career in Engineering”

November 18, 2012

Dear Professionals, Alumni, and Faculty,

On behalf of the SWE UIUC Professional Liaison Committee, I would like to invite you to attend the Annual SWE Professional and Alumni Brunch on December 1, 2012 from 11 am – 1 pm at the Illini Union, Room 314 (1401 W Green St Urbana, IL 61801).  This event is geared towards providing alumni and professionals with a platform to meet or reconnect with current students and to share their advice and knowledge.

The event will begin with a brunch reception which is free of charge to all professionals, followed by the keynote speaker, Eric Bartsch (‘95 MS Mechanical Engineering UIUC) short company co-sponsorship presentations, and recognition of professionals and alumni at the brunch. The focus of the conversation will be about innovation based on the brunch theme “A Lifetime of Innovation.”  Eric is both an innovator and a leader of innovation teams with a long track record of developing successful new products within mutiple industries. He is currently the Founder and President of Chanute Consulting LLC.  He will give his presentation “Innovation Leadership Principles – Why They Matter in a Career in Engineering,” where he will share what he’s learned about innovation in the marketplace in an interactive and thought-provoking discussion.

This brunch is a unique opportunity for you to discuss your experiences as a professional and the challenges that you have faced in your career. You will be seated at a table where you will be able to speak individually with students, all in a more personalized environment.  Our students benefit greatly from your experiences and value the opportunity to network with you. As a professional, your presence at the event is particularly meaningful and would be much appreciated.

If you have co-workers, friends or family who are alumni or engineering professionals within driving distance of the University of Illinois at Urbana-Champaign, please extend this invitation to them.  If you are able to attend this event on December 1, please RSVP by November 21st at the following link:

Please let me know if you have any questions.  We look forward to seeing you!


Kelly Samara, SWE UIUC Alumni Brunch Coordinator,
Molly Imgruet, SWE UIUC Alumni Brunch Coordinator,
Amelia Johnson, SWE UIUC Professional Liaison,

War and Business Strategies have similarities and also significant differences

One of the Business Strategy forums has a current discussion on what can be learned from War Strategy and applied to Business Strategy. While there are a lot of similarities, there are some key differences that need to be considered when comparing the two. Often businesses miss these nuances when developing their own strategies. Here are five key differences to think about when comparing the two:

* War strategy is about dominating the opponent. The goal is to continue until the opponent gives up and surrenders. In business the focus should be on winning over the customer. You can dominate your opponent and still lose if the market changes around you.

* A third party gets to decide the winner in business. Your customer gets to ultimately decide whether you or your competition gets the sale (maybe both of you get the sale if you are positioned differently and deliver different value). A third party exists in war (the population of the warring countries) but they rarely get to decide the outcome.

* There can be multiple winners in business. A great strategy gives a business a unique position to profit in the market. There can be multiple successful businesses in a market segment, and multiple companies can serve a single consumer group.

* The territory being disputed in war is typically a fixed geographic area that is easy to define. The territory in dispute in business competition is a market segment or consumer segment that is very fluid. The territory could change or even disappear while competing businesses are fighting over it.

* War typically involves two sides (us and them) while business strategy involves numerous competitors who are all bumping into each other in the market.

Studying war strategy is valuable but not sufficient to understand business strategy. The same could be said about applying business knowledge to the battlefield. Useful and interesting to learn from each other, but not identical situations.

Eric Bartsch

Understanding Michael Porter – Great Overview of Strategy and Competition

Anyone involved in strategy has been exposed to Michael Porter’s work, but we could all use a periodic review of his contributions to understanding competition and strategy. Joan Magretta has provided us with a great refresher course on the best of Porter in her book: Understanding Michael Porter.

If it has been a while since you have read Porter’s works, or if you are about to embark on strategic planning for your business and need to get grounded in what strategy is, this book is invaluable.

Go get a copy of the book and read it if you have any interest in strategy. Until you have the opportunity to sit down and read it, think through the following criteria as they apply to your business:

Five tests of a good strategy:

1) Unique Value Proposition

2) Tailored Value Chain

3) Trade Offs are Different from Rivals

4) Fit Across the Whole Value Chain

5) Continuity Over Time


The Only Three Questions That Count – The Wisdom of Ken Fisher Applied to Innovation Strategy

As innovators, we know that it is often productive to look for new connections between previously unrelated industries, technologies, markets, etc…

I was recently re-reading a very good book on investing strategy and it struck me that it contains some very applicable lessons for innovators. The book was Ken Fisher’s “The Only Three Questions That Count – Investing by Knowing What Others Don’t” – 2006

You might be asking: What does investing have to do with innovation? In this case, the answer is: Quite a bit! A major premise in this book is that an investor is never going to beat the market, if they use the information that everyone else is using, in the same way everyone is using it. Also, much of what we think we “know” needs to be questioned to separate the folklore from the facts.

This absolutely applies to innovation. If your company knows the same things as your competitors, and if you are doing things the same way they are, then you are going to struggle to compete. The key is to become aware of this and do something about it.

There are three questions that Ken Fisher poses to investors, and all of these apply to both business strategy and innovation strategy:

1)   What do you believe that is actually false?

2)   What can you fathom that others find unfathomable?

3)   What is your brain doing to blindside you?

These are very good questions for innovation leaders to be asking themselves on a regular basis:

1)   What do you believe that is actually false? – We all fall into this trap of developing internal “tribal knowledge” that is accepted as truth, when in fact it may be false. What does your team “know” to be true that really should be questioned? (some ideas below to get the ball rolling)

  1. Customers really don’t want ________________ (fill in the blank)
  2. Everyone wants ________________ (do they really?)
  3. That startup competitor really won’t amount to anything
  4. Our products are best because _______________
  5. Our competitor’s products are inferior because _______________
  6. Our competitors will never figure out how to _______________
  7. ________________ is impossible

2)   What can you fathom that others find unfathomable? – This is a really important one for an innovative company. You have to learn how to do things that others can’t do. You must learn things about your customers that nobody else sees. You must see relevant connections where others don’t.

  1. What can your team do that nobody else can? How will you leverage this?
  2. What does your team need to learn how to do?
  3. How will you get unique insights about your customers that your competition doesn’t have?
  4. What technologies, manufacturing processes, cost advantages, etc… can you gain access to; that your competition can’t? How can you create more of these unique advantages?

3)   What is your brain doing to blindside you? – How are pride, overconfidence, and confirmation bias; all conspiring to blind your team to important information around them?

  1. We all seek out information that supports our view of the world, and we discount information that doesn’t fit with this viewpoint. How is this “confirmation bias” at work in your organization? What data are you rejecting even though it is right there in front of your face, because it doesn’t fit with what you “know” to be true?
  2. We all have pride in our products, brands, and companies. How is this pride causing you to discount what is happening elsewhere?
  3. All projects have champions who believe their product will be a winner in the market. However, in fact many of these products won’t win. How is this overconfidence impacting what projects are in your portfolio?

Ken Fisher developed this framework with investing in mind, but if you read his book more broadly, you will find it very applicable to innovation strategies as well. If you are involved with innovation and are also interested in investing, then you’ll get twice the bang for the buck out of this book.

Eric Bartsch


With innovation, how much measurement is enough? The Heisenberg uncertainty principle applied to innovation & measurement

A good article was posted on the Board of Innovation forum, titled: “It’s Time to Count”

The article discussed the need for innovators to do a better job of keeping “count” of how they are doing. This is a worthy challenge, but it isn’t without it’s pitfalls. My response is attached below and I encourage you to also read the original article.


Having been in the position of leading innovation and being accountable for overall business results (P&L), the most critical measurements are growth in income and sales driven by your innovation efforts.

There are a lot of other things that can be measured when it comes to innovation, and the measurement of those tends to be most critical when you are trying to effect a change in culture or process in your organization. For example, if your group is too internally focused, then start tracking metrics around driving revenue off of external partnerships (and reward that behavior). If there aren’t enough ideas flowing in, then track the flow of ideas. If there aren’t enough ideas outside your core market, then track new ideas in new market segments, etc…

However it can be dangerous to go down the path of trying to measure everything regarding innovation with the goal of somehow fine tuning and optimizing every aspect. Innovation does not work like Operations where repeatability and efficiency are king. If your desire to measure stifles one great home run idea, then the net result of the measurement efforts is negative.

With Innovation Strategy, you are working to maximize the odds that great ideas form within your company or in its external network, and that they make it to market successfully so you can profit from it. This means channeling the efforts of highly creative people and keeping them very motivated to solve problems that have value to your customers before your competition gets there.

These highly creative people typically aren’t motivated by tracking two dozen metrics on every aspect of their innovation process, but they can definitely be motivated to “win” in the context of your competition and increasing profits/sales/market share. There are people who love tracking lots and lots of metrics, and they are vital to have, but in your operations group (or put some of them off to the side monitoring innovation so that you can monitor trends, but keep them invisible to the actual innovators so they aren’t in the way).

I’ll inappropriately invoke the Heisenberg Uncertainty Principle here. In many cases, you can have an outstanding innovation program or you can measure everything about it, but you can’t have both. Measure the things that need changing so you can track your progress. Measure the sales and income you are driving (since that is the only real score that counts). Motivate your people to win and incentivize them to do so. However, measure only what you need to, so that the measurement doesn’t become an end in itself that stifles creativity.

When you are comfortable that you are “counting” what is important, and that the benefits of the “counting” are still larger than the cost of the ideas you have lost because your innovators are spending time on counting, then you have hit the right balance. Having no measurement at all is a bad thing, having an excessive level of measurement in an Innovation culture can also be a bad thing.

Good question to pose to the forum.

Eric Bartsch

How to foster #Innovation in supporting functions – Who is the Customer?

On the Sustainable Innovation Forum, a question was posted regarding innovation in supporting functions that are mostly doing routine or repeatable work. It was questioned whether an innovation culture could (or should) be created in these parts of a company.

The answer is absolutely yes, but with a caveat. The innovation needs to be focused in the right direction or the results will not be good.

There are usually functions within a company that play more of a supporting role vs. other functions that are primary revenue generators and differentiators vs. the external competition. Sometimes this includes HR, Finance, or IT; although there are certainly many businesses where one or more of those functions is a primary revenue generator or external differentiator. The goal of a supporting function is to operate efficiently to support the rest of the business. Innovation is still relevant in these areas, but the energy must be focused on ideas that provide better support to the internal customers.

I’ll use an admittedly rather silly analogy of an on-site company-run employee cafeteria. The cafeteria exists so that employees can eat on-site quickly and cost-effectively. It is a support function and if it can figure out how to be more cost-effective or faster in serving employees, then those are great areas for focusing innovation.

However, if the on-site cafeteria decides that it wants to innovate to boost the cafeteria’s internal revenue metrics by promoting a new schedule that invents new mealtimes and encourages employees to take meal breaks at 10AM, 12PM, and 2PM, that might make the cafeteria’s revenue increase substantially, but it would be detrimental to the productivity of the primary functions that keep the whole business profitable.

An innovative mindset is always a good thing, but it needs to happen in the context of doing things that benefit the customer. The customer for a support function is one or more of the revenue generating functions in a company. The innovation in a support function has to occur in the context of making life easier or more efficient for the primary revenue-generating functions. Alternatively, it can be useful to innovate in reducing the expense structure of a support function, but there is a significant potential pitfall here that I’ll get back to in a moment.

I find that innovation sometimes goes haywire when a support function starts innovating but forgets that their customer is the rest of the company. Then you run the risk of getting lots of cool-sounding, cutting edge ideas that make the local metrics for the support function look really good, but the result for their internal customers is change and turmoil just for the sake of change.

We frequently see support functions implementing new innovative processes that make life easier for the support function, but that transfer work onto the employees in other functions who are supposed to be serving the company’s external customers. This is the pitfall many companies fall into when their support functions innovate on cost effectiveness. There are many ways for a supporting function to come up with innovative ways to reduce their own internal expense metrics, but unfortunately frequently this happens in ways that add hidden costs elsewhere.

If the revenue-generating employees in your business suddenly have to spend half their time doing work that used to be done by a supporting function, the support function may have great results on their internal expense metrics, but the overall corporate results will suffer. Be careful when innovating on cost effectiveness in supporting functions. If all of the costs (direct and hidden) aren’t captured in the analysis, the overall results may be detrimental.

Any function can and should focus on innovation, but it needs to be beneficial to the customer of that function (internal or external) or the effort will be misguided. In the end, innovation in a support function is no different than innovation for a revenue-generating function. You must focus the energies of the innovation on what is meaningful and beneficial to your customer. This means knowing your customer (internal or external) and their needs.


Innovation Metrics – Why they must be customized for each business

On another forum, there was a good discussion about how to best measure innovation. This is a question often asked, and there is not a standard answer that works for all companies, although there are some general guidelines that are relevant most of the time.

What is the best way to measure Innovation?

One of the difficulties in answering the question is that its a bit like asking: What is the best way to measure a car? Horsepower? Mileage? 0-60 time? Number of seats? Length? Number of cupholders? Kilowatts of stereo amplifier power?

In order to measure innovation, it is necessary to use multiple metrics to track different aspects of innovation that are relevant to a specific company. If a company is transforming from being less innovative to more innovative, then there are culture and process metrics that are important to track the changes. If a company is too internally focused and decides it is important to get more external ideas, then there are metrics around that.

In general it is useful to measure things like:

-Portfolio of products (things already on the market) – How many were launched in the last X years/months? How many are significantly differentiated vs. competition (in ways that are customer-relevant)? How long does it take on average for competition to duplicate or nullify what differentiates your products?

-Portfolio of projects (things in your development pipeline) – How many disruptive/breakthrough projects are in your pipeline? How many incremental innovations are in the pipeline? How much general line maintenance are you doing (new colors, sizes, versions)? How much of your effort & budget are you committing to each type of development project?

-Impact of innovation outside new product development – Is your supply chain developing new ways of being more efficient? Are you differentiating your business model vs. competitors? Is your marketing different in ways that make it more effective?

-Financial results – What percent of sales & profits are coming from new products launches within the last X years/months? What are you spending on R&D / Product Development (this can be too high or too low)?

With all of these potential metrics, one difficulty is that the absolute measurement is not very meaningful without knowing the trends and the relative position in an industry. The big insight comes from the direction these metrics are going vs. competition. In some industries it would be phenomenal to have 50% of sales coming from product platforms created in the last 3 years. In others that would be disastrous.

Also, there are a lot of useful metrics that are difficult to reduce down to a numeric value. There may be some things you can monitor effectively with a green/yellow/red rating or a five point scale. Some of the process and culture metrics hit a point of diminishing returns when you try to turn them into a traditional numeric metric.

Determine what role innovation plays in your corporate strategy and what changes you need to achieve in the next year or two. Then figure out a set of metrics that are relevant to measuring your progress in those areas.


CCG Innovation Blog – Top 5 Factors in Creating a Pipeline of #innovation – #CCGInnovationTop5

Differentiating a company’s value proposition from its competition is one of the most strategically important things an executive team can do. Innovation is what leads to differentiation, and as long as there are competitors seeking to add to their value propositions, the need for ongoing innovation never ends. Achieving a sustainable pipeline of innovation requires a company to look at innovation from multiple angles. The following is a list of five different dimensions of innovation within a company, all of which are critical to succeed.

Top 5 Factors in Achieving Innovation:

1) Innovation Strategy – A business must have a clear roadmap for what types of innovation are desired, what resources are available, and what goals are important. (What, How, and Who) The overall Corporate Strategy must explain how the company plans to differentiate itself on an ongoing basis. This clarifies where the innovation must occur. A detailed innovation strategy then gives the organization direction on how to continue to differentiate a company from its competition.

2) Culture – There must be a culture that supports and nurtures innovation. The five attributes in “The Innovator’s DNA” by Dyer, Gregersen, and Christensen must be present. Reward structures must also be put into place to signal to employees the importance of embracing change and looking for new ways to remain competitive.

3) People – The skills that lead to innovation are ones that should be encouraged and nurtured across a large percentage of the population of a company. However, it is also vital to have a handful of highly productive natural innovators on your team. There are many books on innovation which put forward a philosophy that anyone can be taught to innovate. This is absolutely true. Anyone’s innovation skills can be improved, and this is a very worthy goal. However, innovating in business is in some ways analogous to winning in professional sports. Anyone can be coached to play basketball better. However, no matter how hard I try, I’m not going to turn into Michael Jordan, regardless of how skilled my coach is.

There are people who have the capacity to see into the future and innovate in ways that a team of a hundred average people could not achieve. You need at least a few of these people. In innovation, one ‘great’ performance can do more for your company than a hundred ‘good’ ones.

Do ensure that you are fostering innovation skills in all of your employees, but also understand that you can have a good group of employees that are trained to be more innovative, but if your competition steps onto the court with Michael Jordan on their team, it isn’t going to go well for you.

Seek out the star players and create an environment where they can be productive, and at the same time coach the rest of your employees to continue to be more innovative.

4) Structure – Having a core group of innovators is critical, but if they are isolated and are unsupported by the rest of the organization, it will be difficult to benefit from their ideas and get new concepts into the marketplace. There is a great book: ‘The Other Side of Innovation’ – by Govindarajan and Trimble, that covers the concept of the ‘dedicated’ portions of an innovation team, and the ‘shared’ resources that must be linked to the innovation, but that are also occupied with the ongoing business.

5) External Connections – No company can stay at the forefront of its industry by focusing solely on what it can do internally. The need for great connections with the rest of the world is the driver for the long term trend towards Open Innovation. This impacts culture, where networking is required. It impacts structure, where some of your resources may not be employees. It also impacts strategy, where you may choose to depend on outside resources to provide innovative solutions that allow you to continue to differentiate from competitors.

#CCGInnovationTop5 – #Innovation and Disruptive Trends in #Retailing

This post is the first in a series examining disruptive influences on the horizon for different industries and product categories. Each of these potential changes will create winners and losers in the market. A good business strategy with an integrated innovation strategy, can position a company to benefit from, and even lead, the evolution in its market.


The retail environment is no stranger to seismic changes, having been through many disruptive eras in the past. Examples include the disruptive impact of retail consolidation into mega-retailers (Mom & Pop stores -> Sears -> Kmart -> WalMart) and the impact of internet retailing (Amazon or eBay). Given that innovation never stops, it is interesting to look at where the next big disruptions in retailing may come from. In many of these cases, it may already be here lurking in front of us. Notably, innovative business models play as big a role as new technology in most of these cases.

1) The brand-building store – The Apple store is of course a great example of what happens when the manufacturer of a product decides that they need to be able to connect directly with the consumer. Increasingly, the powerful product brands are going to want direct connections with their consumers. There is an inherent tension between traditional retailers (who want to stock multiple product brands and emphasize both the brand of the retailer and the breadth of their product offering) and product brands (who want their brand presented to the consumer, unfiltered by the retailer). Product brands may either demand a store within a store (the Apple section at Best Buy) or create their own retail environments to get their message directly to the consumer. The stores owned by the product brands create an opportunity to offer higher levels of service because they do not have to split the margins with a third-party retailer. However, as product brands are then able to differentiate on service in their retail environments, it is reasonable to expect traditional retailers to accelerate their pace of buying or creating their own brands so that they may differentiate themselves with unique products. Retailers and product brands are going to have to evolve their relationships to deal with an environment where they may simultaneously be partners and competitors.

2) The walled ecosystem – The iTunes store is a great example of a marketplace that was created with a strict set of rules that define what may be sold and how. What is interesting is that the model relies on the retailer defining and policing the rules, but it puts a large responsibility on the company developing the product. Imagine a bricks and mortar version of this system, where a physical store is built with rules for general product assortment, merchandizing, product safety, and packaging; but where the manufacturer is then responsible for stocking the stores and managing inventory (an extension of the Frito Lay model used in grocery stores). The store would be responsible for setting rules that result in a desirable retail environment for the consumer, and for creating a unique shopping experience (driving traffic to the store). The manufacturer would be responsible for interpreting those rules and determining the best products to sell to the consumer traffic in those stores (closing the sale). This could significantly change the nature of the relationship between manufacturer and retailer.

3) The evolution of the app and the mobile device – We are already multiple generations into the evolution of mobile devices in the retail environment. As this trend continues, location barriers will cease to exist. Already, a consumer who is inside one store frequently decides to make a purchase from another one on their mobile device. This creates a question of what it means to be “inside” a retailer. That used to give the retailer a certain degree of control of the purchasing process. Now a consumer can be physically inside a store while being virtually inside another one at the same time. Retailers must consider what value they can deliver to avoid competing solely on price. Equally important will be how that value is delivered. Value delivered prior to the sale decision (i.e. product information, access to physical product samples, expertise of sales people) may not result in that consumer sticking with the same retailer to make the purchase. Value delivered after the sale  (i.e. additional warranty, training, discounts on related products, or other ongoing services) may make a bigger difference in the purchase decision because it requires the consumer to go through with the purchase and not just use the physical retailer as a catalog for the virtual one.

4) Virtual reality – This is actually a very old trend in retailing in the broadest sense of virtual reality. Physical stores have had to compete with mail order, catalog, and internet companies as the virtual world evolved from black and white print, to color, to TV infomercial, to internet product demo. Each new technology made it easier for consumers to get the feel for a product without actually coming to the store to see it. However there currently remains a significant gap between the online experience and a truly great in-person retail experience (Lego store, Cabella’s, Bass World, Apple). However, we can’t assume that this will always be the case. If virtual reality gets to a point where consumers can experience a product in their home, the same way (or in better ways) than in retail, this is a significant risk to physical retail. Imagine a physical camera store competing with a virtual reality store that not only demos the camera, but allows you to try it out while standing at the rim of the Grand Canyon on a virtual vacation.

5) In-home rapid prototyping – This innovation is in its infancy when it comes to consumer use, but we are decades into its evolution in the R&D environment. The ability to quickly manufacture real parts for testing in product development, was a huge revolution when it happened. Early in my career, it was typical for this equipment to cost $500K or more. Now higher performance systems can be found for $25K or less. If this trend continues for 5, 10, or 20 more years, we may have affordable home-manufacturing systems that can be refilled with raw materials (or recycled materials) such that new items can be made at home with no need for factories, distribution systems, or physical retailers. The owners of the IP for the product design, and the manufacturers of the equipment will control the value chain in that environment. This revolution may not be far in the future. MakerBot already sells a system for under $2,000 that has some of this functionality:


Chanute Consulting Group specializes in working with our clients on developing strategies for growing their businesses and increasing their innovation pipelines. Contact us to discuss how to identify potential disruptive trends that could impact your business, and use that knowledge to refine your business and innovation strategies.

The Link Between #Strategy and #Innovation

I recently finished “The Lords of Strategy” by Walter Kiechel III, and it is an interesting read for anyone wanting to understand how we got to the current understanding of the role of strategy in building a business. It also paints an interesting picture of the key individuals and firms involved in creating the strategic consulting industry. The origins of BCG, Bain, and McKinsey are explored, along with the academics from key universities who contributed to the growth of the field. While this is more of a historic view than a tutorial on strategy, it does clarify the link between the different thought leaders in strategy.

One topic that gets brief mention in the book, is the link between Strategy and Innovation. Too often these are seen as separate disciplines, when in fact the two must exist together for a business to be successful over a long period of time. At CCG we believe that Strategy and Innovation are inseparable if a company intends to succeed for the long term:


You will find many definitions of strategy, but a combination of several of them may be necessary to encompass the full scope of what strategy really means to a business. In one sense it includes the goals of a business, action plans to achieve the goals, and resource allocation to support the goals (1). In another sense it defines the value proposition a company brings to its customers and specifies the value chain used to be used to create this value (2). It is also the answer to a list of questions that include: What are the goals? How do we get there? Who is the customer? What must we do? What are we not going to do? Who is the competition? What must we do to deliver better value to the customer than they do?

A good strategy is able to address all of these areas, to allow a leadership team to rally a company around a common direction. However, these definitions all are relevant to a point in time. Businesses don’t have the luxury of focusing on winning only in the context of the status quo, they must also maintain their relevance as markets evolve, new competitors appear, and the needs of customers change. This is where Innovation becomes critical as a piece of strategy itself.


The definition Chanute Consulting Group uses for innovation is the combination of three required elements:

1) The generation of new ideas…

2) that add value for the customer…

3) leading to profitable business results.

A company that succeeds at these three things, can be considered to be innovative. Including innovation at the highest level in a corporate strategy is critical because the business environment is a moving target. The best products of today may be only average a few years from now. Your customers may have very different needs next year than they do now. Your current competitors (and the new ones that may not even exist yet), will be working hard to innovate in their own ways, to leap ahead of your products or services.

This is where the role of innovation in a corporate strategy becomes vital. A good strategy will include the role innovation plays in keeping the strategy relevant as the world changes around a company, to all of the employees (not just the R&D organization) around a common direction:

  • What will our market(s) look like in the future?
  • Where do we have to add more value for our customers to remain competitive in the future?
  • How will we occupy a unique value proposition to differentiate ourselves from the competition?
  • Are the competitors of tomorrow different than the ones today?
  • What do we have to learn to do differently/better to remain relevant?
  • Where will the new ideas come from and what will we do with them?
  • What resources are available for innovation, both internally and externally?
  • What dimensions of our business must we focus on for innovation? (everywhere? core product lines? new markets? cost competitiveness? performance? efficiency? speed? flexibility?)
  • Where are we deliberately choosing not to focus?
  • How will we profit from our innovation?
  • Will the business model need to change as much as the products do?

If all of these elements are not clearly defined in a corporate strategy, then there is a risk that the strategy is too focused on the current environment around a company, with too little consideration of the changes that are inevitable. Some companies have great strategies that work for a period of time, but only until the next innovator appears. Obvious examples of both businesses and industries that have seen leaders come and go are:

Movie Rental: Blockbuster -> Netflix -> Redbox -> ?

Transportation: Railroad travel -> Major Airlines -> Low Cost Airlines -> ?

However, some companies have demonstrated skill in staying ahead of changes in their markets, to remain relevant even as the markets, customers, and competition are evolving significantly. Examples include: P&G and IBM.

The inclusion of Innovation as a major element of a corporate Strategy is the difference between a strategy that wins at a point in time, and one that can be more robust for the long term. While it is difficult for any organization to lead forever (it is more likely than not that Apple and Google will eventually be surpassed) it should be the goal of every CEO and executive team to weave innovation throughout their strategic plans, to proactively address the inevitable changes that will occur over the lifetime of the strategy and the company.



(1) – Alfred Chandler Jr – Strategy & Structure 1962

(2) – Michael Porter