10 Taking a strategic approach to creativity and innovation

How managers approach both strategy and innovation has significant implications for the long-term success of their organisation. While the traditional view might be that they are separate phenomena, both strategy and innovation are closely linked when it comes to achieving longer-term organisational success. Importantly, by taking a more strategic view and practising what has been called strategic innovation, both managers and organisations are able to maximise the benefits of their creativity and innovation practices for the benefit of customers, employees and stakeholders.

One attempt to link together both strategy and innovation in a meaningful way was outlined by Markides (1997), who coined the term strategic innovation. Key to this approach is that ‘Strategic innovation is about innovating the strategy itself’ (FT.com, n.d.).

Figure 22 Costas Markides

In order to kick-start strategic innovation, Markides outlines five key approaches that leaders in an organisation should take:

1. Redefine the business.

2. Redefine the who: who is your customer?

   • A company should think of new customers or new customer segments and develop a game plan that serves them better.

3. Redefine the what: what products or services are you offering these customers?

   • A company should think of new customer needs or wants and develop a game plan that better satisfies these needs.

4. Redefine the how.

   • Companies should leverage existing core competencies to build new products or a better way of doing business and then find the right customers.

5. Start the thinking process at different points.

   • For example, instead of thinking, ‘This is our customer, this is what he or she wants, and this is how we can offer it,’ start by asking: ‘What are our unique capabilities? What specific needs can we satisfy? Who will be the right customer to approach?’

By following these steps, Markides contends, organisations are able to enhance both their strategic and innovative potential.

While it might require a degree of lateral thinking, these same five key approaches can just as easily apply to a public sector body or perhaps even charity. However, clearly in those contexts the focus might, for example, be less on customers and more on service users, and – equally – less on profit and more on outcome.

Now watch the following short clip in which Markides (Irish Management Institute, 2013) discusses the concept of strategic innovation in greater detail.

Download this video clip.Video player: bb842_openlearn_235455.mp4

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Transcript

[MUSIC PLAYING]

COSTAS MARKIDES:

The first message will be that there are different types of innovation out there. There is product innovation. There's technological innovation. There's process innovation and so on and so forth. So the first thing that people need to decide upon is, what kind of innovation should I be aiming for? So if you come to me and say, I want to be innovative. I will say, I don't understand what that means. You have to tell me specifically what type of innovation you want to achieve.

Now let's say you come and say, I want to do strategic innovation. That's good. That's a first step that you have defined precisely which type of innovation you aspire to achieve. The second then is to understand what exactly is this strategic innovation before you start going into the how to. And what is strategic innovation? In my mind, it's very, very simple. It's discovering either a new who. And by that, I mean a new customer segment to focus on in the business, a different customer segment from what everybody else is looking, a different who. Or thinking of a different benefit to add to your product, different from what everybody else is offering, not just functionality but other benefits, and then a different how in the business. And by how, I mean maybe a different way of playing the game, a different value chain activity, a different business model, and so on.

So it's very important for people to appreciate that strategic innovation is the discovery of fundamentally different or new who, what, how in the business. It's not in your product. It's not in your technology. It's not in your process. It's a different who, what, how. That's the second thing that people need. And then once they say, oh, that's exactly what I would like to achieve and so on, then we can start into the specifics of how do you go about discovering.

[MUSIC PLAYING]

COSTAS MARKIDES:

It's not the marketing department, and it's not just anybody in the organisation. There has to be ownership at the very top because you're talking about some serious innovation initiatives here. You're going to redefine who the customer is and finding new customer segment to go after. This is not a decision that anybody can take. It's the board's decision. It's the leadership position. The same way if you say, I'm going to change my distribution method, or I'm going to change my inventory method, or I'm going to change the value proposition of my product. These are very, very important strategic decisions. So at the very least, top management has to be involved.

Now having said that, of course, we need to differentiate between two things. Innovation is, first of all, coming up with the ideas. And secondly is the implementation of the ideas. The coming up with the ideas, I think, could be decentralised. It's not just the board that has ideas. Anybody, anywhere, anytime can come up with ideas. And in fact, we also encourage people to go outside the organisation. Open innovation is the new thing.

Get ideas from outside, from your competitors or from outside the industry or from different countries, from every employee in the organisation, from the marketing department, from the factory floor. Anybody can give you ideas. You can do it through a process. It's a process that top management has to put in place to gather ideas.

And then once you accept that ideas can come from everybody and anybody and so on, the second step is the implementation. Who takes ownership of the idea? And that is where I think at the very top, there has to be somebody that says, I will be the owner of the idea. It doesn't mean that the top person is the one that goes out and implements it. He or she can then say let's form a team of different people in the organisation to analyse the idea and decide whether that's a good idea to implement.

[MUSIC PLAYING]

End transcript

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In the next section you will consider the key consequences of Markides’ approach.