A New Approach to Strategic Innovation

Companies typically treat their innovation projects as a portfolio, aiming for a mix of projects that collectively meet their strategic objectives. The problem, say the authors, is that portfolio objectives have become standardized, and innovation projects are often only weakly related to a company’s distinctive strategy.

This article introduces a new tool to help leaders better align their innovation investments. The strategic innovation tool kit has two elements: a strategy summary framework and an innovation basket. Leaders start by clarifying a unit’s strategy and determining what needs to change to achieve it. The change needs are translated into innovation goals, and leaders create their “innovation basket” by plotting each project against those goals. They can then cut projects that aren’t aligned and create new ones that are. It’s an iterative and creative process: Projects are adjusted to fit the strategy but can also shape it.

Examples from the authors’ research demonstrate how the process of creating an innovation basket gives managers fresh insight into what their innovation activities are really doing for their strategy.