As someone who works for a strategy consultancy, it becomes clear that for most companies, there is a disconnect between what they say their strategy is, and how they actually behave.
This can have a profound impact on the likely success rates of innovation in those companies.
I recently rewatched the excellent TEDx talk by Karen Dillon (video above), on Do You Have a Strategy for Your Life?
It is adapted from her book “How will you measure your life?“, which she co-authored with Prof Clayton Christensen.
In her talk, she outlines one of the fundamental issues which most companies fail to grasp, which is what strategy actually is.
A strategy is not what a company says their strategy is.
Is it not some kind of aspiration or vision statement handed down by the C-Suite, printed in their annual report or as part of an advertising campaign.
A real strategy is formed in the everyday decisions that every single employee makes, about how they will spend their own time, energy and the company’s resources.
This is the concept of resource allocation.
During my own work on Strategy, we always help clients to understand that setting a strategy is all about making choices.
Choices about which opportunities to pursue (where to play), how to pursue them (how to win), and as a result, which opportunities to not go after.
And choices about which resource allocations (time, focus, energy, and resources) of their employees will be incentivised and which will be punished (even though this is hardly ever formalised).
Where this often falls apart is that there is a disconnect between a stated strategy and employee behaviour. This is especially true when it comes to innovation, where new ideas need to be implemented.
In Karen Dillon’s example, we might see a strategy to sell more of the company’s newer, cheaper version of a product which will drive the company into the strategic direction. But if salespeople know they will get more commission by selling the previous, more expensive model, then they will be incentivised to avoid the innovative new version.
There are other scientifically-studied reasons why employees may avoid implementing new innovations as well, even if they are aligned with the formal strategy:
- They may be suffering from loss aversion, where they feel the pain of a change of the status quo more deeply than the possible future benefit the new innovation may bring.
- They may not want to take responsibility for the potential failure of someone else’s idea
- People don’t feel comfortable raising concerns or issues with how projects are progressing
- Staff are afraid of breaking through their comfort barrier of new ideas
- The company may claim that they support innovation, but is actually just performing innovation theatre
Have a look at your own company now.
Are there any behaviours which are working against the company’s strategies and preventing new innovations from growing?
In that case, what choices can you make to encourage your employees to allocate their limited resources to make them happen?
Let me know in the comments below.
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