For a decade, CEOs have been consistently concerned that current business models are at risk, while their satisfaction with innovation performance has been low. This growing uncertainty reveals a stark disconnect between the urgent need for reinvention and the underwhelming results.
Today, CEOs find themselves wrestling with a tumultuous economic and geopolitical landscape, while simultaneously racing to innovate with the help of new tech, like generative AI. While they’re still focused on the pursuit of growth, leaders must walk a tightrope, balancing the immediate need for cost optimization with the imperative to reimagine their business models and forge new paths to revenue. The stakes have never been higher, and the clock is ticking.
Is your company ready to try something new? Something with a track record of success? The journey begins with creating an innovation thesis.
What is an innovation thesis?
An innovation thesis:
- Is a statement that guides an organization’s innovation efforts.
- Defines where a company should focus its time, effort, and resources to achieve a significant return on innovation.
- Aims to both sustain and grow the core business while transforming it for the future.
Why do businesses need an innovation thesis? Well, I painted a pretty bleak picture at the outset of this article, listing numerous challenges that organizations face. But the root of the problem is not the problems themselves, but rather how a business responds to them. When an organization doesn’t have a clear direction, workers feel it, and it impacts their output.
What are teams working toward? Many don’t know.
Despite this urgent need for reinvention, there’s a troubling disconnect in many organizations. Miro found that 39% of information workers say their leaders don’t discuss the company’s innovation strategy, and a staggering 37% don’t even know what their innovation strategy is.
This lack of communication and clarity has dire consequences. Without a compelling innovation strategy that gives leaders confidence, fear of failure can take hold. Instead of bold moves that could capitalize on disruptive forces, companies default to incremental improvements and cling to the familiar.
From there, innovation devolves into theater, wasting resources and causing employee burnout. Bets are placed in the wrong areas, and the business model begins its inevitable decline. Top talent jumps ship, cash dwindles, the brand’s reputation suffers, and stakeholder confidence evaporates. Public perception shifts from celebrating an organization’s successes to dissecting its failures.
Why companies shy away from talking strategy
Because we operate in a fast-paced market, the pressure to deliver immediate results and maintain operational efficiency can overshadow the importance of big-picture planning. Organizations often find themselves grappling with a host of challenges that hinder their ability to engage in meaningful conversations about innovation strategy:
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The urgency of the now: External pressures, such as economic fluctuations, competitive threats, and evolving customer demands, often force companies to prioritize short-term business needs. This leaves little room for exploring innovative ideas that may not yield immediate returns.
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Unstructured innovation: In the absence of a clear innovation strategy, ad hoc projects may arise from different departments or individuals. While these initiatives might hold potential, they often lack a strategic direction and may not align with the company’s broader goals.
- The prioritization puzzle: Evaluating and prioritizing various innovation ideas can be a daunting task. Without a framework to assess the feasibility, potential impact, and alignment with strategic objectives, companies may struggle to identify the most promising avenues for innovation.
How a strong innovation thesis illuminates the path forward
A well-defined innovation thesis can serve as a powerful antidote to these challenges, providing organizations with a clear roadmap for their innovation journey, including:
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Laser focus: By identifying the intersection of internal strengths and external opportunities, an innovation thesis directs resources and efforts toward the most promising areas. This targeted approach maximizes the potential for impact.
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Strategic alignment: A strong thesis ensures that innovation initiatives align with the overall corporate strategy. This fosters a cohesive approach, preventing the fragmentation of resources and ensuring that innovation efforts contribute to the company’s broader goals.
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Accelerated progress: With a clear mandate and strategic direction, promising innovations gain the necessary momentum. The allocation of adequate funding, resources, and internal support enables these projects to move faster from concept to market.
- Calculated risks: An innovation thesis encourages a portfolio approach, where diverse bets are placed on different ideas. This diversification mitigates risk by spreading investments across various projects, increasing the likelihood of overall success.
The building blocks of an innovation thesis
A robust innovation thesis comprises two key components:
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Internal assessment: This involves a thorough evaluation of the company’s existing strategy, goals, strengths, capabilities, and assets. Understanding these internal factors lays the foundation for identifying areas where the organization can leverage its unique advantages.
- External exploration: Analyzing data and signals from the external environment reveals emerging trends, market opportunities, and potential disruptions. This insight helps identify areas where innovation can create significant value and address unmet needs.
The blueprint: a practical guide to crafting your innovation thesis
To translate your strategic vision into actionable steps and guide you through the process of crafting a compelling innovation thesis, Rainmaking, a corporate innovation and venture development firm, created a Miroverse template. This template, inspired by Roger Martin’s frequently referenced “Where to Play and How to Win ” strategy from his book with Alan G. Lafley, Playing to Win, provides a structured framework to define your innovation path.
Before embarking on your innovation journey, it’s crucial to cultivate a unique perspective on the future. Ask yourself where the world is heading and what types of businesses are poised for success. Consider where you envision the greatest value emerging within the customer journey, value chain, and technology landscape.
To inform your perspective, lean on respected sources like Gartner, Forrester, and IDC. Explore platforms such as Pitchbook and Tracxn, which offer valuable insights into privately held companies and venture capital investment trends. These tools reveal where venture funds are placing their bets, indicating emerging technologies and business models with high growth potential.
By understanding where the smart money is flowing, you’ll gain a deeper understanding of your industry’s evolution. Track what your competitors are investing in or acquiring to identify potential threats and opportunities. This broader view can uncover partnership prospects with emerging companies or reveal untapped “white spaces” within or adjacent to existing markets, paving the way for groundbreaking innovation.
Turn uncertainty into opportunity
In a world of constant change and disruption, a well-defined innovation thesis empowers organizations to navigate the complexities of the market, anticipate emerging trends, and make informed decisions that drive sustainable growth. By understanding where the world is heading and aligning efforts with these evolving dynamics, businesses can transform uncertainty into opportunity.
Through the strategic use of resources like the Rainmaking.io Miroverse template and insightful data platforms, leaders can craft a compelling innovation thesis that empowers their organizations to thrive in the ever-changing business landscape. By embracing this structured approach and fostering a culture of innovation, companies can confidently chart a course toward a future marked by growth, resilience, and lasting success.
