6 Best Practices to Align Innovation with Strategy (by Boston Consulting Group)
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Introduction
87% of companies struggle to connect innovation with strategy.
Think about that number. It reveals a stark reality in today's business landscape.
Most organizations talk about innovation, list it as a priority, and invest resources in it. Yet they miss a crucial element: alignment with strategy.
I've seen this disconnect play out countless times. Companies enthusiastically launch innovation initiatives, only to watch them fizzle out months later.
The root cause? A missing link between innovation efforts and business strategy.
BCG identifies six best practices that set successful innovators apart. These practices help bridge the gap between strategic intent and innovation execution.
Let's explore how top performers turn innovation from a buzzword into a real competitive advantage.
Here are 6 best practices to link innovation with strategy
Only 13% of companies have a strong link between business and innovation strategies, and these companies are much more likely to use the six best practices.
Companies that use four or more of the best practices see better results. They have a higher percentage of sales from new products.
Senior Executive Ownership

Innovation thrives when supported by senior leadership, such as the CEO. This top-down strategy ensures that innovation is embedded in the organizational culture and receives adequate backing.
Clarity on Innovation’s Role

It is crucial to have a shared understanding of innovation's purpose and its alignment with the company's strategic goals. This common narrative guides decision-making and promotes a cohesive approach to innovation.
Focus on Competitive Advantage

Organizations should strategically allocate innovation investments towards areas where they possess a distinct "right to win." This targeted approach maximizes the return on innovation efforts and leverages existing strengths
Clearly Specified Domains

Defining specific innovation areas that directly support the overarching business strategy is crucial. This focused portfolio approach ensures that resources are allocated to the most promising and impactful initiatives.
Target Portfolio Structure

Innovation leaders need a clear vision for resource allocation across different innovation domains and timeframes. Balancing short-term gains with long-term bets ensures a sustainable innovation pipeline.
Quantified Objectives

Setting measurable objectives for innovation activities, with clear timelines and risk assessments, enables organizations to track progress, measure impact, and make informed decisions. This data-driven approach ensures accountability and drives performance.
What are the three broad GenAI value plays for companies?
Three Broad GenAI Value Plays for CompaniesThe sources identify three broad value plays for companies looking to capitalize on GenAI's potential: Deploy, Reshape, and Innovate.
- Deploy involves using readily available GenAI tools to achieve quick wins in productivity and build experience within the company. This can be done through one-off projects or by applying the technology to a specific, company-wide use case. This approach allows organizations to gain initial traction with GenAI, identify internal champions for the technology, and highlight smaller applications that have the potential to be scaled up. For example, companies can use ChatGPT to create initial drafts of reports or take advantage of Zoom's automated meeting summaries.
- Reshape involves rethinking key internal functions by integrating GenAI to enhance quality, speed, and efficiency. GenAI becomes a valuable asset in the business transformation toolbox, enabling staff to focus on higher-value tasks. This value play fosters the development of in-house GenAI expertise, creating a helpful talent pool crucial in the current landscape of GenAI talent scarcity. One example is Sanofi, a healthcare company using GenAI pilots to rethink its R&D, manufacturing, and commercial functions. The company aims to improve business economics and free up resources and time for reinvestment in R&D.
- Invent leverages GenAI to generate value by creating new products, services, and business models while enhancing existing offerings' appeal.3 This value play offers the highest potential returns by creating new avenues for top-line growth. At the initial stages of GenAI experimentation, companies might need more time to reach this level. Further along in its GenAI adoption journey, Microsoft exemplifies this value play through its product Copilot, a subscription-based assistant for Microsoft 365. Copilot allows users to apply GenAI to their data, boosting customer productivity and potentially generating billions in incremental recurring revenue.
BCG notes that while "Invent" presents the most significant opportunity, "Reshape" often provides a more accessible starting point for building transformative GenAI expertise.
Given the current emphasis on enhancing innovation readiness through GenAI integration, the sources focus on how companies can "Reshape" their innovation systems using GenAI. This approach also benefits the "Invent" value play, as a reshaped innovation function is better equipped for faster and more effective invention.
Key Takeaways
The path forward is clear. Innovation without strategy is just wishful thinking. But when you align the two, you create a powerful engine for growth.
Start with one practice and build from there. Your company's future might depend on it.
Ready to transform your innovation approach?
The first step is executive buy-in. Start the conversation. Make the change.
- Strategic innovation is critical for success.
- These six best practices help companies align innovation with strategy.
- Using these practices leads to better performance.
- Companies need to start with strategy.
- Companies need to invest in GenAI to boost innovation.
Free PDF & PPT Template: 6 Proven Strategies to Align Innovation with Strategy
PDF and PPT Template
Looking for a clear and actionable framework to integrate innovation into your business strategy? We’ve created a free PDF and PowerPoint template covering the 6 Proven Strategies to Align Innovation with Business Success. Whether you're a business leader or a strategist, this guide will help you implement key best practices to drive innovation in alignment with your company's goals.
What’s Inside?
- PDF Guide: A concise, easy-to-read summary of the six principles.
- PowerPoint Template: A customizable slide deck to present these strategies in your next meeting or workshop.
The PowerPoint version is designed for easy sharing with your team and clients. Customize it with your company's unique insights to ensure your innovation strategy is communicated and aligned with your business objectives.
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