Coherent innovation strategy

In the ongoing series on innovation as a source of competitive advantage, PWC has published a long series of articles on what makes organizations successful when it comes to innovation. One of the major drivers of success is to have a coherent innovation strategy. Coherent companies showed outperformance in both market cap growth and EBITDA margins.

Coherent innovators

Coherent strategy outperforms

PWC showed that you cannot spend your way to innovation outperformance. However, having a coherent innovation strategy gives you a good chance of beating your competition

Now, what is this coherent innovation strategy? PWC defines companies that have coherent innovation strategies as:

”Companies that can craft a tightly focused set of innovation capabilities in line with their particular innovation strategy — and then align them with other enterprise-wide capabilities and their overall business strategy — will get a better return on the resources they invest in innovation.”

How do you develop a coherent innovation strategy in a quick manner?

The way we do it at Innovation360 is to look at the external world for opportunities and threats (using PESTLED and Scenario analysis), we then investigate internal innovation capabilities in terms of strengths and weaknesses (usually by using a 360-degree assessment).

PESTLED and Scenario analysis

PESTLED stands for Political, Economical, Societal, Technical, Legal, Environmental, and Demographical. The macro factors that affect you can be broadly divided into these buckets. The macro factors can then be divided into certain and uncertain factors. The certain factors you can take care of directly in your strategy. The uncertain factors may require scenario analysis to be properly taken care of by your strategy

360-degree assessment

An assessment will answer the questions around your capabilities and where you stand in terms of innovation capability compared to the rest of the world. The assessment will attempt to find any innovation blockers, amplifiers, or organizational misalignments you may have that can assist or hamper your innovation efforts.

Putting it together into a coherent innovation strategy

What you then have is a very large opportunity space for innovation and you can build a basic innovation strategy from these two pieces. In order for the strategy to turn coherent, you have to filter the opportunity space by looking at the organization’s vision, mission, and purpose and then understand what the organization’s overall strategy says. Both in terms of what it says about innovation, but also around what it says is the focus for growth and competitive advantage.

Finally, the opportunity space must be filtered by the goals the organization has for innovation. This is ideally a stated growth target, but can also be things such as employer branding or using innovation to win particular customers.


Coherent innovation strategy

The parts to consider in a coherent innovation strategy

Innovation strategy considerations

You now have a filtered opportunity space and can design your innovation strategy. This means choices. Which opportunities will you go after? There are a number of ways to figure this out. A simple way is to look at your business model in the long and short term, what will have to change to reach your new ideal business model? What is your value proposition now and what will it be in the future?

Strategy considerations

The strategy is about changes to win. These aspects are key in that consideration


Using for instance blue ocean frameworks analysis can help answer these questions. The blue ocean frameworks will also help summarize the changes. What will need to be created, what will you stop doing, what will you do more of and what will you do less of.

The strategic initiatives you have developed will essentially be either

  1. A business initiative to capture a future opportunity
  2. A change initiative to build capability to capture opportunities or to defend against a threat

At the end of the process, you will have a number of strategic initiatives that you can prioritize in terms of impact and required resources. You can also sort the initiatives into buckets of risk and time, that we normally call horizons. Horizon one is improvements to your core business. Horizon two are innovations for the next growing thing and horizon three is the creation of future options.


Going through this exercise is quick and it can be carried out by a small team. The whole organization can be involved if the process is scaled up. It helps those who are working as part of larger organizations make sure that the innovation efforts make sense and are in line with corporate strategy and goals. Getting to an innovation strategy will help you since it will

  • make it easier to prioritize your innovation efforts
  • make sure that the initiatives you are working on have a strategic value
  • guide the need for more radical innovation and where you should start to work with new ideas


Innovation360 carries out this process with clients utilizing comprehensive tools, analytics, and big data. Specifically worth mention is:

  • Innosurvey® 360 assessments. Understanding the strengths and weaknesses in relation to your strategic choice (in a 360 = every level and each part of the level).
  • PESTLED360® analysis (External Key Drivers, threats and/or Opportunities)
  • Scenarios360® analysis (Anticipations of the market development)

Utilizing comprehensive tools, big data, and analytics in strategy development results in faster, and more accurate outcomes that are based on your specific situation not previously done work for your competitor.