Start by checking if you really need it:

  • Large organisations benefit the most from it, since they have multiple units competing for limited internal resources.
  • SMEs are fine without a separate innovation strategy, as long as innovation is properly addressed within their business strategy.

I define innovation strategy as a mixture of policy and action designed to create and take to market something new, with the intent of creating value for the recipients (e.g. customers) and organisation (e.g. in terms of profit).

To develop an actionable innovation strategy you need to pay attention to your internal situation, external environment, boundaries, and how you envision success.

One way to do so is by asking following questions:

  1. What is your business?
  2. What parts of your business are under pressure?
  3. How is the world changing?
  4. What might these changes bring?
  5. How could we exploit these changes?
  6. How can we leverage what we have?
  7. Which strategic objectives do we want innovation to contribute to?
  8. Where do we want to grow?
  9. How does success look, smell, hear, and feel like?

It's up to you how deep do you want to go into each question. You can spend hours, days, weeks, months. Either way, please remember that simplicity makes execution easier.

In other words, you should summarise your innovation strategy and make it as concise, clear, and readable as you can. I prefer the following three-page format:

  • First page: the rationale and intent behind the strategy, together with key objectives (no more than three).
  • Second page: explicitly stated what kind of options will not be pursued.
  • Third page: explicitly stated what kind of options are desirable.

If you'd like to know more, then I suggest the following reading:

Dynamic Strategy
Strategic feedback loops are the key.
The strategy gap
What’s hiding in the cracks?
Seven innovation strategy caveats
Take heed of each caveat and you will be ahead of the majority of your competitors.