Strategic planning inhibits innovation

In my workshops on Assessing the State of Innovation, we discovered that leading with strategy inhibits innovation, which was a bit of a surprise because it contradicts conventional wisdom. This provocative hypothesis, based on collecting anecdotes from about 30 companies, has now been supported by more thorough research.

In an article by Michael Song et. al. in The Journal of Product Innovation Management called “Does Strategic Planning Enhance or Impede Innovation and Firm Performance”, the authors compare several models of the firm and innovation and gather data systematically from 227 firms. Some of their findings:

“Managers should be aware that, in general, formal strategic planning decrease the number of NPD projects for innovation management. Improvised rather than planned activities are more conducive to creating NPD project ideas. Moreover, innovations tend to emerge from improvisational processes during which the impromptu execution of NPD activities without planning spurs ‘thinking outside the box’ which enhances the process of creating NPD project ideas. Therefore, more flexible strategic plans that accommodate potential improvisation may be needed in NPD management since innovation-related activities canned be planned precisely due to the unexpected jolts and contingencies of the NPD process.”

This also supports another key finding of my work on assessing the state of innovation, which says that learning-based processes rather than traditional phase-gate processes create better results.