To maximize your innovation, clearly identify your greatest competitive strength. It’s not time well spent focusing on problem-solving and innovating your weakness. Companies that get clear about their strategy and, thus, about their highest-priority strength, or what I call the Primary Source of Leverage (PSL), are the companies that get more from innovation efforts than most.

Your PSL can be in one of 10 areas: product, chosen market, distribution, service, technology, production, natural resources, membership or your approach to selling or marketing.

Many businesses begin innovation efforts in order to improve everything from company processes to their specific focus on production, sales, marketing or whatever else seems important. Well-run innovation efforts are almost always worth the investment. When they pay off, the actions are repeated, and people begin to think that they are effectively growing the business. Click here for a worksheet that accompanies this commentary. 


The Multiplier. But the times when we have seen market-making impact and have experienced industry game-changers were when a company’s innovation efforts were based on precursors in strategy that indicated where its greatest high-growth levers would be. These innovation efforts would have a synergistic impact because of their relationship to the PSL in the business’ strategy.

For example, a company could do a cost-savings innovation effort and would indeed cut millions in costs. But when an equal amount of effort is focused on the company’s PSL, it has a multiplying effect and makes an eight-, nine-, or 10-figure impact on the business.

As another example, if a company’s products are its PSL, then product innovations are many times more effective than service or cost innovations. If a company’s capabilities to produce better than others is its PSL, then improving the effectiveness and costs of the production process yields more results than improving other areas of the business because the synergy between strategy and innovation will be greater.


Strategic Innovation Objectives. As you begin to realize where your strategy directs and prioritizes your innovation efforts, top-echelon executives should ensure that the proper innovation objectives are created. This is what makes for truly Strategic Innovation Objectives, which are a high-growth lever.

If your PSL is your production capabilities, then you will want to center your innovation objectives on that area. If your PSL is your selling approach, then that should be your innovation focus.

This is the principle of intensifying your strengths and marshaling resources on the area where they will get the greatest return on investment.


Connect Present to Future. Yes, there are times when innovation should be directed at the greatest constraints, which may be the weaknesses of a firm. But those constraints are not necessarily the source of your greatest cost or productivity drains. They often lie in the lack of innovations in your PSL.

Your greatest constraints often can’t be seen because they are the gap between your present and your untapped potential.

This is why it is so important to first create the vision and then work backward from that vision to identify where you need to build innovation objectives. So you would actually build and sort them in reverse order.

This is hard for many to do, but it’s a practice that can catapult a company. This was Steve Jobs’ gift: seeing the future and working backward to determine how to get there. This is opposed to what most do, which is to take only current technologies and resources and build upon them incrementally.

Identify your vision and PSL, apply  innovation, and get a greater ROI.  Click here for a worksheet that accompanies this commentary.