This reminded me of a conversation that I had recently with one of our potential research partners. We are trying to find a corporate partner for my PhD student Nadja’s research work, and we were pitching the project to a couple of people, one of whom I’ve worked with at another firm. In her proposal, Nadja said “Leading practice companies need to follow leading practice for water management.” Nick’s response to that was roughly:

I disagree with that. Leading practice companies can’t be leading practice in everything. They need to be leading practice in the things that are critical for them, but for everything else they just need to be fit-for-purpose. For example, I don’t want to be leading practice in payroll – there are other people that I can outsource that to – we just need to be fit-for-purpose.

I think that this is probably true, not just for water management, but for innovation as well. Even the most innovative firms in the world are not innovative in everything – they have some parts of the business where they are simply fit-for-practice. This is why it is so important to link innovation to strategy. Doing so will allow us to be innovative in the activities that are most critical strategically.

Innovation is critical to success, but we need to target our innovation efforts. What activities do we need to be great at, and which just need to be fit-for-purpose? Focus innovation on the areas where we need to be great.