Innovation strategy — the four questions

What it is

Gary Pisano's four diagnostic questions for defining an innovation strategy, distinct from generating innovation options — which the bank already covers well. The questions force explicit answers to what most organisations leave implicit, which is why their innovation activity so often reads as a collection of enthusiasms rather than a coherent portfolio.

What type of value

Social benefit, customer value increase, or financial saving — clarified before method, because the three imply genuinely different kinds of initiative and different definitions of success.

How value is captured

Differentiation and premium pricing, ownership of complementary assets, or simply being first or dominant in a new market. The business-model assumption sitting underneath every innovation initiative, rarely stated.

How effort is allocated

Across the portfolio — how much goes to incremental improvement of the core versus genuinely new-to-the-world innovation, and whether that split is deliberate or accidental.

How trade-offs are managed

What gets said no to, explicitly, as innovation capacity is finite. A strategy that tries to pursue everything simultaneously is not a strategy.

Coherence check

Once all four are answered, the organisation's actual innovation activity can be mapped against them — and the mismatches, where current activity does not match the stated strategy, are usually the most useful finding.

How you run it

1. Answer what type of value is being soughtSocial benefit, customer value, or financial saving — stated for the portfolio as a whole, before evaluating any individual initiative.
2. Answer how the value will be capturedDifferentiation, complementary assets, or market position. The business-model assumption underneath the innovation strategy, made explicit.
3. Decide how effort is allocated across the portfolioCore improvement versus genuinely new innovation — as a deliberate split, not an accidental one that emerged from whoever asked loudest.
4. State the trade-offs the organisation is actually makingWhat is being said no to. A strategy that tries to have everything is the commonest failure mode here.
5. Map current activity against the four answersWhere does what the organisation is actually doing diverge from the stated strategy — usually the single most useful output of the exercise.

The prompt

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