Five signs your innovation business has outgrown its original strategy

How do you know when your innovation business has outgrown its strategy?

The strategy you developed when you started your business was based on what you knew about your innovation, the market, and operating conditions at the time. But as your business grows, things change.

Research and development (R&D) can reveal new possibilities, customer feedback can take you in unexpected directions, and commercialisation can bring new challenges. External factors, from changing government innovation policy to economic and geopolitical uncertainty, can also affect your plans.

As you develop your innovation you might find that your biggest constraint has changed, you’ve discovered a larger opportunity, or your resources and funding approach no longer support your ambitions and you might find that he assumptions behind your original strategy may no longer hold.

Recognising these signs early can help you to adjust your priorities, make better use of your resources, and build greater resilience as conditions change.

In this blog, we explore 5 signs that your innovation business may have outgrown its original strategy and offer practical guidance on what to do next.

Your strategy should evolve with your business

A strong innovation strategy gives your business direction. It sets out where you want to go, the priorities that will help you get there, and where you will focus your resources.

But it also needs enough flexibility to accommodate change without requiring you to rethink your overall direction every time circumstances shift. It’s important to consider which changes can be managed within your existing strategy and which call for a more fundamental rethink.

Reviewing your plans and priorities through a strategic lens can help keep your business focused on its longer-term goals and ensure your business is in the best position to make the most of any opportunity that arises.

Five signs it might be time to revisit your strategy

The signs that your business has outgrown its original strategy aren’t always obvious, particularly when changes have happened gradually.

Take some time to step back from the day-to-day and think about how your business has evolved. You don’t need to get into the detail yet, so simply start with the big picture: where the business is now, where you want it to go, and whether your current strategy still connects the 2.

Then ask yourself these questions:

• Has the biggest constraint holding your business back changed?
• Have you discovered a bigger opportunity than you originally planned for?
• Do your resources still match your ambitions?
• Does your approach to funding and growth still suit your needs?
• And do the assumptions behind your original plan still hold?

Sign 1. Your biggest constraint has changed

In the early stages of an innovation business, the biggest constraint is often proving the technology or finding a market for it. As you make progress from start-up from scale-up, or as your circumstances change, that constraint may no longer represent your biggest challenge.

For example, your original strategy may have prioritised R&D because proving the technology was the main barrier to progress. Once the technology was proven, manufacturing capacity might have become the constraint. For some businesses, the focus might have shifted to regulatory approval or market access. Another business that has successfully built demand might find its ability to deliver is now limiting growth.

Constraints can also change because of factors outside your business. New competitors, changing customer expectations, regulatory developments, or disruptions to supply chains can create challenges that you didn’t anticipate when developing your innovation strategy.

When the biggest obstacle to your business’s progress changes, you need to reconsider the assumptions underpinning your strategy. Check through the basics to ensure your objectives, target markets, or growth plan still match your current reality, then adapt your innovation strategy to factor in your new constraints.

Sign 2. You’ve discovered a bigger opportunity than you originally planned for

Sometimes a strategy needs to change because things have gone better, or differently, than expected.

Your R&D might have revealed additional applications for your technology. Early customers might have identified a problem you hadn’t set out to solve. A partnership might have given you access to a new industry or market. External events can also rapidly expand the opportunity for an existing technology. The COVID-19 pandemic, for example, accelerated the development and adoption of mRNA technology, opening the way for further research into applications well beyond COVID-19 vaccines. Even a research ‘failure’ can turn into a new opportunity.

A bigger opportunity can be a very good problem to have, but pursuing it may require capabilities and resources that weren’t part of your original strategy. Entering a new market can also change how you commercialise your innovation and who you need to compete with.

This is where a clear strategy becomes particularly useful, and regularly measuring, evaluating, and then improving your innovation strategy is vital. Assess the opportunity against your longer-term goals and decide where you need to focus rather than stretching the business across every possibility.

Remember that you don’t have to build every new capability in-house and that the right innovation partnerships can help you pursue a larger opportunity by providing access to expertise, facilities, or new markets. Consider which capabilities you need to develop internally and which you could access through partnerships.

Sign 3. Your resources no longer match your ambitions

The company structure that initially helped you develop your innovation may not be enough to commercialise it at scale.

As your business grows, you may need to rethink your approach to building an innovation team, particularly as new skills and expertise become necessary. You may also need to evaluate the company’s leadership capacity, infrastructure, and systems. Informal processes that worked well within a small team can become difficult to manage as responsibilities increase and the business becomes more complex.

The founder’s role can change too. In the early stages, founders are often involved in almost every part of the business, but as the business matures, they may need to delegate more responsibility and focus their attention where their leadership has the greatest impact. This can mean confronting some hard truths about leading a growing business.

Commercialising your innovation can also demand capabilities that weren’t business priorities during the heavy R&D stage. You may need to strengthen the commercial and operational sides of the business as you prepare to enter the market or increase production.

Assessing the resources you have against what you’re asking the business to achieve can help identify gaps before they become barriers to growth.

Sign 4. Your growth and funding needs have changed

As your business matures and moves from developing its innovation to bringing it to market and building its customer base, your approach to growth needs to change, along with the funding you need at different stages of your start-up journey.

Moving from a heavy R&D phase to a commercialisation phase is a normal part of the start-up journey, but your priorities and resource allocation need to keep pace with it. Commercialising your innovation and launching your product requires a new level of investment in capital and effort. Continuing to direct most of your time, money, and attention towards yesterday’s biggest challenge can leave the business under-resourced in the areas where it now needs support.

You might need to rethink your business model to grow the business where it needs to go next. A business that initially sold directly to customers, for example, might reach a point where a distribution or licensing model provides a more effective route into a larger market.

Changing your growth plans can also mean you need more capital, or need injections of capital at different times than originally expected. You may need more funding to expand your team, increase production capacity, or adapt to delays; you might also need funding at a different cadence if key factors change, such as longer-than-expected commercialisation timelines.

It’s important to remember that the type of funding you build into your strategy can shape the long-term options for your business. Equity, debt, grants, and internal cash flow have different implications for a business, so understanding the true cost of capital means looking beyond the headline cost of funding to consider factors such as ownership, control, cash flow, and flexibility. For eligible R&D businesses, R&D Advance funding can also form part of a broader funding mix by bringing forward access to expected R&D Tax Incentive refunds.

The suitability of any funding option will depend on the circumstances, priorities, and stage of the business.

Sign 5. The assumptions behind your original business plan no longer hold

Every business strategy rests on assumptions about how the business and the market around it are likely to develop. As your business evolves, some of those assumptions are likely to prove wrong or become outdated.

Perhaps your R&D or commercialisation pathway is taking longer and costing more than expected; customer demand might be developing differently from your forecasts; or changing market, regulatory, or funding conditions may have altered the environment in which you’re operating.

The problem comes when old assumptions continue to guide current decisions. A strategy built around a 2-year pathway to market, for example, may need to be reconsidered if commercialisation is now likely to take 4 years.

Revisiting the assumptions behind your strategy can help you identify where your plans remain sound and where they need to change. It also gives you an opportunity to consider where you need more flexibility if circumstances shift again.

How to review your business strategy

Reviewing your strategy doesn’t have to mean starting again. Begin with what has changed in your business or its operating environment and work out what those changes mean for your priorities.

Ask:

• What has changed since we developed this strategy?
• Which of our original assumptions still hold, and which don’t?
• What are our most important objectives for the next 12 to 24 months?
• Do we have the people, capabilities, partnerships, and capital to deliver them?
• Does our approach to commercialisation and funding still support where we want the business to go?
• What should we stop, start, or do differently?
• What could change again, and where do we need flexibility?

While reviewing your strategy, take the opportunity to look further ahead: founders are often advised to consider their exit strategy from the beginning, even if an exit is years away. As your business changes, revisit your plans and consider whether your current direction still supports where you ultimately want the business to go. This can help guide strategic decisions about growth, capital, ownership, and commercialisation.

Your financial position should also inform your strategy review. Tracking key start-up calculations and metrics, such as your cash position and runway, can help you assess whether you have the resources to deliver your plans or whether your strategy needs to change.

Build an innovation strategy that can adapt to change

Your strategy shouldn’t become irrelevant every time circumstances change, but neither should you feel locked into decisions made when your business and its operating environment looked very different.

For innovation businesses, building resilience means retaining a clear sense of where you want to go while recognising that the route towards those goals may need to change. Reviewing your strategy periodically can help you identify when your existing approach still serves the business and when changes to your priorities, resources, or plans are needed.

Building flexibility into your strategy can help you adapt to changing circumstances, respond to new opportunities, and keep moving towards your longer-term goals as your business evolves.

 

 

 

 

Frequently asked questions

How often should an innovation business review its strategy?

Review your strategy regularly and whenever a significant change could affect your plans or longer-term direction. Major changes in the business, its market, or operating environment can all provide a reason to review whether your current strategy still fits.

How do you know when a business strategy needs to change?

Signs can include a change in the business’s biggest constraint, resources that no longer support its ambitions, new market opportunities, changing funding needs, or important assumptions that no longer reflect current conditions.

Should you change your innovation strategy when market conditions change?

A change in market conditions should prompt you to consider how it affects your business. If it changes an important assumption, creates a new constraint or opportunity, or affects your longer-term plans, you may need to adjust your strategy. Regular reviews can help you distinguish significant changes from shorter-term disruption.

What should an innovation business consider when reviewing its funding strategy?

Start with where you want to take the business and the capital you will need to get there. Consider whether your current funding approach still supports those plans and how your funding choices could affect the business in the future. Your funding strategy may need to change as you move through R&D, commercialisation, and growth.