ISEM 2011 Proceedings, September 21-23, Stellenbosch, South Africa © 2011 ISEM 148-1 ALIGNMENT OF A FUNCTIONAL INNOVATION STRATEGY B.R. Katz 1* , N.D. du Preez 2 , C.S.L. Schutte 3 1 Department of Industrial Engineering Stellenbosch University, RSA bkatz@brhc.com 2 Department of Industrial Engineering Stellenbosch University, RSA niek@indutech.co.za 3 Department of Industrial Engineering Stellenbosch University, RSA corne@sun.ac.za ABSTRACT For a strategy to be successful it first needs to be the correct strategy then it needs to be aligned with the business values, structures, capabilities and other strategies and finally it needs to be executed [1]. This paper focuses, specifically, on the alignment of a company’s functional innovation strategy. The connection between the different levels of innovation strategy and other business strategies are developed and explained. A range of different business strategy classifications are presented from the literature and a golden thread of alignment is sewn from a company’s grand, strategic perspective down to its functional strategies. A theoretical framework is presented, which contains the strength of the relationships between different generic strategic perspectives and the components of a functional innovation strategy. The end result of this paper is a suggested decision framework which a company can use to align its functional innovation strategy with its strategic perspective, which in turn should be aligned with the company’s mission and vision. This will enable the company to assign the correct resources to its innovation activities so that innovation enables it to achieve its overall objectives. The decision framework is tested in theory by focusing on the insurance industry and understanding the interaction between the strategic perspectives of a company and that company’s focus on innovation. Evidence is gathered to support assumptions about the company’s innovation focus. ________________ *Corresponding author