Dec 30, 2003

Strategy Innovation : What is it?

In ISTT I wrote this about Strategy Innovation :

"Robert E. Johnston, Jr. and J. Douglas Bate in their book 'The Power
of Strategy Innovation: A New Way of Linking Creativity and Strategic
Planning to Discover Great Business Opportunities' look at presents a
five-step Discovery Process for staging, aligning, exploring,
creating, and mapping the paths between analytical, numbers-oriented,
day-to-day planning and market-centric, discovery-driven innovation
that focuses on the future.

Strategy innovation is shifting a corporation's business strategy in
order to create new value for both the customer and the corporation.

In a dynamic marketplace, every business runs the risk that its
current business model will become obsolete. As long as there is
customer value to be delivered, there will be companies interested in
delivering it. New companies will create innovative, more efficient
business models in order to compete in profitable industries.

Given the strategic importance of a company's business model in its
ability to compete in the marketplace, it is logical that efforts put
into improving the business model could provide real value to a
company. If that is true, then companies should place at least as
much 'innovation' focus on the other elements of the business model
(and how they interact) as they currently do on the product side.

Strategy innovation is a process of applying innovative thinking to
the entire business model of a company, not just to its products or

In his book The Innovator's Dilemma, Clayton Christensen suggests
that this small company advantage is an important force in the
marketplace. He writes, 'Large companies often surrender emerging
growth markets because smaller, disruptive companies are actually
more capable of pursuing them. Though start-ups lack resources, it
doesn't matter. Their values can embrace small markets, and their
cost structures can accommodate lower margins. Their market research
and resource allocation processes allow managers to proceed
intuitively rather than having to be backed up by careful research
and analysis, presented in PowerPoint. All of these advantages add up
to enormous opportunity or looming disaster— depending on your

Constantinos Markides, a professor at the London Business School and
author of All The Right Moves, calls strategy innovation "a
fundamental reconceptualization of what the business is about, which
in turn leads to a dramatically different way of playing the game in
the industry."

In his book Leading the Revolution, Gary Hamel cites a number of
companies that have dared to reinvent themselves by adopting
innovative strategies and creative new business models. He believes
that this capability will be required to compete in the markets of
the future. "Unless you and your company become adept at business
concept innovation, more imaginative minds will capture tomorrow's

Michael L. Tushman and Charles A. O'Reilly III in their book "Winning
Through Innovation: A Practical Guide to Leading Organizational
Change and Renewal" talk about the pattern by which organizations
evolve: long periods of incremental change punctuated by
revolutionary, or discontinuous, change. These organizational
discontinuities are driven either by performance crises or by
technology, competitive, or regulatory shifts. (similar to Larry
Griener's model that we discussed earlier) They call any organization
that can ride both these changes as "Ambidexterous Organizations"