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The purpose of a strategy innovation
initiative that is right for your company will typically depend
on the following factors:
- Size of company
- Size of industry
- Type of industry
- Strategic frontier
- Degree of innovation desired
Size of Company
In general, larger companies have more resources available for
strategy innovation than smaller companies. Yet the process of
identifying new business opportunities is equally important, if not
more important, for smaller companies to consider. We recommend that all companies
carry out all five phases, regardless of how much time and
money is spent on each phase. However, larger companies with
their greater resources can afford to do more, on a larger scale, than
the smaller companies can.
Larger companies, for example, can usually identify up to a
dozen people across all their functional areas that can be assigned
to participate on the Discovery team. It is not unusual for each
team member to be able to dedicate up to 20 to 25 percent of their
time over a six-to-eight-months period for this initiative. In the
Exploring Phase, larger-company budgets will allow for team travel
across the country or across the world to participate in professionally
organized meetings and customer visits. Depending on the
scope, these global initiatives can last a year or more.
Smaller companies would experience this process very differently.
With fewer people available, they might select three company
executives and a college-age intern to participate in their Discovery
Process. To take advantage of the availability of the intern, they may
want to complete the entire initiative over the course of a summer,
which is quite possible on a focused initiative. Instead of elaborate
meetings at customer sites around the country or abroad, teams
from smaller companies might concentrate their exploration efforts
more on local visits with some customers, telephone interviews
with others, and literature searches on marketplace trends via the
Internet.
The implementation of the Discovery Process for strategy innovation
is extremely flexible and can accommodate the different resources
available in different size companies.
Size of Industry
Similar to company size, the size of the industry will also play a role
in the scope of the Discovery Process. By size, we mean both the
revenues generated and the number of industry ‘‘participants.’’
As you might imagine, being a strategic innovator in the multibillion-
dollar automobile industry will require a more significant
Discovery Process than being an innovator in the unicycle market.
The automobile industry is very complex, with many stakeholders
(customers, suppliers, dealers, manufacturers, after-market suppliers,
etc.) and market segments to explore. The Exploring Phase in
the automobile industry would likely be quite extensive and take a
great deal of time to implement. The unicycle market, on the other
hand, probably consists of only a handful of manufacturers, a relatively
limited number of distributors, and a small core of user/enthusiasts.
Insight gathering in the Exploring Phase would be much
simpler for the smaller, simpler unicycle market, requiring a Discovery
Process that is much more limited in its scope and scale.
At the same time, making a significant impact on the automobile
market through strategy innovation could result in significantly
more revenue growth than making a significant impact on the unicycle
market. The potentially higher return in automobiles would
justify a greater investment in the Discovery Process in that industry
than might be justified in unicycles.
Type of Industry
In addition to size of industry, the type of industry will also help
dictate the scope of the Discovery Process. Industries undergoing a
greater degree of change or transformation will usually require a
more extensive Discovery Process than more stable markets. The
reason is that it is more difficult to gain an understanding of a
market’s future if changes are taking place more rapidly. Very dynamic
markets such as the telecommunications industry will have
very complex forces at work—new products, new companies, new
regulations, new technologies, and what some believe is an inevitable
merging with the computer industry. Each market expert in the
telecommunications industry may well describe a different emerging
market scenario, making it difficult for your Discovery team to
agree on what the future holds for the company. In these more
dynamic markets, it may take multiple exploration efforts and a
longer period of time before the future becomes visible and new
business opportunities can be identified.
More stable markets are much simpler to explore because there
are fewer future-changing forces to consider. A Discovery Process
in the insurance industry, for example, would be a smaller scale
effort than one in the telecommunications world.
Strategic Frontier
The selection of one or more strategic frontiers to be explored in
the Discovery Process will have a critical impact on the size, scope,
and timing of the initiative. A strategic frontier is a market, product,
technology, or business process that lies beyond a company’s
current corporate strategy and business model. The identification
of a single frontier allows the Discovery team to focus their efforts
and activities in the Exploring Phase, interacting with one set of
customers, projecting the future of one market, and seeking insights
on a minimum number of business models. The selection of multiple
frontiers will result in multiple explorations in these areas in
order to best understand the opportunities available.
Besides the number of strategic frontiers being explored, the type
of frontier will often dictate the activities necessary. Insights on value in the frontier
can be found along three different exploration vectors: customer
value, market dynamics, and business model innovation. Some
frontiers, such as repositioning the brand name or product to a
different target audience, might require exploration in only one
vector: the customer value vector. The insights from the new target
audience would be most critical for the creation of a new business
opportunity. On the other hand, leveraging an emerging technology
may require exploration in all three vectors. Getting customer insights
on the technology (customer value vector), a picture of how
the future market might emerge (market dynamics vector), and an
understanding of how to best organize for the new venture (business
model innovation vector) will make that Discovery Process
more complex.
Degree of Innovation Required
We saved the most important consideration for last. The scope and
complexity of the Discovery Process is directly related to the degree
of strategy innovation desired. Companies looking to identify new
business opportunities that will create new-to-the-world markets
and provide them with a unique, sustainable advantage over competition
will need to plan on a robust, larger-scale Discovery Process
commitment. These more visionary market opportunities will
not emerge from merely holding a brainstorming session or two. It
may require a longer-term effort for a team, or the company may
decide to form two or three Discovery teams to pursue this level of
strategy innovation simultaneously.
On the other hand, companies that have a new business opportunity
already in mind and are searching only for a unique, strategic
twist that will give it a proprietary advantage in the market will
often find it after a brief, more concise Discovery Process.
The degree of innovation being sought is usually one of the first
questions to be considered because it has a direct bearing on not
only the scope of the Discovery Process, but the selection of the
activities in that process. |
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