Key Elements for Strategy Innovation

by Darold Smith.

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Strategy innovation can be done in a company on a one-time, ad hoc basis. However, there is growing interest in the development of an internal capability for strategy innovation.

Whether it is done on an ad hoc or ongoing basis, strategy innovation in any corporation must consist of the following four elements:

  • 1. Management mandate
  • 2. Corporate infrastructure
  • 3. Innovation process
  • 4. Corporate culture

Management Mandate

It is not until senior management in a company commits to strategy innovation that the company will respond. Employees will generally set their time commitments to be consistent with the perceived commitment of their management team. Therefore, the stronger the management mandate for strategy innovation, the sooner a higher-quality initiative will be accomplished. For a company looking to build strategy innovation as a core capability, this mandate must be built into its business systems.

Corporate infrastructure.

The infrastructure requirements for strategy innovation can be fairly simple, consisting of a team of people and some funding. For larger companies, the team should be a diverse, cross-functional team of eight to twelve people in upper-middle management who will have some responsibility for implementing new strategic initiatives in the company. Smaller companies will target teams of four to six people and include people who are directly involved with strategic decisions within the company. The team must have a captain to guide the process and a senior-level executive sponsor to fund it. Funding requirements for a strategy innovation initiative will range significantly, depending on the size of the company, its industry, and how aggressive the team wants to be in exploring their strategic frontiers. Some companies have undertaken strategy innovation initiatives that cost in the $50,000 range, while others (usually large, global businesses) have had budgets well into the seven digits. It is the team that estimates the budget, based on the activities they identify as important to pursue.

Innovation Process

A good team needs a good process for how to go about creating new business opportunities that lead to strategy innovation. The Discovery Process is designated to meet that need. The five phases, described in detail in the next section, are designed to provide needed structure but allow for flexibility of activities within the phases to accommodate a wide range of industries and corporations.

Corporate Culture

If a strategy innovation initiative is being done on an ad hoc basis, the team can create for itself the type of creative, collaborative, and entrepreneurial environment or culture necessary for its success. However, if a company wants to develop a formalized strategy innovation capability, then there may need to be adjustments to the corporate culture to allow it to flourish.

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