Strategy Innovation as a Source of Corporate Renewal

Strategy innovation is often considered the calling card of startup companies looking to enter already-existing markets. However, established companies also use strategy innovation to their advantage, if they have the instinct for it. We recognize this instinct as a strong, internal emphasis on corporate ‘‘renewal.’’ The instinct for renewal is something beyond a cultural norm; it seems to be embedded in the organization’s DNA, what it sees when it looks in the mirror. These companies are never completely satisfied with who they are today, but are more interested in who they are becoming.

Companies such as Procter & Gamble, IBM, and Nokia have not experienced their sustained success by merely evolving. They have taken bold, strategically innovative steps at critical points in their histories to redefine who they were. How else does one explain the radical shift in the business of these companies from their origins? Procter & Gamble was once exclusively a soap manufacturer. At one point in their history, IBM made scales and cheese slicers. Before Nokia was in mobile phones, they were a paper products company. These companies are more concerned with their future than their past. They are proactive. They believe that corporate renewal is healthy, if not critical to their ongoing survival and success. All have confidence that they will still be in business in 2050 without believing it will be the same business they are in today.

Companies with an instinct for renewal as part of their corporate DNA are not on a treadmill. They are vigilant in the examination of their business peripheries, expecting the boundaries to change as the marketplace changes. And, when more radical opportunities present themselves, they are poised to respond. That is how a soap manufacturer becomes successful in the pet food business, how a producer of cheese slicers wins Nobel Prizes for physics, and how a paper products company becomes a world-beater in wireless communications.

They expect to renew through strategy innovation and, in the process, be more vital tomorrow than they are today.