Defining a strategic position
The essence of business strategy lies in creating and sustaining a unique strategic position in the marketplace. The ability to think strategically creates a mind-set that makes sense of the complexities facing an organization and enables strategic leaders to originate ideas that differentiate a company from its competitors.
All strategy involves making choices. Defining an organization’s strategic position begins with choices stemming from the answers to three basic questions known as the Who, the What, and the How.
- The Who – Who should an organization target as customers?
- The What – What products or services should be offered?
- The How – How can this be done in an efficient manner?
Defining and maintaining strategy is an ongoing process. If an organization is going to remain competitive and innovative, strategic plans need to be revisited and the who-what-how questions need to be reasked and answered.
Preparing for strategic innovation
Strategy is not driven by words on paper. It moves forward because of the decisions made by people with the ability to think strategically. But there is no such thing as perfect foresight. As carefully formulated and flawlessly executed as a strategy may be, there will always be forces beyond control that require re-evaluation, and reaction.
The key to an achievable and successful strategy is continuous monitoring and upgrading of strategy. Many organizations fail to achieve their strategic intent because of an inability or reluctance to deal with changes such as technological innovation, competitive turbulence, market fluctuations, and changing consumer taste and values.
A dynamic strategic approach accepts that the only thing that is inevitable is change itself. Dynamic strategy prepares an organization to deal with that change, and the resulting disruption in the marketplace.
Even the most established companies can be threatened when a new innovation appears. This occurs when an organization
- lacks the core competencies to take advantage of the innovation
- adopts the innovation too late in the game
- abandons the innovation too early
- is trapped in the old ways of doing things
- does not successfully manage the transition from old to new
Forward-thinking companies prepare for the unknown by both embracing and exploiting innovation. They follow five basic approaches to preparing for strategic innovation. These organizations
- build an early monitoring system to identify turning points before a crisis occurs – To become a strategic innovator, an organization has to be the first to identify new or changing trends and find ways to take advantage of them. This includes a communications strategy for monitoring employee contributions and customer satisfaction.
- develop strategies to prevent inertia – A common threat to innovation is strategic inertia. Inertia occurs when management responds to change only with activities that have succeeded in the past. Strategic organizations embrace change even if it results in disruption. The “shocks” create momentum and accelerate progress.
- develop processes that allow experimenting with new ideas – Innovation and learning require the flexibility to experiment. The freedom to try out new ideas and ways of doing things is what leads to breakthrough innovations.
- are prepared with the required competencies – An innovative organization builds on its existing core competencies to create and adapt to new initiatives. This involves creating internal variety in an atmosphere where learning is allowed to flourish, even at the expense of efficiency.
- manage the transition – The transition to a new strategic path involves both deciding on the timing of the change and managing resistance to a different way of doing things. One strategy is to create a separate organizational unit to develop, nurture, and protect the new strategic processes.
Strategic innovation is the process of creating new ideas and turning them into new business value. It involves fundamental changes in not only how, but why a company operates the way it does. The successful development of innovative products and processes enables growth and creates market opportunities. This is done by meeting the needs of the customer. Innovation is strategic when it involves an intentional process focused on creating breakthroughs in the value delivered to customers.
Innovation is not about one person, project, or process in an organization. It is the result of collective learning by individuals who have the knowledge and the freedom to recognize and pursue opportunities. In business, change can take many forms. It can manifest itself in an almost infinite variety of business philosophies, products, programs, processes, new technologies, human behaviors, and more.
But successful change concerns making choices based on the answers to three questions: Who should we target as customers? What products or services should we offer those customers? How should we do this in an efficient manner? These are the three sources of organizational learning from which strategic leaders define, rethink, and refocus the strategic goals of the organization.
To prepare for strategic innovation, an organization can prepare to take advantage of a strategic change. It must develop the ability to recognize an innovation early, by developing strategies that fight inertia and processes that allow experimenting with new ideas. The organization also needs to develop competencies that allow exploitation of innovation, and to manage the transition between the old and new ways of doing things.