Risks Involved in the Discovery Process

There is very little at risk with a strategy innovation initiative, other than the time and money invested by the team. The internal team sets the overall budget so that costs (primarily in the Exploring Phase) can be controlled to whatever level represents a reasonable investment in the company’s future.

We have never encountered an initiative where discussions with customers and industry experts did not lead to valuable insights for the company. The only question is whether the impact of those insights represents a significant business opportunity for the company (or only a minor business opportunity) and whether the company will choose to follow up with them.

Other things to watch for as critical success factors that can affect overall results include:

_ The selection of the Discovery team, where lack of diversity in functions and skills can limit the quality of the output.

_ The breadth and commitment of the management mandate to the team, as small mandates tend to produce small results.

_ Alignment with senior management perspectives on the business, which greatly enhances the usefulness of the resulting portfolio of new business opportunities.

_ The pursuit of new insights on customers and the marketplace, using techniques that are new to the company.

_ The creativity of the team’s working environment, where the identification of new business opportunities is not constrained by the company’s current business model.

_ The collaborative nature of the team’s working environment, so that opportunities have cross-functional internal support.

Type of Company to Benefit from Strategy Innovation

A strategy innovation process may not be right for every company. However, it is difficult to cite what type of company would not benefit from understanding their customers better, gaining valuable foresight about their emerging marketplace, and considering how changes in their business model could provide a competitive advantage. If your company fulfills these requirements, you can benefit from a strategy innovation initiative or an ongoing strategy innovation process.

Listed below are those types of companies where strategy innovation would be most valuable:

_ Companies that no longer want to compete on the basis of a similar, ‘‘commodity’’ product in the market

_ Companies that seek a sustainable competitive advantage

_ Companies looking to change their strategic direction

_ Companies searching for the next growth platform for their business

_ Companies that need new growth opportunities to meet long-term revenue goals

_ Companies that are in declining markets

_ Companies that have streamlined and downsized their businesses to improve the bottom line and now need to find profit improvements in growing the top line

_ Companies facing a competitive threat and that need to respond with new ways to deliver customer value

_ Companies looking to aggressively increase market share

_ Companies that need to define a corporate mission or vision

_ Companies that value management collaboration in the development of strategy

The following corporate environments are impractical for, or resistant to, a strategy innovation process and the new thinking it provides:

_ Companies with a command-and-control management style

_ Companies that have chosen to be a ‘‘fast-follower’’ or ‘‘low-cost provider’’ in their markets

_ Companies where the collaborative culture is overshadowed by corporate politics

So, while it may not be right for every company, a strategy innovation process can be applied to many different types of companies and address many different corporate situations where new growth in new ways is the goal. What type of company is your company? How might strategy innovation be incorporated to your strategic planning process?

In the next chapter, we provide an actual case study that will provide you with an understanding of how the strategy innovation process can work in a company. Following the case, we outline how to carry out the process through a detailed explanation of the five phases of the process.