The author offers a perspective on the complex new concepts of Michael Raynor and others on managing strategic risk.
Abstract
Purpose
The author offers a perspective on the complex new concepts of Michael Raynor and others on managing strategic risk.
Design/methodology/approach
The author explains Raynor's theories of strategic paradox, strategic options, requisite uncertainty and strategic flexibility, all of which have special meanings in the Raynor vocabulary.
Findings
The strategy paradox arises from “the collision of commitment and uncertainty.” Since the mark of high impact strategies requires making clear commitments in the face of future uncertainty, the key question is, how can the risks involved best be mitigated? One option is to shy away from making clear strategic commitments. This is the route to mediocrity.
Practical implications
The management of “strategic uncertainty” and “strategic options” employs a four‐phase methodology: Anticipate (build scenarios of the future). Formulate (create optimal strategies for each of those alternative futures, distinguishing between core and contingent elements). Accumulate (determine what strategic options are required to cover the contingent elements). Operate (manage the portfolio of options, exercising or abandoning them, as the future unfolds).
Originality/value
Leavy provides an explanation of Raynor's unconventional wisdom that corporate leaders will find helpful.
Details
Keywords
The paper aims to address a pervasive leadership problem: why do so many companies have such a difficult time adapting the innovation approaches that work so well in the venture…
Abstract
Purpose
The paper aims to address a pervasive leadership problem: why do so many companies have such a difficult time adapting the innovation approaches that work so well in the venture capital (VC) ecosystem to the corporate environment?
Design/methodology/approach
The paper looks at why innovation approaches of the VC environment do not work so well in the in the corporate environment.
Findings
The paper finds that the root cause lies in the very real differences between established companies and start‐ups that no amount of organizational redesign or process creativity can overcome. Therefore corporations should not attempt to be VCs. Shifting from selecting ideas to “shaping” them is perhaps the largest break from existing standard practice. Most organizations have any number of ideas floating around, some of which keep resurfacing year after year without ever seeming to get any meaningful traction or to be successfully dispatched. The reason is very often that there is a kernel of truth somewhere in the idea but it has proven impossible to develop a viable business plan.
Research limitations/implications
This paper is based on research that the author used for his new book, The Innovator's Manifesto.
Practical implications
The first step is to focus the corporation's efforts on opportunity areas that are strategically relevant. The practitioner should begin by identifying those high‐level spaces that will define the future of thier industry.
Originality/value
The paper reveals that better innovation begins with a fundamentally different approach to an internal innovation strategy. Leaders of corporate innovation initiatives should replace the oft‐repeated mantra of “fail fast” with the new motto “learn fast.”
Details
Keywords
Since its inception, the discipline of strategic management has been burdened with the charge of redundancy. Good management, it was felt, was by its very nature strategic;…
Abstract
Since its inception, the discipline of strategic management has been burdened with the charge of redundancy. Good management, it was felt, was by its very nature strategic; therefore, strategic management as a separate school of managerial thought really had very little to offer.
Corporate marketers have jumped on the micromarketing bandwagon, but many have discovered that the path to profits contains a number of potholes. This article details three…
Abstract
Corporate marketers have jumped on the micromarketing bandwagon, but many have discovered that the path to profits contains a number of potholes. This article details three companies' niche marketing mistakes; the author suggests how to avoid them.
Dwight Allen and Michael E. Raynor
Many executives base their strategies on the assumption that globalization is here to stay – they bank on a future of open markets, cross‐border capital flows, and international…
Abstract
Many executives base their strategies on the assumption that globalization is here to stay – they bank on a future of open markets, cross‐border capital flows, and international cooperation. However, companies should consider the possibility that what lies ahead are conditions reminiscent of the early decades of the 20th century, with business activities constrained by protectionist walls and international conflict – not globalization, but deglobalization. If the future does bring more international discord and disorder, the commercial impacts could be momentous. But nobody can say for sure which vision of the future will materialize. How can a company move forward given this uncertainty? Strategic flexibility is the answer – an approach to planning that involves defining scenarios on how the marketplace might develop and then adopting strategies that fit all scenarios while making limited investments in assets needed only if specific scenarios emerge. The latter are treated as a portfolio of real options – the investments are increased, held, or abandoned depending on how events unfold. Strategic flexibility is thus valuable to executives facing strategic risks due to globalization’s unclear future.
Details
Keywords
The standard explanation of Southwest's success is that it applied a low‐cost competitive strategy. This paper aims to address this issue.
Abstract
Purpose
The standard explanation of Southwest's success is that it applied a low‐cost competitive strategy. This paper aims to address this issue.
Design/methodology/approach
The paper argues that Southwest was actually employing a disruptive strategy. Financial data show that Southwest's results were highly variable during the time it was growing into a national carrier.
Findings
The paper finds that Southwest's disruptive strategy of innovative operational cost reduction did not produce striking financial returns until it adopted more efficient aircraft, which made its fuel costs competitive.
Practical implications
Cost efficiencies alone do not make a firm a disruptor. What is required is the combination of a low‐cost business model and enabling technologies.
Originality/value
This paper points out that managers should learn to see operational innovations and cost savings in the context of disruption, not just price advantage.
Details
Keywords
The purpose of this paper is to report on the Association for Strategic Planning Conference.
Abstract
Purpose
The purpose of this paper is to report on the Association for Strategic Planning Conference.
Design/methodology/approach
The paper provides a conference report for the 2012 Association for Strategic Planning Conference, held in Lincolnshire, Illinois, USA from May 30‐June 2, 2012.
Findings
The paper reveals presentations of practitioners and veteran consultants who share what is working in their practice of strategic management.
Originality/value
The paper provides reviews of papers presented at the 2012 Association for Strategic Planning Conference provided by practitioners and veteran consultants who share what is working in their practice of strategic management.
Details
Keywords
Michael Putz and Michael E. Raynor
To make top management aware of the innovation paradox: their current success depends on doing and improving upon what they now do well, but their future success requires creating…
Abstract
Purpose
To make top management aware of the innovation paradox: their current success depends on doing and improving upon what they now do well, but their future success requires creating entirely new capabilities.
Design/methodology/approach
One of the authors is director of development at Cisco, a firm that acquires disruptive technology through it's M&A program. The other author is one of the world's leading authorities on innovation.
Findings
A critical element of the solution to the disruptive innovation dilemma lies in setting up an autonomous organization that can adopt radically different resources, processes and values.
Research limitations/implications
A subsequent article will detail the M&A search for firms with technology needed or disruptive innovation.
Practical implications
In a firm with no history of innovation disruption, executives must use their personal authority to create a strategy process that is more emergent than intentional, focus on customers that appear unattractive, and develop new capabilities.
Originality/value
The authors propose that to achieve renewal via disruptive innovation that CEOs must become integral leaders, who learn to go beyond trade offs between constituencies within a set of constraints and see the necessity of changing the constraints themselves.