Business Strategy and Innovation

With the increased dynamic nature of business environment, many businesses are struggling to balance the need to maximize value creation at the core businesses vs the need for continued innovation in order to create value streams from new sources including new products, new markets, new business practices or new business models. Late HBS professor Clayton Christensen famously named it as the innovators dilemma. Traditional business theory would suggest that it would be very difficult to manage two diametrically opposed business activities or business models in the same organization. Research from HBS Professor Mike Tushman and Stanford GSB Professor Charles O’Riley on business ambidexterity is a framework to manage that contradiction. An ambidextrous organization takes care of the core business with the right hand while taking care of innovation with the left hand as a physically separate business. Naturally, there are still many pitfalls in implementing the concept in any organizations. With that context, I would like to recommend three books I have read recently. I had a chance to talk with both Dr Andy Binns and Dr. Shameen Prashantham about their books. I have not had a chance to talk to Dr Felix Oberholzer-Gee about his book, but coincidentally I attended an HBS executive program by Dr Felex Oberholzer-Gee over a decade ago on intellectual property strategy.

Simpler, Better Strategy by HBS Professor Felix Oberholzer-Gee

Albert Einstein set the simplest rule for simplicity: Everything should be made as simple as possible but not simpler.?Felix certainly made the description of business strategy very simple by using a Value Stick. Value is the difference between willingness to pay and willingness to sell. It is about the value created for customers, value for employees, and value for suppliers. It is a simple framework but really fundamental in thinking about value creation and value capture in a different way. Felix also discusses how value can be created by strategic and tactical moves and then how to actually capture the value that your firm has created to monetize it. The book includes many examples but one of the highlighted case in the book is how BestBuy creates more value for customers, or willingness to pay, through the store-within-a-store concept. The fundamental concept presented by Felix applies to any businesses, but especially easier to use for existing businesses or adjacent business opportunities where it is easier to quantify the willingness to pay and willingness to sell. Delightful book!

Corporate Explorer by Andrew Binns, Charles O'Reilly, and Michael Tushman

Leaders all stress the importance of innovation in their organizations, yet many are frustrated by slow progress. On the other hands, just as many, if not more, passionate innovators in large organizations are equally frustrated that their ideas are going nowhere in their organizations as if nobody in the organizations could understand or appreciate how great their ideas could change the world!?

This book is about how corporate innovators, or Corporate Explorers as they are called in the book, can leverage insights, resilience and discipline to overcome obstacles and build build new ventures from inside the large organizations. The book provide a compelling case that done right, large organizations can beat the start-up in their game. Here are a few highlights: Successful organization has a clearly defined strategic ambition for innovation and the explorer can articulate a clear connection between the new business opportunity and the strategic ambition. Corporate explorers do not wait for permission to initiative a disruptive venture. They leverage their internal network and engage senior leaders to build support for vision. A must read for those who wants to pursue new business ideas within their corporation but also corporate executives who want to drive real changes.

Gorillas Can Dance by CEIBS Professor Shameen Prashantham

Different from Andy's book, Sharman's book studies how large corporation can innovate by leveraging its resources and abilities with the agility of startups. While it is not easy for large organizations to partner with startup due to the asymmetries in power, mismatch in strategy, misalignment in expectations, the book laid a structured approach to think about the why, the how and the where in order to avoid some common pitfalls.?The book includes a fairly detailed description of the journey Microsoft went through in figuring out what works and what does not, including its experiences in engaging start ups in India and China. Very insightful learnings.

Key insights from the books:

Innovation is necessary but hard. Many assume innovation is about creative ideas, but coming up good ideas are generally not the bottleneck for innovation. Leveraging a good idea to create impact or value takes a structured approach and leadership.?Good leaders define the purpose for innovation, set an ambition and set the conditions for that innovation team to find a way to make the crazy idea work through internal explorers or external partners.?They build the team, resource the team, and protect the team's freedom to operate. Otherwise, innovation becomes innovation theaters, rather than driving real changes.

Related Articles

Before You Innovate, Ask Questions (12/05/2020)

There is a Ditch on Both Sides of the Road?(1/10/2019)

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