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Emerald Group Publishing Limited
Copyright © 2004, Emerald Group Publishing Limited
Creating new business models
Anders Drejer is Professor of Strategy and Business Development at Aarhus Business School, Denmark, and author of ten books, among them Strategic Management and Core Competencies – Theory and Application (Quorum Books, 2002), and numerous articles in international journals.
The Power of Strategy Innovation: A New Way of Linking Creativity and Strategic Planning to Discover Great Business Opportunities
Robert E. Johnston, Jr. and J. Douglas BatePublished by Amacom
Robert E. Johnston and J. Douglas Bate display impeccable timing with their new book, The Power of Strategy Innovation. A number of companies and researchers are working with concepts similar to those defined and packaged for us in this book.
The Power of Strategy Innovation builds on three pillars. First is the recognition by many that strategic managers need to consider strategy for both tomorrow and today in order to stay successful over time. This is now state-of-the-art knowledge within the field of strategic management, following the work of people such as Hamel and Prahalad and the 1996 acknowledgement by Michael Porter that strategy needs to consider both operational effectiveness and differentiation. Of course, Jim March told us about management as both exploitation and exploration in 1991, but let us not get into petty details about that. Second, the book is based on the well-known theory that innovation and effectiveness need different kinds of organization to succeed – from Burns and Stalker and onwards we have come to accept this – because creative thinking differs from conventional analytical thinking. Finally, the book is based on the recognition that competition these days depends less on products and markets or even on competencies than on concepts and business models that change the rules of the competitive game.
In short, companies need to manage their current set of businesses effectively while at the same time finding and developing new business ideas and models. This the authors define as strategic innovation.
Based on this foundation, the authors assert that a process to supplement the conventional strategic planning process is needed, a supplement they call a discovery ''process''. The discovery process is creative and divergent and precedes the analytical and convergent strategic planning process. The book outlines and describes the discovery process in great detail in five phases; staging, aligning, exploring, creating, and mapping.
Now, is this the right book at the right time? While others have explored similar topics – witness Tushman and O'Reily's notion of ambidextrous organizations capable of both operations, minor improvements and radical innovation – I do not think anyone has quite packed it all into one book and one methodology before. And there can be no doubt that this is most relevant. Many companies and researchers feel the need for focusing on how companies can create new business models as part of their strategic management. Indeed, this is the subject of my current research and I can testify to the need for this book. Further, the authors deserve credit for acknowledging much of the thinking that they work from and for having written a thoroughly interesting book.
But I am not quite sure that this is the right book, still. The book is narrowly focused on the discovery process complete with process tips and examples from real world companies. I am sure that, should you contact the authors, they would be willing to help you and your company implement the process. However, this misses part of the real challenge of having both a divergent, creative strategy process as well as a convergent, analytical one – politics and managers! My own work has revealed that the people working with new ideas and business models often come into conflict with the people working with the existing business, which can lead to corporate warfare and break-down. The old culture of the existing business usually has the upper hand, with the confidence of past successes and secure knowledge of customers and markets. This leaves the new culture of the business based on nothing more than (vague) ideas weak and subject to attack from representatives from the old business, who feel (rightly) threatened by the new business. These cultural clashes and how top management manages the entire strategy process and implementation of new businesses into the organization is a critical aspect of the subject completely omitted from The Power of Strategy Innovation. The related issue of making sure that the top management team can think out of the box and avoid the pitfalls of groupthink is also not discussed in the book. For these reasons, I would like to see another book that actually deals with the ''power'' of strategic innovation as a supplement to this book about the process behind strategy innovation.
Also this is a consultancy book. Therefore, the examples are sketchy and anecdotal and the discussions of theory do not cover the field in depth. Despite these shortcomings, this is still a recommended read for managers and researchers alike.