Quick takes

Citation

Gorrell, C. (2011), "Quick takes", Strategy & Leadership, Vol. 39 No. 1. https://doi.org/10.1108/sl.2011.26139aae.002

Quick takes

Article Type: Quick takes From: Strategy & Leadership, Volume 39, Issue 1

These brief summaries highlight the key points and action steps in the feature articles in this issue of Strategy & Leadership.

Lessons to jumpstart disruptive innovation Peter Skarzynski and Jorge Rufat-Latre

Innovative, disruptive competition is the name of the game at a time when customers need to reassess their previous assumptions about cost and value. Historically, corporate winners who emerge from a downturn are those that have changed the game, not stayed the course. Even smaller companies, when they offer their customers more innovation for their money, can tilt the field in their favor regardless of their competitors’ size or cost management skills.

Three critical lessons for disruptive innovatorsBy following the best practices of successful innovators, leaders can guide their organizations through and out of this economic slowdown and avoid becoming one of countless business victims of “innovation inertia.” A review of a wide spectrum of disruptive innovators over the past few decades reveals that their success as game changers is primarily driven by three critical capabilities:

1. 1.

   The ability to anticipate and act on market discontinuities and unmet customer needs, with a particular focus on the business model.

2. 2.

   The ability to link incremental and breakthrough innovation efforts by focusing on a single, shared aspiration.

3. 3.

   A mindset that expects opportunities for disruptive innovation to inform strategy and for strategy to inform the search for disruptive innovation opportunities.

4. 4.

   Three lessons from successful disruptive innovators are offer as guidance and supported with cited best practices.

Going forward: significant change poses challengesTop-performing companies have learned how to meld disruptive and incremental innovation in disciplined and systematic fashion. By adopting their best practices, almost any company can learn to out-compete their rivals by creating new products, finding white-space markets and imagining new business models even in these toughest of times.

1. 1.

   The time challenge. Focus first on improving existing opportunities already in the pipeline. Use the lessons learned to work on a set of more ambitious innovation opportunities.

2. 2.

   The commitment challenge. Consider a low-resource approach that can get past temporary economic challenges or emergencies. Work on specific innovations that can get you to early wins. Not all platforms have opportunities that can achieve their promise in the short term. In these more difficult times, choose those platforms that take advantage of opportunities faster.

3. 3.

   The inclusiveness challenge: Disruptive innovation involves many people in many areas of the organization but not all people and not all at the same time. Ask your innovation teams to communicate through informal networks and to target influencers. As work progresses, identify the individuals and organizations needed to take next steps. Involve them as early as possible.

Interview Innovating by “doing both”: Cisco manages contradictions that drive growth and profit Alistair Davidson

Strategy & Leadership interviewed Inder Sidhu, Cisco’s Senior Vice President Strategy and Planning for Worldwide Operations about the company’s approach to innovation. His new book about managing seemingly contradictory alternatives is Doing Both: How Cisco Captures Today’s Profit and Drives Tomorrow’s Growth.

Inder Sidhu: “Doing Both” is the philosophy that Cisco has used for growing its business for many years. It started when our CEO, John Chambers had to assess new business initiatives but found teams making false trade-offs with the alternatives offered. For example, he found that often managers would present ideas that aimed for high growth but were not very profitable, or ideas that offered profitability but not high growth. Over the years, John and his management team have consistently sent back such ideas and demanded that new businesses need to “Do Both!”

Our experience at Cisco suggests that the concept of “Doing Both” is relevant to a wide range of management decisions. We have learned to look at every opportunity not as a choice between apparently conflicting goals, but rather a way of obtaining a multiplier effect by seeking and meeting two apparently conflicting goals.

S&L: What else drives Cisco innovation?

Sidhu: We are driven by two major values: customers and market transitions. Some of our competitors have been committed to one particular technology or standard. Our view is that we will develop whatever works for the customer. More abstractly, our business strategy could be thought of as focused upon market transitions rather than evangelizing for a particular technology or standard.

S&L: What can managers do to introduce and implement the concept of Doing Both in their organizations?

Sidhu: Managers need to change their organization – its approval processes, its reward systems, its innovation language and its expectations about the rate of change … For innovation, we actively manage three sources of change – sustaining change that improves the existing business, disruptive change that needs to be developed outside the core business, and externally sourced change that can be spun into the business.

How top performers achieve customer-focused market leadership Carolyn Heller Baird and Cristene Gonzalez-Wertz

The global recession requires leaders to confront game-changing market disruptions. Needed are new ways of doing business: a focus on developing fresh customer insight and establishing digital channel leadership. The goal: to transform customer experience, open new markets and reduce organizational complexity.

Fast forward: three environmental forces driving changeToday’s empowered and enlightened consumer is driving marketplace changes that are likely to have a significant impact on companies’ go-to-market and service approaches. Consumers today are more informed, aware and concerned about products. They purchase products and services through an ever-growing, changing number of channels.

To achieve customer relationship marketing leadership, companies need to acknowledge three external forces in their business strategies. Each is related to satisfying the needs and wants of today’s consumer are: a) new business models, b) increased customer demands, and c) the digital information explosion.

The three new categories of market leadershipThose companies – that respond to the market forces driving change and understand on a fundamental level how customer preferences are evolving – are those most likely to be well positioned to assume market leadership positions over the next few years. Based on indications from an IBM survey, companies adopting one of three models have significant advantages:

• •

  Customer insight leaders.

• •

  Digital channel leaders.

• •

  New era leaders.

Indications are that their success will depend on the degree to which they embrace new digital communications, service, marketing and delivery channels (digital channel leaders); cater to the needs and demands of a new breed of enlightened and empowered consumer (customer insight leaders); or do both (new era leaders).

The roadmap forwardCustomer insight drives success. In examining the best practices of digital channel, customer insight and new era leaders, the survey found that both market making and strategic service require four specific areas of managerial attention: listen, learn, engage, harvest. The approach relies on defining what insight is needed and when and how it can be applied.

Time-value economics: competing for customer time and attention Adrian C. Ott

The amount of time US consumers devote to shopping has remained relatively constant since the 1960s: consumers in the US spend only about 28 minutes each day researching and buying goods and services in all contexts, real world and online. B2B executives spend only between 10-15 percent of working hours making non-commodity purchases.

So why is this a crucial issue? Because in the past five decades there has been a proliferation of products offered and of the distractions customers encounter during those few shopping moments.

Solution: learn how to use “Time-Value Economics”Why not use the barriers of time and attention to build advantage? Innovators need to expand their thinking outside the demographic and psychographic characteristics they have traditionally used to identify and target customers. Companies need to view customers through a Time-ographic model to truly comprehend how they think and act.

Key conceptsThere are many techniques for using this mindset for business model innovation, customer adoption, and competitive advantage. Two key concepts are:

• •

  “The Time-Value Tradeoff” –a. This is the time-and-attention calculation that every customer mentally tallies before buying a product or signing up for a tune.b. Value is greater than the Price + customer time investment.

• •

  “The Time-ographics Framework”a. The variables of the Time-Value Tradeoff are not fixed. People value time differently depending on what they are doing with it.b. Time-ographics Framework describes the customer’s propensity to spend time on an activity or product, and the customer’s willingness to allocate attention to it.c. This 2×2 matrix offers 4 conditions upon which to craft strategy.

Time-Value Economics deserve executives’ attention and offer a good place to start in developing new products or new ways of engaging time-starved customers. For innovators and marketers it’s not about the Time Value of Money, it is about Money Value of Time.

The evolving Internet in 2025: four scenariosEnrique Rueda-Sabater and Don Derosby

The Internet of the future will likely be larger and have a greater impact in society than it does today as it becomes truly global, spreading beyond wealthy countries and large cities into villages and rural areas everywhere. But the Internet’s shape 15 years hence and the path it takes to get there are uncertain and unpredictable. Hence the need for scenarios, a set of divergent stories about the future, to help explore and prepare for possible futures of the Internet.

The process of creating four scenariosResearchers from Global Business Network and Cisco identified a set of five premises to provide a foundation for the scenarios. Next they identified more than a dozen key drivers of change. These critical uncertainties suggest three sets of alternatives outcomes that could play a major role in the evolution of the Internet through 2025: network build out; technological progress; and user behavior.

Of the many plausible scenarios encompassed by these three “axes of uncertainty” four were selected to be developed in depth:

• •

  Fluid Frontiers – many products and services drift vertically towards “free” (indirect payment) options that will challenge many existing business models and create opportunities for radically new ones as consumers experiment.

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  Insecure Growth – markets segment sharply, trustworthy brands are critical for success and secure, premium services of many kinds become major opportunities.

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  Short of the Promise – affordability, price competition at all levels and high functionality/cost offerings become critical.

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  Bursting at the Seams – great diversity of situations will face business models with choices ranging from niche premium plays to tapping into the proliferation of “free” open source applications.

A window on 2025The disparity of outcomes across the scenarios highlights how different combinations of change drivers could shape the evolution of the Internet through 2025 in ways that may differ from the implicit assumptions of its key actors today. It is only by exploring and rehearsing divergent and plausible futures for the Internet, that leaders can develop nimble strategies, robust business models and allocate resources to prepare for a range of possible futures. And, help to shape it.

Should strategy professionals be certified? Randall Rollinson

Arguably, corporate practitioners and the leaders who rely on them have a lot to gain from supporting a training and certification program in strategic planning and strategic management.

Many arguments in favor of credentialing have already prevailed in other professional specialties. But until very recently, no professional body had developed performance standards to certify a base level of knowledge or competency level among strategic-planning practitioners. Before strategic planning can become a recognized profession, an accepted set of standards for strategic-planning practitioners and a widely recognized practitioner-credentialing program must be in place. The Association for Strategic Planning (ASP), the largest organization for strategic management professionals, has been working on such a program and is well on the way to creating it.

Central to achieving ASP’s vision of establishing a national standard in the field of strategic planning is a continuing focus on building consensus on an ever changing body of knowledge as new theories emerge, new research is completed, and new practitioner insights are gained. Collaboration with other strategic-management professionals, including, for example, readers of Strategy & Leadership and members of the Strategic Management Society, will be critical as the program and field evolve.

ASP’s Body of Knowledge (BOK) components

1. 1.

   Strategic Leadership – role definition and planning for change are primary jobs of leaders; at a basic level, the focus is on leading through facilitating a strategic-planning team.

2. 2.

   Strategic Thinking – which precedes planning.

3. 3.

   Strategic Planning – deciding on the right strategy for success.

4. 4.

   Strategic Action and Change – executing the strategy and measuring performance.

5. 5.

   Business Acumen – roles, ethics, and general business knowledge.

ASP’s criteria to be met for credentialing

1. 1.

   Establish a common framework, language, and operational process on which a refined BOK can be debated, refined, or reshaped and then improved again and again.

2. 2.

   Clarify not only on what certified strategy professionals need to “know,” but also what they actually must be able to “do.”

3. 3.

   Obtain acceptance by the academic and management communities across the private, public, and nonprofit sectors.

Catherine GorrellPresident of Formac, Inc. a Dallas-based strategy consulting organization (mcgorrell@sbcglobal.net) and a contributing editor of Strategy & Leadership.