issue 1 - Roland Berger

creating a credible enemy is part of the solution
business culture f
Strategic innovations: new objectives and a new way of thinking
Five rules for how companies can find ways to compete that others have missed
strategic innovation so as to ensure its
successful implementation?”
What can upper management do? I believe
it has to take the organization through a
four-step process. The first is to sell the new
strategy to employees and generate some
passion. But knowledge does not create
passion. So the next step must be to explain
why it is so important both for the employees
and for the organization. The first reaction
will be, “This is impossible.” Therefore
the third step is to make it believable. One
IN THE LAST, DECISIVE STEP,
MANAGERS NEED TO WIN THE HEARTS
OF THEIR EMPLOYEES
way to do this is through early victories.
Success will slowly turn people around and
will have them thinking, “Maybe, after all,
we can do this!” And the final and most important
step is to transform it from a rational
to an emotional process. The first three
steps involve showing employees what the
strategy is and convincing them that it is
important and achievable. Now management
has to win over their hearts too. Managers
have various ways at their disposal to
gain this emotional commitment:
make the employees feel special;
p reinforce that feeling of uniqueness by
being very selective about who is invited
into the team;
p instill the feeling of being part of a special
team by creating team symbols;
p allow them to participate in the setting
of the objectives;
p empower them to go out and do things
toward achieving these objectives; and
p create a credible enemy for them.
These are all tactics that will help teams
and entire companies come together in trying
to achieve very ambitious objectives.
They are tactics that help management
seize upon strategic innovations effectively,
enabling them to practically be in two
places at once.
1) Redefine the business:
A company should constantly ask itself what business it believes it is in. Companies have
traditionally defined themselves by product (car companies), by customer function (transportation)
or as a portfolio of core competencies. Most importantly, a company should go through
a four-step procedure in defining itself: it should list all possible definitions; evaluate each
in terms of customers, competitors and market barriers, etc.; choose one; and ask how competitors
are redefining their businesses.
2) Redefine the who:
A company should constantly ask itself, “Who is my customer?” Companies can identify
customers who are good for the business and those who are bad. And they can identify customer
priorities, which can change more often than needs. But, to be successful, a company
must choose a niche that eventually grows to become the mass market, and the company’s
way of playing the game becomes the new game in town.
3) Redefine the what:
A company should first decide strategically what products or services it should be selling
to its customers. Then it can determine whom to target. To become a strategic innovator,
a company has to be the first to identify new or changing customer needs and priorities and
then find better ways of satisfying them.
4) Redefine the how:
A company can build on its existing core competencies to create a totally new product or way
of doing business. It can share competencies across business units, reuse a competence from
one unit to create a new business and expand competencies as it learns new skills.
5) Start the thinking process at different points:
In thinking of new ideas and ways of doing things, managers need to broaden their perspective
and change their angle of focus. If a company usually thinks first of the customer, it
should start thinking first about its unique capabilities or about what needs it could serve.
Success matrix for the management of strategic innovations
Companies can select among four strategies using two business models.
Serious
Type of conflicts
between established
companies
and disruptive
innovations
Minor
A
Separation
D
Phased separation
B
Phased integration
C
Integration
Low (different markets)
High (similar markets)
Similarities between established companies
and disruptive innovations
think: act 53