Comments for Drivers of innovation strategies: beyond hype

Laura BERTRAND, Iva CAVAR

Covin, J.G. & Slevin, D.P. (1989). Strategic management of small firms in hostile and benign environments. Strategic Management Journal, 10 (January): 75-87

KEY INSIGHTS: Jeffrey G. Covin and Dennis P. Slevin conducted a study through a survey among 161 selected small manufacturing companies with the aim to examine how small businesses can succeed in different environment conditions, specifically hostile and benign ones. It investigates the relationship between organization structure (organic vs. mechanistic), strategic posture (entrepreneurial vs. conservative), and financial performance among these firms.…
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KEY INSIGHTS:
Jeffrey G. Covin and Dennis P. Slevin conducted a study through a survey among 161 selected small manufacturing companies with the aim to examine how small businesses can succeed in different environment conditions, specifically hostile and benign ones. It investigates the relationship between organization structure (organic vs. mechanistic), strategic posture (entrepreneurial vs. conservative), and financial performance among these firms. The results of the paper can be broken down into three key insights. First, small firms with an organic structure generally perform better in hostile environments, while firms with a mechanistic structure generally perform better in benign environments. Second, firms with an entrepreneurial strategic posture perform better in hostile environments, while firms with conservative strategic posture perform better in benign environments. Lastly, the authors suggest that even though their study has shown significant results, it does not mean another structure or strategic posture cannot survive in the other environment. In fact, the authors argue it is certainly possible for small firms to perform well in hostile or benign environments without engaging in the practices identified in this study.

MANAGERIAL IMPLICATIONS:
Following the paper’s recommendations, three implications for managers emerge. Firstly, firms should comprehend their operating environment to adopt the most suitable organizational structure and strategic posture for enhanced effectiveness. Second, constant evaluation of alignment with the ever-changing environment is vital. Lastly, developing tools or models to assess the current environment is crucial. However, as noted by the authors, these strategies may not be universally applicable, emphasizing the importance of seeking additional insights into evolving dynamics of strategic orientation and performance.

LIMITATIONS:
We have encountered two limitations that were not already discussed in the paper. First, the paper does not take regulatory environments into considerations which can significantly affect a firm’s operations and profitability. The regulatory landscape includes industry-specific regulations, tax policies, and environmental standards. Second, the paper does not discuss how firms can identify whether they are operating in a hostile or benign environment. While they do identify how to describe a hostile environment, for example – precarious industry settings, intense competition, harsh, overwhelming business climates, and the relative lack of exploitable opportunities – it does not address any model or similar that can be used by firms to identify in which environment their business is currently operating.

FURTHER READINGS:
McKenny, A.F., Short, J.C., Ketchen Jr., D.J., Payne, G.T., & Moss, T.W. (2018). Strategic entrepreneurial orientation: Configurations, performance, and the effects of industry and time. Strategic Entrepreneurial Journal. 12(4), 504-521
• This study examined the performance of technology industries on industrial-, temporal-, and measurement-related factors, extending the dimensions of strategic posture of the analyzed paper – risk taking, innovativeness, and proactiveness – by two additional dimensions: autonomy and competitive aggressiveness.
Peng, X.B., Liu, Y.L., Jiao, Q.Q., Feng, X.B., & Zheng, B. (2020). The nonlinear effect of effectuation and causation on new venture performance: The moderating effect of environmental uncertainty. Journal of Business Research. 117, 112-123
• This paper contributed to the literature on entrepreneurial decision-making and performance in uncertain environments by offering a view of the relationship between effectuation and causation and new venture performance.

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Yuzhi MIN, Sitong JI, Gilles HARTE, Sebastien WERY

(Article) Yoffie, D. B., & Kwak, M. (2006). With friends like these: The art of managing complementors. Harvard Business Review, 84(9), 88-98

The article "With friends like these: The Art of Managing Complementors." deals with the subject of complementors. It defines the term as "Companies that independently provide complementary products or services directly to mutual customers". A typical example might be car manufacturers and service stations, or telephone manufacturers and network providers like Apple with Proximus. Complementors share together a market. Company strategies…
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The article “With friends like these: The Art of Managing Complementors.” deals with the subject of complementors. It defines the term as “Companies that independently provide complementary products or services directly to mutual customers”. A typical example might be car manufacturers and service stations, or telephone manufacturers and network providers like Apple with Proximus.

Complementors share together a market. Company strategies will influence the total size of the cake and the shares received by the various market players.
The three key insights of this paper are possible strategies for influencing complementors.
The first strategy is “hard power”. Exercising hard power is a coercive strategy based on the strength of the company undertaking it. The strongest company will try to impose its choices, for example, by making its offer compatible or incompatible with that of a complementor. The company may also decide to buy or build a complementor.
The benefits of this strategy are control and a greater share of the profits. But it leads to mistrust and deteriorating relations.
The second strategy is “soft power”. This is based on cooperation or co-optation. Companies enter into partnerships by sharing information, giving guarantees or even investing in each other. The aim of this strategy is to design the business environment to foster trust and mutual benefit. It’s well-suited to smaller companies. But its effects are more diffuse, slower and difficult to evaluate.
Finally, the third strategy – “smart power” – is a mix of the two previous ones. It combines the advantages and disadvantages of in varying degrees.

To use these insights in business, managers must first identify and understand their complementors by analyzing their business, their strategies and identifying their incentives to cooperate or compete.
Managers must also analyze their own leverages. These being derived from relative market positions, competitive advantages, resources and capabilities.
Finally, they need to decide how to influence their partners. The choice of strategy depends not only on the two previous analyses, but also on the company’s own philosophy and values.

We have identified three limitations based on a number of examples. The first is that, even if a company has a strong market leadership position, it may suffer from the hard power of an even stronger competitor. For example, Microsoft on Intel.
Secondly, some companies are just too small to have leverage over their complementors. Third limitation is that sometimes soft power can be very costly for a company trying to influence another. Sometimes even more expensive than creating or buying one’s own. For example, IBM investment in Linux development.

Some complementary resources have enabled us to go further in understanding the concepts.
– Understanding how complementors can interact on platforms and with platforms owners.
Cenamor, J. (2021). Complementor competitive advantage : a framework for strategic decisions. Journal of Business Research, 122, 335 343. https://doi.org/10.1016/j.jbusres.2020.09.016

– Giving us a precise example of this case with Android, Google and independent app developers.
Strategic Management Society. (2019, 20 juin). Threat of platform‐owner entry and complementor responses : evidence from the mobile app market [Vidéo]. YouTube. https://www.youtube.com/watch?v=lBX2RdPwfXk

– Explaining how revolutionary innovation can impact business relationships and, for example, complementors.
Miehé, L., Palmié, M., & Oghazi, P. (2023). Connection successfully established : How complementors use connectivity technologies to join existing ecosystems – Four archetype strategies from the mobility sector. Technovation, 122, 102660. https://doi.org/10.1016/j.technovation.2022.102660

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Catherina Schwaiger, Dora Magyar, Tanmaay Chandak, Babtiste Chantry

Prange, C., & Schlegelmilch, B. B. (2018). Managing innovation dilemmas: The cube solution. Business Horizons, 61(2), 309-322

KEY INSIGHTS: Christiane Prange and Bodo B. Schlegelmilch aim to design a framework to measure innovation in this paper. According to the authors, research has witnessed 100+ parameters to develop a framework to measure innovation over the years. However, the findings were vague or non-universal. In this paper, the authors plot innovation along 3 dimensions – Change Impact, Strategy Impact, and…
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KEY INSIGHTS:
Christiane Prange and Bodo B. Schlegelmilch aim to design a framework to measure innovation in this paper. According to the authors, research has witnessed 100+ parameters to develop a framework to measure innovation over the years. However, the findings were vague or non-universal. In this paper, the authors plot innovation along 3 dimensions – Change Impact, Strategy Impact, and Market Impact. Change Impact assesses whether the change in product or processes is transitional (minor) or transformational (major). Similarly, Strategy Impact captures the impact on corporate strategy – whether a particular business unit is affected or the entire corporate vision is influenced. Lastly, Market Impact measures if the innovation is market sustaining or disruptive, typically examining if competitors need to adapt to the change (if the innovation is indeed game-changing). The three dimensions plotted together form a “Cube” solution.

MANAGERIAL IMPLICATIONS:
Upon plotting the 3 dimensions along x, y, and z axes, we get 8 possible types of innovations. The paper outlines reputed examples of each innovation type. To convey the framework to managers and help them adopt the same, one needs to ask the right questions for them to evaluate their firm’s innovation type and categorize it with respect to Change (transitional or transformational), Strategy (business or corporate), and Market (sustaining or disruptive) Impact. Further, managers also need to understand that an innovation’s position in the cube is dynamic subject to external factors and internal capabilities. Putting the cube in action in real life also involves assessment of the following trade-offs:
• Complexity vs Simplicity of the innovation
• Flexibility vs Stability – more flexibility leads to better innovation culture but higher uncertainty
• Experimentation vs Control – whether impact can be foreseen or needs hit and trial approach
• Focus vs breadth – innovations impacting multiple units can lead to loss of core competencies
Thus, managers need to qualify their existing innovation types, decide the innovation which is most-suited to the company’s strategy, and communicate and stick with the innovation strategy to create clear and impactful results.

LIMITATIONS:
Like any research, the cube solution has its limitations. Below are 3 important areas where the paper falters:
• Subjective limit to scope of innovation: Determining the magnitude of impact of an innovation and thereby categorizing it as low or high along a particular dimension is not documented and is therefore subjective. For instance, Dell’s PC innovation was low market impact at the start (from Strategic innovation to Paradigm change)
• The paper does not account for the impact of internal capabilities to manage innovation
• The 3 dimensions don’t account for customer impact directly, which is a limitation since the ultimate impact of an innovation is measured by customer value and willingness to pay

FURTHER READINGS:
Below are a few relevant and interesting articles related to this subject matter:
• The Innovation Value Canvas – International Journal of Innovation Management (Vol. 24, No. 2)
o Underlines a framework to choose an apt business model and value proposition for technological innovations
• Real options or fallen angels – Creativity and Innovation Management (Vol. 31, October 17, 2022)
o Examines failed/terminated projects with emphasis on how past failures determine the magnitude and frequency of future failures
• Supply chain innovation – Journal of Product Innovation Management (Vol. 39, Issue 2)
o Develops a framework to measure supply chain innovation basis marketing, technology and development, and logistics-oriented innovation activities

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Charlotta Delbar, Anna Gouet, Katherina Fasching, Yok Chen

Camillus, J. C. (2008, May). Strategy as a Wicked Problem. Harvard Business Review. https://hbr.org/2008/05/strategy-as-a-wicked-problem

The article is called ‘Strategy as a Wicked Problem’. The first key insight of the article is “What is a wicked problem?”. A wicked problem is created by an important amount of causes, the origin of the problem is unknown. To solve a wicked problem, individuals have to think outside-the-box, a traditional problem solving approach will not suffice. The second…
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The article is called ‘Strategy as a Wicked Problem’. The first key insight of the article is “What is a wicked problem?”. A wicked problem is created by an important amount of causes, the origin of the problem is unknown. To solve a wicked problem, individuals have to think outside-the-box, a traditional problem solving approach will not suffice. The second key insight is “How to manage a wicked problem?”. The first main approach that the paper outlines is involving all stakeholders, making sure they are involved in solving the problem. Secondly, having a “feed-forward approach” to face the wicked problem is crucial. This means being future oriented when articulating strategies and not focusing on successful strategies of the past.
The first managerial implication concerns identifying a wicked problem. For that, we provide five criteria that managers can use to detect whether they are facing a wicked problem. Once detected, managers should proceed with the following two implications. In light of the key insight that all stakeholders should be involved in the planning process, the question arises how managers can achieve this. Therefore, our second recommendation to managers is to organise brainstorming sessions, social events or surveys with stakeholders in order to obtain their ideas and understand their standpoints. One problem that can be encountered here is the difficulty of defining who the relevant stakeholders are for a company. However, it is important to reflect and decide on who the most important stakeholders might be that can help you solve the specific wicked problem. The third implication for management has to do with setting up strategies that envision the future. A practical recommendation to achieve this would be to list scenarios the company would like to see happening for the next five to twenty years, and respectively setting up strategies that would foster the development of these circumstances. Another practical implication is to use discovery driven planning (DDP). DDP consists in setting up a set of assumptions regarding the future of the company. The validity of each assumption is tested as the plan develops: when new data is found it is integrated to the plan. This planning does not rely on past experience as uncertainty regarding the future is acknowledged and embraced.
We have encountered two limitations where it is not recommended to follow the aforementioned implications. The first limitation concerns our implication to encourage all your stakeholders to get involved in the planning process. If the company needs to disclose its confidential strategies or technologies in order for stakeholders to understand the problem, it is not advisable to share this sensitive information, due to the risk of information leakage. The second limitation ​regards the use of DDP and the fact that it is not advisable to use this method for all businesses. More conventional and mature businesses may not profit from using DDP because for it to work the company needs to be agile and flexible with resources. In this way, DDP should be used for new ventures as these are less predictable and may further benefit from this approach.
Lastly, we discovered further insight on how to deal with wicked problems. The first article, called ‘Wicked problems, reductive tendency, and the formation of (non-)opportunity beliefs’, explains a situation called reductive tendency, and its negative effect on entrepreneurs when simplifying a wicked problem, mainly due to them overlooking important details. The second article is called ‘Open Innovation for Wicked Problems: Using Proximity to Overcome Barriers​’. The main idea of this article is using the proximity framework when using open innovation to solve wicked problems.

Gras, D., Conger, M., Jenkins, A., & Gras, M. (2020). Wicked problems, reductive tendency, and the formation of (non-) opportunity beliefs. Journal of Business Venturing, 35(3), 105966.
Ooms, W., & Piepenbrink, R. (2021). Open Innovation for Wicked Problems: Using Proximity to Overcome Barriers. California Management Review, 63(2), 62-100.

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Marek Lehky, Marta Botelho, Christopher Meixner-Alter, Arthur Van de Venne

(Article) Loewe, P., Williamson, P., & Wood, R. C. (2001). Five styles of strategy innovation and how to use them. European Management Journal, 19(2), 115-125.

From this article five key insights were drawn, based on the five innovation strategies outlined: The Cauldron, the Spiral Staircase, the Fertile Field, Pacman, and the Explorer. First, the Cauldron strategy entails the leaders to have a rough picture of the needed change in their business. Consequently, this rough image is shared with the leader’s most trusted associates who…
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From this article five key insights were drawn, based on the five innovation strategies outlined: The Cauldron, the Spiral Staircase, the Fertile Field, Pacman, and the Explorer.

First, the Cauldron strategy entails the leaders to have a rough picture of the needed change in their business. Consequently, this rough image is shared with the leader’s most trusted associates who then refine it according to their own knowledge and points of view. Finally, these associates pass it down to more and more people who are involved in the company until the final picture is polished enough to the point that it is a realistic situation. Managers are required to be aware of their own business problems, as well as critically assess employees’ involvement with the company. Examples of this were Enron and Lucent Technologies. Second, the Spiral Staircase, in which managers focus on their existing business and keep innovating on what they already have repeatedly. Usually, customer problems are key factors to guide innovation in this strategy, making it very susceptible to customer experiences and insights on the delivered products or services. This implies that managers constantly exchange information with customers about possible product improvements. That was the case for both British Airways and Charles Schwab Company. Third, the Fertile Field. This innovation strategy finds disruptive ways to use existing resources. For that, it is compulsory that the company has a deep understanding of its own portfolio of competencies in order to be able to advance in new, yet undefined, directions. For managers, it is imperative that they continuously assess the company’s capabilities and that they are aware of potential innovative developments in analogous markets. Two companies that followed this strategy were Emerson Electric and NiSource. The fourth innovation strategy, Pacman, works better in a fragmented field, in which the next idea is still unclear. Thus, by investing in smaller firms that are in the earlier stages of the innovation cycle, innovation will be right around the corner. However, heavy investments in R&D well-developed processes to facilitate the integration of the newly acquired firms. Thus, managers are required to being well-informed about both the market and the start-up industry, while establishing a culture of integration. A good example of a company who used this strategy is Microsoft. Finally, The Explorer innovation strategy works best in a long-term perspective. In other words, it is required to pursue new business models that are initially fuzzy, but that can provide high payoffs in the future. The best circumstance to adopt this strategy in is when a company has a stronger intuition than the competitors on a long-term subject. Managers need to have a long-term perspective and a mindset implementation aiming at disruptive innovation. Monsanto company is a great example of this strategy.

The limitations of this paper can be divided into two categories, environment and resources.

Firstly, the article only refers to large corporations such as Microsoft, Enron and Lucent Technologies that have (or had) many resources and talent. Other types of companies, mostly SMEs, might not have these resources and talents as they are limited to not only a certain amount of people and sales. Another limitation might be different management structures. The presented corporations have hierarchical structures when one person might change a lot. With the right number of resources, people, and persuasion. Nevertheless, different companies with, for instance, flat management structures might not be able to execute the strategies presented in the paper due to the completely different company culture. In addition, different industries and markets have different conditions. The paper presented only a few industries that were like each other. Other industries might not be capable of utilizing the strategies solely because of the different settings. An example might be a company focusing on the Food and Beverage industry where the conditions might not be suitable as in the technology, or telecommunication industries.

Secondly, the paper does not really take resources into consideration. It often describes champions in the companies that made the success happen. For example, Charles Schwab or Chuck Knight who had the expertise, experience and trust of the board to find completely new departments that enabled the companies to innovate. In addition, the money issue was not there. It might be a problem for a company lacking these champions or not having a culture enabling them to risky steps like that. In relation to money, there is no indication of how the strategies would survive during difficult economic times. An example might be the current situation with high inflation, a recession nearby and high energy prices. Companies cannot really put innovation as their focus, because they would possibly go bankrupt.

To tackle the limitations we propose three new sources sumarrized below:

Foss, N. J., & Saebi, T. (2017). Fifteen years of research on business model innovation: How far have we come, and where should we go?. Journal of management, 43(1), 200-227

BM and its innovations have been an important topic in macro-management debates over the last few decades. Although the BM and BMI literature streams are clearly related to strategic areas, they are not clearly anchored to any particular (macro) management area. The BMI literature is characterized by conceptual ambiguity and disjointed research efforts. The BMI literature currently represents a significant attempt to confront the confusing and complex realities that pose real challenges to practitioners. They are implicit, but often vague and ill-defined concepts. Simplifications, conceptual clarifications, theoretical models, and cumulative empirical work are required.

Pisao, G. P. (2019). The hard truth about innovative. Harvard Business Review, 97(1), 62-71.

Leading the way in building and maintaining an innovative culture is particularly difficult for three reasons. First, an innovative culture requires a combination of seemingly contradictory behaviors that can lead to confusion. Second, certain behaviors required for an innovative culture are relatively acceptable, while others are unacceptable to some within an organization. Highly competent people are accustomed to decision-making and accountability, and their “failures” are more likely to lead to learning outcomes than waste. Disciplined experimentation costs less and yields more useful information, so tolerance for failed experiments becomes prudent rather than shortsighted.

Müller, J. M., Buliga, O., & Voigt, K. I. (2021). The role of absorptive capacity and innovation strategy in the design of industry 4.0 business Models-A comparison between SMEs and large enterprises. European Management Journal, 39(3), 333-343.

SME still don’t see cross-company collaboration as a priority. Small businesses may want to focus on developing novelty-driven business models rather than “making what was done before more efficient.” However, a firm’s ability to interact with other firms affects not only the extent to which knowledge can be accessed and transferred, but also its value to other potential partners in the value creation and innovation ecosystem creation.

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José Baena Soares, Louise Bocquet, Devam Doshi, Lola Favart

(Article) Pisano, G.P. (2015). You need an innovation strategy. Harvard Business Review, 93(6), 44-54.

This article called “You need an innovation strategy” talks about why companies need to align their innovation strategy with their business strategy. The first finding is that a robust innovation strategy should clearly explain how value will be created for customers and company, and then how it’ll be captured by the organization. Secondly, an explicit strategy is necessary to handle…
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This article called “You need an innovation strategy” talks about why companies need to align their innovation strategy with their business strategy. The first finding is that a robust innovation strategy should clearly explain how value will be created for customers and company, and then how it’ll be captured by the organization.
Secondly, an explicit strategy is necessary to handle the involved trade-offs. It is needed to clarify which trade-offs are best for the organization as a whole.
Finally, a company’s innovation strategy should specify the allocation of resources to each type of innovation, through a high-level plan. This however is not an easy task, and the answer will be specific to the type of business in itself and contingent on factors such as the company’s strengths, the rate of technological change, …
Regarding managerial implications, the most senior leaders of the company should be the ones setting up the innovation strategy linked with the business strategy and the core value proposition. As every function in the organization usually wants to serve its own interests, only the senior leaders can take decisions that are best for the company. Secondly, there is no ideal mix for the allocation of resources to the different types of innovation. A high-level plan needs to be created considering key factors such as the intensity of competition, the rate of technological change, the magnitude of the technological opportunity and so on. The senior leaders need to define clearly which resources need to be allocated and where they should be allocated. Finally innovation strategies must evolve, otherwise it may become irrelevant. Different frameworks are elaborated by companies every year such as the COIN framework, designed to help large organizations to create a continuous Return on Innovation.

There are a handful of limitations to the identified implications, which can limit the extent to which managers can use the learnings from the published article. First, the author argues that the innovation strategy should be set up by senior management only. This method fails to take into consideration the ideas and arguments from lower level employees, which should be taken into account when creating an innovation strategy. Secondly, Pisano argues that there must be a high-level detailed plan on how to use the resources accordingly to innovate. However, some of the factors mentioned in the article, such as technological change, the magnitude of the technological opportunity and the intensity of competition can be hard to quantify, and thus, analyse and design a detailed plan. In addition, it would be particularly hard for SMEs to analyse such factors due to lower levels of available budget and personnel for such. Third, regarding the stated fact that innovation strategy evolves and needs adaptation, it is not explained how senior management can time such evolution and therefore act accordingly. Finally, on a more general scope, the author fails to mention how culture is important when developing an innovation strategy. According to a McKinsey study, 94% of senior executives argue that people and corporate culture are the most important drivers of innovation. Therefore, it is important to incorporate a culture and an environment that incentivizes innovation.

We took a look at a number of other articles that supported, disagreed, and complemented the article. Ishak W writes about why a culture of innovation should start from the bottom-up instead of the top-down. Any company needs a mechanism and culture that enforces and promotes innovation from within. The author argues that the generic ideas of investing, attracting talent, and idea development are just hygiene factors and the key driver is innovation parenting, as the author calls it. It is the process in which innovators and leaders are held accountable for innovation and are given personal responsibility. In other words, organizational networks should be based on a democratic decision-making process and a horizontal, non-hierarchical structure, given that these types of organizations tend to be more innovative.
Another paper that complemented the original paper was ‘The impact of hard and soft quality management and​ proactive performance​ behaviour in determining innovation​’ develops a model of the relationship between quality management (QM) as a multidimensional construct. They defined hard QM as practices that include benchmarking, zero-defects mentality, goal measurement and process improvements.”Soft QM” practices included adherence to culture, management commitments, suppliers and customer focus.
By splitting into hard QM and soft QM, the authors used the model on data on ISO 9001 certified firms and interpreted that it is the Hard QM that has a high correlation to innovative performance and firms should prioritize that, while soft QM has a very low correlation.

Here are the references of our two articles:
Escrig-Tena, A. B., Segarra-Ciprés, M., García-Juan, B., & Beltrán-Martín, I. (2018). The impact of hard and soft quality management and proactive behaviour in determining innovation performance. International Journal of Production Economics, 200. https://doi.org/10.1016/j.ijpe.2018.03.011

Waguih, I. (2017, September 7). Creating an innovation culture. McKinsey. https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/creating-an-innovation-culture

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Alice Carbonnelle, Alice Thiran, Marcin Choinski, Peter Daniel Elmer

(Article) Mintzberg, H. (1978). Patterns in strategy formation. Management Science, 24(9), 934-948.

The article, “Henry Mintzberg: Patterns in strategy formation” tries to understand what strategies are and how they are formed in organizations. From this article, three key insights can be highlighted. Firstly, strategy formation is an interplay of three basic forces: an environment that is continuously and irregularly changing, an organizational operating system (bureaucracy)…
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The article, “Henry Mintzberg: Patterns in strategy formation” tries to understand what strategies are and how they are formed in organizations.
From this article, three key insights can be highlighted. Firstly, strategy formation is an interplay of three basic forces: an environment that is continuously and irregularly changing, an organizational operating system (bureaucracy) that tries to stay stable, despite the changing environment and finally a leadership whose role is to mediate between these two forces. Secondly, two main patterns in strategic change were identified. The first is that the lifecycle of an overall strategy respects the following pattern: conception, elaboration, decay and death. The second is that there is the presence of periodic waves of change and continuity within the lifecycle. Finally, two kinds of strategies were identified (intended and realized) that can be combined in three different ways: intended strategies that get realized (deliberate strategies), intended strategies that do not get realized (unrealized strategies) and finally realized strategies that were never intended (emergent strategies).
From these key insights, three concrete actions are recommended to managers so that they can better design and implement their global strategy. Firstly, managers should stay up to date with environmental changes and try to predict properly their impact. Secondly, managers should be aware that the strategic changes that they intend to do may not be successful if the bureaucracy is too strong. Therefore, the manager should demonstrate strong leadership, try to push the bureaucracy to be as much flexible as possible, train its employees to deal rapidly with change and consider the time that it will take to implement a strategic change. Finally, managers should not blindly stick to the strategy aligned at the very beginning of the implementation process but rather review it frequently in relation to its adequacy and with the subordinates that often have more complete information.
The first limitation is the fact that mediating between bureaucracy that wants stability and a changing environment can be quite easy as the bureaucracy can be flexible and is not always as powerful as explained. This is the case for Zara for instance that implemented a reactive supply chain. The second limitation is linked to the patterns of strategy formation identified in the paper: there is no explanation of how to identify which of the phases the company is facing. Also, not all strategies go through all phases: after the conception, the strategy might not be implemented by the lower level because of conflicting objectives or a lack of communication. The third limitation is about the determinants of strategy formation (i.e. environment, bureaucracy and leadership), but the importance of the purpose is not highlighted even if it is an important element to consider when designing a strategy.
Conclusions coming from the main article may be supplemented by two further papers. According to the first one (Satyro, Sacomano et al., 2017), numerous strategymakers incorrectly respond to environment changes (sustainability). As a remedy, the authors suggest an easy framework of strategy formation process, successfully reflecting the sustainability challenges. The second paper (Sharapov & Ross, 2019) may be useful for leaders struggling with changing environment. It describes imitation-based technique of strategic risk management. Authors recommend imitating the most similar rival (in terms of attributes) when the environment is quite stable, but – if it changes drastically – imitating the closest follower (the challenger). The references have been posted below:
– Satyro, W.C. & Sacomano, J.B. & Contador, J.C. & Almeida, C. & Giannetti, B.F. (2017). Process of strategy formulation for sustainable environmental development: Basic model. Journal of Cleaner Production, 166, 1295-1304.
– Sharapov, D. & Ross J-M. (2019). Whom should a leader imitate? Using rivalry-based imitation to manage strategic risk in changing environments. Strategic Management Journal, 2019, 1-32.

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Angélique De Schrevel, Wenjun Liu, Yuan Meng, Thomas Vranckx

(Article) Simpson, D. G. (1998). Why most strategic planning is a waste of time and what you can do about it. Long Range Planning, 31(3), 476-480.

Executive Summary Strategic planning is a tough subject and a lot of companies put a lot of effort and importance in the planning of their own strategy, but is it worth it? This article written in 1998 by Daniel G.Simpson documents some of his personal lessons learned during his nine years as head of strategy and planning in a multinational company…
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Executive Summary
Strategic planning is a tough subject and a lot of companies put a lot of effort and importance in the planning of their own strategy, but is it worth it? This article written in 1998 by Daniel G.Simpson documents some of his personal lessons learned during his nine years as head of strategy and planning in a multinational company and highlights the three main reasons why he strongly believes that strategic planning could be a waste of time for most of the companies. First of all, the Mission, Vision and Values aspects should have less importance in the strategy planning function because they are often either too generic or gibberish and it’s a hard task to get to the point where they can add a unique value to the company’s strategy. Secondly, it seems important to separate the strategy planning function from the finance area, where most of the work consists of mitigating the risk or quantifying every process and action while developing the right strategy requires a workforce with innovative spirit generating constantly new ideas. Finally, the strategy development does not seem to respond well to routines and, therefore, its planning should not be an annual event but should rather be built to last a few years and be reviewed by a special unit only under certain circumstances.
The first managerial implication is considerately thinking about the work going into mission, vision and values determining. Given that most are too generic, most companies should not put too much effort into developing a mission, vision or value. If a company still wants to put efforts in these three elements, it should do such work at the end of strategy development work and spend much time defining what business the firm is in and what value it adds. The second implication is to significantly expand the level and number of people involved in the process of strategic planning. Strategy should be discussed with a large group of people at multiple levels of the company. Another interesting input is that companies could get insights from business partners who are independent from the company. They are able to have visions that people in the company do not have.
The main limitation about thinking carefully about how much effort to be put into work in mission, vision and values is that: it underestimates the empowering effect of mission, vision and values on employees. These three can unite all the employees of the company even though the concepts are too generic. Similarly, having one suitable mission or vision can add to employees’ motivations. What’s more, it also seems more complicated to have an alignment between all the employees in their way of working if managers do not have any common mission, value or vision, especially with multinationals. Those three elements are an important part of the internal communication within a company. Besides, regarding the idea about expanding the level and number of people involved in the strategic process, the limitation is it could be time-consumed and complex. Having a lot of different points of view from a very broad number of employees at different levels of the company can be very challenging to find common ground. It is becoming more complicated to have an alignment between all the employees in their way of working if you do not have any common mission, value or vision, especially with multinationals. Those three elements are an important part of the internal communication within a company.
In the end, we explore further on other relevant articles. The first one introduces a conceptual model of how to achieve consistency between the relevant goal and the planning levels. It bridges the gap between long-term planning and a management model by depicting the relationship between strategy, business portfolio, tactics, and operation, which together help fulfill the strategic planning. The second paper focuses on the relationship between strategic planning and organizational ambidexterity, emphasizing the importance of managers’ innovation orientation on realizing the business’s future fulfillment. Thirdly, the last paper ‘Strategic planning as a complex and enabling managerial tool’ discusses more on the complexity between innovation and long-term planning and provides the solution – risk-taking and knowledge-based reward systems – for the innovation trade-off.
Further Sources:

Arthur Posch, Christian Garaus (2020). Boon or curse? A contingent view on the relationship between strategic planning and organizational ambidexterity. Long Range Planning (53- 6). https://doi.org/10.1016/j.lrp.2019.03.004.

Dietfried Globocnik, Rita Faullant, Zulaicha Parastuty (2020). Bridging strategic planning and business model management – A formal control framework to manage business model portfolios and dynamics. European Management Journal (38 – 2, 231-243). https://doi.org/10.1016/j.emj.2019.08.005.

Richard J. Arend,Y. Lisa Zhao,Michael Song,Subin Im (2017). Strategic planning as a complex and enabling managerial tool. Strategic Management Journal. https://doi.org/10.1002/smj.2420

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Luuk Hackeng, Patrick Westermann, Damien Krug, Léon Lamotte, Giulia Lopriore

(Article) Wamba, S. F., Gunasekaran, A., Akter, S., Ren, S. J. F., Dubey, R., & Childe, S. J. (2017). Big data analytics and firm performance: Effects of dynamic capabilities. Journal of Business Research, 70, 356-365.

This paper analyses the effect of Big data analytics capabilities (BDAC) on firm performance (FPER), while taking into account the mediating effects of process-oriented dynamic capabilities (PODC) on the relationship between BDAC and FPER. The first key finding is that managers should embrace the 3 pillar model when planning the development of BDAC in their organization, Rather than expecting an…
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This paper analyses the effect of Big data analytics capabilities (BDAC) on firm performance (FPER), while taking into account the mediating effects of process-oriented dynamic capabilities (PODC) on the relationship between BDAC and FPER. The first key finding is that managers should embrace the 3 pillar model when planning the development of BDAC in their organization, Rather than expecting an increased firm performance from IT investment alone. The 3 pillars consist of Big Data Management, Infrastructure & Personnel Expertise capabilities. The second key insight is that the positive effect of BDAC on FPER is partly mediated by process-oriented capabilities. This means that part of the effect is actually due to the positive effect of BDAC on PODC, which consequently also has a positive effect on FPER. The total effect is the sum of both. This implies that if PODC is missing, the effect of BDAC on FPER would be smaller. However, strengthening BDAC will in turn strengthen the organization’s PODC, which can represent a competitive advantage in rapidly changing environments.

There are a few managerial implications related to the 3 dimensions mentioned above. Firstly, companies need to have a flexible infrastructure, which implies to be connected and compatible. To be connected, companies need to have a global presence, while simultaneously having centralized and shared analytics through implemented communication processes. To be compatible, companies need to have software applications that can be used across multiple analytics platforms.

Secondly, companies need to acquire the best analytical team with technical, relational and business knowledge, which can be achieved with a good HR strategy. This HR strategy includes appropriate recruitment, specific training, strategic meetings & involvement. Analytics personnel need to be capable in programming skills, data management and maintenance. Additionally, high-level management should involve analytics personnel in decision-making in order for them to understand the organization’s policies and plans at a very high level. Analytics personnel should also be knowledgeable about the business environment & problems to come up with the appropriate solutions. Lastly, analytics personnel need to teach others, in order to ensure continuity and skill development and also manage projects in a collective environment.

The third pillar focuses on management capabilities. Managers need to plan and control to ensure a successful BDAC by providing clear goals and guidance. Planning highlights that managers should start focussing on a small number of business issues that are tightly defined, as this will drive the team in the right direction in terms of what data and technology is needed. Controlling implies that companies need to generate ROI to prove the value of BDA, while monitoring alignment with business strategy.

This paper also has limitations, specifically missing aspects like culture, managerial commitment and Intra- & inter- industry heterogeneity. National and organisational culture are not taken into account since the study includes only Chinese firms. The commitment to adopt big data analytics by top management is also missing, since the study surveys IT managers and business analysts. Lastly, the model failed to account for important differences between and within these industries.

Finally, there are two additional papers that provide further insights. Müller, Fay & vom Brocke (2018) highlight substantial differences in returns from BDA when considering the industry in which a firm operates. Second, Akter (2016) highlights that not only big data is important to achieve improved firm performance, but also a strong alignment between big data and business strategy.

(Article) Müller, O., Fay, M., & vom Brocke, J. (2018). The Effect of Big Data and Analytics on Firm Performance: An Econometric Analysis Considering Industry Characteristics. Journal of Management Information Systems, 35(2). https://doi.org/10.1080/07421222.2018.1451955
(Article) Akter, S., Wamba, S. F., Gunasekaran, A., Dubey, R., & Childe, S. J. (2016). How to improve firm performance using big data analytics capability and business strategy alignment? International Journal of Production Economics, 182, 113–131. https://doi.org/10.1016/j.ijpe.2016.08.018

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Bjørn Soyer, Hua Yang Hu, Laure Stevens, Loïc Sidler, Marie Lavry

(Article) Rosenbusch, N., Brinckmann, J., & Bausch, A. (2011). Is innovation always beneficial ? A meta-analysis of the relationship between innovation and performance in SMEs. Journal of Business Venturing, 26(4), 441‑457. https://doi.org/10.1016/j.jbusvent.2009.12.002

Key Insights Various prominent scholars argue that innovation is a key distinguishing attribute and the only solution to thrive in increasingly hyper-competitive markets. But what might impact the innovation-performance relationship? The principal findings from this meta-analysis are, first, innovation orientation has a stronger positive impact on performance than innovation process outcomes such as patents or innovative products or services. Secondly, innovation has…
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Key Insights

Various prominent scholars argue that innovation is a key distinguishing attribute and the only solution to thrive in increasingly hyper-competitive markets. But what might impact the innovation-performance relationship?

The principal findings from this meta-analysis are, first, innovation orientation has a stronger positive impact on performance than innovation process outcomes such as patents or innovative products or services. Secondly, innovation has a stronger impact on performance in younger firms than in more established SMEs and young firms need to start with internal innovation rather than external collaborations. Finally, a cultural environment characterized by collectivism (cfr. Hofstede) fosters innovation.

Concrete actions

First, the managers should establish an innovative orientation at the beginning of the activities. In fact, they should set a positive attitude toward change, engage and empower their teams to launch new initiatives collaboratively. Therefore, it is important to promote collectivism, set a learning philosophy, transfunctional acclimatation and future-oriented leadership. The internal benefits would be more ambitious goals, inspiring culture, better value-creation process, employees commitment and proactivity, while the external benefits would be higher brand equity, better collaboration partners and attracting highly skilled employees.

Second, it is recommended to set a dynamic degree of external collaboration. The managers should first focus on internal innovation, and then start engaging external collaboration at more attractive terms when they have better insights and market recognition. In order to not suffer from liability of smallness and newness, it is preferable to start with small external partners to have equal decision-making power.
Third, managers should focus on increasing the conversion rate of innovation input into innovation output to be more competitive in the market. For this purpose, it is important to invest in human capital and information technology, while having a common market-oriented R&D across departments.

Limitations

SMEs are advised to innovate early to improve performance, however there is no mention on how to make it sustainable in the long term. In fact, SMEs are vulnerable to big players who outmatch them in terms of resources. The paper further suggests that companies should try to innovate in-house, instead of forming external partnerships. Nevertheless, it doesn’t make a distinction between the forms of partnership, for instance it fails to consider open-innovation which can be beneficial for both parties. Moreover, the authors advocate that higher performance is achieved in collectivist countries, yet urban cities are becoming increasingly cosmopolitan. Besides, successful innovative companies like Huawei, operate under a dual paradigm of individualism and collectivism.

Additional lectures

Three new relevant references have been examined to have further insights. The first study (Löfsten, 2014) has found other conclusions than our chosen article such as the fact that the age of a firm has no relation with its innovation performance. The second article (Ajzen & al., 2016) examines the fact that specific indicators are needed when it comes to determining innovation performance (factual, declarative, relative and indirect) and financial performance (proximal, intermediate and distal). Finally, the last article (Gök & Peker, 2016) explains the role of market performance as a mediator between innovation performance and financial performance by converting innovation into positive financial outcomes. The innovation performance will indeed lead to a better market performance that will consequently lead to a better financial performance.

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François Denoël, Valentine Mertens , Louis Verougstraete, Louis Wittock

(Article) Ahlstrom, D. (2010). Innovation and growth: How business contributes to society. Academy of Management Perspectives, 24(3), 11-24.

The paper’s aim is to demonstrate that “the main goal of business is to develop innovations that generate economic growth and other societal benefits”. The author illustrates that corporate and economic growth are linked. When firms create disruptive innovation, they generate internal corporate growth while providing new products at a low price. It triggers economic growth and improves living standards.…
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The paper’s aim is to demonstrate that “the main goal of business is to develop innovations that generate economic growth and other societal benefits”.
The author illustrates that corporate and economic growth are linked. When firms create disruptive innovation, they generate internal corporate growth while providing new products at a low price. It triggers economic growth and improves living standards.

He articulates his paper around two main questions.
First, he answers the question “Why Growth matter?”. From a macroeconomics perspective, income growth has always been used as an indicator to measure the wealth of a society. He argues that economic growth is the most powerful instrument for reducing poverty and improving the quality of life.
In the second part of the paper, the author explains “Where does growth come from”.
For firms, there isn’t one unique factor for growth, it can come from right strategic choices about revenue growth, diversification and alliance. However, very often, the concept of disruptive innovation is used to justify growth.
Disruptive innovation “describes a process by which a product or service powered by a technology enabler initially takes root in simple applications at the low end of a market”.

Managerial implications

Focus on LT growth – Incumbents tend to focus on short-term profitability instead of long-term growth. One reason is the use of hurdle rates (required rates of return) to measure their performances. Instead of investing in projects with long-term growth, they select their investments based on the maximization of hurdle rates.

Think about serving currently non-served segments – Incumbent firms ignore the low-end footholds which they consider as not profitable enough. They prefer to improve their products/services for the upper markers. The success of the disrupters lies in the fact that they target segments ignored by incumbents. In those segments, disruptive entrants sell products/services with fewer features at a lower price.
Entrants then move upmarket, delivering the performance that incumbents’ mainstream customers require, while preserving the advantages that drove their early success.

Anticipate the disruption ! – As the expression said: “Disrupt or be disrupted”. Managers of incumbent companies should be aware of potential disruptive innovations entering their markets. Therefore, it is important for them to continuously scan the environment looking for innovations it could implement or for new entrants it should acquire in order to ease the threat of disruptive innovations.

Limitations

For certain situations, the definition given by the author about disruptive innovation isn’t complete:
-Certains products have transformed industries and up-ended incumbents, but don’t fit into the framework of low-end disruption.
-Outside the disruptive innovation, other factors can explain why a firm fails or succeeds (competency trap, internal competition).
-Not all incumbent companies overshot customers’ needs
-It can be difficult for incumbents to play on both sides, as there is a risk of cannibalization.
-Some industries resist disruption;

Further research

To go deeper into the disruptive innovation field, the two following resources are relevant:
-Clayton Christensen: Where does growth come from ? (2016). Youtube video, Retrieved from: https://www.youtube.com/watch?v=rHdS_4GsKmg&t=1958s&ab_channel=TalksatGoogle
-Sampere, J., Bienenstock, M., & Zuckerman, E. (2016). Debating Disruptive Innovation. MIT Sloan Management Review, 57(3).

In the first video, the founding father of disruptive innovation (Christensen) added elements in his theory, he also explained why Uber and Tesla aren’t disruptive.
The second source (a scientific paper) tries to give an objective assessment of the theory and explains when the theory can be applied.

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Hambye Mathilde, Hellemens Margaux, Humblet Louise, Saussez Charlotte, Wauthy Lisa

Executive Summary of the article: “Robert G. Eccles, Ioannis Ioannou, George Serafeim (2014) The Impact of Corporate Sustainability on Organizational Processes and Performance. Management Science 60(11):2835-2857. https://doi.org/10.1287/mnsc.2014.1984”

Key Insights This paper compares two groups of companies, categorized into high-sustainability and low-sustainability companies in the period from 1993 to 2010, which were defined by the implementation or not of social and environmental policies in the 90’s. The paper focuses on the effect of those policies on the processes and performance. The first key insight is that high sustainability companies…
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Key Insights
This paper compares two groups of companies, categorized into high-sustainability and low-sustainability companies in the period from 1993 to 2010, which were defined by the implementation or not of social and environmental policies in the 90’s. The paper focuses on the effect of those policies on the processes and performance. The first key insight is that high sustainability companies are characterized by a governance structure that in addition to financial performance, accounts for the environmental and social impact of the company. Therefore, the board of directors is more likely to be formally responsible for sustainability, and top executive compensation incentives are more likely to be a function of sustainability metrics. High sustainability companies also tend to have a more comprehensive and engaged stakeholders management, based on a longer term vision, focusing on listening and responding to their stakeholders needs, investing in managing the relationships with them and providing an internal and external report on these relationships. Finally, high sustainability companies appear to outperform their counterparts in terms of stock market and accounting performance.

Managerial implications
Two scenarios have been created depending if the company finds itself in the high sustainability or low sustainability category. The first scenario underlines 4 steps for low sustainability companies to implement in order to become a high sustainability company.
Corporate governance: give some responsibilities to the board of directors for sustainability or create a separate board committee for sustainability. Simultaneously, top management compensation should be a function of both financial and sustainability metrics.
Stakeholders engagement practices: be more proactive, more transparent and more accountable in the way they engage with their stakeholders in order to develop a strong long term relationship with them.
Long term time horizon decision making.
Measurement/reporting: have higher measurement and disclosure of non financial measures, since these are more relevant to non shareholding stakeholders
The second scenario focuses on attention points for high sustainability companies to keep on increasing the performance of the company in general.
Pay attention to additional costs and the possibility of inefficient resource allocation.
Keep the board focused on shareholders as well.
Carefully manage stakeholders expectations.
These two scenarios are especially relevant for companies in the B2C business sector, their performance will benefit relatively more from the implementation of social and environmental issues policies. Indeed, this sector is driven by brand and reputation and companies’ products depend upon extracting a large amount of natural resources.

Limitations
The sample was only composed of relatively large US-based companies. To broaden the analysis, it would make sense to also look at companies in other countries, as well as small and/or private companies, for instance start ups. Moreover, it mostly focuses on stakeholder engagement in a general sense, as well as economic benefits and accounting performance. This approach has been the norm in most research, but there has been minimal research about the impact of CSR on employees’ behaviour. It is essential to take into account how those policies could influence employees, as the company’s performance and success depends heavily on employees and how they perceive their work. Furthermore, as there is no distinction made between the high sustainability companies regarding the amount and the nature of social and environmental policies adopted, potential trade-offs due to sustainability might not appear in the findings of this study. Therefore, looking at policies chosen by companies could contribute to more accurate results. Finally, there is a lack of random assignment in the study, meaning the correlation between variables is not necessarily equivalent to causation. Possibly, the performance and organisational structure differences between the low and high sustainable firms are not only due to the adoption of CSR policies, but to other systemic divergences which are not mentioned in the study.

Additional sources
To get further insights on that topic, 3 additional readings are recommended:
Flammer, C., (2015), “Does Corporate Social Responsibility Lead to Superior Financial Performance? A Regression Discontinuity Approach”, Management Science, 61(11), p.2549-2568
The article provides insights on the causal relation between corporate social responsibility & financial

Hawn, O. and Ioannou, I., (2016), “Mind the Gap: the Interplay Between External and Internal Actions in the Case of Corporate Responsibility”, Strategic Management Journal, 37(13), p.2569-2588
The article provides insights on the mechanisms that materialize the link between corporate social responsibility & financial performance

Chen, H. C., & Yang, C. H. (2019). Applying a multiple criteria decision-making approach to establishing green marketing audit criteria. Journal of Cleaner Production, 210, 256-265
The article provides a definition of criteria in order to implement standards for audits of non financial performance measurement for green marketing.

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Etienne Mortier, Katja Glauser, Nzal Lauriane Mamay, Shi Qingyu (Jade), Yuan Feng
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Conor Ryan, Michele Zingaretti, Gilles Buillot, Lauren Ury, Anais de Bergeyck

(Article) Reeves, M., Love, C., & Tillmanns, P. (2012). Your strategy needs a strategy. Harvard Business Review, 90(9), 76-83.

“Your strategy needs a strategy” is a valuable paper about how the strategy of a company needs to be adapted to the predictability of the environment and the influence the company has on this environment. The paper highlights how in highly changing environments, such as the internet software industry, competitive advantage comes from reading and responding to signals faster than…
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“Your strategy needs a strategy” is a valuable paper about how the strategy of a company needs to be adapted to the predictability of the environment and the influence the company has on this environment. The paper highlights how in highly changing environments, such as the internet software industry, competitive advantage comes from reading and responding to signals faster than your rivals do, adapting quickly to change, or capitalizing on technological leadership to influence how demand and competition evolve. Even though most executives are aware of the need to match their strategy making processes to the specific demands of their competitive environments, many still rely on approaches that are better suited to predictable, stable environments, even when their own environments are known to be highly volatile or mutable. Therefore, in order to be able to deploy your unique capabilities and resources, and better capture opportunities, you need a strategy for your strategy. The paper suggests four styles of strategy: classical, adaptive, shaping, and visionary depending on the two factors, predictability and malleability, in a matrix. A fifth style, survival mode, was dependent on extraneous factors which require the firm to have a short-term strategy in order to survive.

As a result of this paper, there are many takeaways for management to implement. Firstly, it is very important for management to accurately judge how predictable and malleable the market is through proper continuous analysis of the environment. Secondly, it is important to boost the company’s competences continuously in a competitive environment and review on an on-going basis depending on how fast-moving the market is, sometimes speed should be valued higher than 100% accuracy. It is also important to remove barriers to change from a classical strategy to an adequate strategy in an unpredictable environment. For example, the strive to secure economies of scale could block innovation opportunities in an unpredictable environment. Lastly, it is important to adopt the four strategies to the macro and micro environments within the company. Two business units could have two different types of business strategies within the company itself dependent on the different markets in which it competes, and it is important to be aware of this.

This paper also brings limitations to the fore. For example, simply predicting the predictability of your current market does not result in an accurate prediction of how predictable it is going to be in 5 years’ time. It is important to therefore predict the disruption coming (which is not always evident). Further to this, this paper suggests a lot of time consuming and expensive analysis which is not always viable for SMEs as they simply do not have the resources to take constant review functions. Companies should therefore plan their strategies regarding their predictability of their market but keeping in mind the resources and capabilities that are available to them currently and into the future. A further limitation is that shareholders are not always willing to back a long-term flexible strategy because it is somewhat ambiguous so receiving support for this kind of strategy is hard to implement as the rules of the strategy are not clear in nature.

Finally, there are two papers that are recommended for further research into a strategy’s strategy. Firstly, a paper from the European Business Review aims to identify the differentiated paths followed by firms to innovate in business models. It gives special focus into SMEs regarding the suitable alignments of business model components when they innovate in their business model. Secondly, the Economics and Management journal shows a model of how to create and implement innovative strategies to follow up on the learnings from this paper.

(Article) Ammar, O., & Chereau, P. (2018). Business model innovation from the strategic posture perspective: An exploration in manufacturing SMEs. European Business Review, 30(1), 38-65.
(Article) Lendel, V., & Varmus, M. (2011). Creation and implementation of the innovation strategy in the enterprise. Economics and Management, 16, 819-825.

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Etienne Mortier, Katja Glauser, Nzal Lauriane Mamay, Shi Qingyu (Jade), Yuan Feng

(Article) Kanter, R. M. (2006). Innovation: The classic traps. Harvard Business Review, 84(11), 72-83.
Executive Summary:

Most company fuel their growth by creating new products and services. Yet too many firms repeat the same mistakes in their efforts to innovate. For example, some companies adopt the wrong strategy: investing only in ideas they think will become blockbusters. So small ideas that could have generated big profits get rejected. Other companies made error on the side of process…
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Most company fuel their growth by creating new products and services. Yet too many firms repeat the same mistakes in their efforts to innovate.
For example, some companies adopt the wrong strategy: investing only in ideas they think will become blockbusters. So small ideas that could have generated big profits get rejected.
Other companies made error on the side of process strangling innovations by subjecting them to the strict performance criteria their existing businesses must follow.
The article divided those mistakes into strategy mistakes, structure mistakes, process mistakes and skill mistakes and then provide analysis and recommendation for each situation.
Key Insights:
1. Innovation is not just about blockbuster. Sufficient small/ incremental innovations can also lead to profit.
2. It is important to balance the innovative & existing businesses within your organization. Same tight controls as existing businesses may lead to innovation-strangling. Clash of cultures or conflicting agendas between innovative and existing businesses.
3. The company also need strong interpersonal skills in innovation team. With lessening formal controls, interpersonal connections should be tightened and more communication and motivation are needed as well as Find support from the mainstream business.
Managerial Implications:
1. Assess pertinence of innovation. Innovation is not always the best response
2. Use portfolio management for innovation
Widen search and broaden scope of innovation projects
Mix of incremental and radical innovation projects
Agile project management for radical innovation (MVP)
3.Separate entity for innovative projects
Close communication between regular businesses and innovative businesses
Separate entity with own management and objectives
4.Balance between technical and interpersonal skills
Separate project manager and “team” manager
Limitations:
Firstly, the costs involved in the process can run up very high especially when you broaden your research in innovation. Secondly, innovation type should actually depend on the environment because it could make a difference if it is a slow-changing industry instead of a fast-changing industry and a start-up instead of a multinational organization. Finally, it is notable that sometimes confrontation can be helpful, for instance, a culture promoting challenges and improvement can be useful.

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Philippine David

(Article) Avermaete, T., Viaene, J., Morgan, E. J., & Crawford, N. (2003). Determinants of innovation in small food firms. European Journal of Innovation Management, 6(1), 8-17.

The objective of this paper is to identify important determinants of product and process innovation in small food firms. These firms are generally viewed as operating in a mature and low technology area, where R&D activities are limited, and patenting is rare. The first assumption is that innovation in small food firms is not primarily R&D based. The statistics indicated…
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The objective of this paper is to identify important determinants of product and process innovation in small food firms. These firms are generally viewed as operating in a mature and low technology area, where R&D activities are limited, and patenting is rare. The first assumption is that innovation in small food firms is not primarily R&D based. The statistics indicated that R&D activities, as an indicator, failed to capture the innovation capacity of small firms in low tech industries in particular. Furthermore, the results suggest that, although the skills of the workforce and the investment in know-how tended to determine whether firms would innovate, these characteristics did not explain why some firms were traditionals, followers or leaders of innovation. The third assumption states that if small food firms wanted to invest in R&D activities, they needed to collaborate with external partners because of the lack of internal expertise and the limited means to carry out inhouse R&D activities.

Three managerial implications could be extracted from this paper. Firstly, innovative small food firms should hire more technical managers and professionals to further improve and innovate their products and processes as a lack of technical capability may hinder innovation in small food firms. Secondly, by collaborating with external partners, small firms will be able to reduce the risks of innovation as they are able to observe the potential consumers and consult with the research institutes. Thirdly, managers should liaise with the government in regard to how subsidies should be used, either for investing in R&D or to invest in training for employees

Concerning the limitations, it was found that, since assessing innovation is subjective, it can be very difficult to assess how the small food industry can be “innovative”. Furthermore, according to us, R&D departments are very common to assess innovation levels in big companies. However, in small businesses, R&D activities are often neglected as it is costly. Therefore, going further than R&D departments in small businesses is essential in order to understand correctly the market and respond to it in innovative ways. This would be considered as a valuable source of R&D activities for small food firms. The third limitation is that the paper only discusses product and process innovation. However, other types of innovation could be interesting to consider. Lastly, characteristics of innovation differ from one country to another because of the difference in environments. Hence, innovations in the small food industry can not be assessed worldwide.

To further develop this paper, two additional references were analyzed:
– Earle, M. D. (1997). Innovation in the food industry. Trends in Food Science and Technology, 8, 166–175.

– Hullova D., Don Simms C., Trott P. & Laczko P. (2019). Critical capabilities for effective management of complementarity between product and process innovation: Cases from the food and drink industry. Research Policy 48, 339-354.

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Mark Chen, Thibault d'argent, Matteo Marta, Alvin Vercruysse

Francis, D., & Bessant, J. (2005). Targeting innovation and implications for capability development. Technovation, 25(3), 171-183.

Executive Summary - Group 5 Key insights The paper Targeting innovation and implications for capability development written by Dave Francis and John Bessant, talks about the importance of considering innovation as the way in which it is organized and managed. This is what the authors call Innovation Management Capability. It follows that enterprises, that are better able to manage innovation than others…
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Executive Summary – Group 5
Key insights
The paper Targeting innovation and implications for capability development written by Dave Francis and John Bessant, talks about the importance of considering innovation as the way in which it is organized and managed. This is what the authors call Innovation Management Capability. It follows that enterprises, that are better able to manage innovation than others possess a superior ‘innovation capability’. Nevertheless some innovation initiatives have proved to be dysfunctional and even an excessive rate of innovation can be disadvantageous. That is why, innovation capability needs to include the ability to make the best strategic assessment. An important aspect of innovation is its functionality. The authors refer to this as ‘targeting’. Innovation capability can be targeted in four main ways: by innovating to introduce or improve products and processes, and by defining and re-defining a positioning and paradigm. The positioning relates to the situation where an established product/service is introduced to a new context. Paradigm relates to the situation in which a reframing of the current product/service, process and market context results in seeing new challenges and opportunities and letting go of others. Firms can pursue these 4 P’s at the same time.

Implications
Most firms concentrate on incremental innovation (“do better”). On the short-term, it is a good strategy as the product’s features constantly improve. On the long-term, a new entrant might come up with a completely new idea and disrupt the market. Therefore, it is important to also focus on radical innovation (“do different”) in order to prevent new entrants to come up with new proposed value. Second, there are two main parts within innovation. First, an invention has to be found. The second part, implementation, is at least as important. An idea without being successfully implemented on the market is not profitable nor useful. As a result, managers should also focus on the implementation part when they plan their capabilities. Last, the 4Ps can be used as a strategic tool. Managers create a diamond containing the 4Ps on each corner. Then, for each dimension, potential actions should be stated and carried on if relevant. At the end, an innovation agenda is build.

Limitations
From our point of view, there is a lack of diversity and completeness in the data set of the testing model. Indeed, the sample is composed of only five firms, all active in the Pharmaceutical industry. The question that arises is the following : how would the results be different if the sample was bigger and with firms from different industries (mainly, with less time required for implementation and other constraints). After that, the results provided in the table only include innovation that requires strategic commitment. It would be relevant to consider innovation that are “within the box” and take place at lower levels of the organization. Secondly, firms that are reluctant to evolution for various reasons should also be taken into account (e.g. Bpost afraid of losing its customers). Lastly, timing and location for the introduction of an innovation is crucial. Indeed, the market may not be in the best state to welcome the innovation. In terms of location, the strategy should be adapted regarding the local needs of the market.

Further References
The first paper analyses the innovation of technological strategy and standard competition by covering the cases of Apple and Microsoft. The implementation of strategies is consistent with the potential creation of platforms. And the ability to establish the innovator’s own technology as standard provides a route to competitive advantage. The second reference consists in the analysis of three dimensions: change, strategy, and market impact. Within those three dimension, the following eight innovation types are sub-dimensions: Incremental, Operational, Design, Strategic, Low-end, Paradigm, Industry and Standard-setting innovation. Nevertheless, companies may be forced to develop competing resources and capabilities to succeed with different types of innovations. A further complication arises as some innovation types need time in order to be successful, whereas others provide quick returns.

References
PRANGE, C., SCHLEGELMILCH, B., Managing innovation dilemmas: The cube solution, Business Horizons, 2018, 61(2), pp. 309-322.

WONGLIMPIYARAT, J., Technology strategies and standard competition-Comparative innovation cases of Apple and Microsoft, The Journal of High Technology Management Research, 2012, 23(2), pp. 90-102.

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LI Jiamin

Brian Leavy (2003). Assessing your strategic alternatives from both a market position and core competence perspective. Strategy & Leadership, 31, 29-35

The article published in 2003 by Brian Leavy provides insights on how market position perspective and core competence perspective can be used to assess the strategic alternatives. The author stresses the strengths of both approaches and also mentions the drawbacks if only one approach is adopted by companies. Key Insights Compared with the conventional way of interpretation of the two perspectives,…
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The article published in 2003 by Brian Leavy provides insights on how market position perspective and core competence perspective can be used to assess the strategic alternatives. The author stresses the strengths of both approaches and also mentions the drawbacks if only one approach is adopted by companies.
Key Insights
Compared with the conventional way of interpretation of the two perspectives, the author points out that the positioning perspective focuses on the industry structure and starts by considering which industry and sector the companies want to be in. Core competence perspective emphasizes the resources companies can take advantage of as well as the relations among core competences, core products and end products.

However, simply focusing on one approach is not in favor of companies’ sustainable development, which will either lead to their business model copied by fast followers or identify the core products too late. As a consequence, to leverage both perspectives’ strengths, companies should adopt the “bifocal vision”—combine the two perspectives together.

Managerial Implications
To become a giant as GE did, managers should restructure diversity to select the best businesses on the market and to focus on their potential growth. Further growth can be possible thanks to potential mergers and acquisitions. At the same time, sharing know-how, taking care of human, relational and structural capital is very important.

Furthermore, managers should conduct an analysis (strategy intent, leverage capability, market creation) to identify where company could achieve success. Secondly, managers should consider all options of possible growth. Eventually, continuous spot on the strategy and adjustments are necessary to follow consumer preferences and mega trends.

Limitations
Nevertheless, there are some more aspects managers should pay more attention to when conducting business. On the one hand, products and functions of multi-business firms like GE are usually quite complex, which requires companies to take conglomerate structure, m&a decisions as well as competitive advantage and added value into consideration. On the other hand, when it comes to strategic renewal like what Nokia, companies should also be able to consider core products’ ability to convince customers as well as the reaction ability to the market.

Further References:
P. W. Farris, & J. M. Moore. (2004). The Profit Impact of Marketing Strategy Project retrospect and prospects. Cambridge: Cambridge University Press.
C. O’ Reilly, & M. Tushman. (2011). Organizational Ambidexterity in Action: how managers explore and exploit. California Management Review, 53(4).
S. Tierney, & M. Kuby. (2008). Airline and Airport Choice by Passengers in Multi-Airport Regions: The Effect of Southwest Airlines. Professional Geographer, 60(1), pp. 15-32.

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Charlotte Boonen, Mayank Deora, Heloise de Villenfagne, Arun Baskaran

C Kostopoulos, Konstantinos. (2018). The Resource – Based View of the Firm and Innovation: Identification of Critical Linkages.

The author of the article first talks about the shortcomings of snapshot industry analysis. The shortcoming is attributed to Increased rate of change in terms of technology, products and customer preferences and also the blurring of borders between industries. In such an environment, snapshot analysis such as five forces, diversification strategy might not be fully helpful. Hence it is the…
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The author of the article first talks about the shortcomings of snapshot industry analysis. The shortcoming is attributed to Increased rate of change in terms of technology, products and customer preferences and also the blurring of borders between industries. In such an environment, snapshot analysis such as five forces, diversification strategy might not be fully helpful. Hence it is the internal resources and capabilities that can help to catch up with these changes. Secondly, Capacity of a firm to innovate is determined by heterogeneous resources such as financial, technical and Intangible resources. This is done through a process involving creation, accumulation and deployment of the resources. This process is determined by the capabilities of the firm. In the end, the article gives the cyclical link between accumulation of resources leading to innovation and in turn, innovation leading to more accumulation of resources.

Many organisations primarily focus on responding to competition instead of preventing it. For preventive measures, they need to work continuously and keep an eye on the market trends, analyse them and make strategies to counter it. This requires a dedicated full-time team and have huge implications in terms of cost. In today’s highly dynamic environment, it is very essential to identify indirect competition i.e. disruptive innovations. This requires visionary top management which can anticipate future trends and act well in time.
Furthermore, the role of intangible resources is increasingly becoming important. Intangible assets include manpower and skills possessed by them. Employees with risk taking propensity have high probability of innovation. Consequently, they need autonomy, but the real dilemma is how to strike a balance between autonomy and authority.

Three limits have been identified. Firstly, the resource-based view is focused on the internal organization because it is based on the resources and capabilities a firm owns. They do not consider the external factors that could affect the strategy or the innovation of a firm. For example the demand, even if a firm has the resources and capabilities to gain a competitive advantage, the customer must be at the center. Secondly, this framework is focused on « what is « instead of what could be. So, it is a good tool to describe and understand the inside of a firm where they know the demand and the market. It lacks feasibility for changing environment. Thus, managers should use it to choose strategies when the rules of the game remain quite fixed. Thirdly, the RBV framework does not take into account the role of the manager in making decisions and choosing strategies. However, resources and capabilities that a company have, is the product of the history of strategic choices and resource commitments made by the firm in the past.

Further research:
-Theriou, G. & al. (2009). A Theoretical Framework Contrasting the Resource-Based Perspective and the Knowledge-Based View.European Research Studies, Volume XII, Issue (3)
-Teece, D. & al. (1997). Dynamic capabilities and strategic management. Strategic management journal, Volume 18:7, 509-533
-Monteiro, A. & al. (2017). Entrepreneurial orientation and export performance: the mediating effect of organisational resources and dynamic capabilities. Journal for International Business and Entrepreneurship Development, 1549-9324
Dio: 10.1504/JIBED.2017.082749

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Eva Funcken

Mintzberg, H. (1994). The fall and rise of strategic planning. Harvard Business Review, 72(1), 107-114.

The Fall & Rise of Strategic Planning - Henry Mintzberg (1994) Key Insights This Harvard Buisness Review article was written by Henry Mintzberg, a management professor at McGill University. It was written in 1994 and gives an insightful overview on the pitfalls and fallacies of strategic planning which was thought for many decades to be the one and best way to devise…
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The Fall & Rise of Strategic Planning – Henry Mintzberg (1994)

Key Insights
This Harvard Buisness Review article was written by Henry Mintzberg, a management professor at McGill University. It was written in 1994 and gives an insightful overview on the pitfalls and fallacies of strategic planning which was thought for many decades to be the one and best way to devise and implement strategies. Mintzberg particularly emphasizes on the difference between strategic planning (based on analysis) and strategic thinking (based on synthesis). Moreover, the false equivalence between strategic planning and strategy making rests on three fallacious assumptions:
1) Fallacy of prediction: In brief, strategic planning wrongly assumes the world holds still when elaborating a strategy and forecasting future events is an exact science.
2) Fallacy of Detachment: Strategic planning is possible thanks to the system which captures knowledge about the task. Thus, true management is possible when the manager is no longer wholly immersed in the details of the task. This assumption is dangerous as the hard data that is passed on to the manager is often over aggregated and lacks qualitative richness. In reality, effective managers also have to understand processes before programming them and also have to rely on soft information.
3) Fallacy of Formalisation: Formal systems do not process information better than human beings. They can process more information but not internalize, comprehend and synthesize it.
All in all, Mintzberg affirms that strategic planning has been so far misnamed and should have been labelled strategic programming.
Key Implications
It is critical to clearly distinct strategic planning and strategic thinking. Operationally speaking, the firm should organise strategic planning in two main roles: strategic programmers and strategy finders.
First, strategic programmers should aim to put a high-level strategy into action in three steps:
Codification: translate a high-level strategy into operational objectives.
Elaboration: break-it down into sub-strategies to reach the objectives
Conversion: considering side-effects on the organisation
For example, if a firm wants to be the leader on a market, it firstly needs to determine according to what metric, e.g. market share, and how much share it needs (e.g. 15%). Then it needs to know how to get there (what segment to target, what features a product should have, …). And finally consider how all this will affect budgets, FTEs, etc.
Second, strategy finders are appointed to identify “micro-strategies” across the organisation and relate it to management. They can in turn broaden their scope and increase their impact. As the author quotes, “strategy happens everywhere in the organisation”. Strategy finders should thus look for patterns in failed experiments or best practices to leverage for instance.

Key Limitations
One of the main limitations that have been found in this paper is the focus on managerial choices to tackle strategic innovation. Mintzberg theorizes that in order to make a strategic change, new categories have to be invented. But this is not the only path to have a strategic change. Oriol Iglesias and Nicholas Ind theorizes that through branding and marketing, strategic change can be introduced to the company.
Nowadays the mindset of the consumer is in the middle of the consumer, and rearranging expired, actual or future categories to fit the mindset of the consumer is a different path to follow for companies. An example provided is Barbie, that recently had problems selling their product to the new consumer. An instead of having a managerial shift and create new categories, they took the core product, an existing category, and invested heavily in marketing to change the image of the category, and fitted the existing product to the current situation.

Additional Resources
Iglesias, O., and Ind, N. (2016). Brand Desire. London, United Kingdom: Bloomsbury.

Mintzberg, H. (1993). The pitfalls of strategic planning. California Management Review, 36(1), 32-47.

Rigby, D. K., Sutherland, J. & Takeuchi, H. (2016) Embracing Agile. Harvard Business Review, 94(5), 40-50.

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Winter, S. (2003). ‘Understanding dynamic capabilities’

Winter, S. (2003). ‘Understanding dynamic capabilities’

There has much debate over the last few years about the definition and even the existence of such a concept of dynamic capabilities. According to Winter, a capability is a set of learned processes and activities that enable a company to produce a particular outcome, and we can distinguish two types of capabilities: the zero-level capabilities, which allow the company to run its…
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There has much debate over the last few years about the definition and even the existence of such a
concept of dynamic capabilities. According to Winter, a capability is a set of learned processes and
activities that enable a company to produce a particular outcome, and we can distinguish two types of
capabilities: the zero-level capabilities, which allow the company to run its regular business and make
profit in the long-term, and the dynamic capabilities which enable the company to adopt changes. The
latter ones are considered as idiosyncratic to a company and can be of different orders, depending on
the investment made by the company in the learned, patterned change roles of employees.
However, there is another way for companies to accomplish change: what is called ‘ad-hoc solving’.
This is not highly patterned and repetitious as the dynamic capabilities, and it consists of the ability to
response to novel challenges from the environment or other relatively unpredictable events. While
dynamic capabilities will involve long-term commitments to specialized resources and can end up being
very costly, ad-hoc solving does not require such investments. An example would be to adapt because
a competitor launch a new product on the market or because of Brexit.
A concrete example to illustrate the importance of the ability to react to external changes is Nokia, who
failed to adapt to the smartphone era because they kept investing in what they were good at: R&D. On
the contrary, IBM successfully transitioned from a seller of hardware to a very successful IT-based
services, software and cloud computing business, because the company was able to sense changes in
the market and seize these opportunities.
Implications on today’s industry are consequently diverse. Firstly, due to our current fast-changing
environment, it is essential for companies to be ready to change, either by investing in dynamic
capabilities or by developing ad-hoc solving. The question is therefore whether companies should either
invest in high-order dynamic capabilities or favor ad-hoc solving skills. Investing in dynamic capabilities
requires specialized personnel and investments, and finding no occasion for change would merely
consist of carrying a cost burden. However, attempting too much change could also end up imposing
additional costs, if the cost of these capabilities is higher than the value of novelty achieved.
Consequently, a cost-benefit analysis would be necessary in order to assess which of the two solutions
would suit the best the company.
Even though this article brings some answers in terms of competitive advantage and ability for a
company to adapt to change, some limitations have been raised. Firstly, developing ad-hoc solving
skills in order to deal with change can surely be less cheaper but it involves a high degree of
unpredictability, which requires you to develop a separate team for contingency management. From a
cost point of view, this will trigger high investments which are not affordable for each company, and not
feasible for small or lean companies. Finally, the dynamic capabilities approach can not be applied in
every industry (e.g. where imitation is easy) or to all types of innovations (e.g. business model
innovations).
For further readings, we suggest the two following articles: « Developing Innovation Capability in
Organizations: a Dynamic Capabilities Approach » by Benn Lawson and Danny Samson (2001), and
« Entrepreneurship and Dynamic Capabilities: A Review, Model and Research Agenda » by Shaker A.
Zahra, Harry J. Sapienza and Per Davidsson (2006). In the first article, the writers use the dynamic
capabilities approach to define innovation management as an organizational capability and provide
a framework for managers showing that the process of innovation can be managed and replicated within
organizations. The second one tackles the concept of dynamic capabilities in new vs established firms,
and try to understand what these differences imply for these companies.

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Parmar, R., Mackenzie, I., Cohn, D., & Gann, D. (2014). The new patterns of innovation

Parmar, R., Mackenzie, I., Cohn, D., & Gann, D. (2014). The new patterns of innovation

The search for new business ideas is a hit-or-miss in most corporations. In particular, tested ways of framing this search already exist, precisely by looking at competency, customer or business environment. The authors of the paper, moreover, identified a fourth approach that complements the previous ones and focuses on opportunities generated by the explosion of digital information and tools. According to this, they have…
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The search for new business ideas is a hit-or-miss in most corporations. In particular, tested
ways of framing this search already exist, precisely by looking at competency, customer or
business environment. The authors of the paper, moreover, identified a fourth approach that
complements the previous ones and focuses on opportunities generated by the explosion of
digital information and tools. According to this, they have developed five patterns to explain
the creation of value: augmenting products to generate data; digitizing assets; combining data
within and across industries; trading data; codifying a distinctive service capability.
Turning to the implications , managers should understand why these patterns are emerging
now. The trend is actually based on an IT-enabled innovation, which is driven by three
factors: the explosion and increasing availability of digital data; better tools for data analysis
and the opportunity to conduct business more vitally, in the cloud, nowadays. An example
may be the Smart Energy Meter, which shows how several patterns can be combined to
successfully structure the creation of new business ideas. Managers should ask themselves
some core questions regarding each of the patterns in order to uncover new business
opportunities and to dive deeper into the topic. Finally, managers need to know that successful
innovation initiatives have four things in common: strong technology presence; inputs from
external parties; motivated leadership and emotional commitment (beyond hygiene factors
like a cross-functional team, adequate resources and top management support).
Nevertheless, some limitations are present. First, when digitizing physical assets, we found
some concerns in the way this pattern can be applied by entrepreneurs. If we take the example
of Yeerida, which is an Italian book-streaming platform launched in 2016, we can have a
better idea of the huge implicit risks. Indeed, the company realized soon that books could be
easily decrypted by using the HTML source of the web page, so damaging the business.
Another limitation can be seen in the way sensitive information and privacy concerns may
arise for companies dealing with personal data. A case which may be seen as broadly related
to this the Facebook one, with reference to the sales of 3000 political ads bought during US
Presidential elections in 2016. As a consequence of the scandal, the company had to promise
to hire new 1,000 employees in order to supervise on future advertisement.
In terms of further references , several barriers can be identified: (1) leaders have a
tech-implementation view and take the wrong metrics as KPI for the success of the
implementation; (2) vendors oversell the promise of instant change through the digital
technology and (3) are paid for selling it, not getting it used; (4) such a change encounters
high costs. Concerning management style, some companies are born digital and others might
even enjoy bigger gain from digital technology adaptation. Therefore they need to hire
specialists and redefine the understanding of “judgement”. It is not about intuition anymore.
Appendix:
Bonnet, D. (2014). Convincing Employees to Use New Technology. Harvard Business
Review. 92 (2), 12-14.
McAfee, A. & Brynjolfsson, E. (2012). Big Data: The Management Revolution. Harvard
Business Review. 4-9.

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Giovanni Rinciari Laurent Clerbois Ernest van Zuylen Gustaf Orsucci

Nalebuff , B.J. Adam M. Brandenburger, (1997),”Co-opetition: Competitive and cooperative business strategies for the digital economy”

This paper analyses how a company should behave towards stakeholders to achieve optimal results. In today’s business environment you often hear the phrase “business is war”, but is it perhaps better to aim for peace? Nalebuff and Brandenburger gives their thoughts on the topic with a modified version of game theory; with the ultimate goal of creating a larger pie and being entitled to…
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This paper analyses how a company should behave towards stakeholders to achieve optimal
results. In today’s business environment you often hear the phrase “business is war”, but is it
perhaps better to aim for peace? Nalebuff and Brandenburger gives their thoughts on the topic
with a modified version of game theory; with the ultimate goal of creating a larger pie and
being entitled to as large of a piece as possible.
The first key-point is to create the right relationship to the other players on the field. They
introduce the concept of co-opetition, the fact that a company should find a balance between
cooperation and competition with other players.
The second point is that it is important to not consider all competitors as the enemy. They
introduce the concept of a complementor; if a customer purchases their product and the value
of your product increases due to that transaction, then the company in question is a
complementor. If your value decreases, then you are dealing with a regular competitor.
The third point of the paper is that business can be linked to Game-Theory. The important
message here is that in the game of business you have an opportunity that you do not have in
regular games. If you’re not satisfied with how the game is played, then you can just change the
game through disruption.
The author emphasize that a manager should create the value-net of his industry; a stakeholder
canvas where you study the other players’ behaviour & strengths, and strategize accordingly. It
is also important to identify your complementors and cooperate with them. Your goods are
complementary so a strategy to boost sales is mutually beneficial. The authors suggest a
strategy based on low prices so that the client can afford both products.
We found the concept of complementors to be slightly theoretical. We found some examples
where their definition of complementors and competitors did not work. Netflix and Warner
Bros is an example. Warner Bros creates movies which Netflix pay for to use on their platform,
making them complementors. But they are also fierce competitors through Warner Bros owned
HBO Go, an online service identical to Netflix. The authors do also suggest price-agreements
with complementors without warning for regulations regarding price-collusions. This does of
course only apply to limited scenarios but it is an important limitation for companies operating
in more regulated sectors.
Group 1 Innovation and Corporate Strategy 2/10/17
Appendix
FURTHER REFERENCES
Article 1: Maurice E. Stucke, “Is competition always good?” Journal of Antitrust Enforcement,
Volume 1, Issue 1, (1 April 2013), Pages 162–197,
• Discusses competitions effect on society.
Article 2: Malcolm R. Burns , “Predatory Pricing and the Acquisition Cost of Competitors,”
Journal of Political Economy 94, no. 2 (Apr., 1986): 266-296.
• This paper investigates whether predatory price cutting reduces a trust’s
cost of acquiring its competitors.

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Anonymous

Prajogo, D. I. (2016). The strategic fit between innovation strategies and business environment in delivering business performance

The author of the article “The strategic fit between innovation strategies and business environment in delivering business performance”, Daniel I. Prajogo analyses the influence of the business environments (dynamic or competitive) on effectiveness of product or process innovation strategies in delivering business performance. There are three key insights enclosed: 1. Majority of scholars focus only on internal factors’ influence on innovation,…
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The author of the article “The strategic fit between innovation strategies and business environment in delivering business performance”, Daniel I. Prajogo analyses the influence of the business environments (dynamic or competitive) on effectiveness of product or process innovation strategies in delivering business performance. There are three key insights enclosed:
1. Majority of scholars focus only on internal factors’ influence on innovation, as it is believed to be under entity’s full controll;
2. However, the author believes that it is the business environment that has significant effect on innovation strategies’ success;
3. Moreover, outcome depends on the factor combination: dynamic markets favor product innovation, while process innovations fit competitive ones.
Furthermore, the major managerial implications are the following:
1. Dynamic environment makes company respond faster to changing customer tastes or preferences. Thus, product innovation strategy fits this market the most;
2. Cost competition casues process innovation to be more dominant in the competitive market as customer preferences are rather stable, while resources are limited;
3. If the market has big variations in terms of environment, it is more useful for entities to have both product and process innovations (BNP Paribas example).
However, during the work we identified several limitations to the content showcased within the text:
1. Waiting for new niche could take too much time and money spent on R&D;
2. Fast development of new technologies decreases relevance of past process innovations;
3. Implementing both product and process innovation strategies creates risk of losing the focus due to running various programs at once.
After further research, we recommend the following articles listed in the references bellow. The first one analyses the effect of customer orientation on innovation performance. The next one is another text from Mr. Prajogo and provides further insights on the topic discussed during the workshop. Third article considers relevance of organizational capabilities for innovation, but also its link to customer satisfaction and profitability. The final piece concerns usage of tangible and intangible assets for gaining competitive advantage and shows how innovations are developed through services, co-creation with customers and supplier integration.
REFERENCES:
Prajogo, D. I. (2016). The strategic fit between innovation strategies and business environment in delivering business performance. International Journal of Production Economics, 171, 241-249.
Wang, Q., Zhao, X., & Voss, C. (2016). Customer orientation and innovation: A comparative study of manufacturing and service firms. International Journal of Production Economics, 171, 221-230.
Jayaram, J., Oke, A., & Prajogo, D. (2014). The antecedents and consequences of product and process innovation strategy implementation in Australian manufacturing firms. International Journal of Production Research, 52(15), 4424-4439.
Lun, Y. V., Shang, K. C., Lai, K. H., & Cheng, T. C. E. (2016). Examining the influence of organizational capability in innovative business operations and the mediation of profitability on customer satisfaction: An application in intermodal transport operators in Taiwan. International Journal of Production Economics, 171, 179-188.
Zhang, M., Zhao, X., Voss, C., & Zhu, G. (2016). Innovating through services, co-creation and supplier integration: Cases from China. International Journal of Production Economics, 171, 289-300.

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David Bilicz, Carolina Godinho, Ivana Kopkovà, Alexandra Rombis and Elena Zerbino

What is Strategy? By Michael Porter

What are the key insights of the paper? The first key insight observed is the concept of operational effectiveness (OE). Per se, OE is not enough to be the best in the market; companies therefore must be able to deliver greater value or create comparable value at lower cost or both. If they do so, they can strive to avoid…
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What are the key insights of the paper?
The first key insight observed is the concept of operational effectiveness (OE). Per se, OE is not enough to be the best in the market; companies therefore must be able to deliver greater value or create comparable value at lower cost or both. If they do so, they can strive to avoid aggressive competition. The second insight pertains strategic fit as it locks out imitators by creating a coherent and organized chain that is almost impossible to replicate. The last insight retained is the importance of trade-offs in a strategy. Trade-offs most often come within the company and help the organization differentiate.
What are the managerial implications of those insights?
Regarding the first insight, managers should use less benchmarking, focus more on creating value and generating different activities from its competitors. Ikea, for instance, has a clear strategic position as it meets the home furnishing needs of its target customers. They do so by offering a set of services that are uniquely aligned with customers’ exigencies that competitors are unable to mimic. Regarding the strategic fit, consistency makes it easier to communicate strategy while ensuring competitive advantage on cumulated activities. In addition, a consistent position allows the company to transmit its values to both customers and employees. Continental Airlines for example unsuccessfully tried to be both a regular and low-cost airline. This created confusion for customers and costed the company an enormous straddling penalty.
Lastly, growth that is coherent with the company’s strategy reinforces its unique position and identity. If the company succeeds in performing the right trade-offs, there is potential for growth and profit.
What are the limitations of those insights and our outstanding issues?
Firstly, Porter’s theory is difficult to apply to small/medium firms, which often do not possess the capabilities to become market leaders, and do not focus their strategies towards it. They are more focused on delivering value and making enough profit to sustain their business, appealing to their niche market, rather than being the best within their industry. Secondly, focusing within one industry limits growth and companies can strive even if present in multiple industries. Lastly, due to the present fast changing environment, flexibility is key. Companies should be able to sustain a quick adaptation if urgent change is required.

Further References

1. Operational Effectiveness vs Strategy
https://www.youtube.com/watch?v=X01qb0Y18eU
2. What is Strategy? The Three Levels of Business Strategy
https://www.youtube.com/watch?v=uhfFoINNEKI
3. Business Planning & Market Strategy by E.K. Valentin
4. Porter, M., 2008, The Five Competitive Forces that Shape Strategy, HBR.
https://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy

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