Comments for Innovation strategies: beyond new product development

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

(Article) Shenkar, O. (2010). Copycats: how smart companies use imitation to gain a strategic edge. Strategic Direction, 26(10), 3-5.

Charlotte Boonen, Mayank Deora, Heloise de Villenfagne, Arun Baskaran (Article)“Copycats : How smart companies use imitation to gain a competitive advantage ” written by Oded Shenkar issued by Emerald Group publishing in 2010. The following paper will review the main points discussed during the presentation of the article entitled “Copycats : How smart companies use imitation to gain a competitive advantage…
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Charlotte Boonen, Mayank Deora, Heloise de Villenfagne, Arun Baskaran

(Article)“Copycats : How smart companies use imitation to gain a competitive advantage ” written by Oded Shenkar issued by Emerald Group publishing in 2010.

The following paper will review the main points discussed during the presentation of the article entitled “Copycats : How smart companies use imitation to gain a competitive advantage ” written by Oded Shenkar issued by Emerald Group publishing in 2010.

The main key insights of the article are the following; Humans and animals have always relied on imitation to survive in a hostile environment. The pace of imitation is evident. In the 19th century, 100 years were needed to copy an innovation. Since the second half of the 20th century, only 2 years are sufficient. The question is why companies copy? One of the biggest advantages of imitating is that they benefit from a freeride.This means a situation where someone benefit from something without paying for it. In this case, they save money on R&D but also in marketing , because the product is already used and known. They can easily adapt what the pioneer did, to perfectly fit to what the customer expect. We do not have to think that imitation is embarrassing, we should put it into center stage strategically and operationally. Imitation as not to be seen as an obstacle to innovation but a driver. An imovater is a firm that understand that imitation is supportive of innovation. So we can say that is a fusion between innovation and imitation to create a competitive advantage.

Regarding, the implications, the article proposes eight different rules to follow in order to ensure a good imovate. A first set of four rules expresses ways to spot the appropriate imovation to be implemented. First, the company shouldn’t reinvent the wheel, and thus make sure to offer additional value or cheaper cost. Secondly, companies should recognize and reward imitation to create a positive perception around it. Thirdly, it is crucial to look beyond your own territory and rather seek for unknown, remoted firms to find a great innovation to imitate. Finally, the context must be understood and the environment must fit with the imovation. The second set of rules are related to the implementation of the imovation. First, analysis should be conducted in order to understand the causal explanation between the innovation and each of its individual component, secondly, not only timing is important, the real purpose of the imovation must also be fixed when launching, thirdly, the company shouldn’t forget to consider risk and costs linked with the imovation and finally, a defensive strategy should be ready when other players will start to imitate in their turn.

Limitations
Although the article talks about eight general rules for a firm to succeed in ‘imovation’, but how should the firm prevent second order imitation i.e. another firm imitating it. Without a proper defence strategy, the competitive edge of ‘imovating’ firm is not sustainable in long run. It might use intellectual property rights (IPR) to safeguard its territory, but lose legislations in many geographies makes it a bit easier for imitators to copy someone.
The author talks about cost advantages to an imitating firm. This will hold true only if the first mover and second mover have comparable resources. If the second mover does not have similar capabilities, it might end up incurring higher cost than the first mover. It is imperative to have a resource based view (RBV) in order to better understand the internal resources and capabilities. The four important aspects of VRIO framework should be compared before trying to imitate a first mover.

Further Research
Casadesus‐Masanell, R. and Zhu, F. (2013), Business model innovation and competitive imitation: The case of sponsor‐based business models. Strat. Mgmt. J., 34: 464-482. doi:10.1002/smj.2022

Ellen Enkel and Florian Mezger, (2013), IMITATION PROCESSES AND THEIR APPLICATION FOR BUSINESS MODEL INNOVATION: AN EXPLORATIVE STUDY, International Journal of Innovation Management (ijim), 17, (01), 1-34

Ordanini, A. , Rubera, G. and DeFillippi, R. (2008), The many moods of inter‐organizational imitation: A critical review. International Journal of Management Reviews, 10: 375-398. doi:10.1111/j.1468-2370.2008.00233.x

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

(Article) Coeurderoy, R., & Durand, R. (2004). Leveraging the advantage of early entry: proprietary technologies versus cost leadership. Journal of Business Research, 57(6), 583-590.

Executive Summary - Group 5 Key insights The paper, published by R. Coeurderoy and R. Durand in 2004, analyses the early entry advantages with regards to proprietary technology and cost-leadership strategy. Regarding the competitive advantage in general, the authors state that if a pioneer wishes to maintain a sustainable advantage it must do so through the establishment of resource barriers (e.g. brand,…
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Executive Summary – Group 5
Key insights
The paper, published by R. Coeurderoy and R. Durand in 2004, analyses the early entry advantages with regards to proprietary technology and cost-leadership strategy. Regarding the competitive advantage in general, the authors state that if a pioneer wishes to maintain a sustainable advantage it must do so through the establishment of resource barriers (e.g. brand, relationships) and economies of time (acquired with time and expertise).
– When it comes to early mover’s advantage related to technology proprietary, this latter highly depends on the firm’s capability to develop and protect its technological resources. As a result, it means that the company should impede technology diffusion within the industry.
– Next, the authors point out that there is no early entry advantage associated with cost leadership strategy (and nor even with fast followers). Indeed, the only competitors that may benefit from that strategy are the late followers.

Implications
– The fact of keeping undisclosed the sources of innovation will protect first mover from early followers and to maintain its early mover’s advantage. Nevertheless, it is quite difficult to keep the secret of the mechanism or features of a technology, especially in the long-term. Indeed, there are 3 main legal ways to discover the benefits of a company’s technological insights : a potential early follower hires ex-employees, the method of reverse engineering and eventually asks the suppliers of the first mover in order to understand how the product works.
– In case of quick and easy imitation, followers can benefit from the pioneer’s incurred costs and enter more efficiently the market. That being said, being more efficient than the first entrant does not mean that entering the market is always a good decision. Some circumstances such as the pioneer’s strong brand loyalty, patent on a product, partnering with key suppliers and high switching costs, can discourage a firm to enter the market. Especially in case of reaping increasing returns advantages, it is very difficult to face a competitor who has a technology adopted in an early stage and who may have the benefits from market power through self-reinforcing positive feedback mechanisms.

Limitations
– Only existing companies have been analysed. Ineed, first movers companies which closed were not taken into account. If included, results might have been different and more reliable.
– The article mentions that companies should protect their technology in order to remain competitive. That being said, they also have to innovate and adapt their technology to remain relevant and up to date. Kodak and Blockbuster did fail to adapt and went bankrupt.
– The study neglects the geographical aspect. Indeed, the authors state that the first mover should protect its technology and the follower focus on cost leadership. Nonetheless, in some countries, such as India, Venezuela and Brazil, there might be issues due to a lack of intellectual property protection. Regarding cost leadership, in very poor countries, first movers might also have to focus on costs since the purchasing power is very low.
– Last, sometimes it might be wise to do the opposite of protecting its technology. Licencing a technology can be beneficial in two specific cases : when customers do not want to be locked to one single offer and when spreading the technology propels an increase of competitiveness among suppliers.

Further references
The first article discusses Walmart’s cost leadership strategy and how the multinational captured significant shares of the market. If a company chooses a cost leadership strategy and at the same time raises sustainability objectives, it can find solutions that may have benefits in both areas.
The second reference states that long-term market leaders are more likely to be later entrants, while the first entrants (who failed to launch what became successful markets), have disappeared from memory, although the failures laid the groundwork for success by subsequent entrants. In a more positive vein, a minority of early entrants actually do survive and gain sustainable advantages. The conditions include core and complementary resources held by early entrants and their potential competitors.

References
STANKEVICIUTE, E., GRUNDA, R., BARTKUS, E., Pursuing a cost leadership strategy and business sustainability objectives: Walmart case study, Economics and Management, 2012, 17(3), pp. 1200-1206.

VIDAL, E., MITCHELL, W., When do first entrants become first survivors?, Long Range Planning, 2013, 46(4-5), pp. 335-347.

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Eva Funcken

(Video) Knut Haanaes: Two reasons companies fail — and how to avoid them (TED talk)

According to the lecturer Mr. Haanaes, a former senior partner at BCG, two of the biggest reasons companies fail is pertaining to their inability to balance Exploration and Exploitation strategies. In fact, research shows only 2% efficiently manage both at the same time. On the one hand Exploration is about conducting research and engaging in intensive R&D to bring radical innovation.…
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According to the lecturer Mr. Haanaes, a former senior partner at BCG, two of the biggest reasons companies fail is pertaining to their inability to balance Exploration and Exploitation strategies. In fact, research shows only 2% efficiently manage both at the same time.
On the one hand Exploration is about conducting research and engaging in intensive R&D to bring radical innovation. On the other hand, Exploitation is about bringing incremental improvements, e.g. in processes.
Two reasons can explain their struggle in finding the balance. Firstly, the perpetual search trap. It refers to a company constantly enhancing its offering, that becomes obsolete even before it is brought to market. Secondly, the success trap is the case in which a company relies on a successful historical product and fails to identify the need to change.
To avoid those, Mr. Haanaes suggests to always remain skeptical about your success, and think in multiple time scales. In fact, considering a company’s value over one year, about 30% comes from innovation. On a 10 year scale, it accounts for 70%, highlighting the need to balance exploitation on short term and exploration on the longer term.

Key Implications
The implications of falling in the different traps or just relying in one of the two types of innovation are huge, and that is why there is a need to act to face this problem. As said before, seeing the examples of Virgin Galactic, Apple self-driving car, or a sustainable Unilever, thinking in multiple time scales is key for the company in order to continuously grow and be present in the future, trying to acquire that 70% in ten years.
The second implication is more linked to the mindset of the company and the innovators, after reading the paper of J. T. Gourville and the TED Talk, is obvious that the mindset of the innovator has to be skeptical. And the company and the innovator should take a step back and look rationally the value that has been created and added, and also the view of the innovation in order to have a complete perspective of the situation and not fall in the over-value of the innovation itself.

Key Limitations
It goes without saying that one of the limitations of this talk is that the external environment has big consequences on a firm’s endeavour in balancing exploration and exploitation. A market’s competitive intensity, appropriability regime and previous exogenous shocks are some of the elements influencing the choice.
Most importantly, we felt it was important to underline a second axis used to further depict the innovation mode : closed vs open innovation. Closed innovation refers to the mindset that innovation has to stem from inside a company. In other words, internal R&D is the best way to find the best idea to win over the market. On the other hand open innovation refers to embracing the external sources of innovation and developing opportunities with external players. A study even creates a new taxonomy for the modes of innovation : open exploration/exploitation and closed exploration/exploitation adding more depth to the strategic choice.
As a conclusion, it is important to know that exploitation and exploration strategies exist, and that finding the right balance between the two is key in the achievement of your objectives. However, these strategies have their own implications and you need to keep them in mind : remain skeptical to change and think in longtime scale.

Additional resources :
Ericson, A., Kastensson, A. (2011). Exploit and explore : Two ways of categorizing innovation projects. International Conference on Engineering Design, ICED11.
Schulze, P. (2009). Balancing Exploitation and Exploration. Organizational Antecedents and Performance Effects of Innovation Strategies. Springler Gabler.
Gourville, J. T. (2004). Why Consumer’s Don’t Buy: The Psychology of New Product Adoption. Harvard Business School
Sources:
Lavie, D., Stettner, U. & Tushman, M.L. (2010). Exploration and Exploitation within and across organisations. The Academy of Management Annals, 4(1), 109-155.
Clausen, T. H., Korneliussen, T., & Madsen, E. L. (2013). Modes of innovation, resources and their influence on product innovation: Empirical evidence from R&D active firms in Norway. Technovation, 33 (6-7), 225-233.

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Maïté de Corswarem

(Article) Henderson, R. (2006). The innovator’s dilemma as a problem of organizational competence. Journal of Product Innovation Management, 23(1), 5-11.

Executive Summary: This article, published in 2006 by Rebecca Henderson, entails the overall aim to identify some limitations regarding Christensen’s book called the Innovators Dilemma’s published in 1997. It tries to take a better grasp of what is happening at the organizational level of incumbents when they are being disrupted by new entrants and to reanalyse the incumbent’s defaulting approach.…
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Executive Summary:

This article, published in 2006 by Rebecca Henderson, entails the overall aim to identify some limitations regarding Christensen’s book called the Innovators Dilemma’s published in 1997. It tries to take a better grasp of what is happening at the organizational level of incumbents when they are being disrupted by new entrants and to reanalyse the incumbent’s defaulting approach.

Key insights:

The author tries in a first stage to refute Christensen’s cognitive and political explanation on why incumbents cannot respond to disruptive innovations. The cognitive explanation identifies the problems that incumbents have with their data. Hence, it explains that incumbents simply don’t have the knowledge to identify these new needs of consumers. The political explanation orientates the problem around the fact that the managers that are responsible for the most important products or services of the firm simply get higher budgets allocated than new, risky and innovative projects. These two explanations are refuted by the author who says it is a competence-based problem. More specifically, it says that the incumbents recognized the threat beforehand but that they chose to ‘ignore’ it because they are simply not capable of answering to those new needs of consumers.

In a second stage the author refutes Christensen’s view on how incumbent firms only focus on their best consumers who assure their higher margins and therefore fail to identify new needs. On the other hand, Henderson says that it is constraints that imply this situation. In particular, the constraints on the firm’s organizational competence which are indeed anticipated by the firm.

Managerial implications:

As for the key takeaways, one should remember that there are three reasons why established firms fail too often to identify disruptive innovations. Namely, they simply don’t possess the organizational competence or their cost structures and distribution channels don’t allow them to radically change their offer or they focus too much on brand awareness rather than on consumer needs.

On top of that, a firm can better evaluate disruptive innovations by having a thorough knowledge of its core resources and competences, its consumer map and to avoid organizational inertia by broadening its knowledge on consumers but also on non-consumers.

Limitations:

Nevertheless, when talking about incumbents being disrupted one could argue that this practice very rarely succeeds. Hence, the number of start-ups declines more and more and the failure rate of start-ups increases more and more. On top of that, the M&A market of start-ups surges at an increase of 42% in 6 years. Furthermore, the example given about the confectionary industry being disrupted by the energy bars can be quickly refuted when analysing its current state. In particular, the energy bar market is dominated by the incumbents who have their own energy bars on the market and who have made acquisitions of the biggest newcomers.

Further references:

Yu, D., & Hang, C.-C. (2010). A reflective review of disruptive innovation theory.
International Journal of Management Review, 12(4), 435-452.
King, A.-A., & Baatartogtokh, B. (2015). How Useful Is the Theory of Disruptive Innovation?. MIT Sloan Management Review, 57(1), 77-90.
Christensen, C.-M., Hall, T., Dillon, K., & Duncan, D.-S. (2016). Competing against luck: The Story of innovation and customer choice (1st Ed.). HarperBusiness.

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Anonymous

Schlegelmilch et al. (2003) ‘Strategic innovation: The construct, its drivers and its strategic outcomes’

What are the key insights of the paper? The first insight of the paper was the concept of strategic innovation, considered as the combination of strategy and innovation, based on: the fundamental questioning of existing models and rules, the reshape of the market, and a series of substantial value improvements for customers. The second insight is the definition of the four drivers of this type…
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What are the key insights of the paper?
The first insight of the paper was the concept of strategic innovation, considered as
the combination of strategy and innovation, based on: the fundamental questioning of
existing models and rules, the reshape of the market, and a series of substantial value
improvements for customers. The second insight is the definition of the four drivers
of this type of strategy: company culture, processes, people (within and outside the
company), and resources – these should be aligned to the innovative strategy to be
successful in its implementation. The last insight was relative to the outcomes
generated by strategic innovation, which are related to customers and competition.
Strategically innovative companies create value proactively, delivering superior value
to their customers making competition irrelevant.
What are the managerial implications of those insights?
The first implication is that managers should value people’s inputs. The departments
involved in the implementation of the strategy should be involved in its “creation”, as
they can better understand how it can be incorporated in their functional area. In
addition, people’s inputs should not be discriminated based on the fact that they are
younger with less experience. Secondly, managers should focus on creating the
trend and their own market space, independent of customers or competitors.
Companies should try to offer customers what they don’t know they want, and
educate them to want what they offer. Lastly, managers should find the optimal
combination between analytical and growth-visions processes to elaborate their
strategy; this allow companies to identify where they are, and where they can be.
What are the limitations of those insights and our outstanding issues?
Even if the innovation process should be spread widely and horizontally within the
company, many companies that successfully implemented innovation strategy are
centralized. Amazon is an example of a very successful company with centralized
decision-making power. Furthermore, innovation is a means and not an end that helps
companies achieve their strategic goals. As these goals can be several, we do not
consider the possible outcomes to be restricted to only competition and customers.
For example, LUSH, a green soap producer, could be strategically innovative and its
main outcome would be sustainability. Finally, the framework provided to design an
innovation strategy is useful, but it lacks psychometric measurements of drivers and
outcomes, which leaves it pretty abstract.
Further Readings
Moon, Y., 2004. Birth of Swatch. Harvard Business Review.
https://hbr.org/product/birth-of-the-swatch/504096-PDF-ENG
Ram Nidumolu, C. P. (2009, September). Why Sustainability Is Now the Key Driver
of Innovation ? Harvard Business Review .
http://www.billsynnotandassociates.com.au/images/stories/documents/sustainability_t
he_key_driver_of_innovation.pdf
Paladino, A. (2007). Investigating the Drivers of Innovation and New Product
Success: A Comparison of Strategic Orientations. The Journal of Product
Management , 24 (6), 534-553.

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Anonymous

Hamel (1998) “Strategy innovation and the quest for value”

The main purpose of this paper is to describe some points on which the organization need to focus in order to pursue a successful innovation strategy. The author treats the innovation strategy as the only tool for the pioneers of the market to renew their success and the only way for new entrants to survive. To create wealth for the company it is needed…
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The main purpose of this paper is to describe some points on which the
organization need to focus in order to pursue a successful innovation strategy. The
author treats the innovation strategy as the only tool for the pioneers of the market to
renew their success and the only way for new entrants to survive. To create wealth for
the company it is needed to focus on the game of strategy innovation but not on the
growth. However, it is very important to understand that there is a plenty of good
strategies that have never been implemented. The most important challenge for the
company’s management will not be the proposition of a unique innovation strategy and
its content, but the ability to conduct the strategy.
The author claims that in order to be successful the company should create a set
of preconditions that can catalyze the emergence of an optimum strategy. The article
introduces 5 types of preconditions for the emergent innovation strategy. First one is
about attracting new people to the process of strategy creation: new people means new
vision, which can help to go beyond the usual boundaries. Second precondition suggests
that people responsible for strategy creation should always try to find new contacts and
new conversations, because they need to search for opportunities of new insights. The
third one introduces the concept of return on emotional investment: individuals will
embrace a change if they know that they have a voice in inventing the future of their
company. The fourth precondition suggests that managers must constantly search for
new lenses to reconceive the environment to increase the probability of strategy
innovation. And the last precondition is about the continuous involvement in the new
experiments.
In this article the innovation strategy is seen as the most powerful tool. However,
we identified some limitations or obstacles that companies may encounter while
applying it. Firstly, not every company has means to run new experiments and the
failure, can ruin their reputation, image, strategy if the company is still young. In
addition to that, it may be difficult to involve newcomers in the implementation a
strategy if the result is uncertain, which is often the case. Moreover, the author did not
pay attention to product innovation. Indeed, it can also create wealth for the company as
it enables it to enter new market and thus, the need to think about innovation strategy
to survive is reduced. Lastly, companies have to be cautious because you can’t really
follow a strategy if constantly change, that’s why it could be useful to set some KPIs.
For the further readings we suggest the article written by Donald Sull, Rebecca
Homkes, and Charles Sull (2015) “Why Strategy Execution Unravels—and What to Do
and a book written by Joe Tidd, John Bessant, and Keith Pavitt (2005) “Managing
Innovation: Integrating Technological, Market and Organizational Change”, Part II: pp
107-234 – developing a framework for innovation strategy.

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Anonymous

Markides, C., & Sosa, L. (2013). Pioneering and first mover advantages: the importance of business models

The authors of “Pioneering and First Mover Advantages: The Importance of Business Models”, Constantinos Markides and Lourdes Sosa, aim at demonstrating the relationship between business models and exploiting first mover advantages. According to authors, there is a large gap in literature about first mover advantages concerning the influence of business models on the performance of companies. The authors display following…
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The authors of “Pioneering and First Mover Advantages: The Importance of Business Models”, Constantinos Markides and Lourdes Sosa, aim at demonstrating the relationship between business models and exploiting first mover advantages.
According to authors, there is a large gap in literature about first mover advantages concerning the influence of business models on the performance of companies. The authors display following key points to illustrate and prove this issue:
1) There is a general consensus among scholars that there are both advantages and disadvantages of acting as a first mover in each market;
2) Business models could have a substantial impact on the usefulness of the first mover advantages.
The authors present their managerial implications to pioneers and late entrants. For pioneers the authors suggest that they should target the average consumer, focus on the functionality of the product and cutting costs to sell it at a lower price. Such companies should enhance customers’ loyalty and try to widen the ultimate market, they should keep exploiting their first mover advantages. However, the limitations here are that first mover advantages tend to get weaker over time, and some pioneers successfully grow by providing additional value to customers rather than lowering prices.
For late entrants the authors suggest that they should use innovative strategies and accept lower profit margins to combat incumbents. But, as first mover advantages erode over time, the importance of an innovative business strategy decreases. There are also examples of late entrants that could achieve higher profit margins from the very first days on the market.
Pioneers should use business model and product innovations to respond to late entrants (for example, by shifting the basis of competition). Authors suggest that they should try to differentiate and cut costs at the same time. But it is hard to achieve low cost and differentiation simultaneously. Besides, late entrants might outperform incumbents on the new basis.
After further research, we suggest following articles to deepen knowledge in this field:
1) “Fast Second: How Smart Companies Bypass Radical Innovation to Enter and Dominate New Markets” by Markides.
2) “Game Changing Strategies: How to Create Market Space in Established Industries by Breaking the Rules” by Markides.
3) “First to market, first to fail? Real causes of enduring market leadership” by Tellis.
4) “The business model: recent developments and future research” by Zott.
REFERENCES
1) Markides, Constantinos, and Lourdes Sosa. “Pioneering and first mover advantages: the importance of business models.” Long Range Planning 46.4 (2013): 325-334.
2) Markides, C., Geroski, P., 2005. Fast Second: How Smart Companies Bypass Radical
Innovation to Enter and Dominate New Markets. Jossey-Bass, San Francisco.
3) Markides, C., 2008. Game Changing Strategies: How to Create Market Space in Established Industries by Breaking the Rules. Jossey-Bass, San Francisco.
4) Tellis, G., Golder, P., 1996 Winter. First to market, first to fail? Real causes of enduring market leadership. Sloan Management Review, 65e75.
5) Zott, C., Amit, R., Massa, L., 2011. The business model: recent developments and future research. Journal of Management 37 (4), 1019e1042.

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Anonymous

The Strategy Concept I: Five Ps For Strategy by Henry Mintzberg

This paper looks at the 5 main interpretations of what a strategy is. It labels these as the 5 Ps of strategy. The first P is Plan. This is developed consciously and purposefully by the organization in advance in order to carry out its mission and set its actions and goals. This is an interpretation of strategy in the general sense. A more…
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This paper looks at the 5 main interpretations of what a strategy is. It labels these as the
5 Ps of strategy. The first P is Plan. This is developed consciously and purposefully by the
organization in advance in order to carry out its mission and set its actions and goals. This is an
interpretation of strategy in the general sense. A more specific interpretation is that of strategy
as a ploy whereby a firm develops a specific strategy in order to threaten or discourage a
competitor. This is highly relevant in the competitive landscape where a company’s strategy is
largely targeted at dealing with its competitors. The third P is Pattern. Strategy here, is a pattern
that emerges over time with consistent actions and behavior of the company. It is not planned.
The fourth P is Position, essentially what the company wants to set as its position in the industry.
It is a collective strategy and connects the internal to the external. These 4 Ps are strategy views
based on the outside view. The fifth P being Perspective is the inside view. It connotes the
personality of the firm and is a shared concept.
A strategy has a process, something that can almost be called a life cycle. First comes the intended
strategy which are the actions that the firm wants to take. This gives rise to the deliberate strategy
which is the plan and the adaptation of the initial strategy to the environment. And finally, if the
actions taken are successful, it leads to a realized strategy. A realized strategy can also come from
an emergent strategy which is not deliberate, i.e. a pattern. In a fast-changing environment like
the one we are evolving in, the importance and the focus we give to emergent strategy is crucial.
The implications for a manager are that they need to understand what the existing patterns are
(both as a firm and in the industry) and find out the missing elements. (E.g. Kodak). They should
consider all the Ps but focus on developing a strategy progressively and avoid mixing the various
types of strategy. Developing a strategy takes time and cannot be done instantly. They should
focus on the emergent strategy (pattern and perspective) to develop a strategy best suited to
them as a firm and be able to adapt their initial strategy to the changes in the market.
The main limitation of the paper is that it is very theoretical, and does not provide any practical
examples or recommendations for managers. Furthermore, it looks only at the external
environment in terms of competition and does not consider other factors (included in
frameworks like SWOT and PESTEL). Strategy also varies with the level and type of business unit.
For example, a sales department would be more outward oriented and look at the ploy strategy
to deal with competition but a department such as HR has to be inward focused and use
perspective to understand the needs of the firm best. Finally, strategy is also affected by the
competitive advantage and the core competencies of the firm which are not considered in the 5
Ps.
For the further reading we suggest to have a look at the several views that exist on the strategic
management topic. Besides the 5Ps from Mintzberg, it is relevant to have a look at the generic
strategies of Porter, reviewed by William B.Gartner in his article : William B. Gartner (1985). The
Academy of Management Review. Vol. 10, No. 4, pp. 873-875.
The emergent concept is also promoted in the research of Quinn through « Logical
Incrementalism » : Quinn, James Brian, Sloan Management Review, v20 n1 p7-19 Fall 1978.

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Anonymous

Kim, S. K., Arthurs, J. D., Sahaym, A. and Cullen, J. B. (2013). Search behavior of the diversified firm: The impact of fit on innovation

According to the paper, diversification has both a negative (1) and positive (2) impact on innovation : (1) the firm moves away from its core business and gradually loses the ability to leverage on its core competencies; as a consequence, it experiences an increase in marginal costs due to the amount of new information to process; moreover, there is a general tendency towards acquiring…
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According to the paper, diversification has both a negative (1) and positive (2) impact on
innovation : (1) the firm moves away from its core business and gradually loses the ability to
leverage on its core competencies; as a consequence, it experiences an increase in marginal
costs due to the amount of new information to process; moreover, there is a general tendency
towards acquiring innovation rather than developing it in house; (2) conversely, from a
resource-based view (RBV), diversification may enhance innovation because the firms
engaging in diversification are willing to exploit existing resources in order to develop new
competencies; since diversified firms possess more opportunity for the internal use of
knowledge, innovation could also increase basing on the economies of scope arising from
diversification; additionally, transferring technology and skills may be easier within
organizational boundaries rather than beyond them. Search scope moderates the relationship
between related diversification and innovation output such that related diversification is
positively related to innovation output when the firm pursues local search and negatively
related to innovation output when the firm pursues distant search.
Kim et al. underline that managers should try to match their innovation strategy with the
scope of the company. Nowadays, there are many companies that claim to be innovative, but
when creating a corporate strategy they do not look at the bigger picture and do not
incorporate their innovation strategy into it. It needs to be taken into consideration that local
search will help companies to categorize multiple diversification opportunities arising at the
same time and can prevent them from being overwhelmed. Furthermore, managers need to
remember that radical innovation will tend to fit better with an unrelated diversification
strategy, while for incremental innovation managers are advised to use a related
diversification strategy. Moreover, they should focus on building on existing competencies as
well as adding to their knowledge base to achieve higher innovation performance while
making sure that it is consistent with strategic fit. Last but not least, it needs to be said that
economic benefits of innovation are sometimes difficult to quantify immediately and directly.
Regarding the limitations of this paper, we have identified two main aspects. First of all, the
paper states that unrelated diversification strategy is beneficial for a firm exploring unfamiliar
and dissimilar technologies for innovation while it is detrimental to innovation output for a
firm exploiting technologies in the similar and familiar domains. However, this statement
should be more nuanced as some firms achieve innovation productivity with unrelated
diversification while having a narrow search behaviour, such as Mars with their
diversification into pharmaceuticals. Secondly, the causal relationship among diversification,
search behaviour and innovation may differ in ways that they do not capture in the paper.
Therefore, we would advise managers to also take other factors into account and and avoid
taking the results as set in stone.
In conclusion, we decided to further analyse the main topic by addressing two additional
studies. The first one (Aloini, D., Martini, A., 2013) stresses the importance of embracing a
how-to-search perspective in doing business, i.e. maximising the quality of information that
the company can get from its search. In order to accomplish that, a main objective should be
focusing on exploratory activities as a precious means to achieve higher performance. The
second one (Laursen, K., Salter, A. J., 2006) shows that innovation and the amount of search
done in the market are explained by an inverted-U curve relationship, meaning that managers
should focus their attention in a medium-low amount of research, but with the maximum
amount of insights, if they want to be innovative
Appendix:
Aloini, D., Martini, A. (2013). Exploring the exploratory search for innovation: A structural
equation modelling test for practices and performance. Int. J. Technology Management, Vol.
61, No. 1.
Laursen, K., Salter, A. J.(2006). Open for innovation: The role of openness in explaining
innovation performance among U.K. manufacturing firms . Strategic Management Journal,
27: 131–150

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Anonymous

Zook, C. (2007). Finding your next core business

The author of „Finding Your Next Core Business”, Chris Zook, aims at identifying the signs indicating that an enterprise has exhausted its core business. Moreover, he provides the tools to find potential for transformation within the company. According to the text, there are three key reasons why a given core business loses its potency: 1) It targets a shrinking profit pool, which…
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The author of „Finding Your Next Core Business”, Chris Zook, aims at identifying the signs indicating that an enterprise has exhausted its core business. Moreover, he provides the tools to find potential for transformation within the company.
According to the text, there are three key reasons why a given core business loses its potency:
1) It targets a shrinking profit pool, which means being active in an industry with a general negative tendency considering profits available;
2) It practices inherently inferior economics. It may bear outdated features, such as cost structure, which serve as a disadvantage against new entrants;
3) It keeps an unsustainable growth formula. Growth rates plateau once the market reaches saturation and the competition manages to copy incumbent’s ideas.
A common tendency is that detection of such a pitfall comes too late. Thus, it is advised to perform periodical assessments of business’ vitality.
If the core is nearing depletion, it seems tempting to redefine a given business dramatically. However, according to the author, it is far more likely to achieve success by searching for change drivers in company’s interior. Namely, it is claimed, that an answer to the issue of exhaustion lies in overlooked assets. Managers could choose one of three distinctive areas within the organization to search through and find a spark to construct their future core:
1) Undervalued business platforms;
2) Untapped insight into customers;
3) Underexploited capabilities.
However, on the course of our research on the article we have noticed several limitations of the logic provided. Listed below is a selection of our arguments:
1) It does not account for managers opting out from conducting transformations for their own safety;
2) The author did not consider customers not wanting to share their data or providing false information;
3) Developing a valuable capability in-house is time-consuming.
For further research on the topic of core business’ transformation, we would like to suggest the following articles:
1) “Having Trouble with Your Strategy?” by R. S. Kaplan and D. P. Norton. It revolves around the idea of using balanced scorecard to find problems with the strategy;
2) “Assessing Your Strategic Alternatives” by B. Leavy. The author presents how to systematize the new core strategy of a company.

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Giovanni Rinciari Laurent Clerbois Ernest van Zuylen Gustaf Orsucci

Clausen, T. H., Korneliussen, T., & Madsen, E. L. (2013). Modes of innovation, resources and their influence on product innovation: Empirical evidence from R&D active firms in Norway

EXECUTIVE SUMMARY The Paper, published in 2013 on the Technovation journal by Tommy Høyvarde Clausen, Tor Korneliussen and Einar Lier Madsen, analysis a taxonomy of four different modes of innovation impacting the ability of the firm to reach product innovation. The paper relies on data collected through surveys among more than 1000 R&D active firms in Norway. KEY POINTS The paper details…
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EXECUTIVE SUMMARY

The Paper, published in 2013 on the Technovation journal by Tommy Høyvarde Clausen, Tor Korneliussen and Einar Lier Madsen, analysis a taxonomy of four different modes of innovation impacting the ability of the firm to reach product innovation. The paper relies on data collected through surveys among more than 1000 R&D active firms in Norway.

KEY POINTS
The paper details the four modes of innovation being combinations of open/closed and exploration/exploitation. The distinction between open and close will be the use of internal or external resources. For example, a firm using the opinion of different stakeholders such as clients or suppliers, will be considered as opened. Regarding the exploitation/exploration, the contrast resides on the target of the improvement. For example, the exploitation will try to improve the efficiency and execution of its current processes while the exploration will create something completely new.
Each of the four modes of innovation will affect positively or negatively the firm on its resource base. This latest including both technological and market resources.
Companies holding better technological and market resources are more inclined to generate product innovation.

IMPLICATIONS
To reach product innovation on the best possible path, managers should be aware of some implications of the key points stated above.

• Managers should be aware that modes of innovation directly affect the resource base and therefore the product innovation. Moreover, they should not only think of those links before the launch of a new product innovation process, they should also remember their implications periodically during the implementation of the project.
• Managers should know that combinations between open/closed exploitation/exploration are not mutually exclusive. Indeed, one can always follow a mix of open exploration and open exploitation simultaneously.

LIMITATIONS
We found some gaps in the paper which can impact its conclusions.

• The effect of the mode of innovation chosen by the company may differ with the industry and/or whether it is a service firm or a company producing items.
• The paper focuses on Norway while the effects could be completely different from one country to another.
FURTHER REFERENCES

Herzog, P. (2011) Open and closed innovation: different cultures for different strategies. Springer Science & Business Media.

Hollenstein, H., (2003). Innovation modes in the Swiss service sector: a cluster analysis based on firm-level data. Research Policy 32, 845–863.

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