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Book Review: The Power of Strategy Innovation
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Book Review: The Power of Strategy Innovation by Robert E. Johnston, Jr. and J. Douglas Bate

The Power of Strategy Innovation: A New Way of Linking Creativity and Strategic Planning to Discover Great Business Opportunities

Written by: Robert E. Johnston, Jr. and J. Douglas Bate. New York: AMACOM, 2003. 286+xviii pages.
Reviewed by: Steven P. MacGregor

The Power of Strategy Innovation

Robert Johnston and J. Douglas Bate describe strategy innovation as the “process of exploring your emerging future, understanding the changing needs of your customers, and using the insights … to identify new business opportunities” (p. ix). Essentially, the “power” is being able to produce innovative, breakthrough products and services that help companies break “the bonds of incrementalism” (p. 4).

These products and services are based on the identification of opportunities that Johnson and Bate uncover through their five-step “discovery process.” The primary strength of the book is providing a convincing argument for this type of approach. What also is valuable, although a little less so, is the specific process offered to achieve these aims. In general, the book addresses an important industrial need, beginning to bridge the gap between strategy and product development.

Primarily, this is a book for managers in the product and service development field who want to launch their companies toward the best in class. The book addresses current strategic planning activities and cites examples of several leading companies that have implemented new approaches to strategy—essentially strategy innovation. Therefore, those who aspire to become leaders (and as Johnson and Bate point out, merely survive in the not-too-distant future) will find the book a useful starting point. It may serve for convincing top-level management of the importance of a new, innovative approach to strategy, as well as putting in place the basic infrastructure for realizing that approach.

The core message of the book regards “breaking out of incrementalism,” by which the authors mean creating more breakthrough products to complement incremental product line extensions. Although this is nothing new in its own right, the authors argue that “the strategic planning process is more often one that perpetuates, and at best revises, the current strategy every year” (p. 29), resulting in a lack of completely “new” products. Their aim is to increase insight to customer needs and foresight of changing market forces to uncover valuable breakthrough opportunities at the front end of strategy. The argument that strategy innovation is needed as an input to strategic planning is topical within both the academic and industrial domains; for example, see Kaplan (2003) and Erard (2004), respectively. This insight and foresight increases the agility of an organization, allowing the sustainable generation of business opportunities that may enable not only survival but also prosperity in the competitive marketplace. This is the unarguable logic of strategy innovation—what remains is if the book delivers on providing a useful guide to achieving these aims.

The book is well structured and relatively easy to read with bulleted chapter summaries and boxed “process tips.” There are many industrial “stories” from leading companies including 3M and IBM, gleaned from the authors' experience, which are both interesting and valuable. A glossary section lists established and new terms. The text is divided into three parts, the main one detailing the discovery process using a case example and a chapter on each of its five phases. This “implementation guide” is sandwiched by two parts covering more general aspects of strategy innovation. The book has short and effective opening and closing sections—the introduction charts the historical context that has led to the emergence of strategy innovation, while the epilogue looks to the future, albeit very briefly.

Part 1 introduces the integration of strategy with innovation, making the point [confirmed by published research in Kaplan (2003)] that current strategic planning activities do not do nearly enough to satisfy innovation goals. The authors also emphasize strategy innovation as a mechanism for managing the future and introduce the discovery process as a means of achieving this.

Part 2 begins with a description of the Moen case—the plumbing fixture company that grew dramatically, the authors' claim, after using the discovery process. The five-phase process then is described—staging, aligning, exploring, creating, and mapping—which is a logical if perhaps unspectacular approach to uncovering business innovation opportunities. The essence of the process is one of convergent/divergent creativity including preparatory, search, and planning elements. In many cases, standard best practice from traditional design and development processes is replicated and is combined with strategy considerations. A quick understanding and value of this process can be understood from the main outputs produced. “Strategic frontiers,” described as “a market, product, technology, or business process that lies beyond a company's current corporate strategy and business model” (p. 44), are the first major output, which lead to insights (for valuable opportunities), that in turn are developed into new business concepts. These outputs are fed into a strategic roadmap, intended to guide market exploitation. Worthy of note is that, regardless of the finer points of the process, the basic infrastructure and associated outputs are extremely useful to have.

Part 3 covers operational characteristics of the discovery process and incorporating an innovative culture within an organization. A useful question-and-answer section regarding process operation includes further anecdotal information.

In general, the book delivers successfully on a convincing argument for altering the strategic process within a company—directing the development of products and services through a creative approach as opposed to traditional quantitative-based strategic planning processes. However, the reader should be aware that the form of the discovery process presented is not a “clearly articulated process” as claimed in one of the flap external reviews but more of a general infrastructure for getting started. These foundations are sound and consist of some new and interesting concepts, people considerations, and method frameworks. This basic level is enriched at the top level by tips, ideas, and industrial anecdotes. But the reader will need to seek further reference and assistance for the critical middle level of process details and implementation. For example, the authors explain how “employees … have been inundated with processes over the last several decades” (p. 253) and thus need to focus on outputs as opposed to a specific process. This makes good sense, but they should state this and should elaborate slightly much earlier in the book.

There are some weaknesses. The text could be tighter in places, especially in the implementation part. The multitude of industrial stories disrupts the flow of presentation somewhat. Overall usability could be improved by an effective summing up of the process, perhaps using the main outputs as a means of visualization. Finally, although the Moen case is described as “in-depth,” its 13 or so pages include little more than the description of the team using an anthropologist and through leader—it is more of a long industrial story than a detailed case. More details would have been valuable to enrich the more general presentation of the discovery process.

Much of the value of the book is in its simplicity. The same core values are repeated through the chapters, including the need to focus on the future, the value of including outsiders to achieve a different perspective, the need for top-management support, and the value of ambiguity. Such a style may be construed as a weakness if the primary audience was the academic community but is valuable for industry that, often surprisingly, ignores these basics of business success.

In summary, the book makes a contribution to the new product development (NPD) field and includes useful insights, tips, and ideas that are the result of the authors' experience in the field. Basic, but perhaps often-forgotten, rules of business success represent the foundation of an argument for changing an organization's strategic approach and a process for making that change. As such, academics may find the book little more than an interesting background read. For managers—the target audience—and specifically for those in companies that need to improve their prospects, the book is both a convincing argument for change and a first basic step to making it a reality.

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