|Book Review: Strategy, Innovation, and Change|
Strategy, Innovation, and Change: Challenges for Management
Written by: Robert Galavan, John Murray, and Costas Markides (eds.). New York: Oxford University Press, 2008. 331+xii pages.
Strategic planning in the fuzzy front end of product development enables commercial success. An effective strategy answers the following questions: Who are customers for a product based on this idea? Why will they buy a product based on our idea? Are we doing the right things, when developing this idea, to create value for desirable customers and to capture value for our business unit?”
This book provides relevant tools and techniques for product development and innovation leaders to answer the three questions. Each of the 17 chapters was contributed by experts who work with leaders in uncertain markets. The chapters are divided into three sections: Part I, “Understand Your Situation”; Part II, “Develop Your Options”; and Part III, “Lead the Change.”
In their introduction, the editors suggest reading the book in two ways: (1) Dip in and out of the book, reading individual chapters of interest; or (2) Read the chapters in the three sections of the book in sequence following the book's frame of strategic planning—analysis, formulation, and implementation. I took the first approach and selected one of the chapters from each section of interest to product development and innovation leaders.
The first chapter selected is Chapter 2, “From Customer Understanding to Strategy Innovation: Practical Tools to Establish Competitive Positioning.” The authors emphasize starting strategy formulation by understanding how prospective customers decide to buy the new product. Beginning strategy formulation by a serious analysis of prospective customers' businesses—understanding the customers' experience—is not as easy as an analysis of what the business unit thinks it can do better than competitors. However, as important as core competencies are, concentrating on them often produces strategies displaying little understanding of experiences that prospective customers value.
Prospects decide to buy a new offering only when—as seen from the prospects' perspective—the offering makes available more value for money. Value for money is the subjective judgment prospective customers make when they assess the difference between the new offering's price and what they would be prepared to pay for the offering regardless of price. Some of the reasons the prospect uses in assessing value for money are difficult to measure, intangible, and misunderstood: “The only way to get fully reliable information on customers' perceptions is to engage in a dialogue with them” (p. 41).
A key to success is having a thorough understanding both of the customers' needs and how the customer evaluates the new and completive offerings. The customers' evaluation of these offerings is important even if some on the development team consider the customers' view as “wrong.” Only by understanding these wrong opinions can the business unit discover what could be added to the new offering to improve its perceived use value to target customers.
“From Lines to Loops: An Iterative Approach to Strategy,” the topic of Chapter 9, views the strategy loop as more likely than a linear approach to spot emerging product opportunities and to translate them into efficient development of an idea. In a linear approach the strategy is crafted at the beginning, when the manager knows the least about how events will unfold. A linear view encourages commitment to a failing course of action, even as new evidence mounts that the strategy was based on flawed assumptions.
An iterative loop contains four types of discussions.
Make sense: Discover a shared mental model of an opportunity.
Make choices: Agree on clear priorities to guide action.
Make it happen: Ensure that people make good promises and deliver.
Make revisions: Sense anomalies and revise key assumptions.
The author of the chapter, Don Sull, views the strategy loop as simple in theory but unstructured and messy in practice: “Nor do the discussions march through the loop in lockstep. A new product development team, for example, might begin by making sense of the opportunity; make initial choices; and the surface insights that cause the team to revisit their initial sense making” (p. 169). Managers seeking to keep a discussion on track might ask the following questions: What are we talking about? Are the right people in the room? Are we talking about the right thing right now? Does the conversation have the right tone? Are we skipping key conversations?
In “Leading in the Knowledge Economy,” the topic of Chapter 12, authors Rob Goffee and Gareth Jones remind the reader that clever people are highly talented individuals with the potential to create exceptional value for customers and shareholders from the available resources provided. A central challenge of leading clever people is that they do not particularly like to be managed or corralled.
Goffe and Jones draw on 20 years of research with hundreds of leaders throughout the world to give guides on creating trust within a business unit between clever people and colleagues in other parts of the business. Effective leaders relentlessly listen to the needs of clever people: “The ideas of clever people are so present to them that they cannot understand why they may not be present to you—now. One leader we spoke to admitted that initially he found the quarterly meetings with [research and development] R&D baffling. Some of the projects under discussion that seemed to be going nowhere were allowed to continue. The new leader could not understand what criteria were being used to make decisions. It took an insider—someone who had worked in R&D for years—to privately explain the subtle nuances” (p. 237).
In this book the editors bring together 25 contributors with the special ability to engage both the concepts and the application of strategy and leadership. The result for seasoned innovation leaders can be powerful insight when crafting a productive strategy in the fuzzy front end of new product development.