S&IM READINGS
1 – PISANO (2015)
YOU NEED AN INNOVATION STRATEGY
Strategy = commitment to a set of coherent, mutually reinforcing policies/ behaviours aimed at
achieving a specific competitive goal
Organization’s capacity for innovation stems from an innovation system = coherent set of
interdependent processes and structures that dictates:
1. How the company searches for novel problems and solutions
2. Synthesizes ideas into a business concept and product designs
3. Selects which projects get funded
Helps you design a system to match your specific competitive needs
CONNECTING INNOVATION TO STRATEGY
ROBUST INNOVATION STRATEGY SHOULD ANSWER THESE QUESTIONS
1. How will innovation create value for potential customers?
a. Choosing what kind of value innovation will create & then sticking to that is critical,
because the capabilities required for each are quite different& take time to accumulate
e.g. more convenient to use, perform better, more reliable/ durable, cheaper, etc.
2. How will the company capture a share of the value its innovations generate?
a. Value creating innovation attract imitators as fast as they attract customers how do you
keep most of the pie to yourself?
b. What complementary assets, capabilities, products or services could prevent customer
from defecting to rivals & keep their own position in the ecosystem strong
c. Best way to preserve bargaining power in ecosystem & blunt imitators is to invest in innov.
3. What types of innovation will allow the company to create and capture value, and what
resources should each type receive?
a. When thinking about innovation opportunities, companies have the choice between
i. How much of their efforts to focus on technological innovation?
ii. How much to invest in business model innovation?
1
,Routine = builds on a company’s
existing technological competences &
fits with existing business models &
hence its customer base
Disruptive = requires new business
model but not necessarily a
technological breakthrough
Radical = purely technological
Architectural = combines
technological & business model
disruptions. (most challenging for
incumbents to pursue)
No one-fits-all strategy:
Businesses in markets where
the core technology is evolving rapidly (like pharmaceuticals, media, and communications)
will have to be much more keenly oriented toward radical technological innovation—both its
opportunities and its threats.
Company whose core business is maturing may have to seek opportunities through
business model innovations and radical technological breakthroughs.
Company whose platforms are growing rapidly would certainly want to focus most of its
resources on building and extending them.
MANAGING TRADE-OFFS
Demand-pull = finding customers “highly challenging problems and then figuring out how the
company’s cutting-edge technologies can solve them”
limited by customers’ imagination and willingness to take risks
hinges on picking the right customers, otherwise can miss market information
Supply-push = developing technology & then finding or creating a market
more suitable when identifiable markets don’t yet exist
but may create technologies that never find a market
which trade-offs are best for the company as a whole ( innovation strategy) —is extremely helpful in
overcoming the barriers to the kind of organizational change innovation often requires
THE LEADERSHIP CHALLENGE
senior leaders of organization need to set strategy BECAUSE innovation cuts across about
basically every function & only top management can orchestrate that
2
,4 essential tasks in creating & implementing innovation strategy
1. Answer “How are we expecting innovation to create value for customers and for our
company?”
Explain that to company
2. Create high-level plan for allocation resources to the different kinds of innovation
3. Manage trade-offs
4. Recognize that innovation strategies must evolve
5.
3
, 1 – ZOLLO ET. AL. (2018)
TOWARD AN INTEGRATED THEORY OF STRATEGY
MANAGERIAL SUMMARY
1. Raising mangers’ awareness that decision in different strategic domains (e.g. competitive,
growth & stakeholder strategies) produce joint effects on value created for stakeholders
should be selected as an internally coherent bundle
2. Identify factors that influence different strategic decision & thus production of joint results
3. Proposing specific bundles of internally coherent choices that might provide useful reference
points within the context of the 3 strategies considered
INTRODUCTION
integrative conceptual framework linking these strategic decisions (competitive, growth,
stakeholder strategy) with the aim to respond to these questions:
a) Which integrative mechanisms affect the combined outcome of different types of strategic
choices in terms of value creation for customers & other stakeholders?
b) How do competitive, growth, and stakeholder strategies jointly influence the firm’s capacity to
generate value?
TYPES OF STRATEGIC CHOICES
Competitive Strategy
= core content of the ‘policies and plans’ that characterize the way a firm decides to position
itself in the markets in which it competes vis-à-vis the value propositions of its rivals
Cost leadership vs. differentiation
Cost leadership: mostly entails standardization, process simplification & homogeneity
Differentiation relies on customization, tailoring products/ services to customer needs through
“design, service, quality & new product development”
Growth Strategy
= range of business the company intends to pursue & how it intends to develop the required
resources and capabilities to pursue them
Internal (organic) vs. external (acquisitive) growth
Stakeholder Strategy
= choice between integrated vs. arms-length modes of interaction with stakeholders during the
various steps of the decision-making process
Integration vs. arms-length relationship
E.g. entails the involvement of selected stakeholders I strategic decision-making processes
that are relevant to their interests
THE MECHANISMS OF INTEGRATION ACROSS STRATEGIC CHOICES
4
1 – PISANO (2015)
YOU NEED AN INNOVATION STRATEGY
Strategy = commitment to a set of coherent, mutually reinforcing policies/ behaviours aimed at
achieving a specific competitive goal
Organization’s capacity for innovation stems from an innovation system = coherent set of
interdependent processes and structures that dictates:
1. How the company searches for novel problems and solutions
2. Synthesizes ideas into a business concept and product designs
3. Selects which projects get funded
Helps you design a system to match your specific competitive needs
CONNECTING INNOVATION TO STRATEGY
ROBUST INNOVATION STRATEGY SHOULD ANSWER THESE QUESTIONS
1. How will innovation create value for potential customers?
a. Choosing what kind of value innovation will create & then sticking to that is critical,
because the capabilities required for each are quite different& take time to accumulate
e.g. more convenient to use, perform better, more reliable/ durable, cheaper, etc.
2. How will the company capture a share of the value its innovations generate?
a. Value creating innovation attract imitators as fast as they attract customers how do you
keep most of the pie to yourself?
b. What complementary assets, capabilities, products or services could prevent customer
from defecting to rivals & keep their own position in the ecosystem strong
c. Best way to preserve bargaining power in ecosystem & blunt imitators is to invest in innov.
3. What types of innovation will allow the company to create and capture value, and what
resources should each type receive?
a. When thinking about innovation opportunities, companies have the choice between
i. How much of their efforts to focus on technological innovation?
ii. How much to invest in business model innovation?
1
,Routine = builds on a company’s
existing technological competences &
fits with existing business models &
hence its customer base
Disruptive = requires new business
model but not necessarily a
technological breakthrough
Radical = purely technological
Architectural = combines
technological & business model
disruptions. (most challenging for
incumbents to pursue)
No one-fits-all strategy:
Businesses in markets where
the core technology is evolving rapidly (like pharmaceuticals, media, and communications)
will have to be much more keenly oriented toward radical technological innovation—both its
opportunities and its threats.
Company whose core business is maturing may have to seek opportunities through
business model innovations and radical technological breakthroughs.
Company whose platforms are growing rapidly would certainly want to focus most of its
resources on building and extending them.
MANAGING TRADE-OFFS
Demand-pull = finding customers “highly challenging problems and then figuring out how the
company’s cutting-edge technologies can solve them”
limited by customers’ imagination and willingness to take risks
hinges on picking the right customers, otherwise can miss market information
Supply-push = developing technology & then finding or creating a market
more suitable when identifiable markets don’t yet exist
but may create technologies that never find a market
which trade-offs are best for the company as a whole ( innovation strategy) —is extremely helpful in
overcoming the barriers to the kind of organizational change innovation often requires
THE LEADERSHIP CHALLENGE
senior leaders of organization need to set strategy BECAUSE innovation cuts across about
basically every function & only top management can orchestrate that
2
,4 essential tasks in creating & implementing innovation strategy
1. Answer “How are we expecting innovation to create value for customers and for our
company?”
Explain that to company
2. Create high-level plan for allocation resources to the different kinds of innovation
3. Manage trade-offs
4. Recognize that innovation strategies must evolve
5.
3
, 1 – ZOLLO ET. AL. (2018)
TOWARD AN INTEGRATED THEORY OF STRATEGY
MANAGERIAL SUMMARY
1. Raising mangers’ awareness that decision in different strategic domains (e.g. competitive,
growth & stakeholder strategies) produce joint effects on value created for stakeholders
should be selected as an internally coherent bundle
2. Identify factors that influence different strategic decision & thus production of joint results
3. Proposing specific bundles of internally coherent choices that might provide useful reference
points within the context of the 3 strategies considered
INTRODUCTION
integrative conceptual framework linking these strategic decisions (competitive, growth,
stakeholder strategy) with the aim to respond to these questions:
a) Which integrative mechanisms affect the combined outcome of different types of strategic
choices in terms of value creation for customers & other stakeholders?
b) How do competitive, growth, and stakeholder strategies jointly influence the firm’s capacity to
generate value?
TYPES OF STRATEGIC CHOICES
Competitive Strategy
= core content of the ‘policies and plans’ that characterize the way a firm decides to position
itself in the markets in which it competes vis-à-vis the value propositions of its rivals
Cost leadership vs. differentiation
Cost leadership: mostly entails standardization, process simplification & homogeneity
Differentiation relies on customization, tailoring products/ services to customer needs through
“design, service, quality & new product development”
Growth Strategy
= range of business the company intends to pursue & how it intends to develop the required
resources and capabilities to pursue them
Internal (organic) vs. external (acquisitive) growth
Stakeholder Strategy
= choice between integrated vs. arms-length modes of interaction with stakeholders during the
various steps of the decision-making process
Integration vs. arms-length relationship
E.g. entails the involvement of selected stakeholders I strategic decision-making processes
that are relevant to their interests
THE MECHANISMS OF INTEGRATION ACROSS STRATEGIC CHOICES
4
