The power of strategy innovation

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  • T HE P OWER OF S T R AT E G Y I N N O VA T I O N A New Way of Linking Creativity and Strategic Planning to Discover Great Business Opportunities Robert E. Johnston, Jr. J. Douglas Bate American Management Association New York Atlanta Brussels Chicago Mexico City San Francisco Shanghai Tokyo Toronto Washington, D.C. .......................... 10127$ $$FM 06-16-03 13:04:27 PS
  • Special discounts on bulk quantities of AMACOM books are available to corporations, professional associations, and other organizations. For details, contact Special Sales Department, AMACOM, a division of American Management Association, 1601 Broadway, New York, NY 10019. Tel.: 212-903-8316. Fax: 212-903-8083. Web site: This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Library of Congress Cataloging-in-Publication Data Johnston, Robert E. The power of strategy innovation : a new way of linking creativity and strategic planning to discover great business opportunities/ Robert E. Johnston, Jr., J. Douglas Bate. p. cm. Includes bibliographical references and index. ISBN 0-8144-0768-4 1. Strategic planning. I. Bate, J. Douglas. II. Title. HD30.28.J657 2003 658.4012dc21 2003004618 2003 Robert E. Johnston, Jr. and J. Douglas Bate. All rights reserved. Printed in the United States of America. This publication may not be reproduced, stored in a retrieval system, or transmitted in whole or in part, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of AMACOM, a division of American Management Association, 1601 Broadway, New York, NY 10019. Printing number 10 9 8 7 6 5 4 3 2 1 .......................... 10127$ $$FM 06-16-03 13:04:27 PS
  • Dedicated to: Danielle, Rob, and Em: Your energy, humor, and love inspire me. Bob Bradley and Jeffrey: You can accomplish anything you commit to doing. Doug .......................... 10127$ $$FM 06-16-03 13:04:27 PS
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  • C ONTENTS A vii I ix PART ONE THE WHAT AND WHY OF STRATEGY INNOVATION 1 C 1 Strategy Meets Innovation 3 C 2 S I I M F 13 C 3 S I I N S P 28 C 4 T D P 38 PART TWO A GUIDE FOR IMPLEMENTATION 55 C 5 T D P: T M S 57 C 6 T D P: S P 71 v .......................... 10127$ CNTS 06-16-03 13:04:35 PS
  • C vi C 7 T D P: A P 106 C 8 T D P: E P 136 C 9 T D P: C P 185 C 10 T D P: M P 211 PART THREE ADVANCED STRATEGY INNOVATION 227 C 11 M D P 229 C 12 F S I S 247 E T F S I 269 G 273 R R 279 I 283 .......................... 10127$ CNTS 06-16-03 13:04:36 PS
  • ACKNOWLEDGMENTS This book is possible only because of the contribution of numerous participants in strategy innovation initiatives across many different industries and dozens of companies reaching back to 1983. However, we wish to acknowledge here the special contribution and support of a few individuals who have helped us bring it to fruition. We decided early on that the story was best told by some of the many pioneers who have championed strategy innovation on behalf of their companies. Individuals who contributed generously in terms of personal time and support include Bob Galvin, Motorola; Bill Coyne and Ron Baukol, 3M; Dieter Kurz and Marc Vogel, Carl Zeiss; Craig Wynett, P&G; Bob LaPerle, Eastman Kodak; Bruce Carbonari, Fortune Brands Home and Hardware; Maureen Wenmouth and Tim O Brien, Moen; Dan Buchner, Design Continuum; Ken Cox, NASA; Gary Kaiser, Eli Lilly; Ray Siuta, Hewlett-Packard; Terry Tallis, Essential Possibilities, and Dana Seccombe, both formerly with Hewlett-Packard; and Garrett Bouton, Barclays Global Investors. Although this book will highlight the stories of dozens of companies, we would like to express a special thanks to two companies: Moen and McNeil Consumer and Specialty Pharmaceuticals. At Moen, CEO Dick Posey, the executive staff, and the Periscope II team have been extremely supportive of our efforts. At McNeil, we would like to express our appreciation to CEO Bill McComb; Bob Carpenter, vice president of marketing; Amy Weiseman, manager of innovation and new product processes; and the entire Edison vii .......................... 10127$ $ACK 06-16-03 13:04:51 PS
  • A viii team for their commitment to the exploration of a role for strategy innovation in their company. We were warned that writing a book is one of lifes challenges that will test our character, fortitude, and sense of humor. Thanks to the wisdom and disciplined freedom afforded us by AMACOMs editorial director, Adrienne Hickey, the orchestration of associate editor Mike Sivilli, and the experienced professionalism of Niels Buessem, we found the process to be both enjoyable and fullling. Published authors who provided seasoned support and encouragement include Chris Zook, Bain & Company; Sidney Parnes, Creative Education Foundation; Teresa Amabile, Harvard Business School; Stan Gryskiewicz, Center for Creative Leadership; Jonathan Low, Cap Gemini Ernst & Young; T. George Harris, University of California, San Diego; Lynne Lesvesque, Harvard Business School; and Brian Mattimore, consultant. While the coauthors have collaborated for over fteen years, anyone who worked a day with IdeaScope Associates has made a contribution to this emerging eld of strategy innovation. Former colleagues who have provided us with special support include Chris Von Pichl, Meg Dunn, Maxine Teller, Amy Weiseman, and Harvey Ehrlich. A special thanks to Stephen Cornell, who was an early conceptual catalyst in the mountains west of Banff and provided important polish later on. Individuals not already mentioned who provided us with valuable feedback for ways to strengthen our strategy innovation story include Peter Carey, Worth and Louise Loomis, Dorie Shallcross, Ted Colson, Jeneanne Rae, K.T. Conner, Burt Woolf, Will Clarkson, David Arnold, Bella English, Maura Grogan-Cornell, and Melinda Merino. A special thanks also to Paul Wentzell and Terry Tallis, who provided us with timely graphics support. Additionally, we would like to express our deep gratitude to Chris von Pichl, Peter Carey, Deborah Frieze, Bruce Landay, and Bruce Crocker for their helpful counsel in advancing the mission and impact of The Visterra Group. Finally, our wives, Ty Johnston and Anne Bate, carried the special burden of living with rst-time authors, and we are genuinely grateful for their perseverance and care. .......................... 10127$ $ACK 06-16-03 13:04:51 PS
  • I NTRODUCTION We want you to use this book. Nothing would please us more than knowing that leading-edge companies around the world are developing their own Discovery processes for the pursuit of strategy innovation. Strategy innovation is not a fad. It is not the latest managementprogram-of-the-month. It is a process of exploring your emerging future, understanding the changing needs of your customers, and using the insights gained in those explorations to identify new business opportunities for your company. Thats it. Whereas many management programs help you shrink your costs to grow your bottom line, strategy innovation is aimed at growing your top line. New business opportunities help drive new company strategies, which drive future growth. So, why arent more companies doing strategy innovation? Because they dont have an internal structure or process to do it. Who in your company is responsible for the future? Who is feeding your strategic planning process with ideas that stretch your current strategy and get you into new markets? How are you going about identifying your next new business platform, the basis of your future growth and success? What we describe in this book is a phase-by-phase approach to the process of strategy innovation, not step-by-step. We provide the blueprint and encourage you to customize it for the specic needs of your company and your industry. This blueprint has been evolving for more than a decade, based on our experiences in a wide range of companies and industries. We will share with you some of ix .......................... 10127$ INTR 06-16-03 13:05:07 PS
  • I x the stories that helped to create this process of strategy innovation. It is a process that works. Creating a cross-functional process for strategy innovation in a corporate setting is not as simple as it sounds. This is especially true when the process ventures outside the current corporate strategy or business model. Escaping your corporate gravity and then avoiding your corporate immune system are two threats to the establishment of this process. We will point them out and help you address them. We will also share what we have learned about selecting and preparing a reconnaissance team for this process. The alignment with senior management on which strategic frontier to explore is a critical consideration that will be explained in