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Linking Innovation to Strategy, part 1 | The Discipline of Innovation

Linking Innovation to Strategy, part 1

I just read a great post by John Borthwick which reviews the upcoming book about google by Ken Auletta. I encourage you to read the entire post, as I’m only going to focus on this part of it:

What about a corporate statement of intent like Google’s “Don’t be evil”?

“Don’t be evil” resonated with me because it suggested that Google as a company would respect its users first and foremost and that its management would set boundaries on the naturally voracious appetite of its successful businesses.

In the famous cover letter in Google’s registration statement with the SEC before its IPO, its founders said: “Our goal is to develop services that significantly improve the lives of as many people as possible. In pursuing this goal, we may do things that we believe have a positive impact on the world, even if the near term financial returns are not obvious.” The statement suggests that there are a set of things that Google would not do. Yet as Auletta outlines, “don’t be evil” lacks forward looking intent, and most important it doesn’t outline what good might mean.

That immediately made me think of Hambrick & Fredrickson’s strategy diamond, a tool that John & I find useful when we’re working with firms on innovation and strategy issues. It looks like this:

In their original article on the diamond, Hambrick and Fredrickson take issue with statements like google’s – saying that these statements of intent are insufficient as guides to strategy. They contend that a sound strategy requires all five elements, and that these need to be integrated and consistent with each other.

It is a practical model, and you can get some good results with it (we’re currently using it to help redesign our MBA recruiting strategy). I like the systems approach it takes (which, ironically, is listed as a weakness at the Proven Models website!). There are a couple of key ideas to take from the diamond model.

First, innovation must be integrated with strategy. When you work on implementing new ideas, you need to think about how it fits in with what you’re currently doing.

Second, all elements of strategy are interconnected. This is critical when you think about innovations over a longer time horizon. If you are aiming to create a different value proposition, or to move into a new customer segment, all the other parts of your strategy will likely have to change as well. This is a large part of why large firms find it difficult to react to radical innovations – everything has to change. Nevertheless, the strategy diamond can at least help you think through how to approach these more radical changes.

Finally, innovation and strategy are about choices, not planning. I read a blog post yesterday where the author said something along the lines of “if you’re not thinking about all 6 billion people in the world as your potential customers, you’re crazy.” This is stupid. No matter what idea you’re trying to spread, it can never be for everyone. If you try to make something that pleases all 6 billion people in the world, the odds are very high that you will end up pleasing something closer to none of them.

Strategy is about choosing which subset of the 6 billion you’re aiming for – choice here is critical. That’s the real weakness with “don’t be evil” – it doesn’t actually help us make any of those choices.

About Tim Kastelle

Student and teacher of innovation - University of Queensland Business School - links to academic papers, twitter, and so on can be found here.

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