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Spinning the wheel of strategic innovation

This century wealth will be created through strategic, rather than product, innovation. But how can truly innovative strategies be ...

By Jules Goddard and Chris Styles 01 June 2004

This century wealth will be created through strategic, rather than product, innovation. But how can truly innovative strategies be developed when firms see themselves as operating in a mature market and adopt almost identical strategies to competitors? Chris Styles and Jules Goddard suggest the “Strategy Wheel” – an eight-step model – as a solution.
Spinning the wheel of strategic innovationThe aeroplane, TV, mobile phone and PC were all significant, discontinuous product innovations that created new markets, industries and wealth in the 20th century. Whatever their origins, major product breakthroughs are difficult to achieve and sometimes out of reach of firms with limited resources. As suggested by leading authors such as Gary Hamel and Costas Markides, there is, however, another kind of innovation – strategic innovation – that will be critical for survival and growth in the 21st century and is only limited by a firm’s creativity and courage.

In the last 20 years a new type of business hero emerged – not the product inventor but the inventor of strategy. Michael Dell, Anita Roddick and Richard Branson didn’t invent the product categories they sold (computers, soap and airlines had been around for sometime before they arrived). Rather, they invented new business models – or strategies – for selling them. As markets globalise, competition intensifies, and both consumers and investors become more demanding, strategic innovation will not just be left to a handful of insightful entrepreneurs but will become a necessary weapon for corporate survival and growth.

In the next section we outline the problem of the “maturity trap” – how and why strategic convergence happens in most industries, leading to them being labelled mature. We then show how using strategic innovation – through a heuristic (“aid for discovery”), or model, we call the “Strategy Wheel” – can help firms get out of this trap.

The power of the Strategy Wheel is that it forces its users to be explicit about the assumptions underlying a firm’s and an industry’s dominant business models, challenge them, look into the future and devise radically new strategies. Rather than another strategy “product”, the Strategy Wheel is a framework that brings together existing strategic ideas into a structured, coherent whole.

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