Strategy and Innovation: from Clausewitz to Lao Tzu

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by: Idris Mootee

The most amazing thing with strategic experience innovation is that it takes one kind of company and leadership to create the idea and another kind of company to scale it up and drive industry transformation and we see it in markets after market.

It was not Apple that created the music download yet they are the ones that not only scaled it up into a mass market but at the same time leading and shaping the game. Often having the mass market share does not translate into market leadership from an innovation perspective. So what usually happens with experience innovation is that small start-up firms create the experience and new expectations and then big guys move in and scale it up and take on mass market by leveraging their market power both in channel distribution and bundling.

Let’s talk strategy for a minute. Does that simply imply that for any kind of successful strategic innovation, the big guys should not even try to be in the market of creating these innovations and simply wait to steal whatever ideas from others? Not really. There’s the big risk of missing the big opportunity and sometimes catching up is not as easy as they think. What they end up is writing a big check to buy these companies. Is this a good strategy?

Strategy is a word that comes from the Greek strategia, meaning “generalship.” In the military, strategy often refers to maneuvering troops into position before the enemy is actually engaged. In this sense, strategy refers to the deployment of troops. Once the enemy has been engaged, attention shifts to tactics. Here, the employment of troops is central. Substitute “resources” for troops and the transfer of the concept to the business world begins to take form. Strategy also refers to the means by which policy is affected, accounting for Clausewitz’ famous statement that war is the continuation of political relations via other means.

Here’s a saying by Lao Tzu {approx 500 BC China} ‘Strategy and Compassion’ …

“If I cannot be host,

Then let me be guest.

But if I dare not advance

Even an inch,

Then let me retire a foot.”

The best strategy for these big organization is “be a guest” by joining a network of innovation partners; start up firms, innovation consultants (like Idea Couture), innovation lab to collectively participate in creating new products and experiences. It sounds logical but the big issue for these big organizations is how do you adopt such an open-innovation strategy and what kind of consultants could help you to implement it successfully. It takes a special kind of term to help them to make any innovation effort work. As companies reach beyond their boundaries to find and develop ideas, they are exploring new models to manage innovation.

A good example is Firefox. Here’s an excerpt of an interview of Mozilla’s Mitchell Baker (former chairman and CEO) with McKinsey that talks about succeeding at open-source innovation. She talked about the power of the participatory, open-source model of collaboration.

As Firefox flourished, the process that created it became a model for participatory, open-source collaboration. Baker’s role, central from the beginning, has taken many twists and turns. Ten years ago, she was a software lawyer at Netscape Communications–which developed the original commercial Web browser–when the company decided to release its product code to the public. Baker’s interest in defining and managing the project quickly earned her a place as one of its leaders. She continued to guide the project after Netscape was acquired by AOL, led the subsequent spin-off (to the nonprofit Mozilla Foundation and its subsidiary, the Mozilla Corporation) to develop the next-generation Firefox browser, and presided over Firefox’s impressive growth. In her role as “chief lizard wrangler,”1 she balanced and blended Mozilla’s commercial needs with the motives and efforts of an army of volunteers who develop the code and distribute the browser. Over the years, Baker has helped define the legal and functional model that allows an open-source community and a corporation to share responsibility for product development while managing the project and maintaining the organization’s momentum–not to mention its financial viability.

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