By J. Michael Barrett, Michael Cadenazzi and Ryan Braden
The concepts of formalized strategy, and the associated deliberate planning processes strategy entails, have fallen on hard times recently. Unpredictable and unmanageable risks seem to abound, and no matter what strategy is followed, events like Hurricane Katrina, the BP oil spill and the changing of political parties in Congress and the White House can dramatically affect anyone's bottom line.
Yet just because we can't control everything doesn't mean we can expect success by abandoning that which can be influenced. What has changed is not the need for strategy, but the nature of the strategy that is needed. Indeed, in an era of uncertainty the right kind of informed, flexible and dynamic strategies are even more important than ever before.
Leading business schools and best-selling books on strategy have long postulated successful strategies as requiring market insight and a well-articulated, properly executed strategic plan aligned to strict adherence to performance measures.
But this linear approach is actually only half the story. In today's complex and dynamic environment, real innovation also needs flexible, agile and continuously evolving implementation. This seeming contradiction between strict measurement and flexible goals is perhaps why it is often so hard to implement innovative strategy at the organizational level. In fact, it is in the challenge of meeting this complex contradiction before us where we find the real opportunity to create lasting value.
Toyota, Apple, Bethlehem Steel
Consider such famous firms as Toyota, Apple and the once venerable Bethlehem Steel, each of which has been seen as a lion of its respective industry. Each has also fallen on hard times, generally from a failure to marry the art of their strategy with the science of their strategy. Mastering the ability to improve upon the measurable piece (the science) by evolving the intuitive piece (the art) is the secret to remaining competitive.
Specifically, it is the strict needs of scientific measurement of inputs and outcomes blended with the art of knowing how and when to change course that enables successful innovation and success over time.
For example, Toyota's long been touted for its masterful continuous improvement production system, yet missed the fact that relentless improvements and carefully refined processes (the science) didn't scale as quickly as was demanded by their ambitious strategy to grow to be the world's largest carmaker (the art), leading to all manner of process flaws and embarrassing safety recalls.
Apple, currently back in vogue as the innovator of choice, spent nearly a decade lost in the woods, scraping by and even selling a significant portion of shares to former arch-rival Microsoft because after a series of high-profile and costly failures it abandoned the costly risks associated with being an innovator in a nascent market (the science)—yet innovation (the art) was its core strength, and with the return to risk has come great reward.
Similarly, Bethlehem Steel prided itself on improving and growing as a large-scale steel mill focusing on producing ever-better products (the science) without accounting for the evolution towards mini-mills and broader product offerings (the art), which proved a fatal mistake after more than a hundred years in business.
How best can firms combine these seemingly opposing forces, incorporating innovation while ensuring steadfast,
deliberate performance measurement?
The answer lies in three concrete steps:
1. The mainstream experts are right. Linear processes are an essential ingredient. Leaders must know where they are going, how they plan to get there, what resources are needed, who will lead the charge, and what the situation will look like when they have arrived at the destination.
2. There is a need to promote and reward creativity, questioning of assumptions, and continuously revisiting the planned end state of the project. This is essential because a bit of deliberative thought can often allow early realignment of expectations, performance and outcomes. Notably, this process requires a set of innovative tools and personality characteristics quite unlike those needed for managing existing processes. Specifically, the leader must have an open mind and a unique ability to both make decisions and yet be willing to try new ideas.
This latter quality is crucial because sometimes the real world requires momentum to keep the project moving, and no one recommends letting process be the enemy of progress. Yet, at the same time, the team charged with innovation must be handed enough flexibility to evolve the nature of the project as required by the facts unearthed as the project moves forward. Indeed, that is why the innovator's credo has always been to "fail early, fail often."
Such agility plays havoc with strictly planned budgets and planned timelines, but it is necessary for the creative process to take place. When the art and science are put together the process map includes numerous feed-back mechanisms and cycles to allow for adjusting assumptions and objectives at each stage. The result is both intuitive and logical, albeit non-linear and somewhat paradoxical.
3. There are several critical organizational factors every successful project must have. This includes having the right leadership, meaning a senior enough person to make decisions and also someone trusted by the C-suite that can defend the project against naysayers and doubters, as well as effective mechanisms for collecting and assessing data and evidence so as to enable data-driven decisions and informed analyses of performance, possible alternative approaches and root causes. There also must be a culture able to accept the inevitable cost overruns and the need to change out key players with varied skill sets as the project unfolds.
Conclusion
In closing, there are no guarantees of success and a whole host of market and other factors may still derail the proposed innovation. But failure is much more likely if we simply look at the science of the numbers in a linear way, one that is absent the understanding of the art of strategy, the part that requires intellectual and cognitive agility and continually revisiting critical assumptions.
J. Michael Barrett, Michael Cadenazzi and Ryan Braden are consultants with Diligent Innovations, a Washington DC-based strategy firm serving both public and private sector clients in the Aerospace, Defense and Homeland Security markets. J. Michael Barrett can be reached a mbarrett@diligentinnovations.com.
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