Six Myths of Corporate Strategy

Corporate Executive Board had a very good summary of Six Myths of Corporate Strategy:

  • Myth 1: Most Executives Want a Clear Strategy
  • Myth 2: Employees Want Strategies to Succeed
  • Myth 3: Visionary Strategists Deliver Premium Returns, Silencing all Opposition
  • Myth 4: Executives Should Force-Rank Investment Opportunities Based on Expected Return
  • Myth 5: Strategists want to Maximize Shareholder Value
  • Myth 6: Strategists Should Start with the End in Mind

I have found many an organization where executives do not wholeheartedly support a well defined strategy / plan because it would make them more accountable (someone can measure performance relative to plan – probably erroneously).  Sometimes organizations are very afraid of failure and this makes executives hedge plans to make sure success can be declared every time.  This has been a very important lesson for me to learn:  In one of my consulting engagements I followed what the executive said literally and tried to come up with a clear strategy.  I was redirected quietly and quickly.  This is not a criticism of executives in any way. Just something all R&D managers must keep in mind.  One has to deliver the right results within the boundaries of existing culture and organization.

Employees pretty consistently vote for their personal gain rather than company strategy.  One example of this behavior is patent protection.  Patents are very very expensive to obtain.  In most cases, patent protection will not generate a positive return on its investment.  Most employees understand this quite well, but still want patents because it makes their resume much stronger.

I think processes and tools need to be flexible enough to allow R&D managers to make practical decisions within organizational realities.  For example, it may not be optimal to rank all R&D opportunities based on pure financial metrics.  R&D investment management is a balancing act – satisfying a plethora of conflicting needs – from near-term market entries to long-term disruptive technologies to skill-set improvements.  We need tools that effective allow R&D managers to make these trades.

Management Innovation

I have had quite a few posts about innovation management.  However, this one is even better – Management Innovation – innovation in the management process.  Prof. Birkinshaw, Prof. Gary Hamel et. al have written an interesting article on how innovation takes place in management:

Management innovation involves the introduction of novelty in an established organization, and as such it represents a particular form of organizational change. In its broadest sense, then, management innovation can be defined as a difference in the form, quality, or state over time of the management activities in an organization, where the change is a novel or unprecedented departure from the past

It is a great article with a history of research into management innovation.  I plan to dig into some of this background in the near future and I will definitely post what I learn.  In the meantime, there are some interesting concepts in this paper worth discussing.

The authors point out that according to prior research, there are four “perspectives” on how management innovation takes place:

  • Institutional Perspective: What institutional conditions give rise to the emergence and diffusion of management innovations?
  • Fashion Perspective: How do aspects of the supply of and demand for new management ideas affect their propagation?
  • Cultural Perspective: How do management innovations shape, and get shaped by, cultural conditions
    inside an organization?
  • Rational Perspective: What is the role of managers in inventing and implementing new management

I think this is a very important concept.  If we want to manage R&D into increasingly complex systems in increasingly diverse environment, we will need some strong management innovation.  To achieve this leap in management processes, tools and metrics, we will probably need to encourage and nurture all four types of innovation. 

The authors have also laid out this really cool figure outlining the R&D process and delineating where management innovation could take place:

I think we will probably need to examine processes and tools used for every step in the figure above and determine whether the existing processes are adequate or if we need to come up with something much better.  For example, two organizations co-designing a product at motivation stage might actually see the development completely differently: One as a novel problem because they are developing a new technology (internal change) OR the other as a threat because a competitor is changing the playing-field (external change).  R&D managers will need to bridge this gap and provide a process that lets both organizations work together and communicate effectively.  Interesting times!