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Deliberate Strategy Pros In the ordinary course of business, emergent innovation strategies do a good job. They arise from a deep-rooted wisdom of the past and tends to replicate past successes. I have earlier written about the different logics used in emergent innovation strategies. I have also highlighted their pros and cons. But, in times of change, emergent innovation strategies become inadequate and sometimes counter-productive. For example, Polaroid tried to leverage digital imaging by adding printers to digital cameras. Kodak tried to sell more film in the digital era by producing developing photo CD players. Blackberry continued to rely on its physical keyboard in the face of virtual keyboards. Apple never imagined that Google could enter the smartphone market. These actions stemmed from autonomous innovation logics that perpetuate past successes. As these examples show, at times of discontinuity, autonomous strategies backfired. The counter-productive nature of emergent strategies points to the benefits you can derive from a deliberate innovation strategy. The five most important benefits from a deliberate strategy are as follows:

1. Effective Resource Allocation One drawback of emergent innovation strategies is the potential for ineffective resource allocation. Ineffectiveness arises when the past allocation logic no longer delivers results. The previous resource allocation methods usually stop working during times of significant change in your business. The good news is that business leaders do not miss significant changes taking place in their industry. When Sony launched its digital camera, Kodak’s team took notice. The problem arises when the changes are at a business unit level or are not spectacular in nature. For example, Dollar Shave Club (DSC) didn’t appear on the radar of P&G’s top management team early on. There is another situation when the emergent innovation strategy leads to ineffective resource allocation. It happens when the innovation needs of a business go through rapid change. At such times, autonomous strategies push the resource allocation out of whack. An example of this phenomenon is from the Disk drive companies as documented by Clayton Christensen. He found that disk drive companies continued to use old resource allocation model even when their industry was changing. As smaller and more portable drives emerged, sales continued to focus on core customers. Due to that, the innovation focus became out of sync with emerging business needs. It led to a largescale disruption in the industry.

2. Organizational Alignment Consider a football team wherein half the players are mistaken about the goalpost. These players will fight their teammates who are trying to push the ball to the right goalpost. During times of change, innovation needs change fast. Without a clear and deliberate innovation strategy, your organization can behave exactly like this. In my interviews with Kodak managers, I found a surprising fact. What defeated Kodak’s digital efforts was not Sony but managers at Kodak. When the market was moving towards digital cameras, Kodak developed cutting edge digital cameras. But at retail stores, its employees were pushing the customers away from digital cameras. They were sending a message that analog cameras were better than digital cameras. These employees believed that the goal was to sell more film. During times of rapid change, old goals and old strategies continue. At such times, old goals clash with emerging goals. The result can be a lack of organizational alignment. A deliberate innovation strategy can help you avoid alignment issues.

3. Blindspot Management When you drive a car at 200 mph, your success depends on an immense focus on the road and your driving. Due to this speed, you develop a tunnel vision. This tunnel vision makes you succeed as a race car driver. If you try to overcome the tunnel vision you will not be able to win the car race. The

same happens when you lead a fast moving business. What makes you successful (focus) also makes you vulnerable due to your tunnel vision. This focus is why you develop blind spots. Thye are an inevitable part of life. While the upside of blind spots is effective actions, the downside can be costly. In my book The Dark Side of Innovation, I explain in great detail how research in cognitive sciences explains decision mistakes of firms. In the book, I linked blind spots and other cognitive errors with potential disruption of firms. Blind spots can make you miss many opportunities and challenges. Apple’s inability to predict Google’s entry into mobile phones was one such example. Who would have thought ten years back that Amazon, Google, and Apple would be bitter rivals? A robust innovation strategy process can help you avoid blind spots. Such a process should contain a horizon scanning mechanism that allows you to see far off threats and opportunities. I developed an active environmental scanning process in my book the dark side of innovation. You can also learn more about this process in my podcast episode on predicting disruption. Such a method, when used as a part of your innovation strategy process, can be a life saver for your business. It can help you avoid the downside of your inevitable blind spots.

4. Unlocking Value As companies wade through streams of emergent innovation strategies, they sometimes miss major opportunities to unlock value. At other times, they are so busy trying to focus on the innovation success that they pay less attention on how to make money from their innovations. TiVo was a great example of a company whose innovation was wildly successful but who made no money from this success. TiVo created a cult-like following for its DVR. People began to use the word Tivo as a verb. However, TiVo couldn’t protect its innovation and make money from them. Tivo like situation occurs for many start-ups who are so busy making their inventions successful that they forget to think about profiting from them. The typical thinking is that once the innovation becomes successful, profits will automatically follow. Unfortunately, it is not always true. Kodak had developed extensive capabilities in electronics and imaging that would have allowed it to enter the printers business early on. However, its entry into the printer business took place much later when it was struggling with the digital threat at an existential level. A deliberate innovation strategy forces you to think about unlocking hidden value and tapping profit opportunities in a systematic manner. It helps you unlock value on a going basis.

5. Innovation Stickiness Innovations often arise in one of two ways. First, managers connect the dots in the market and develop innovative ideas. Second, managers connect technical dots to create new solutions. However, innovators rarely step back and think about how to make their innovation more sticky. A wrong read of the market can also lead to innovations that find no demand. For example, Segway was a technical innovation that just didn’t stick in the market. At this same time, new coke was a response to Pepsi challenge that backfired in the market. Often, emergent innovation strategy uses heuristics to determine potential stickiness. A deliberate innovation strategy forces you to consider whether your innovation will be sticky or not.

Key Take Aways In short, a deliberate innovation strategy can lead to superior innovation performance. It helps you get a greater bang for your innovation bucks. Which of these benefits does your firm stand to gain the most?

Deliberate vs. Emergent Business Strategy Put simply, strategy can be described as a given set or course of action(s) adopted by a person or an organization towards the achievement of specific, predetermined goals / outcomes. Mintzberg and Waters (1985) classify organizational strategies as either deliberate or emergent, though some strategies have dual characteristics of both deliberate and emergent (and are therefore aptly termed ‘deliberately emergent’). A strategy can be described as deliberate where the collective vision, goals and / or intention(s) of an organization (in most cases, as determined by its leadership) is articulated as broadly and in as much detail as possible, communicated to the actors (i.e. the employees – those responsible for implementation) within that organization in order to realize a given outcome. On the other hand, strategy can be described as emergent where consistencies arise in the actions / behavior of an organization over a period of time, even though the adoption of such behavior / actions was never explicitly intended; an example of this can occur ‘when an environment directly imposes a pattern of action on an organization’ (p. 258). There is no universal consensus on which approach is better than the other as each has its own advantages and disadvantages and ultimately, determination of the most suitable strategy formulation method is up to an organization’s management. For deliberate strategies such as planned and imposed strategies, it can be argued that this approach has the advantage of clarity of purpose as opposed to emergent strategies; in other words, where management’s intentions are clearly and explicitly spelt out, it becomes easier for actors to understand, identify and work towards a common collective purpose at a minimized level of deviation from the intended objective. Focus on a particular desired outcome is honed and the organization’s participants are provided with a clear and unambiguous sense of direction. However, it can similarly be argued that this approach to strategy has its disadvantages; being fixated on a specific outcome may increase an organizations rigidity and lower its speed of responsiveness in the event of changes in their operating environment or negative feedback received from the pursuit of a particular strategy (as opposed to the flexibility offered by emergent strategies). To support this notion, Kiesler (1971) cited in Mintzberg and Waters (1985) posits that “psychologists have shown that the articulation of a strategy locks it into place, impeding willingness to change it”. Conversely, a simple and clear description of emergent strategies is that it’s “a strategy that derives more from collective action than from collective intention” (p. 267). In this instance, a pattern or consistent stream of actions is allowed to emerge through influences such as the environment, positive feedback or consistent success after adoption of a particular course of action; there is no clearly spelt out intention from a central leadership and as such, a key advantage of emergent strategies such as unconnected or consensus strategies is that they offer a degree of flexibility or responsiveness which is absent in deliberate strategies. Users of this strategy class are able to adjust their patterns in reaction to realized outcomes of their present actions. An organization’s scope of operations is a key determining factor of its adopted strategy; most financial institutions for example have little choice but to adopt deliberate strategies; being a financial institution entrusted with public funds, organizational direction is mostly clearly and carefully articulated, communicated and pursued (with minimal room for

deviation from the set objectives) in order to realize specific outcomes – efficiency, customer satisfaction, profitability. Going by Mintzberg and Waters (1985, p. 268) definition, this can be described as planned strategy, with organizational intentions clearly formulated from central leadership. From the point of view of the individual employees however, their limited ability to resist the adopted strategy can be used to define the strategy as ‘imposed’, as its formulation is concluded by ‘top management’; this is where the importance of clear articulation of strategy comes in as the collective co-operation of the actors who will effectively implement adopted strategy can make all the difference between realized and unrealized deliberate strategy. With the internationalization of businesses over the years due to globalization, as deliberate as such firms might like to be in strategy formulation, some level of room must be made for the accommodation of emergent strategies. The global financial system is increasingly dynamic, fluid and unpredictable. Even after setting deliberate strategies, unforeseen events in the financial economy may emerge, forcing organizations operating in that space to make necessary adjustments in alignment with current realities. For instance, the recent crash of the U.S. housing market undoubtedly forced firms which may have been practicing a mortgage-focused business strategy to have a rapid rethink. Coming closer to home, that same U.S. housing market crash preceded the global economic downturn of 2007/8, which in turn led to several foreign investors pulling their funds out of the Nigerian stock market (which had been enjoying a boom at the time), subsequently leading to a near collapse of that market. Instantly, most banks (which had adopted strategies to tap into the market boom of the period in order to maximize returns) had to either totally reverse or severely adjust their investment strategies in view of emergent economic events. Again, each approach has its advantages; following a deliberate strategy approach provides clarity of purpose and unambiguous focus on set objectives; in the event that this method proves successful i.e. the predetermined objective(s) for which the strategy was implemented is achieved, such success can legitimize the adoption of that strategy and also gain stakeholder support. Adopting emergent strategies provides stakeholders with flexibility to adjust their behavioral patterns according to feedback received from any particular course of action; this less rigid approach legitimizes the actions of its participants as they enjoy the benefit of experimenting with various courses of action until they arrive at one which will most likely lead to the realization of their intended (and usually unarticulated) objectives.

I would like to use the Johnson Matthew as an example, who is a leading global speciality chemicals company. Science and technology are embedded in everything that it does. It has operations in over 30 countries and employs around 11,000 people. It was founded in 1817 to refine and develop products using precious metals – something it still does today. Matthey produces catalytic converters for around a third of all cars manufactured in the world. This product has huge environmental and health benefits for everyone through reducing pollution. Its products aim to have a positive impact on society and the environment, values which are at the heart of Johnson Matthey’s operations. This case study demonstrates how Johnson Matthey uses a PEST analysis to monitor changes in its external environment that will have an impact on its operations. The findings of this analysis are used to form future business strategies to remain competitive in its fast-paced industries. 

Political: Changes in the political arena influence many organisations. Since the 1970s more and more countries have passed laws to control air pollution and to reduce air pollution from cars. Its is now a race against the clock to reduce the emissions. The increase of passing emission laws around the world made JM grow globally and significantly over the years

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Economic: The world’s economies affect most organisations to a certain degree. For Johnson Matthey there are three main areas where economic factors influence its operations. These are the global recession, economic growth in China and price changes in the precious metals market. The 2008 recession lead to difficulty in access to finance for investment in JM also reduction in revenues. The company set targets to reduce the use of natural resources and decrease waste through lean production techniques. This created a more sustainable model of production. It also focused on developing products that contained fewer rare nonrenewable raw materials such as platinum. Achieving these targets meant Johnson Matthey reduced costs and became more sustainable. Johnson Matthey is keen to benefit from the high levels of economic growth in China. This growth has led to a higher demand for cars in the country and a subsequent increased demand for catalytic converters.

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Social: Social changes that affect Johnson Matthey’s operations include changes in education, the population and environmental concerns. Catalytic converters reduce pollution by cutting down harmful emissions. This reduces illness and costs to health services. These catalysts are just one example of a product that can benefit society as a whole and the vast majority of Johnson Matthey’s products bring these sorts of benefits to society.

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Technological: JM is the driver for technological change. It is a world leader in R&D, led by highly skilled people recruited from STEM subject fields. Currently working on numerus technological advancements project, which also includes low carbon way to produce electricity, that can be used source of power in the future.

Johnson Matthey is focused on ‘doing the right thing’ with its products that aim to have a positive impact on society and the environment To remain a world leader in its industry, Johnson Matthey has to take account of a whole range of external factors over which it has no control. Through monitoring these factors using a PEST analysis, Johnson Matthey has been able to protect its future by making informed decisions regarding its business operations and strategies to grow the business...