Comments for Drivers of innovation strategies: beyond hype

KEY INSIGHTS AND MANAGERIAL IMPLICATIONS:
Leverage Intangible Resources as a Competitive Advantage:
Intangible resources, such as innovation capability and quality management, play a crucial role in creating sustainable competitive advantage. Companies that make effective use of these inimitable resources can promote creativity and maintain quality standards that are difficult for competitors to replicate. This approach is consistent with the resource-based view, which emphasises the importance of unique, non-tradable assets in maintaining market leadership.

Optimizing Resource Allocation Between Innovation and Quality:
Balancing investment between innovation and quality is critical to maximising a firm’s performance. While innovation drives growth, quality underpins profitability, and both contribute to market value. Firms must carefully allocate resources to ensure that innovation and quality do not conflict, but rather complement each other. This strategic alignment enables companies to perform well both in exploring new opportunities and in exploiting existing strengths.

Path to Market Value:
The final path to superior market value is achieved through the integration of innovation and quality. The study shows that both growth and profitability mediate the relationship between innovation, quality and market value. By creating a synergy between these dimensions, companies can improve their overall financial performance and market capitalisation.

LIMITATIONS:
The papers face several limitations that impacts its relevance today.
Sample limitation: Focus only on Fortune 1000, excluding non-American companies and SME’s.
Oldest: Relies on data collected between 1990 and 2000.
Measurement: Subjective measures for innovation and quality, can lead to inflated perceptions depending on the respondent.
External factors: Excludes the macroeconomic influences and their impacts on the company’s market value.

FURTHER READINGS:
Wang, C., Guo, F. and Zhang, Q. (2021) How does disruptive innovation influence firm performance? A moderated mediation model, European Journal of Innovation Management.
• This study focuses on the impact of disruptive innovation on firm performance, emphasizing the mediating role of innovation speed and quality, as well as the critical role of market institutions.

Corral de Zubielqui, G. et al. (2019) ‘Knowledge quality, innovation and firm performance: A study of knowledge transfer in smes’, Small Business Economics, 53(1), pp. 145–164.
• This study investigates how knowledge transfers impact innovation and firm performance in SMEs, highlighting the mediating role of external knowledge in innovation. This study extends the scope to smaller companies.

The article “With friends like these: The Art of Managing Complementors.” deals with the subject of complementors. It defines the term as “Companies that independently provide complementary products or services directly to mutual customers”. A typical example might be car manufacturers and service stations, or telephone manufacturers and network providers like Apple with Proximus.

Complementors share together a market. Company strategies will influence the total size of the cake and the shares received by the various market players.
The three key insights of this paper are possible strategies for influencing complementors.
The first strategy is “hard power”. Exercising hard power is a coercive strategy based on the strength of the company undertaking it. The strongest company will try to impose its choices, for example, by making its offer compatible or incompatible with that of a complementor. The company may also decide to buy or build a complementor.
The benefits of this strategy are control and a greater share of the profits. But it leads to mistrust and deteriorating relations.
The second strategy is “soft power”. This is based on cooperation or co-optation. Companies enter into partnerships by sharing information, giving guarantees or even investing in each other. The aim of this strategy is to design the business environment to foster trust and mutual benefit. It’s well-suited to smaller companies. But its effects are more diffuse, slower and difficult to evaluate.
Finally, the third strategy – “smart power” – is a mix of the two previous ones. It combines the advantages and disadvantages of in varying degrees.

To use these insights in business, managers must first identify and understand their complementors by analyzing their business, their strategies and identifying their incentives to cooperate or compete.
Managers must also analyze their own leverages. These being derived from relative market positions, competitive advantages, resources and capabilities.
Finally, they need to decide how to influence their partners. The choice of strategy depends not only on the two previous analyses, but also on the company’s own philosophy and values.

We have identified three limitations based on a number of examples. The first is that, even if a company has a strong market leadership position, it may suffer from the hard power of an even stronger competitor. For example, Microsoft on Intel.
Secondly, some companies are just too small to have leverage over their complementors. Third limitation is that sometimes soft power can be very costly for a company trying to influence another. Sometimes even more expensive than creating or buying one’s own. For example, IBM investment in Linux development.

Some complementary resources have enabled us to go further in understanding the concepts.
– Understanding how complementors can interact on platforms and with platforms owners.
Cenamor, J. (2021). Complementor competitive advantage : a framework for strategic decisions. Journal of Business Research, 122, 335 343. https://doi.org/10.1016/j.jbusres.2020.09.016

– Giving us a precise example of this case with Android, Google and independent app developers.
Strategic Management Society. (2019, 20 juin). Threat of platform‐owner entry and complementor responses : evidence from the mobile app market [Vidéo]. YouTube. https://www.youtube.com/watch?v=lBX2RdPwfXk

– Explaining how revolutionary innovation can impact business relationships and, for example, complementors.
Miehé, L., Palmié, M., & Oghazi, P. (2023). Connection successfully established : How complementors use connectivity technologies to join existing ecosystems – Four archetype strategies from the mobility sector. Technovation, 122, 102660. https://doi.org/10.1016/j.technovation.2022.102660

The article is called ‘Strategy as a Wicked Problem’. The first key insight of the article is “What is a wicked problem?”. A wicked problem is created by an important amount of causes, the origin of the problem is unknown. To solve a wicked problem, individuals have to think outside-the-box, a traditional problem solving approach will not suffice. The second key insight is “How to manage a wicked problem?”. The first main approach that the paper outlines is involving all stakeholders, making sure they are involved in solving the problem. Secondly, having a “feed-forward approach” to face the wicked problem is crucial. This means being future oriented when articulating strategies and not focusing on successful strategies of the past.
The first managerial implication concerns identifying a wicked problem. For that, we provide five criteria that managers can use to detect whether they are facing a wicked problem. Once detected, managers should proceed with the following two implications. In light of the key insight that all stakeholders should be involved in the planning process, the question arises how managers can achieve this. Therefore, our second recommendation to managers is to organise brainstorming sessions, social events or surveys with stakeholders in order to obtain their ideas and understand their standpoints. One problem that can be encountered here is the difficulty of defining who the relevant stakeholders are for a company. However, it is important to reflect and decide on who the most important stakeholders might be that can help you solve the specific wicked problem. The third implication for management has to do with setting up strategies that envision the future. A practical recommendation to achieve this would be to list scenarios the company would like to see happening for the next five to twenty years, and respectively setting up strategies that would foster the development of these circumstances. Another practical implication is to use discovery driven planning (DDP). DDP consists in setting up a set of assumptions regarding the future of the company. The validity of each assumption is tested as the plan develops: when new data is found it is integrated to the plan. This planning does not rely on past experience as uncertainty regarding the future is acknowledged and embraced.
We have encountered two limitations where it is not recommended to follow the aforementioned implications. The first limitation concerns our implication to encourage all your stakeholders to get involved in the planning process. If the company needs to disclose its confidential strategies or technologies in order for stakeholders to understand the problem, it is not advisable to share this sensitive information, due to the risk of information leakage. The second limitation ​regards the use of DDP and the fact that it is not advisable to use this method for all businesses. More conventional and mature businesses may not profit from using DDP because for it to work the company needs to be agile and flexible with resources. In this way, DDP should be used for new ventures as these are less predictable and may further benefit from this approach.
Lastly, we discovered further insight on how to deal with wicked problems. The first article, called ‘Wicked problems, reductive tendency, and the formation of (non-)opportunity beliefs’, explains a situation called reductive tendency, and its negative effect on entrepreneurs when simplifying a wicked problem, mainly due to them overlooking important details. The second article is called ‘Open Innovation for Wicked Problems: Using Proximity to Overcome Barriers​’. The main idea of this article is using the proximity framework when using open innovation to solve wicked problems.

Gras, D., Conger, M., Jenkins, A., & Gras, M. (2020). Wicked problems, reductive tendency, and the formation of (non-) opportunity beliefs. Journal of Business Venturing, 35(3), 105966.
Ooms, W., & Piepenbrink, R. (2021). Open Innovation for Wicked Problems: Using Proximity to Overcome Barriers. California Management Review, 63(2), 62-100.

This article called “You need an innovation strategy” talks about why companies need to align their innovation strategy with their business strategy. The first finding is that a robust innovation strategy should clearly explain how value will be created for customers and company, and then how it’ll be captured by the organization.
Secondly, an explicit strategy is necessary to handle the involved trade-offs. It is needed to clarify which trade-offs are best for the organization as a whole.
Finally, a company’s innovation strategy should specify the allocation of resources to each type of innovation, through a high-level plan. This however is not an easy task, and the answer will be specific to the type of business in itself and contingent on factors such as the company’s strengths, the rate of technological change, …
Regarding managerial implications, the most senior leaders of the company should be the ones setting up the innovation strategy linked with the business strategy and the core value proposition. As every function in the organization usually wants to serve its own interests, only the senior leaders can take decisions that are best for the company. Secondly, there is no ideal mix for the allocation of resources to the different types of innovation. A high-level plan needs to be created considering key factors such as the intensity of competition, the rate of technological change, the magnitude of the technological opportunity and so on. The senior leaders need to define clearly which resources need to be allocated and where they should be allocated. Finally innovation strategies must evolve, otherwise it may become irrelevant. Different frameworks are elaborated by companies every year such as the COIN framework, designed to help large organizations to create a continuous Return on Innovation.

There are a handful of limitations to the identified implications, which can limit the extent to which managers can use the learnings from the published article. First, the author argues that the innovation strategy should be set up by senior management only. This method fails to take into consideration the ideas and arguments from lower level employees, which should be taken into account when creating an innovation strategy. Secondly, Pisano argues that there must be a high-level detailed plan on how to use the resources accordingly to innovate. However, some of the factors mentioned in the article, such as technological change, the magnitude of the technological opportunity and the intensity of competition can be hard to quantify, and thus, analyse and design a detailed plan. In addition, it would be particularly hard for SMEs to analyse such factors due to lower levels of available budget and personnel for such. Third, regarding the stated fact that innovation strategy evolves and needs adaptation, it is not explained how senior management can time such evolution and therefore act accordingly. Finally, on a more general scope, the author fails to mention how culture is important when developing an innovation strategy. According to a McKinsey study, 94% of senior executives argue that people and corporate culture are the most important drivers of innovation. Therefore, it is important to incorporate a culture and an environment that incentivizes innovation.

We took a look at a number of other articles that supported, disagreed, and complemented the article. Ishak W writes about why a culture of innovation should start from the bottom-up instead of the top-down. Any company needs a mechanism and culture that enforces and promotes innovation from within. The author argues that the generic ideas of investing, attracting talent, and idea development are just hygiene factors and the key driver is innovation parenting, as the author calls it. It is the process in which innovators and leaders are held accountable for innovation and are given personal responsibility. In other words, organizational networks should be based on a democratic decision-making process and a horizontal, non-hierarchical structure, given that these types of organizations tend to be more innovative.
Another paper that complemented the original paper was ‘The impact of hard and soft quality management and​ proactive performance​ behaviour in determining innovation​’ develops a model of the relationship between quality management (QM) as a multidimensional construct. They defined hard QM as practices that include benchmarking, zero-defects mentality, goal measurement and process improvements.”Soft QM” practices included adherence to culture, management commitments, suppliers and customer focus.
By splitting into hard QM and soft QM, the authors used the model on data on ISO 9001 certified firms and interpreted that it is the Hard QM that has a high correlation to innovative performance and firms should prioritize that, while soft QM has a very low correlation.

Here are the references of our two articles:
Escrig-Tena, A. B., Segarra-Ciprés, M., García-Juan, B., & Beltrán-Martín, I. (2018). The impact of hard and soft quality management and proactive behaviour in determining innovation performance. International Journal of Production Economics, 200. https://doi.org/10.1016/j.ijpe.2018.03.011

Waguih, I. (2017, September 7). Creating an innovation culture. McKinsey. https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/creating-an-innovation-culture

Executive Summary
Strategic planning is a tough subject and a lot of companies put a lot of effort and importance in the planning of their own strategy, but is it worth it? This article written in 1998 by Daniel G.Simpson documents some of his personal lessons learned during his nine years as head of strategy and planning in a multinational company and highlights the three main reasons why he strongly believes that strategic planning could be a waste of time for most of the companies. First of all, the Mission, Vision and Values aspects should have less importance in the strategy planning function because they are often either too generic or gibberish and it’s a hard task to get to the point where they can add a unique value to the company’s strategy. Secondly, it seems important to separate the strategy planning function from the finance area, where most of the work consists of mitigating the risk or quantifying every process and action while developing the right strategy requires a workforce with innovative spirit generating constantly new ideas. Finally, the strategy development does not seem to respond well to routines and, therefore, its planning should not be an annual event but should rather be built to last a few years and be reviewed by a special unit only under certain circumstances.
The first managerial implication is considerately thinking about the work going into mission, vision and values determining. Given that most are too generic, most companies should not put too much effort into developing a mission, vision or value. If a company still wants to put efforts in these three elements, it should do such work at the end of strategy development work and spend much time defining what business the firm is in and what value it adds. The second implication is to significantly expand the level and number of people involved in the process of strategic planning. Strategy should be discussed with a large group of people at multiple levels of the company. Another interesting input is that companies could get insights from business partners who are independent from the company. They are able to have visions that people in the company do not have.
The main limitation about thinking carefully about how much effort to be put into work in mission, vision and values is that: it underestimates the empowering effect of mission, vision and values on employees. These three can unite all the employees of the company even though the concepts are too generic. Similarly, having one suitable mission or vision can add to employees’ motivations. What’s more, it also seems more complicated to have an alignment between all the employees in their way of working if managers do not have any common mission, value or vision, especially with multinationals. Those three elements are an important part of the internal communication within a company. Besides, regarding the idea about expanding the level and number of people involved in the strategic process, the limitation is it could be time-consumed and complex. Having a lot of different points of view from a very broad number of employees at different levels of the company can be very challenging to find common ground. It is becoming more complicated to have an alignment between all the employees in their way of working if you do not have any common mission, value or vision, especially with multinationals. Those three elements are an important part of the internal communication within a company.
In the end, we explore further on other relevant articles. The first one introduces a conceptual model of how to achieve consistency between the relevant goal and the planning levels. It bridges the gap between long-term planning and a management model by depicting the relationship between strategy, business portfolio, tactics, and operation, which together help fulfill the strategic planning. The second paper focuses on the relationship between strategic planning and organizational ambidexterity, emphasizing the importance of managers’ innovation orientation on realizing the business’s future fulfillment. Thirdly, the last paper ‘Strategic planning as a complex and enabling managerial tool’ discusses more on the complexity between innovation and long-term planning and provides the solution – risk-taking and knowledge-based reward systems – for the innovation trade-off.
Further Sources:

Arthur Posch, Christian Garaus (2020). Boon or curse? A contingent view on the relationship between strategic planning and organizational ambidexterity. Long Range Planning (53- 6). https://doi.org/10.1016/j.lrp.2019.03.004.

Dietfried Globocnik, Rita Faullant, Zulaicha Parastuty (2020). Bridging strategic planning and business model management – A formal control framework to manage business model portfolios and dynamics. European Management Journal (38 – 2, 231-243). https://doi.org/10.1016/j.emj.2019.08.005.

Richard J. Arend,Y. Lisa Zhao,Michael Song,Subin Im (2017). Strategic planning as a complex and enabling managerial tool. Strategic Management Journal. https://doi.org/10.1002/smj.2420

Key Insights

Various prominent scholars argue that innovation is a key distinguishing attribute and the only solution to thrive in increasingly hyper-competitive markets. But what might impact the innovation-performance relationship?

The principal findings from this meta-analysis are, first, innovation orientation has a stronger positive impact on performance than innovation process outcomes such as patents or innovative products or services. Secondly, innovation has a stronger impact on performance in younger firms than in more established SMEs and young firms need to start with internal innovation rather than external collaborations. Finally, a cultural environment characterized by collectivism (cfr. Hofstede) fosters innovation.

Concrete actions

First, the managers should establish an innovative orientation at the beginning of the activities. In fact, they should set a positive attitude toward change, engage and empower their teams to launch new initiatives collaboratively. Therefore, it is important to promote collectivism, set a learning philosophy, transfunctional acclimatation and future-oriented leadership. The internal benefits would be more ambitious goals, inspiring culture, better value-creation process, employees commitment and proactivity, while the external benefits would be higher brand equity, better collaboration partners and attracting highly skilled employees.

Second, it is recommended to set a dynamic degree of external collaboration. The managers should first focus on internal innovation, and then start engaging external collaboration at more attractive terms when they have better insights and market recognition. In order to not suffer from liability of smallness and newness, it is preferable to start with small external partners to have equal decision-making power.
Third, managers should focus on increasing the conversion rate of innovation input into innovation output to be more competitive in the market. For this purpose, it is important to invest in human capital and information technology, while having a common market-oriented R&D across departments.

Limitations

SMEs are advised to innovate early to improve performance, however there is no mention on how to make it sustainable in the long term. In fact, SMEs are vulnerable to big players who outmatch them in terms of resources. The paper further suggests that companies should try to innovate in-house, instead of forming external partnerships. Nevertheless, it doesn’t make a distinction between the forms of partnership, for instance it fails to consider open-innovation which can be beneficial for both parties. Moreover, the authors advocate that higher performance is achieved in collectivist countries, yet urban cities are becoming increasingly cosmopolitan. Besides, successful innovative companies like Huawei, operate under a dual paradigm of individualism and collectivism.

Additional lectures

Three new relevant references have been examined to have further insights. The first study (Löfsten, 2014) has found other conclusions than our chosen article such as the fact that the age of a firm has no relation with its innovation performance. The second article (Ajzen & al., 2016) examines the fact that specific indicators are needed when it comes to determining innovation performance (factual, declarative, relative and indirect) and financial performance (proximal, intermediate and distal). Finally, the last article (Gök & Peker, 2016) explains the role of market performance as a mediator between innovation performance and financial performance by converting innovation into positive financial outcomes. The innovation performance will indeed lead to a better market performance that will consequently lead to a better financial performance.

Key Insights
This paper compares two groups of companies, categorized into high-sustainability and low-sustainability companies in the period from 1993 to 2010, which were defined by the implementation or not of social and environmental policies in the 90’s. The paper focuses on the effect of those policies on the processes and performance. The first key insight is that high sustainability companies are characterized by a governance structure that in addition to financial performance, accounts for the environmental and social impact of the company. Therefore, the board of directors is more likely to be formally responsible for sustainability, and top executive compensation incentives are more likely to be a function of sustainability metrics. High sustainability companies also tend to have a more comprehensive and engaged stakeholders management, based on a longer term vision, focusing on listening and responding to their stakeholders needs, investing in managing the relationships with them and providing an internal and external report on these relationships. Finally, high sustainability companies appear to outperform their counterparts in terms of stock market and accounting performance.

Managerial implications
Two scenarios have been created depending if the company finds itself in the high sustainability or low sustainability category. The first scenario underlines 4 steps for low sustainability companies to implement in order to become a high sustainability company.
Corporate governance: give some responsibilities to the board of directors for sustainability or create a separate board committee for sustainability. Simultaneously, top management compensation should be a function of both financial and sustainability metrics.
Stakeholders engagement practices: be more proactive, more transparent and more accountable in the way they engage with their stakeholders in order to develop a strong long term relationship with them.
Long term time horizon decision making.
Measurement/reporting: have higher measurement and disclosure of non financial measures, since these are more relevant to non shareholding stakeholders
The second scenario focuses on attention points for high sustainability companies to keep on increasing the performance of the company in general.
Pay attention to additional costs and the possibility of inefficient resource allocation.
Keep the board focused on shareholders as well.
Carefully manage stakeholders expectations.
These two scenarios are especially relevant for companies in the B2C business sector, their performance will benefit relatively more from the implementation of social and environmental issues policies. Indeed, this sector is driven by brand and reputation and companies’ products depend upon extracting a large amount of natural resources.

Limitations
The sample was only composed of relatively large US-based companies. To broaden the analysis, it would make sense to also look at companies in other countries, as well as small and/or private companies, for instance start ups. Moreover, it mostly focuses on stakeholder engagement in a general sense, as well as economic benefits and accounting performance. This approach has been the norm in most research, but there has been minimal research about the impact of CSR on employees’ behaviour. It is essential to take into account how those policies could influence employees, as the company’s performance and success depends heavily on employees and how they perceive their work. Furthermore, as there is no distinction made between the high sustainability companies regarding the amount and the nature of social and environmental policies adopted, potential trade-offs due to sustainability might not appear in the findings of this study. Therefore, looking at policies chosen by companies could contribute to more accurate results. Finally, there is a lack of random assignment in the study, meaning the correlation between variables is not necessarily equivalent to causation. Possibly, the performance and organisational structure differences between the low and high sustainable firms are not only due to the adoption of CSR policies, but to other systemic divergences which are not mentioned in the study.

Additional sources
To get further insights on that topic, 3 additional readings are recommended:
Flammer, C., (2015), “Does Corporate Social Responsibility Lead to Superior Financial Performance? A Regression Discontinuity Approach”, Management Science, 61(11), p.2549-2568
The article provides insights on the causal relation between corporate social responsibility & financial

Hawn, O. and Ioannou, I., (2016), “Mind the Gap: the Interplay Between External and Internal Actions in the Case of Corporate Responsibility”, Strategic Management Journal, 37(13), p.2569-2588
The article provides insights on the mechanisms that materialize the link between corporate social responsibility & financial performance

Chen, H. C., & Yang, C. H. (2019). Applying a multiple criteria decision-making approach to establishing green marketing audit criteria. Journal of Cleaner Production, 210, 256-265
The article provides a definition of criteria in order to implement standards for audits of non financial performance measurement for green marketing.

“Your strategy needs a strategy” is a valuable paper about how the strategy of a company needs to be adapted to the predictability of the environment and the influence the company has on this environment. The paper highlights how in highly changing environments, such as the internet software industry, competitive advantage comes from reading and responding to signals faster than your rivals do, adapting quickly to change, or capitalizing on technological leadership to influence how demand and competition evolve. Even though most executives are aware of the need to match their strategy making processes to the specific demands of their competitive environments, many still rely on approaches that are better suited to predictable, stable environments, even when their own environments are known to be highly volatile or mutable. Therefore, in order to be able to deploy your unique capabilities and resources, and better capture opportunities, you need a strategy for your strategy. The paper suggests four styles of strategy: classical, adaptive, shaping, and visionary depending on the two factors, predictability and malleability, in a matrix. A fifth style, survival mode, was dependent on extraneous factors which require the firm to have a short-term strategy in order to survive.

As a result of this paper, there are many takeaways for management to implement. Firstly, it is very important for management to accurately judge how predictable and malleable the market is through proper continuous analysis of the environment. Secondly, it is important to boost the company’s competences continuously in a competitive environment and review on an on-going basis depending on how fast-moving the market is, sometimes speed should be valued higher than 100% accuracy. It is also important to remove barriers to change from a classical strategy to an adequate strategy in an unpredictable environment. For example, the strive to secure economies of scale could block innovation opportunities in an unpredictable environment. Lastly, it is important to adopt the four strategies to the macro and micro environments within the company. Two business units could have two different types of business strategies within the company itself dependent on the different markets in which it competes, and it is important to be aware of this.

This paper also brings limitations to the fore. For example, simply predicting the predictability of your current market does not result in an accurate prediction of how predictable it is going to be in 5 years’ time. It is important to therefore predict the disruption coming (which is not always evident). Further to this, this paper suggests a lot of time consuming and expensive analysis which is not always viable for SMEs as they simply do not have the resources to take constant review functions. Companies should therefore plan their strategies regarding their predictability of their market but keeping in mind the resources and capabilities that are available to them currently and into the future. A further limitation is that shareholders are not always willing to back a long-term flexible strategy because it is somewhat ambiguous so receiving support for this kind of strategy is hard to implement as the rules of the strategy are not clear in nature.

Finally, there are two papers that are recommended for further research into a strategy’s strategy. Firstly, a paper from the European Business Review aims to identify the differentiated paths followed by firms to innovate in business models. It gives special focus into SMEs regarding the suitable alignments of business model components when they innovate in their business model. Secondly, the Economics and Management journal shows a model of how to create and implement innovative strategies to follow up on the learnings from this paper.

(Article) Ammar, O., & Chereau, P. (2018). Business model innovation from the strategic posture perspective: An exploration in manufacturing SMEs. European Business Review, 30(1), 38-65.
(Article) Lendel, V., & Varmus, M. (2011). Creation and implementation of the innovation strategy in the enterprise. Economics and Management, 16, 819-825.

The objective of this paper is to identify important determinants of product and process innovation in small food firms. These firms are generally viewed as operating in a mature and low technology area, where R&D activities are limited, and patenting is rare. The first assumption is that innovation in small food firms is not primarily R&D based. The statistics indicated that R&D activities, as an indicator, failed to capture the innovation capacity of small firms in low tech industries in particular. Furthermore, the results suggest that, although the skills of the workforce and the investment in know-how tended to determine whether firms would innovate, these characteristics did not explain why some firms were traditionals, followers or leaders of innovation. The third assumption states that if small food firms wanted to invest in R&D activities, they needed to collaborate with external partners because of the lack of internal expertise and the limited means to carry out inhouse R&D activities.

Three managerial implications could be extracted from this paper. Firstly, innovative small food firms should hire more technical managers and professionals to further improve and innovate their products and processes as a lack of technical capability may hinder innovation in small food firms. Secondly, by collaborating with external partners, small firms will be able to reduce the risks of innovation as they are able to observe the potential consumers and consult with the research institutes. Thirdly, managers should liaise with the government in regard to how subsidies should be used, either for investing in R&D or to invest in training for employees

Concerning the limitations, it was found that, since assessing innovation is subjective, it can be very difficult to assess how the small food industry can be “innovative”. Furthermore, according to us, R&D departments are very common to assess innovation levels in big companies. However, in small businesses, R&D activities are often neglected as it is costly. Therefore, going further than R&D departments in small businesses is essential in order to understand correctly the market and respond to it in innovative ways. This would be considered as a valuable source of R&D activities for small food firms. The third limitation is that the paper only discusses product and process innovation. However, other types of innovation could be interesting to consider. Lastly, characteristics of innovation differ from one country to another because of the difference in environments. Hence, innovations in the small food industry can not be assessed worldwide.

To further develop this paper, two additional references were analyzed:
– Earle, M. D. (1997). Innovation in the food industry. Trends in Food Science and Technology, 8, 166–175.

– Hullova D., Don Simms C., Trott P. & Laczko P. (2019). Critical capabilities for effective management of complementarity between product and process innovation: Cases from the food and drink industry. Research Policy 48, 339-354.

The article published in 2003 by Brian Leavy provides insights on how market position perspective and core competence perspective can be used to assess the strategic alternatives. The author stresses the strengths of both approaches and also mentions the drawbacks if only one approach is adopted by companies.
Key Insights
Compared with the conventional way of interpretation of the two perspectives, the author points out that the positioning perspective focuses on the industry structure and starts by considering which industry and sector the companies want to be in. Core competence perspective emphasizes the resources companies can take advantage of as well as the relations among core competences, core products and end products.

However, simply focusing on one approach is not in favor of companies’ sustainable development, which will either lead to their business model copied by fast followers or identify the core products too late. As a consequence, to leverage both perspectives’ strengths, companies should adopt the “bifocal vision”—combine the two perspectives together.

Managerial Implications
To become a giant as GE did, managers should restructure diversity to select the best businesses on the market and to focus on their potential growth. Further growth can be possible thanks to potential mergers and acquisitions. At the same time, sharing know-how, taking care of human, relational and structural capital is very important.

Furthermore, managers should conduct an analysis (strategy intent, leverage capability, market creation) to identify where company could achieve success. Secondly, managers should consider all options of possible growth. Eventually, continuous spot on the strategy and adjustments are necessary to follow consumer preferences and mega trends.

Limitations
Nevertheless, there are some more aspects managers should pay more attention to when conducting business. On the one hand, products and functions of multi-business firms like GE are usually quite complex, which requires companies to take conglomerate structure, m&a decisions as well as competitive advantage and added value into consideration. On the other hand, when it comes to strategic renewal like what Nokia, companies should also be able to consider core products’ ability to convince customers as well as the reaction ability to the market.

Further References:
P. W. Farris, & J. M. Moore. (2004). The Profit Impact of Marketing Strategy Project retrospect and prospects. Cambridge: Cambridge University Press.
C. O’ Reilly, & M. Tushman. (2011). Organizational Ambidexterity in Action: how managers explore and exploit. California Management Review, 53(4).
S. Tierney, & M. Kuby. (2008). Airline and Airport Choice by Passengers in Multi-Airport Regions: The Effect of Southwest Airlines. Professional Geographer, 60(1), pp. 15-32.

The Fall & Rise of Strategic Planning – Henry Mintzberg (1994)

Key Insights
This Harvard Buisness Review article was written by Henry Mintzberg, a management professor at McGill University. It was written in 1994 and gives an insightful overview on the pitfalls and fallacies of strategic planning which was thought for many decades to be the one and best way to devise and implement strategies. Mintzberg particularly emphasizes on the difference between strategic planning (based on analysis) and strategic thinking (based on synthesis). Moreover, the false equivalence between strategic planning and strategy making rests on three fallacious assumptions:
1) Fallacy of prediction: In brief, strategic planning wrongly assumes the world holds still when elaborating a strategy and forecasting future events is an exact science.
2) Fallacy of Detachment: Strategic planning is possible thanks to the system which captures knowledge about the task. Thus, true management is possible when the manager is no longer wholly immersed in the details of the task. This assumption is dangerous as the hard data that is passed on to the manager is often over aggregated and lacks qualitative richness. In reality, effective managers also have to understand processes before programming them and also have to rely on soft information.
3) Fallacy of Formalisation: Formal systems do not process information better than human beings. They can process more information but not internalize, comprehend and synthesize it.
All in all, Mintzberg affirms that strategic planning has been so far misnamed and should have been labelled strategic programming.
Key Implications
It is critical to clearly distinct strategic planning and strategic thinking. Operationally speaking, the firm should organise strategic planning in two main roles: strategic programmers and strategy finders.
First, strategic programmers should aim to put a high-level strategy into action in three steps:
Codification: translate a high-level strategy into operational objectives.
Elaboration: break-it down into sub-strategies to reach the objectives
Conversion: considering side-effects on the organisation
For example, if a firm wants to be the leader on a market, it firstly needs to determine according to what metric, e.g. market share, and how much share it needs (e.g. 15%). Then it needs to know how to get there (what segment to target, what features a product should have, …). And finally consider how all this will affect budgets, FTEs, etc.
Second, strategy finders are appointed to identify “micro-strategies” across the organisation and relate it to management. They can in turn broaden their scope and increase their impact. As the author quotes, “strategy happens everywhere in the organisation”. Strategy finders should thus look for patterns in failed experiments or best practices to leverage for instance.

Key Limitations
One of the main limitations that have been found in this paper is the focus on managerial choices to tackle strategic innovation. Mintzberg theorizes that in order to make a strategic change, new categories have to be invented. But this is not the only path to have a strategic change. Oriol Iglesias and Nicholas Ind theorizes that through branding and marketing, strategic change can be introduced to the company.
Nowadays the mindset of the consumer is in the middle of the consumer, and rearranging expired, actual or future categories to fit the mindset of the consumer is a different path to follow for companies. An example provided is Barbie, that recently had problems selling their product to the new consumer. An instead of having a managerial shift and create new categories, they took the core product, an existing category, and invested heavily in marketing to change the image of the category, and fitted the existing product to the current situation.

Additional Resources
Iglesias, O., and Ind, N. (2016). Brand Desire. London, United Kingdom: Bloomsbury.

Mintzberg, H. (1993). The pitfalls of strategic planning. California Management Review, 36(1), 32-47.

Rigby, D. K., Sutherland, J. & Takeuchi, H. (2016) Embracing Agile. Harvard Business Review, 94(5), 40-50.

The search for new business ideas is a hit-or-miss in most corporations. In particular, tested
ways of framing this search already exist, precisely by looking at competency, customer or
business environment. The authors of the paper, moreover, identified a fourth approach that
complements the previous ones and focuses on opportunities generated by the explosion of
digital information and tools. According to this, they have developed five patterns to explain
the creation of value: augmenting products to generate data; digitizing assets; combining data
within and across industries; trading data; codifying a distinctive service capability.
Turning to the implications , managers should understand why these patterns are emerging
now. The trend is actually based on an IT-enabled innovation, which is driven by three
factors: the explosion and increasing availability of digital data; better tools for data analysis
and the opportunity to conduct business more vitally, in the cloud, nowadays. An example
may be the Smart Energy Meter, which shows how several patterns can be combined to
successfully structure the creation of new business ideas. Managers should ask themselves
some core questions regarding each of the patterns in order to uncover new business
opportunities and to dive deeper into the topic. Finally, managers need to know that successful
innovation initiatives have four things in common: strong technology presence; inputs from
external parties; motivated leadership and emotional commitment (beyond hygiene factors
like a cross-functional team, adequate resources and top management support).
Nevertheless, some limitations are present. First, when digitizing physical assets, we found
some concerns in the way this pattern can be applied by entrepreneurs. If we take the example
of Yeerida, which is an Italian book-streaming platform launched in 2016, we can have a
better idea of the huge implicit risks. Indeed, the company realized soon that books could be
easily decrypted by using the HTML source of the web page, so damaging the business.
Another limitation can be seen in the way sensitive information and privacy concerns may
arise for companies dealing with personal data. A case which may be seen as broadly related
to this the Facebook one, with reference to the sales of 3000 political ads bought during US
Presidential elections in 2016. As a consequence of the scandal, the company had to promise
to hire new 1,000 employees in order to supervise on future advertisement.
In terms of further references , several barriers can be identified: (1) leaders have a
tech-implementation view and take the wrong metrics as KPI for the success of the
implementation; (2) vendors oversell the promise of instant change through the digital
technology and (3) are paid for selling it, not getting it used; (4) such a change encounters
high costs. Concerning management style, some companies are born digital and others might
even enjoy bigger gain from digital technology adaptation. Therefore they need to hire
specialists and redefine the understanding of “judgement”. It is not about intuition anymore.
Appendix:
Bonnet, D. (2014). Convincing Employees to Use New Technology. Harvard Business
Review. 92 (2), 12-14.
McAfee, A. & Brynjolfsson, E. (2012). Big Data: The Management Revolution. Harvard
Business Review. 4-9.

The author of the article “The strategic fit between innovation strategies and business environment in delivering business performance”, Daniel I. Prajogo analyses the influence of the business environments (dynamic or competitive) on effectiveness of product or process innovation strategies in delivering business performance. There are three key insights enclosed:
1. Majority of scholars focus only on internal factors’ influence on innovation, as it is believed to be under entity’s full controll;
2. However, the author believes that it is the business environment that has significant effect on innovation strategies’ success;
3. Moreover, outcome depends on the factor combination: dynamic markets favor product innovation, while process innovations fit competitive ones.
Furthermore, the major managerial implications are the following:
1. Dynamic environment makes company respond faster to changing customer tastes or preferences. Thus, product innovation strategy fits this market the most;
2. Cost competition casues process innovation to be more dominant in the competitive market as customer preferences are rather stable, while resources are limited;
3. If the market has big variations in terms of environment, it is more useful for entities to have both product and process innovations (BNP Paribas example).
However, during the work we identified several limitations to the content showcased within the text:
1. Waiting for new niche could take too much time and money spent on R&D;
2. Fast development of new technologies decreases relevance of past process innovations;
3. Implementing both product and process innovation strategies creates risk of losing the focus due to running various programs at once.
After further research, we recommend the following articles listed in the references bellow. The first one analyses the effect of customer orientation on innovation performance. The next one is another text from Mr. Prajogo and provides further insights on the topic discussed during the workshop. Third article considers relevance of organizational capabilities for innovation, but also its link to customer satisfaction and profitability. The final piece concerns usage of tangible and intangible assets for gaining competitive advantage and shows how innovations are developed through services, co-creation with customers and supplier integration.
REFERENCES:
Prajogo, D. I. (2016). The strategic fit between innovation strategies and business environment in delivering business performance. International Journal of Production Economics, 171, 241-249.
Wang, Q., Zhao, X., & Voss, C. (2016). Customer orientation and innovation: A comparative study of manufacturing and service firms. International Journal of Production Economics, 171, 221-230.
Jayaram, J., Oke, A., & Prajogo, D. (2014). The antecedents and consequences of product and process innovation strategy implementation in Australian manufacturing firms. International Journal of Production Research, 52(15), 4424-4439.
Lun, Y. V., Shang, K. C., Lai, K. H., & Cheng, T. C. E. (2016). Examining the influence of organizational capability in innovative business operations and the mediation of profitability on customer satisfaction: An application in intermodal transport operators in Taiwan. International Journal of Production Economics, 171, 179-188.
Zhang, M., Zhao, X., Voss, C., & Zhu, G. (2016). Innovating through services, co-creation and supplier integration: Cases from China. International Journal of Production Economics, 171, 289-300.