WHY? - REASON FOR CHANGE
Having the discipline to focus is one of the most challenging aspects in building and running a business. To succeed in the marketplace, companies must embrace a Business Value Strategy.
Authors Michael Treacy and Fred Wiersma describe three value disciplines : Operational Excellence, Customer Intimacy and Product Leadership. In today’s complex world of interacting organizations and individuals, we defined a fourth value discipline: Corporate Coherence [David J. Teece et al. – 1994]. The main premise is that companies must choose to excel in one of these disciplines, where it aims to be best-in-class, act upon it consistently and vigorously, and remain competent in the other three value disciplines. We also believe firms can do business in ways that both deliver long-term shareholder value and benefit society (shared values) [Michael E. Porter and Mark R. Kramer – 2011]. As such, making choices and finding the right ‘inside-out / outside-in’ balance is part of the Business Value Strategy.
HOW? - WIDTH OF CHANGE
Without understanding the challenges of your VUCA environment, different parts of an organization can easily wind up pursuing conflicting priorities, sub-optimization and poor implementation – even if there’s a clear Business Value Strategy.
Formulating an Innovation Strategy helps ambidexterity balancing short and long term priorities. It sets boundaries to your innovation performance expectations. It indicates whether an improvement, a disruptive a/o breakthrough innovation approach is best. It helps to creating a high-level plan for allocating resources and people to the different kinds of innovations. Inspired by McKinsey’s Three Horizons model , we distinguish three horizons: Expansion (red), Exploitation (purple) and Exploration (blue). Each horizon is bounded by its market dynamics and organization’s capacity to innovate, describes purpose (drivers), direction of growth and innovation concerned.
WHAT? - DEPTH OF CHANGE
Depth refers to the level of complexity of change. Between e.g. 1st-order product development projects and 3rd-order social innovation programs the notion of the known and unknowable arises, and impacts the boundaries for planning and policy management of the change in question.
A goal without a plan is just a wish. You need a sharply defined Plan of Approach. For example, if you know where you come from and you know exactly where you want to go, you can organize and manage complexity from a reductionist perspective as a SMART project (hiking), possibly beefed up with issue management (dropping) or even contingency planning (trekking). But when neither starting point nor future are known, uncertainty is the only certainty, than you better organize and manage complexity from a Design Thinking perspective. As a Value-Based project in terms of shared values exploration, curiosity, questions and self-reflection (discovering). To be successful in today’s world, your PoA should not only focus on internal operations but also on external levels of complexity. How you wish to work together with external parties? By co-operation or collaboration with customers and suppliers (value-adding partnerships)? Or perhaps with competitors and complementors (coopetition)?