The Strategist’s Dilemma: What Makes A Breakthrough Strategy

September 09, 2020

Neither it’s about numbers and data, nor it’s solely about products and technology. Breakthrough strategies are a never-ending quest for differentiation. An investigation into what goes into their making.

Apple designs gorgeous products bedazzling technocrati on every cue. Yet, its products are only the tip of its carefully curated innovation spear. The company, in fact, saves substantial amounts on supply chain management, which gives it an edge over others. CEO, Tim Cook has won several praises for bringing efficiency in Apple’s supply chain.

Product innovations are vital to business success. A nice little feature that securely starts a device with a fingerprint or a special graphic chip in a computer. Users value these advances. But alone, new functions and features are insufficient for continued differentiation.

Today designs can be knocked off in record time. Launch any new gizmo, and its engineering configuration will quickly appear online. They are the easiest for the competitors to copy. Interestingly, there is an anti-award – The Plagiarius Award – given to the makers and sellers found guilty of most scandalous product imitations.

So, it is equally important for businesses to nurture other sources of breakthroughs –processes, revenue models, customer engagement, and so on – to land a bigger and more lasting competitive advantage. We look at what breakthrough strategies really are, and how to develop a good one.

Who-What-How Continuum: Escaping Mindscapes

A group of MBA students was given an exercise: Split in the pair of two and arm-wrestle. The winner will be one who pushes the opponent’s hand down the maximum times in 60 seconds. The success rate for most was two, or three. But the winner was a pair whose number was in 100s. The duo simply decided to cooperate by proposing no resistance, instead of competing.

Breakthrough strategies are different from regular ones. They are about finding your unique strategic position by thinking differently toward the same objective; questioning every grain of accepted wisdom and confronting dominant ways with a new approach.

Potential breakthroughs are the first casualty of a myopic worldview that we often inherit in our lifetimes. How should you explore your unique strategic position?

A strategic position is the most viable sum of Who/What/How of your business.

Who should you target as customers?

What products or services should you offer (value proposition)?

How can you best deliver these to your customers (distribute or manufacture)?

Failure to make a clear choice along these lines is a common source of a strategic letdown for many companies.

As strategists answer these threefold questions, avoid falling into mindscapes that prevent most from asking the right questions when defining their business. The U.S. railroads, for instance, once defined itself as a railroad-oriented business instead of transportation-oriented, eventually loosing much to airlines and busses.

Doblin’s Ten Types of Innovation

As you find your unique strategic position and live through it, find yet another distinct advantage. With the changing industry conditions, customer preferences, and moves & countermoves by competitors, one just can’t settle for the current position. Sanofi, a multinational pharmaceutical conglomerate established in 1973, recently unveiled its new strategy prioritizing key growth areas.

Doblin, after probing 2,000+ innovations throughout history, discovered that most breakthroughs fall under 10 innovation frameworks that fall under three categories – Configuration, Offering, and Experience. The former is most internally focused related to the workings of a business and away from customers, and the latter is most apparent to the customers. Offering is a combination of both.

Doblin’s framework can be a great catalyst for strategists and managers to think about transformation and escape from limiting mindscapes. Any single type or a combination of them can be used to lead business innovation.

Five Principles to Build Innovation Instincts

Organizations pursue all kinds of paths to breakthroughs. Some set up their venture-capital arms to leverage ideas generated at startups, and some create R&D hubs. Many others also rely on university partnerships and acquisitions.

Since innovation comes from stumbling more than you soar, the quest for it must become a routine, instead of it being an occasional thing, or something taken up by a certain cool group of people only.

Managers and strategic thinkers at organizations can follow these principles (we call them hygiene factors) to embed innovation thinking into the organizational structure and create an environment that promotes new ideas.

1. The role of dissenters, outsiders, and Cassandras.

Dissenters at organizations are often snubbed. Outsiders are considered as threats. And the bad news bearers, aka the Cassandras, are never heard. When, in fact, they are the richest source and raw material for breakthroughs.

Innovation thrives on uniqueness and novelty – be it of products, revenue, or process. You cannot escape the limitations of your mindscapes without encouraging ones who come with a different mindset. Many successful companies bring in outside talent to get some fresh blood flowing.

Your disregard for contrarian thinking not only prevents you from tapping into those fresh insights but also sends a message to the larger organization that discourages new ideas.

2. Importance of tinkering time. The 15% principle.

3M, an American multinational conglomerate has a 15% rule that invites employees of the company to spend 15% of their time in a day on “experimental doodling” or simply working on their pet projects. Post-it notes and multilayer optical films for laptops and smartphones are some innovations at 3M that were created this way.

A similar approach is followed by Google, which it calls 20% time. A few of Google’s best products – Gmail, AdSense, and Google News – owe their existence to this employee tinkering time.

By giving a little slop or freedom, such rule acts as a breath of fresh air to the otherwise mundane rigid routine.

3. Being better as well as being different.

Most strategists face the classic dilemma: Should I invest in developing new products or should I improve the existing ones? To be successful, one must do both.

At its core, it’s the principle of working toward being better as well as being different. The former entails focusing on your existing strategic position and improving it by engaging in restructuring, refocusing, process reengineering, and employee empowerment, among others. The latter is about identifying new and unexploited customer segments (who), identifying new customer needs nobody else is fulfilling (what), and figuring out new ways of producing, delivering, and distributing (how).

4. Asking the right questions.

It may sound weird, but correctly formulating questions is more important than finding solutions. Asking intelligent questions that expose a variety of angles of an issue is an art. It proves more productive than collecting and analyzing zillions of data.

Any strategist can use good questions as a trigger for a good strategy.

One way is to refuse incomplete answers. Be patient and work toward creating solutions. Instead of defaulting to trade-offs, resolve tensions by finding out other ways that satisfy the problem. Ironically, to reject half-baked answers, you would need to be comfortable with ambiguity. Not in a matter of becoming complacent, but in your depth of understanding about it. So that new answers can emerge.

5. A pledge to a continuous search for a strategic position.

Bill Gates once expressed,

We have done some good work, but products become obsolete so fast. I don’t know the number before our doom comes.

Since no strategic position remains unique forever, it is important to incessantly work toward improvements as a principle. Those who become too comfortable with present success, soon find their once impregnable position to be captured by someone else.

Successful breakthroughs come not by trying to beat the dominant player at its own game, but by changing the rules of the game. It requires creating strategic positions, not in sight of anybody else. Certified Strategy professionals are equipped with a wider understanding of the business world, and a novel strategic mindset to help multinationals win and rebound.