The need for new strategy tools

What strategists need _ Engage Innovate Blog

Since 2010, we’ve been on a misson to “develop and share new strategy tools”. Our work goes under the title, ”Strategy Tools for the Next Generation“. In the the latest McKinsey Quarterly, the consulting firm lays out their case for a world in need of new strategy tools. It’s a strongly recommended read

The evidence is abundant. The world needs new strategy tools. The process of strategy; how companies shape their own future is rapidly changing. Yet the challenge remains; how do we solve tomorrow’s challenges using yesterday’s tools. Well, simply put. We don’t. Most of the strategy tools in actual use around the world were built for a time of slower change, less integrated markets, a more stable industry structure and a far longer life-time of most large companies.

This is just the reason we are in need of new tools, new thinking and a fundementally new logic around strategy. We’ve been proposing this for a number of years through “Two Lenses on Strategy“.

Two lenses on strategy
Two lenses on strategy by: Engage // Innovate’s Strategy Tools for the Next Generation

With this background in mind, we found McKinsey’s recent “What the Strategists Need: A Meeting of the Minds”, to be an incredibly valuable contribution to the field.  In a lenghty conversation between Strategy Officers, CEO’s, Strategy Professors and McKinsey’s Head of Strategy Practice, we get a great look into the current thinking around ”the state of the discipline,…with an emphasis on innovation in a changing world”.

We’ve chosen a few sections for summary of the talk (in italic) and our own comments below.

Old tools are actively misleading

”Yes, I think we may need new tools or frameworks. When the environment changes profoundly, the maps with which we navigate it may need to shift as well. For instance, from telco to healthcare to computers, sector boundaries are changing or dissolving, and new business models are redefining the competitive landscape. So tools such as Michael Porter’s five forces, created for a more stable, more easily definable world, don’t just lose their relevance—they become actively misleading”

This is a crucial point. The stable industry structure most strategists are comfortable with is increasingly getting challenged. Rita McGrath suggests “arenas” as fields of competitive thinking. A failure to acknowledge and understand these forces, will lead executives to view the world through wrong and directly misleading lenses.

We use what we know

”One reason our frameworks often seem out of date is that managers persevere to the point of desperation with the familiar things they learned 10, 20, or 30 years ago”

This is something we see often with clients and workshop participants  – and it also explains why the field of strategy is moving slowly in established companies. Today’s top executives went to school 20-30 years ago, and the theories and tools they learned were already getting out-dated. It’s no wonder, and quite a natural explanation on “the stuff we learned, is the stuff we feel comfortable using”.

Our tools are getting out-paced 

“A major problem is that the theoretical and empirical research in strategy has moved so quickly… that its distillation into intuitive concepts and frameworks applicable to strategy-making processes of firms has lagged far behind”

Yet, the challenge is not only the executives learning slowly (see our previous point). It’s also very much a problem of academy moving too slowly. A typical strategy research project can take years to design and complete, and yet several more years and multiple reviews to get published. In the meantime, the research and emerging tools simply get out-dated. Erik Wilberg, a senior lecturer on strategy at BI – Norwegian Business School and a long-time researcher on the media industry stated, “by the time my research gets published, it’s already out-dated”. Yet, this is changing. Crowd-sourcing, built on an open, global platform is now driving speed in academic research and time-to-market. The best example has been the “The Capitalist’s Dillemma“, with it’s unique approch to research. We can expect to see more creative, disruptive models of research in the future.

First, think. Different

My view is that we need …to help executives rethink what they do”

A key starting point for any strategy process; what’s our mind-set.Our starting point is always to help explore existing dominant logics and thinking modes. Without this, most teams simply fall into the mental trap of “more of the same, within our hidden, predominant view of the world”, i.e. trapped deeply in the box.

Innovation Thinking Modes -by Strategy Tools for the Next Generation
Innovation Thinking Modes -by Strategy Tools for the Next Generation

There’s a superb selection of books, helping Strategy Officers challenge their existing mind-set. We recommend:
Creative Confidence, by the Kelly Brothers
Creating Minds, by Howard Gardner
Mindset, by Carol Dweck

Questions drive creative thinking

”Framing questions is the other tough challenge, and it’s one of the most important yet underappreciated parts of strategy development”

Yes! A core skill for any Strategy facilitator, Strategy Officer and CEO, is the ability to find and ask the right questions at the right time. The skill to ask mind-opening, exploring and energizing questions, while most people around the table simply expect another PowerPoint presentation is a trigger for good stratey processes.

Strategy is fundamentally a creative excercise 

”A strategy is not the obverse of an analysis. It usually comes from some creative insight”

Gary Hamel, Clayton Christensen, Rita McGrath, Bill Fischer, Alex Osterwalder and Yves Pigneur, Costas Markides, Scott Anthony and Mark W. Johnson are just a hand-ful of the strategy experts arguing strategy being a fundementally creative excercise. Yet, few executives are trained in the skills and tools to make this happen. Yet.

Strategic innovation is challenging 

”…but it’s darned difficult to create truly innovative strategy options.”

Strategy; from "linear plan" to "a portfolio of business models"
Strategy; from “linear plan” to “a portfolio of business models”

We see the field of strategy moving from “a linear plan” to “juggeling a portfolio of overlapping and competing business models”. Rita McGrath calls this “balance a transient portfolio” of business models.

Developing a series of strategy options is one thing. Developing and running a series of business models, and reinventing the company again and again around these various business models, that’s a whole other challenge. Today, Amazon and Apple are the two leading examples. Tesla Motors is emerging as another. Yet, the truth is, for most strategy executives today, ”…it’s darned difficult to create truly innovative strategy options.”

This is why we find our work around Strategy Tools for the Next Generation to be highly energizing and a fantastic challenge. The world is learning to work differently with strategy – and we hope to contribute to that movement. The McKinsey Roundtable is another great conversation on the topic and we will see more of these in the future. For us, the next will be in Vienna, in November, we’re we’ll be joining the 6th annual Global Drucker Forum, The Great Transformation. With many of the world’s leading strategy academics in session, we’re looking forward to the conversations on changing how the world works with strategy and innovation.

The need for new strategy tools

Why we need new strategy tools – and how to use them

M2404_blogheader

(full interview from the FEI blog, Jan. 20th, 2014)

We recently had a chance to do a Q&A with Christian Rangen & Elisabeth Ovstebo, founders of Engage // Innovate and Strategy Tools for the Next Generation: Q: Chris, over the past four years, you and Elisabeth have worked to develop a series of new strategy and innovation tools. Tell us about the background. A: Sure Valerie. The field of strategy has changed significantly over the last 10 – 15 years. But the tools and practices in most firms around the world hasn’t changed at the same pace. Columbia Professor Rita McGrath, author of ‘’The End of Competitive Advantage’’ – strategy book of the year 2013- , says “Strategy is stuck”. We very much concur with her. Q: So what are these big changes that are happening in the field? A: When we look at the world of strategy today – the big picture – we see five major trends. #1 Business models are getting broken faster #2 The life time of large firms is declining rapidly #3 The speed of x is increasing exponentially #4 Trying to handle these forces, some firms are learning to cycle through a series of business models #5 Disruptions are quickly becoming the new normal

Q: So what should companies do? A: We recommend two steps: Number one: companies should move from “strategy as analysis” to “Strategy as innovation”. This requires a fundamental shift in how strategy is perceived and requires a change in mindset, ambitions, perspectives on the future and business model logic. This is also where most innovation heroes should direct their energies – connect their burning passion to the strategic context of the firm.

Number two: strategy should shift from a “linear plan built around defending a core business model” to a “continuously shifting through business models, spread across a time horizon”. This is the simple core idea behind one of the tools, the Strategic Innovation Canvas. Think of it as juggling a high paced innovation portfolio at a strategic level. This requires constant innovation, proactive change and a series of new management skills. Rita writes well about it in her book.

Q: So why is this so difficult? A: Well, it shouldn’t be. We have ample research. There are stacks of excellent books on the topic, including ‘’The End of Competitive Advantage’’, ‘’Game-Changing Strategies”, “Strategic Transformation”, “Business Model Generation” and “Seizing the White Space” to name a few. But there’s a big gap between reading the material and “doing”. We need to move from primarily theories and text, to clear, visual thinking and hands-on training and doing. Q: And this is where your work around new tools comes in? That’s why we’ve spent the last four years, not only on original research, but on developing visually strong, hands-on, action tools. Tools that are easy to use. Tools that can be learned in a matter of hours. Tools that help executives be more successful with strategy and innovation. Tools like the Innovation Pyramid, Innovation Thinking Modes and Innovation vs. Reaction, to name three, all build on extensive research and background work. But they are easy to understand and easy to put to use, without having to go through all the textbooks themselves. That’s the key. So far we have 14 tools online, with more designs in the pipeline. All of them available for free at www.strategytoolsforthenextgeneration.com, under the Creative Commons philosophy. Q: Elisabeth, what are some of the effects you’re seeing with firms putting these new tools to use? A: Well, there are three main effects. First, innovation quickly comes an integral part of strategy. People see that new thinking and new ideas – strategic creativity – becomes a core asset. Tools like Strategic Innovation Canvas and Three Levels of Business Models just enables this very natural move of strategy = innovation Second, strategy becomes much more of a dynamic and inclusive process, through more creative workshops and lots of visual thinking. Working with visual strategy facilitators, like Holger Nils Pohl is just a fantastic experience. He will also be joining our workshop, by the way. Finally, people develop a shared understanding, a shared language and shared action around strategy. Alex Osterwalder has worked energetically to design a shared language around business models. We’re seeing the same thing around the wider field of strategy. We should also add, for most clients, we make strategy fun and exciting again – like it should be. Teams we work with drive strategy with a far more innovative mindset and as a result a more innovative strategy follows.

Q: And you will cover some these tools in your workshop? A: Yes, we will. We are very happy to get a chance to present and share our work at FEI. This is a fabulous arena with fellow innovators from around the world. We always learn so much. Our workshop will be very much a hands-on, doing, working session. It’s pretty exciting to put 25 – 30 executives in the same room and see them work with each other, quickly helping each other solve actual strategy and innovation challenges. While we will use some cases, like Tesla Motors, Google and Amazon; our focus is doing and learning. We want to see people master new tools in 3 hours – rather than just hear about them. We try to stay very interactive.

Q: Chris, what are some of the challenges you’re facing when working with these tools?
A: Throughout our executive education programs, our workshops and consulting projects, we see two key challenges.
The first is “lack of time”. Over and over again, we find key management groups being simply too busy, too operational to contemplate fundamental shifts to their strategic logic. For many, replying e-mails and handling current clients gets all their attention. The day-to-day operation gets in the way of time to seriously dive into new strategy tools and radically change the trajectory of their futures. We call it the “pull of the present”. In our experience, this is clearly the biggest challenge.
Second, is a perceived a lack of strategic creativity. “I’m not a creative person” or even worse, “we are not an innovative team”. We hear this a lot. But it’s not true. Building on the words of David Kelley of IDEO, “Anybody can be strategically creative  – you just have to learn how’’ (ok, so we added strategically). His recent book, Creative confidence, is a great read on this subject.  But really, we spend a significant amount of time building creative thinking skills and revealing how the mind actually works – and how this impacts and inhibits our innovative thinking. Once teams crack this code, creative strategic options flow forward and truly create engagement and buy-in.
Q: On a closing note, what would be your top two advices on what not to do for firms moving into 2014 on the topics we are discussing?
A: Number one; don’t believe your present core business model will last as long as you think.
With the speed of change increasing exponentially, a lot of companies will face disruption and industry upheaval in the coming decade. Start laying the groundwork for your next series of core businesses models today.
Number two; don’t treat strategy and innovation as two separate disciplines.
The strategy people and the innovation people should be connected at multiple levels. They should run joint programs, workshops and company-wide processes. Working together, they should define strategy roadmaps, experiment with new business models, run innovation portfolios and redefine the way strategy gets done. This is truly where innovation needs to be happening, at a strategic level.
Editor’s Note:
Christian Rangen & Elisabeth Ovstebo are founders of Engage // Innovate and Strategy Tools for the Next Generation. They are strategy & innovation consultants, business school lecturers, authors, frequent innovation speakers and happy owners of a Brazilian management camp. Christian is also a member of FEI’s advisory board.
Since 2010 they’ve been on a mission to develop new strategy & innovation tools. So far, 14 tools are published at www.strategytoolsforthenextgeneration.com. They work with multinational companies to establish new innovation and strategy practices. They also run Engage // Innovate Ventures, investing in disruptive business ideas.
Meet Christian & Elisabeth at their half-day workshop, “Your Future Innovation Tools: Strategy Tools for the Next Generation” at Front End of InnovationMunich and Venice.
* All illustrations by Holger Nils Pohl and Christian Rangen.
Why we need new strategy tools – and how to use them

Joining the MIX

Welcome to the MIX. The global Management Innovation Exchange.
Mission: reinvent manangement

Today is the final day of entering this round of the global innovation competition; Innovating Innovation Challenge. Set forth by Harvard Business Review, McKinsey and the MIX, the competiton gathers global thinkers and doers around innovation for mutual learning and inspirations. Among Norwegian firms, Statoil has been duly noted in 2012. This year, Finn.no and our client Peanuts have both entered the MIX. We’re proud and delighted to see more Norwegian firms entering this global innovation network.
We’re also delighted to share that Strategy Tools for the Next Generation is now featured as one of the “Hacks”. Read more.

MIXs

Joining the MIX

Engage // Innovate at World Innovation Convention

The brochure for the upcoming World Innovation Convention 2012 is just out – and it looks stunning.

Engage // Innovate are truly looking forward to being back in Cannes this year. On day one we are running a 90 minute workshop on the Innovation Pyramid.

Download the entire brochure here.

Engage // Innovate at World Innovation Convention

Engage // Innovate at World Innovation Convention

Engage // Innovate at World Innovation Convention 2012 from Christian Rangen on Vimeo.

Would you like to experience one of Europe’s most exciting innovation conferences? Sign up here. Would you like to experience one of the amazing, highly interactive workshops, learn more here. Curious to learn more on how you can apply the Innovation Pyramid? Read up here, or perhaps you should consider joining our ten-month program, “ledelse av innovasjon“(in Norwegian), starting September 2012. We are Engage // Innovate. We help companies make innovation happen.

Engage // Innovate at World Innovation Convention

Engage // Innovate celebrates year one

‘’Here’s to the crazy ones. The misfits. The rebels…..Because the people who are crazy enough to think they can change the world are the ones who do”
– Apple computer


Dear friends, partners, clients and students

One year ago we founded Engage // Innovate on the idea of helping clients make innovation happen and drive strategic transformation. We set ourselves some audacious goals. We call this #Piratethinking. Today we celebrate year one. We are proud to say it’s been a insanely great year.

We have met and worked with a number of bold and exciting people on innovation, strategy and leadership. Statoil, Aibel, SR-Bank and Gjensidige are some of the firms we’ve worked with. Christian, through his teaching at BI, has taught hundreds of students on bachelor and executive programs; all providing input and feedback on our management thinking. Second, we have developed a range of ideas, tools and concepts; all helping our clients making innovation happen. We’ve helped companies think big and dream bigger. Finally, our social media work has allowed us to connect and interact with thousands of enthusiastic people across the globe in ways that would not have been possible only years ago.

Our year one has been an amazing adventure.

Looking forward, the future looks even brighter.

This spring we are working on an increasing number of brave, game-changing client projects. We are particularly delighted to be allowed to judge the upcoming StartUp Weekend Stavanger. In May we publish our book, “Dream Bigger – your personal innovation sketchbook”. This summer we’ll spend time at Villa Vista Taiba, Brazil, kitesurfing, researching and writing. In September, we launch our exciting ten-month innovation program, “leading innovation”, for up to five Norwegian companies. This fall Christian will also be teaching an increasing number of game-changing educational programs on strategy and bold management thinking at BI. In November we travel to Cannes for the World Innovation Convention, where we’ll run a 90-minute workshop on the Innovation Pyramid. In January we are back in Brazil to run another client strategy session at Villa Vista Taiba.

That’s our immediate plan.

Along the way we hope to run our new two-day workshops on “Sparking Strategic Innovation” and “The People-side of Innovation” in an increasing number of international settings. We continue to develop the Innovation Pyramid and expand our selection of visual innovation tools. We work on our upcoming book “Strategy Tools For the Next Generation”. And we aim to publish our first-ever Harvard Business Review article.

Those are our aspirations.

But most importantly, every single day we go to work to help clients make innovation happen.
So thank you all for a great year one. We look forward to the next 20.

Elisabeth & Christian

Engage // Innovate at World Innovation Convention 2012 from Christian Rangen on Vimeo.

Engage // Innovate celebrates year one