The themes of technological innovation, entrepreneurship, and organizing

The Mechanism: Strategic Innovations

The transformation to highly levels of achievement is predicated on strategic innovations. Strategic innovations are radical changes to the corporation, its business units, the extended enterprise, the organization, the leadership, relationships, and the technologies, products and processes. Strate­gic innovations involve high-level investments into employees, learning, intellectual property, know-how, business portfolios, technological underpinnings, brands, and product lines. They also involve the tangibles of developing and commercializing new products and creating and building new business ventures and the intangibles of enhancing one’s reputation and acquiring new knowledge. Strategic innovations make sustain­ability and SD real for the people who are task with carrying out the actions.

Strategic innovations are a global corpora­tion’s answers to how to develop a unique place in today’s turbulent and complex business world. Global corporations seek practical approaches to their quests to be competitive and achieve ongoing success. While strategic innovations do not always result in significant advancements in competitiveness and market success, they do offer a greater probability of achieving game changing outcomes that are more difficult for competitors and would be rivals to emulate. However, strate­gic leaders often view strategic innovations, i. e.

radical innovations, as risky and subject to many perils. While it is clear that strategic innovations are more challenging, they are not necessarily more risky than incremental innovations or doing nothing when all factors are considered. While the potential results of incremental innovations are usually more predictable and successful from a product or process point of view, the actual busi­ness outcomes are often less fruitful and enduring. For instance, improving obsolete products may result in additional sales and revenues in the short term, but the resultant business performance and financial outcomes are often unchanged and the products are eventually replaced or eliminated. The investment in incremental innovations may be positive, but the business may lose valuable time and money pursuing marginal outcomes.

Strategic innovations are necessary to assure that global corporations stay ahead of the driving forces and expectations in the business environ­ment. Among the most crucial are strategic in­novations that create unique advantages for the corporation through innovative solutions, systems, and structures and build enduring relationships. Table 2 lists some types of strategic innovations.

Innovative solutions engender outstanding combinations of value creation, value innovation, and value delivery expressed and supported using the value systems and extended enterprise. Radical technological innovation is a primary mechanism for effecting strategic innovation. The strategic leaders initiate the development of new technologies using the research and development (R&D) programs and projects. While there are many variations, the corporate R&D generally involves developing new-to-the-world technolo­gies and/or products with potentially exceptional business value.

Radical technological innovations depend on external context. Exploring the global business environment and the market spaces and deter­mining how the corporation and its enterprise(s) fit the needs and requirements for the future are effective ways for initiating the long process of creating new technologies. Radical technological innovations are based on insights from the business environment and the organization’s imagination about what can be accomplished. Global corpora­tions can take a proactive approach and invest into transforming their businesses by developing new technologies that are cleaner and more efficient and effective. Some of the best opportunities are those involving eliminating the negative side of existing technologies. This results in new-to-the - world products that have superior attributes and value. Strategic leaders must allow for risk taking
and even failures to occur as the R&D people find new ways of achieving success. Moreover, creating radical innovations that solve problems for people in emerging markets are also great opportunities. Antoine van Agtmael (2007) in his book, The Emerging Markets Century, details how many of the emerging companies in BRIC countries, Taiwan, South Korea and Mexico are gaining footholds as world-class competitors through brainpower and innovation. He cites the incredible progress made by companies like Embraer of Brazil, Lenovo of China, Samsung of South Korea, and TSMC of Taiwan. These companies are vying for their place in the world.

Historically, global corporations used simple business models for managing their businesses. The general methodology employed a de-coupled, hierarchical approach that included operations management of the value system on the bottom and strategic business management at the top. Traditional business models limited the scope of the analytical framework to facilitate decision­making and simplify the interactions. Due to the lack of integration at the operating level, strategic leaders had to play a significant role in resolving difficulties within the system. The strength of the approach became the weakness.

During the mid - 1980s Michael Porter’s models of the value chain and the value system dramati­cally shifted the management constructs from a vertical organizational approach to a system ap­proach with horizontal processes (Porter, 1985, pp3 3 -35) .A higher level of sophistication is neces­sary for incorporating all of the forces impinging on the entire organization and its linkages, partners, stakeholders, and customers. An effective business model is a comprehensive management construct that forms the basis for analysis, understanding, decision-making, continuous improvement, as well as radical innovation. It is a unifying ap­proach that integrates the people, the processes, the practices and the programs into a comprehen­sive management system. Today, fully integrated business models are pivotal for success as more corporations depend on supply networks, strategic alliances, and external relationships for sustaining success. Business model innovation encompasses the whole, both internal and external, and the present and the future. It is inclusive of all of the essential dimensions in managing and leading an organization. Business model innovation involves the convergence of the solution, systems and the structure.

In Leading the Revolution, Gary Hamel (2000) discusses the ‘age of revolution’. He suggests that “it is not knowledge that produces wealth, but insights into opportunities for discontinuous in­novation” (p 14). Hamel’s business model includes “four major components: core strategy, strategic resources, customer interfaces, value networks” (p70). He incorporates into the “new innovation” model the concept of a solution (pp283-313). He views innovation as an essential element for achieving strategic success.

Given the diversity of the global competitive landscape and the expectations of people and society, the most important part of strategic in­novation is the development of talent. Unlike the business world of the early twentieth century that was based on machine-driven methods, twenty - first century corporations are based on intellectual capital. The core competencies and capabilities of the corporations are its true strategic assets. From strategic management and strategic innovation perspectives, people are the innovative force. They create the solutions and the systems. Lead­ership and organizational development address the needs of the people in the organization and how to enhance their knowledge and capabilities through learning and experience. Leadership and organizational development invoke a spirit to become the best and to build new capabilities and competencies for the emerging technologies and practices of the 21st century. It provides the means and mechanisms for the organization to acquire the new knowledge and skills to perform to the highest standards.