Strategic innovation in one

Thomas J. Watson Sr., who founded IBM, once said, "If an organization is to meet the challenges of a changing world, it must be prepared to change everything about itself except its fundamental beliefs. The only thing that remains unshakable is the fundamental idea of how the business operates."

However, no corporate strategy can be effective in perpetuity. Some companies are able to have all the parts of their business model work together successfully for many years. But one day they will lose forward momentum like a car. Others may notice a lack of power, but don't know exactly where the next gas station is, so they're just going slowly and hoping for good luck. There are also companies that have surveyed the road ahead to know when and where to add power. They simultaneously pay attention to road conditions, maps and fuel gauges and know to refuel before they get too low.

Cars need to be refueled, strategy needs to be innovative

Companies need to innovate strategically to understand the road conditions ahead, know how to keep the "fuel" in the product library sufficient, and the financial "engine" running smoothly. So what is strategic innovation? Strategic innovation is to change the business strategy of an enterprise in order to create new value for customers and enterprises. Generally speaking, strategic planning and innovation are two separate processes; strategic innovation combines these two processes into one.

A company is strategically innovating if it is in tune with a changing market and sees change as an opportunity; if it aspires to create new value for customers, it is innovating strategically; if it is willing to reposition itself and its operational processes in order to implement new and more aggressive development plans, the company is undergoing strategic innovation.

Strategic innovation is not just product innovation, but the process of applying innovative thinking to the company's entire business model. Through strategic innovation, companies can "change the game" to give their products, capabilities and assets a competitive advantage.

To compete in tomorrow's market, senior management needs to be aware of the coming tomorrow and seize new business opportunities in order to create value in the future. Implementing a strategic innovation plan requires a certain process. This process is called the discovery process and consists of five stages: preparation, coordination, exploration, creation, and planning (see the sub-column "Five Steps of the Discovery Process").

Moen's Dilemma

To understand how to implement strategic innovation, let's look at the case of Moen in the plumbing industry. The Moen Company has a long history with many "firsts" in the industry. The company has produced the first single-lever faucet, the first washerless tank system, and more. In the early 1990s, however, the company was in a tough spot. Moen was acquired by American Brands, and Bruce Carbonari was appointed as the new president. Caponari quickly discovered that in order to thrive, the company had to make changes. The company's market share is decreasing year by year. Although it is the second brand in the market, it is far behind the first brand. In addition, the company was not well positioned in the face of changes that were beginning to take place in the market.

The company's past success has been to produce high quality products and sell them by wholesalers of plumbing products. The company's business model seldom considers product styles, company marketing and retailers, and such an outdated business model has been unable to achieve new development goals. More and more female consumers have become the decision makers of kitchen and bathroom design, and they not only value the practicality of products, but also pay attention to whether the products are fashionable. The proliferation of magazines and exhibitions about home design has fueled a surge in interest, while retailers have brought plumbing products closer to the home. As a result, the market landscape facing Moen has become more complex.

Caponari began to think about how to position the company in the future market: "Around 90% of the company's sales come from products designed in the 1960s. Obviously, the sales are not satisfactory, so we need to change. But Before we can change the product or the way we do business, we have to change the way we do business, and even the culture of the entire company."

Moen's faucet purchase rate is low, with users only buying one every nine years. This became the focus of Caponnari's new "9 to 5" strategy. He asked employees to design newer and more innovative products to entice users to buy a Moen product every five years, rather than every nine years. The company moved up and down, investing new manpower and material resources to add new product lines. While companies are doing a good job of developing new products, they don't have a solid process for determining what new products end up being produced. Many employees in the company have different ideas about this. To do this, Moen needed to define a corporate strategy and corresponding product plan to achieve the desired rate of revenue growth.

Select leaders and build teams

The first thing Caponari does is to align the company's goals, and select a leadership team to lead the company to achieve this goal. To that end, he pulled three people from management: Dan Buchner, director of new product development, Maureen Wenmoth, director of marketing services, and Tim O'Brien, director of technology innovation Grace (Tim O'Brien). They form a cross-functional team from within the company and lead the team to develop a "future product roadmap" that defines how the company will meet its growth goals over the next five years.

The group agreed that in order to achieve this goal, the group must accomplish the following:

● A five-year strategic product roadmap

● A pre-emptive competitive strategy

● A company-wide commitment to being the #1 in the industry Goal

●Prediction of major future trends and events

●Explore new technologies

●Transition from "product design-centric" to "consumer-centric"

With After these ideas, Buckner, Wemmers, and O'Brien went to great lengths to identify the success factors: choose the right people, and invest enough time and money. They personally selected and established a "Periscope Project Team" composed of middle and senior leaders. The team's mission is to look at Moen's prospects from a fresh perspective, like a periscope. Buckner said: "The project is so big that it's impossible to think too far from the beginning, so the focus at the beginning is on people. We need people who are flexible, have the time, and are committed to the project. People who care about the company without being too much. They were worried that the change would impact their original scope." In addition, they formed an expanded periscope team of key executives and decision makers within the company.

After the group was established, the three leaders prepared a company status compendium so that all program participants had a basic understanding of what was to be done. This concise document includes the company's existing capabilities, resources, talent and its strengths, while also identifying possible strategic growth areas. Perhaps the most important part of the brief was an acknowledgement of the company's shortcomings, one of which was that Moen used to base its decisions on new products based on "holes" in competitors' product lines. "In doing so, we cede business strategy to our competitors," says O'Brien.

New Perspectives, New Insights

To see things from a new perspective, Moen asked a cultural Anthropologists turn to a deeper look at human behavior. The expert examines multiple homes and businesses to see how people use water and the role it plays in their lives. He observed and filmed people cleaning dishes, pets, driveways, cars, filling sinks, etc., while recording how people moved and adjusted faucets to facilitate these activities. In addition, he ranked the importance of water safety, flow rate and efficiency of use. As Wemmers points out: "The result of the investigation is that people need more than just the function of the faucet. We used to think we knew everything about the faucet. In fact, before we did the investigation, we knew very little, and we were in a cocoon."

Inspired by new perspectives on consumer behavior, the Periscope team asked to see how these behaviors might change in the future. To do this, they turn to more than a dozen recognized experts from various fields who will discuss a wide range of topics. To clarify these issues, Moen asked employees what the most pressing and hottest questions were. As a result, the staff raised a number of topics for the experts to discuss.

The purpose of the expert panel is to stimulate the thinking of the periscope group and the expanded periscope group, not to tell them what to do. Expert discussions allowed the Moen team to think about the company's business from a broader perspective. According to O'Brien, "This is the best way to identify future needs, allowing us to think in terms of present and future factors, rather than past factors."

The company held a second panel of experts aimed at It is a further deepening of understanding based on the results of the first meeting. The focus this time is how to successfully develop Moen's new business philosophy and model and apply it to market competition. The conference attendees are experts in kitchen and bathroom design, changing consumer lifestyles and trends in architectural design. A trend was raised, namely "environmental terrorism". In response to this trend, the Periscope team envisioned a new product called "PureTouch". The faucet had a built-in filter and an electronic signaling system that indicated whether the water was safe to drink, a unique innovation at the time.

New business opportunity, new blueprint

The Periscope team can now design for the future. The group developed a five-year roadmap that describes how Moen will better compete in the plumbing product market over the next five years. These include major initiatives, landmark events, and likely world and market conditions over the next five years:

● Timelines for new product launches and landmark events

● Trends and major developments in retail, consumer and government regulations Prediction of Events

●Possible Competitive Strategies and Competitors' Reactions

Buckner explained, "We have designed a detailed future blueprint based on the results of expert discussions and updated the blueprint during annual planning. We have a clear business focus and an understanding of the decisions that have to be made. Activities designed in the blueprint are implemented ahead of schedule. Three-quarters of the activities are already underway, twice as fast as planned."

For the rollout PureTouch, Moen spent several years in intense development and technical research. In the process, the company recruited a new batch of talents to strengthen its ability to develop new products. At the same time, an effective new product development and promotion mechanism has been established. The development of PureTouch and other similar new products greatly changed Moen. Now, Moen no longer sees itself as a mere faucet manufacturer, but as a full-service water supply company. In the marketplace, the new product lineup and new corporate stance send a signal to consumers and industry competitors that Moen will adhere to its long-term strategy of "becoming an industry leader through innovation".

Six months after the launch of PureTouch, Moen became the No. 1 brand in the North American residential faucet market. By the end of 2002, Moen had tripled in size, pushing the $1 billion mark in sales. The company's stock has risen 72% since the early 1990s. In all the markets where Moen's products are located, its brand is ranked number one.

Many people assessing the success of the Periscope project see this strategic innovation plan as a "catalyst" for consensus across the company on a new growth platform. The internal mechanisms and capabilities developed for these goals enabled the company to launch a range of new products that would enable the company to achieve rapid growth over the next five years, become an industry leader, and achieve its financial goals. Since then, Moen has firmed its strategy of "becoming a leader through innovation" with a new five-year innovation plan called "Periscope Two."

As Moen's experience shows, strategic innovation can have a huge impact on a company's growth and its future. Any company can discover new business opportunities as long as it is committed to implementing strategic innovation.

Original text excerpted with permission from The Power of Strategy Innovation by Robert E. Johnston, Jr. and J. Douglas Bate. The book is published by AMACOM, a branch of the American International Management Association, and the author registered the copyright in 2003. The English version can be ordered from McGraw-Hill Education (Asia), Singapore. Translated by Dai Fenghua.

Robert E. Johnston, Jr. and J. Douglas Bate co-founded The Visterra Group in Boston, a company dedicated to advocating corporate strategic planning through strategic innovation.