As we discussed last week there is a difference between an Incremental Strategy and Innovation Strategy.
All strategies are designed to improve performance, which means you are going to do something different than what you are doing. Whenever you establish a new strategy, you are establishing a desire to change something. Whether it is incremental or innovative, managing strategy execution is managing change.
As the diagram shows even incremental strategy has a slope to it, meaning that some change management is going to be called for. To increase performance over time, either path requires changes in how the organization operates. Yet clearly, the change management process for an innovative strategy will be much more significant than for an incremental strategy.
For many companies, strategic plans are incremental in nature and very close to operating plans. These are mostly plans to improve operating effectiveness and extend the current business model. But when you are setting a strategic direction that is innovative, trying to manage the strategy execution the same way will be devastating and unlikely to succeed.
What determines an innovation strategy is the degree by which you are making changes to the basic business model. This model is the norms, rules, metrics and processes of how the organization produces its results. (For a more detailed description of this refer to Harvard Business Review Article "Reinventing Your Business Model").
Innovation strategy requires a different focus that addresses the forces within your organization that are operating mostly under the surface at the unconscious level. Mostly we pay attention to what we do and how we do it, what we can observe and measure. The forces associated with the activity we perform.
And there are other forces operating within our organization that we also need to pay attention to. There are relationship patterns that are unconsciously affecting results. For example somehow everyone knows to go to Bob for any of the key issues around fulfillment. But there is no identified process that says, "go to Bob".
The same is true for other forces, forces that unconsciously define how we interact with the customer, how we choose projects to bid on, how we collectively respond when the boss is upset, and the many unstated yet felt rules and values of the organization. Nothing is specifically defined yet everyone behaves consistent with these energy patterns.
The fact that much of our organization behavior has become unconscious is mostly a good thing; it has been incorporated in the semi-autonomic nervous system of the corporate body. It's a lot like learning to ride a bike. Eventually we become proficient because most of the rules for riding and balancing have become part of our unconscious, part of our semi-autonomic nervous system. This is what allows an organization to operate with a high degree of efficiency. It is also what makes changing the basic rules for how we operate so difficult and why we have to make those rules conscious once again.
What we call resistance to change is really nothing more than energy that has formed very strong flow patterns. Our organization only appears to be resistant to change because these energy patterns usually remain under the surface of what we pay attention to.
To manage the execution of your innovation strategy, we must first identify the existing patterns of energy flow. Like the processes of activity that we normally think of changing, we can also change these energy flows. Often slight changes in the patterns of relationship energy and context energy, the energy that defines our meaning and purpose, can create significant changes in results.
It is during the innovative shifts in strategy that the Context and Relationship Fields have the most impact. If you remain unconscious to them, they could very well work against you. However if you include specific strategic initiatives to reframe them, they will carry you on a wave of success.
Have you had to execute an innovation strategy where the business model was changed? Share with us what your experiences has been. How did you address the issue of context and relationships changes that the strategy required?