Week 8: New corporate strategies

What constitutes effective corporate strategy in a world of regulatory and technological uncertainty? It seems odd, given the premise of our course, to see an article in 2015 in Harvard Business Review suggesting that firms need an innovation strategy. One might have assumed that this would be a standard part of doing business in the 21st century.  The article itself is interesting and well worth a read as it provides a useful ‘landscape map’ of different alternative models for innovation strategy, but the basic point made is that innovation needs to be linked up to corporate strategy, in much the same way in lecture 7 we argued for the need for firms to think more carefully about how to link their strategy to the regulatory environment to gain competitive advantage.

Innovation is not just about coming up with better technological gizmos, since if that was the case then the world leading labs at XeroxIBM and Bell Labs from the 1950s into the 1970s should have led these firms strongly into the last quarter of the twentieth century.  Instead, the focus on technologies narrowly defined can lead firms into a dead end as systems and platforms shift over time. Microsoft successfully turned itself into a quasi-monopoly for two decades with a focus not on better technology but on securing market power, but it too has faded somewhat as many of its previous advantages have disappeared. Google and Apple are the latest success stories sitting on vast wealth with seemingly little obvious strategy on how to spend hundreds of billions (as an entertaining aside, see Malcolm Gladwell on the links between Xerox PARC and Apple).

As Daniel Kahneman points out, perhaps the biggest problem is that the strategies applied and the decision-making processes don’t seem to scale up with the stakes involved.

As a final exercise, hopefully you can use this last blog to reflect on whether regulatory or innovation strategies offer greater potential in your (favourite) sector.  If you want to be more specific, pick a firm (or organisation) of interest to you and provide your views on what strategies you would recommend over a ten-year time horizon.

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