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 / First Quarter 2001 / Issue 22(originally published by Booz & Company)


The State of Strategy, 2001

Strategic Experimentation
One way of embracing uncertainty was contributed by Ian C. MacMillan of the Wharton School at the University of Pennsylvania, in a presentation entitled The Entrepreneurial Mind-set: Strategic Experimentation for Turbulent Times. "We're seeing a convergence between more conventional strategic thinking and entrepreneurship,'' he said. "What has emerged is a concept of strategic experimentation. Because the world is so complex, it's no longer possible to think of strategy coming off a platform rooted in the past."

Mr. MacMillan said that a study of habitual entrepreneurs reveals "an underlying pattern of decisions they follow that are 'followable' by huge organizations as well. It just requires a shift of mind-set.'' Strategic experimentation then becomes a constant search for opportunities. Within an enterprise, "everyone plays, everyone feels it is their duty to search for opportunities,'' he said. The firm must "deploy simple, powerful tools to engage the intellect of everyone in the firm and around it to seek and pursue opportunities.''

The watchwords of strategic experimentation are simplicity, self-confidence, and speed, Mr. MacMillan said. But he readily conceded that the practice carries its own dichotomy. "Your established business needs a deliberate strategy; your emerging business needs a discovery-driven strategy,'' he said. "There are not many companies that can do two diametrically opposite processes. The strategists of the future are going to attend as much to the process of strategy as the content."

There were doubts about the ability of many companies to make that transition. Grant Miles, of the University of North Texas, said he found most companies ill-prepared for an age of continuous innovation, and little consensus among strategists on how to proceed. "We're not good about thinking about the generation part of wealth creation,'' he said, presenting a paper entitled Wealth Creation and Entrepreneurial Strategies: Process, Meta-Capabilities, and Barriers, coauthored with Charles Snow, of Pennsylvania State University, and Raymond Miles, of the University of California at Berkeley. "Much of what we study is about appropriation, because our typical view is that generation is a one-time event. With most corporations set up for appropriation — capturing the rent — that makes it very difficult if we're moving into a period where generation will occur over and over.''

Mr. Miles said the new era will require greater collaboration between firms, and a business model based on market exploration. "Instead of defining a market position, or trying to exploit it, we're looking at continuously exploring new markets,'' he said. Profiting from such continuous exploration "requires recognition of the innovation, the potential value, and the means to benefit from it. The problem is that much of the time, these three things are not present in the same place, so you have the need for true sharing of knowledge and collaboration among firms. This is one that's going to be tough, because it is in some ways the opposite of the appropriation mind-set that's carried us for 100 years.''

Strategy Genes
Although much of the conference was devoted to papers exploring the application of traditional strategic models, like real options reasoning or the resource-based view of the firm, it also featured attempts to define new frameworks, or at least new metaphors, to grapple with the complexities of managing in an entrepreneurial time.

In a paper entitled The Genes of Strategy Innovation, David Choi, fellow of global leadership at Harvard Business School, Gary Hamel, of the London Business School and founder of Strategos (a management consultancy), and Liisa Valikangas, of the Stanford Research Institute and Strategos, applied the model of the genome to explore how innovations arise and how they are distributed among firms. The genetic metaphor represents "a shift from analyzing companies and their strategies to analyzing innovations,'' said Ms. Valikangas. "It helps us explore ideas and memes, and how they travel across companies and industries."

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