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


The State of Strategy, 2001

Just as genes are conserved across species, so that a given DNA sequence performs the same function in yeast, mice, and humans, so too can innovations cross industrial boundaries, Ms. Valikangas said. But just as genes produce different results, even in the same organism, depending on their interactions with other genes, so can innovations play out very differently in different firms.

"Just because you have a particular idea doesn't mean it gets replicated in a particular way,'' Ms. Valikangas said. The Strategy Genome Project asks, "Are there innovation genes that transcend companies, industries, and time?'' The conclusion is yes, and that such innovation genes survive companies and spread from one industry to another. "Novelty is less in the content than in the context,'' she said. "Innovation is combinatorial rather than visionary.'' Her advice: "Make your company a giant DNA lab,'' because, in business as in biology, diversity breeds health.

The "Ba" Culture
Another novel metaphorical view was presented by Hiroyuki Itami, of Hitotsubashi University, in his presentation on The Strategic Management of Ba. Ba is a Japanese word that translates literally as "place.'' Used colloquially, it means a place where people interact and where something common emerges. "You create an entrepreneurial culture by setting up a forum of action where people are invigorated and empowered,'' Mr. Itami said. "That's what I call ba.''

In Mr. Itami's vision of ba, management's role "is not to control people, it is to let them initiate and collaborate. Ba positions firms for the current environment, a world of continual and cumulative innovation across a wide range of fronts, where people's roles change constantly,'' he said. "Ba is an enabler.''

Mr. Itami, Mr. Miles, and Mr. MacMillan all spoke of the need for self-organizing teams in the quest for a more entrepreneurial strategy. So did Gwendolyn Lee, a graduate student at the University of California at Berkeley, who explored the Open Source software movement in her paper, Linux Kernel Development as a Model of Knowledge Creation.

"How does a distributed group of individuals, dispersed across space, time, and organizational boundaries, create a useful product?'' Ms. Lee asked. "The popular myth is that self-organization is chaotic. We found clear division of labor based on self-selection." She noted that the Linux operating system has one project leader, Linus Torvalds, 121 people devoted to maintenance, 2,605 developers, and 1,562 individuals working on debugging, according to the Linux mailing list on the Internet.

Traditional Planning Lives
But there were also testimonials for traditional strategic management. Barrett A. Toan, president and CEO of Express Scripts Inc., a pharmacy benefits manager, said his firm still does three-year strategic plans, and finds that they greatly simplify management. "Our approach is extremely analytical, written out, and thought through,'' he said. "It's partly [via] thinking through the issue rigorously that we understand what we really think. It's nothing to do with being correct or incorrect.''

Garth Saloner, a professor at Stanford University, seconded that view. "The locus of activity has migrated from engineering to the business school, and issues of strategic management are first and foremost,'' he said. "The landscape changes so rapidly that the challenge is often posed whether traditional strategy can play a role. I believe many of the tools and frameworks carry on, and that good strategic management is at a premium in the New Economy.''

But, as conference co-chair Chuck Lucier, senior vice president and chief marketing officer of Booz-Allen & Hamilton, warned, if those processes are designed to ensure stability, they will be counterproductive in a market in which change is constant and pervasive. "Our challenge," Mr. Lucier said, "is to find that 'something new' for the next generation. I haven't seen that framework that is not mired in the past but speaks to the future."

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