Strategy vs. Business Model innovation

A post on the Innovation Excellence blog asks, “Is business model innovation just another name for strategy?” The author, John Steen, answers in the affirmative in the case of incremental innovation, but argues that radical business model reinvention reaches beyond the conventional strategy toolkit.

I think that strategy and business model innovation diverges when we talk about radical business model innovation. Why? Because strategy is still based upon conventional thinking about planning, prediction and measurement. Moving to very different business models needs the tools and concepts from innovation management rather than predictions and plans from strategy textbooks. Tools such as real options and the three horizons will help stage the innovation process to reduce downside risk and capture the upside. Innovation jams and lead-users might be useful to get new ideas on other business models. Stage-gate methods might enable us to trial new business models and scale up as some models show signs of being successful.

Integrating Sustainability and Corporate Strategy

Integration of sustainability commitments into a company’s competitive strategy plan will increase the likelihood of ongoing funding.

More and more Fortune Global 500 companies are following this approach. Ben Packard, VP of global responsibility at Starbucks described his company’s rationale like this:

At Starbucks, sustainability and strategy are now integrated at the strategic planning level. The global responsibility strategy is driven at the enterprise, strategic planning, and annual operating planning level. One reason we do this is because the bigger costs of driving changes in our supply chain occur outside of the global responsibility budget.

The road to sustainability integration into competitive strategy is difficult. But companies such as Starbucks, UPS, Centrica, and Hitachi are employing three common steps to create “sustainability infused competitive strategies.” These steps include:

Seek natural ways to tie sustainability and strategy together

Connect sustainability to opportunity

Integrate materiality issues into competitive strategy

via guardian.co.uk

Good examples of how leading companies are ensuring corporate sustainability initiatives provide value and do not get marginalized.

Port Metro Vancouver CEO on collaborative planning

To me, collaboration must reflect three critical elements:

Number 1: Collaborative strategy development. This is the building block, the creation of a common vision, the foundation upon which we build commitment, trust and accountability. The time of thinking and acting individually has long since passed.

Number 2: Joint investment. Collaborative financial commitment to the joint strategy is the means by which we execute our strategic vision, and investing jointly solidifies mutual commitment and leverages each individual investment many times over.

And, Number 3: Collaboration in operational measurement and improvement. When we define and refine mutual benchmarks and expectations, together we fulfil our commitment to reciprocal accountability and we maximise the operational and thus commercial and economic benefits of the investments that every partner has contributed.

Having advanced these three critical elements of collaboration, we can then offer an option for customers, a truly integrated reality, and not just promotional repackaging.

I propose to you that the new and powerful value proposition for the Vancouver Gateway is this: By collaborating and completely aligning — even integrating — our business objectives and outcomes, we can leverage our individual investments, better mitigate risks, more dependably deliver the reliability and consistency that our customers demand, and deliver the socio-economic and environmental benefits that our communities deserve. We can accomplish these many goals while also generating the largest economic return for every dollar invested in any Canadian Gateway. These are the realities, and the real strengths of the Vancouver Gateway.

via portmetrovancouver.com

This is an excerpt from a Nov 23, 2010 speech to the Vancouver Board of Trade by Robin Silvester, President and CEO of Port Metro Vancouver.

Good to see a focus on bringing additional voices to the table to shape strategy, but here’s hoping this “collaboration” reaches beyond just government and industry to include citizen and First Nations perspectives.