Sunday, January 06, 2008

Big Think Strategy (Harvard Business School Press, 2007) by Bernd Schmitt

Big Think Strategy (Harvard Business School Press, 2007) is an interesting and thought-provoking book. As Schmitt notes (pg. 15), “data, spreadsheets, and analytical charts are mostly reactive tools that illuminate the past. They cannot envision strategies directed inherently towards the future. They are good for diagnosing problems, not for creating big ideas and powerful solutions…” I could not agree more. Too often executives are paralyzed by analysis and are risk averse. As a result organizations make incremental changes and adapt to their environments in a reactive manner. Only a handful of organizations have the capabilities, and will power, to truly undertake risky and breakthrough innovations.

Recently, with two colleagues, Yukika Awazu (Bentley College, USA) and Ashley Braganza (Cranfield School of Management, UK), I wrote a paper that examined challenges faced by incumbents in developing sustainable innovation programs. This paper can be accessed via the Institute for Innovation in Information Management (see and will be forthcoming in Research-Technology Management (see LINK). We open our paper with the following paragraph:
“When facing disruptive innovation, incumbent firms often exhibit incompetence and respond inappropriately. Organizational structures, routines, and systems that are tailored to existing operations prevent incumbent firms from responding to and leading disruptive innovation. As firms grow, they design systems, processes, and structures that are suitable for current operations. In this way, organizations can minimize their costs and increase their operational effectiveness. Hierarchies reduce transaction costs and increase efficiency. However, efficient, rigidities embedded in functional hierarchies and authority structures do not fit with the natural flow of innovation processes. For innovation to occur, ideas need to be represented freely, exchanged, and filtered. Idea generation activities are typically done in informal or open environments. Cross-functional departments or loosely coupled structures are better for mixing people in various knowledge domains. The optimized operational structure may hamper incumbent firms, particularly with respect to disruptive innovation. Operational protocol is often unsuited for the quite different processes of calibrating inventions and turning them into innovation. In this case, incumbent firms tend to invest in daily, minor, incremental innovations that fit their current organizational design…”

Given my interest in the topic of strategic innovation, I was pleased to find a book that proposes a framework for thinking about breakthrough innovations. Schmitt focuses his comments on how should organizations (1) source new ideas, (2) evaluate risky (and breakthrough) ideas, (3) commercialize ideas by developing enabling strategies, (4) execute big-think strategies, (5) lead via big-thinking, and (5) develop sustainable processes for having repeatable success with big-thinking. The book is laden with interesting examples; the writing style is highly conversational; I enjoyed reading the book; Highly recommended!