Strategy Innovation and the Quest for Value

Why, asks Gary Hamel, has the strategy star begun to dim? Why is strategy no longer a "big idea" in most companies? Strategy innovation is key, he says, to creating new wealth. Only those companies that are constantly able to reinvent themselves will survive in a discontinuous world. Hamel points out that, while strategists spend a lot of time thinking about the changing context and content of strategy, they pay little attention to the conduct of strategy -- the task of strategy making. No one seems to know how to develop innovative strategies that create wealth. He calls for the development of a theory of strategy innovation and offers several propositions: that strategy is emergent, much like life itself; that strategists have been working on the "strategy," rather than on the preconditions that give rise to strategy innovation; that strategy is poised on the border between perfect order and total chaos; and that great strategy is both luck and foresight.

Hamel offers five preconditions for the emergence of strategy:

1. The entire organization, not just top management, should have a voice in creating strategy. The process must be pluralistic and participative.

2. Conversations about strategy must cut across industries and organizations so that knowledge can be combined in new ways.

3. People will embrace change when they see opportunities for rewards and growth.

4. Managers must help companies reconceive themselves, customers, competitors, and opportunities.

5. Companies must do some market experimentation to determine which new strategies work.

In the end, Hamel says, we must spend less time working on strategy as a "thing" and more time understanding what gives rise to new strategy. Only then can we discover the source of corporate vitality.