Innovation as Emergent Strategy

October 13, 2010 by  

One of our favorite writers on strategy is Henry Mintzberg. He is an academic and is co-author of one of the major textbooks on strategy, The Strategy Process. But he is also a gadfly with a real sense of humor. In fact, one of his recent books, Strategy Bites Back, has a photo of a shark ready to bite any strategist that takes him or herself too seriously. In a number of his books, Mintzberg uses a graph similar to this one. 

This graph looks like a cop out when you first see it. It’s basically saying that you will have a strategy but things will happen along the way and your intended strategy is not going to be the same as your realized strategy.

It’s almost like the bumper sticker that says “sh*t happens.” This concept of emergent strategy doesn’t fit with the image of an in-control businessperson creating and executing strategy in a scientific, “business-like” manner. But the longer you work in business, the more you (or at least, we) realize the wisdom on this graphic. Of course you adapt and change and learn along the way. That’s the way it should be. As we have worked to understand the implications of the knowledge economy, this drawing has taken on a new meaning to us. Because emergent strategy is another way of describing innovation.

The Mintzberg figure is a complement to the triangle graphic we used when talking about organization charts. Deliberate strategy is developed and communicated primarily from the top down in the vertical axis. Emergent strategy is developed along a horizontal axis. Emergent strategy is much more about the bottom up and the outside in. As Mintzberg’s graphic illustrates, emergent strategies are ideas that bubble up from the bottom of the organization. Here are some examples from the automotive industry. There are the incremental ideas like we described in the Toyota factory that come from people on the line who make small improvements every day.

But there is also the re-creation of the car production process being undertaken by the Tata Nano, a $3,000 car that will be shipped as components to road-side dealers who can assemble (and repair) the car. Or the re-creation of the entire business model at Local Motors, another Boston-area start up. Local Motors is using a Web 2.0 community to design cars suited to different regions of the U.S. and a “micro-factory” model to manufacture each design in the local market. You could almost say that shifting to community design is a way of institutionalizing emergent strategy. There are also countless companies working on the problems of fuel efficiency and carbon emissions in cars. As mentioned above, there are opportunities for fundamental innovation to re-make a great number of industries such as this one.

To meet these challenges, every company will have to pursue both kinds of strategies. A great example is the recent success of Apple’s iPod. This product became a blockbuster and continues to evolve based on both deliberate and emergent strategies. Apple began this product as part of a deliberate “digital hub” strategy that sought to take advantage of the growing market for consumer digital devices.

The final product was, however, the product of an emergent strategy that created a strong innovation ecosystem at Apple that fosters and encourages experimentation. In the case of the iPod, this ecosystem included partners that developed both the hardware and the software. The iPod continued to evolve and the switch to a very deliberate strategy involved getting access to music catalogs, aggressive advertising and market segmentation. The challenge for Apple and, indeed, all corporate leaders is to manage both of these processes and know when to use each one to greatest effect.

Adapted from Intangible Capital: Putting Knowledge to Work in the 21st Century Organization by Mary Adams and Michael Oleksak.

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