Strategy and Innovation

Is strategy still relevant in today's turbulent and uncertain environment? As are many other things, the subject of strategy is also shifting to keep up with today's world. The definition of strategy is also changing. It is evolving from a plan of actions to achieve future goals to a consistent and justified logic aiming progress by making choices. A strategy is essentially focused on achieving a vision. It involves uncovering critical factors of the situation and designing ways to deal with them and overcoming obstacles.

Two prominent names in the world in terms of strategy are America's Michael Porter and Canadian Henry Mintzberg. Of these, Porter is one of the theorists of the pre-designed strategy approach. Porter's Five Forces Analysis is a framework for trying to arrive at a business strategy by examining intra-industry competition, threat from new entrants, threat from substitute products, bargaining power of suppliers, and bargaining power of buyers. The problem is that this work, done once a year through an off-site meeting on a weekend, becomes obsolete before the ink dries in today's volatile world. Moreover, this type of "strategic planning" approach is based on the assumption that the future can be predicted to some extent by looking to the past. However, today we know from bad examples that this is not a valid assumption. The relatively stable business environment of the past no longer exists. For this reason, the concept of strategic planning has lost its meaning. It is necessary to reinvent the strategy approach in a way that is suitable for today. At this point, Henry Mintzberg's "Emergent Strategy" approach is a very useful concept. As the name suggests, the emergent strategy is a flexible, dynamic model shaped by developments. The strategy emerges over time as goals conflict with a changing reality and adapt to the new situation. In Emergent Strategy, the company learns what works in practice. It’s about a strategy that differs from static plans and can be adapted with developments. Studies show that approximately 65% of large companies have difficulties in implementing their strategies. There is no doubt that these companies are not taking a flexible and dynamic strategic approach. Otherwise, the changing conditions would not be a hindrance. In fact, today's analysis and predictive capabilities facilitate a dynamic strategy.

Why did the emergent strategy approach supersede the planned strategy? Because no matter how hard we try, we cannot control the variables that affect business decisions. To understand why strategic flexibility is necessary, it is enough to look at the events that took place in the world in the last few years. On the other hand, while the companies were involved in one or a few related industries in the past, it has become unclear today especially what innovative companies do. What shall we say if a question is asked about which industry Google is in? It is a fact that this makes it difficult to make a sectoral analysis. It is also easier than before for people who have a good idea in some areas to turn those ideas into action. Who can say that 3D-Printing technology, cannot redefine the manufacturing business as we know it?

Innovation and strategy are inextricably linked. Innovation is, on the one hand, a means of realizing the company strategy, and also a shaper of the strategy. Companies that don't know what their core business is, like Google, Apple, or W.L. Gore, are very successful. The reason for this is that these companies follow a dynamic and continuously adaptable strategy. For example, Apple had seen years ago that the multiplicity of devices such as mp3 players, digital cameras, digital camcorders, mobile phones, and digital planners make life difficult for customers. While compatibility issues were frustrating customers, it demonstrated its strategic flexibility by first turning Mac computers into a digital hotspot, then solving all those needs in a well-designed device like the iPhone. Apple also dropped the word "Computer" from its company name, expanding the playing field to cover many areas such as media, communication, and entertainment. Similarly, those looking at Google as a search engine company cannot understand why they are entering the "Autonomous Vehicle" business. On the other hand, Yahoo that couldn't adapt quickly enough eventually came to the point of acquisition by Verizon Media.

In innovative companies, the strategy is formed not only from top to bottom, but also with contributions from all parts of the company with the possibilities brought to life by innovation outcomes. Innovation supports the simultaneous formation and implementation of the strategy.