Dynamic Strategy Processes
for Innovation
ED HESS
Professor and Batten Executive-in-Residence
MICHAEL LENOX
Professor and Executive Director, Batten Institute
The Research Hourglass
What drives innovation and growth?
How does one create and manage a growth strategy?
Change is the new constant…
 Globalization
 Technology
 Hypercompetition
 Demise of Sustainable Competitive Advantage
 Shorter Product Lifecycles
 Secrecy and Surprise is Difficult
 First Mover Advantage Temporary
 Velocity of Change Is Increasing
Yet, the current approach to Strategy Making is static
 Historically, strategic analysis has been static:
 Driven by 5 Forces, Competencies, BCG 2 X 2
 Driven by Porter’s 2 Basic Business Models
 Historically, a Top-Down Process
 Traditional strategy tools were created in a less
dynamic business environment
New knowledge has emerged about growth & innovation
 In last 10 years, research has highlighted that growth and
innovation are dynamic processes:


Growth results from experimental learning and requires the right
kind of internal environment and processes
Growth is an iterative process that requires adaptation, constant
evaluation of new inputs and learning with frequent review of
resource allocations
 Classical economic models do not adequately model
growth:


Biology & complexity theory better model growth & innovation
Schumpeter and behavioral revolution in economics
Growth demands a new approach to
Strategy Making!
• Modernized for this high velocity
hypercompetitive global business environment
• Recognizing the dynamic, learning process that
underlies growth and innovation
The Emerging Darden School of Thought
 Venkat’s work on entrepreneurial ecosystems
 Saras Sarasvathy’s work on effectuation
 Jeanne Liedtka’s work on growth leaders
 Michael Lenox’s work on open innovation and dynamic
competitive models
 Raul Chao’s work on innovation portfolios
 Ed Hess’ work on growth systems and processes
Our Dynamic Strategy Model
The Competitive Lifecycle
DISRUPTION
GROWTH
Innovation Capability Assessment
Develop
Commercialize
Scale
Improve
Culture
Culture
Culture
Culture
Structure
Structure
Structure
Structure
Processes
Processes
Processes
Processes
People
People
People
People
Leadership
Leadership
Leadership
Leadership
Measurements
Measurements
Measurements
Measurements
Rewards
Rewards
Rewards
Rewards
Unique
Sustainable
Inimitable
Growth Initiatives Portfolio
Long-Term
Short-Term
Bottom-Line
B
Top-Line
A
F