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Strategic Renewal Process towards Environmental Sustainability – A Longitudinal Case

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Strategic Renewal Process towards Environmental Sustainability – A Longitudinal Case
Jenni Kaipainen, Project researcher, Tampere University
Leena Aarikka-Stenroos, Professor, Tampere University
Valtteri Ranta, Doctoral student, Tampere University

Strategic Renewal Process towards Environmental Sustainability – A Longitudinal Case
Jenni Kaipainen, Project researcher, Tampere University
Leena Aarikka-Stenroos, Professor, Tampere University
Valtteri Ranta, Doctoral student, Tampere University

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Strategic Renewal Process towards Environmental Sustainability – A Longitudinal Case

  1. 1. Strategic Renewal Process towards Environmental Sustainability – A Longitudinal Case XXXI ISPIM Innovation conference – Virtual Conference on 7-10 June 2020 Jenni Kaipainen Leena Aarikka-Stenroos Valtteri Ranta Tampere University, Finland
  2. 2. Circular Economy Catalysts: From Innovation to Business Ecosystems Large 5 year project to study and advance the Circular Economy Transition with research-based knowledge, funded by the Academy of Finland (5 million euros) www.cicat2025.fi
  3. 3. Background and motivation for the study Practical need • Many technology and innovation firms are increasingly rethinking their strategies from the environmental perspective. This is because of • The sustainability mega trend (Da Rosa et al. 2013); • Sustainability pressures (Geissdoerfer et al. 2017); • Opportunities for firm competitiveness (Porter and Van Der Linde, 1995). Theoretical background & research gap • Strategy literature has widely explored strategy processes, strategic change and renewal. • More recently, it has provided scattered openings intersecting with e.g. environmentalism, sustainability and circular economy. • However, research by this far is still lacking conclusions on how to manage delivering best results in sustainability (Schrettle et al., 2014), including the implementation of organizational sustainability strategies (da Rosa et al., 2013); More empirical and longitudinal evidence is called for. 6.7.2020 | 3 Need to develop new understanding on the firm-level strategic renewal process in environmental sustainability context.
  4. 4. Approach, RQ and objective • To approach the need originating from both industry issues and theoretical research gaps, we take a processual and longitudinal approach to answer: • The paper's objective • Advancing the theoretical understanding of strategic renewal as a process that integrates environmental sustainability into the innovation and technology firms’ strategies over time.  Enabling managers to harness the overarching strategic renewal processes to develop more environmentally sustainable innovative technology business. 6.7.2020 | 4 RQ: "How strategic renewal process towards environmental sustainability is characterized and structured over time through critical incidents and eras?”
  5. 5. Methodology • To reach the research objective, the study follows qualitative research design aiming for theory development. • Our choice of an extreme case, technological forerunner Neste Oyj, enables uncovering an exceptionally successful strategic renewal process in oil & energy industry. • Longitudinal and multi-sourced data has been gathered between 2000-2019. Access to data, particularly top managers, was very satisfactory. • Analysis and mapping of the strategic renewal is conducted with critical incident technique. 6.7.2020 | 5
  6. 6. Results: Mapping the critical incidents* of strategic renewal process 6.7.2020 | 6 *Most critical incidents, which determine the era changes, marked with blue symbols
  7. 7. • Evaluating the technology (NExBTL) • Foreseeing the market opening and regulation’s development • Risk-taking in strategy • Major investment decisions • Regulation encourages market development; however, resistance in country level regulation • Building competences in renewables, srategic focus to feedstock variety is followed by success in global supply chain • Societal and NGO discussion encourages to develop, persistence in goal- setting and strategy despite the challenges • Renewable business grows and turns profitable • Strategy dialogue leads to renewed strategy and brand marketing • Regulative environment fragmentation and participation in industrial associations increases • R&D and partnering programs become increasingly important. Research competences are applied to aviation business • Strenghts: global supply chain management, feedstock diversification, emotional brand marketing • Importance of partnerships increases, including eg. customers and NGOs • Regulation is more predictable but the national fragmentation of directive regulation still causes trouble • R&D is applied to plastic and polymers business Results: Characteristics of the eras 6.7.2020 | 7 2000 – 2005 Foreseeing and risk-taking 2006 – 2010 Building the base with persistence 2011 – 2014 Visionary turns into profitability 2015 – 2019 Sustainable growth
  8. 8. Results: Strategic sub-process for each era 6.7.2020 | 8 2000 – 2005 Foreseeing and risk-taking 2006 – 2010 Building the base with persistence 2011 – 2014 Visionary turns into profitability 2015 – 2019 Sustainable growth
  9. 9. Conclusions and implications • Key findings: Our longitudinal mapping reveals the structure and characteristics of a 20-year-long strategic renewal process towards environmental sustainability through critical incidents and eras. • Theoretical contributions to several research streams • Strategy process and renewal research as we provide a highly detailed longitudinal case for structuring the process of strategic renewal and build an initial model for strategic renewal process • Sustainability research that has acknowledged the need of transiting towards sustainability but has lacked conclusions on how to manage this transition benefits from our initial model • Practical implications: • The model of strategic renewal process towards sustainability enables companies and policymakers to accelerate renewal towards environmental sustainability and facilitate sustainable business growth on multiple sectors and industries. • Future research: Identification of drivers throughout the renewal process needs more research as they would allow building stronger understanding of accelerating the sustainable strategies; providing more generalizable findings by multiple-case design 6.7.2020 | 9 1. Technology innovation that supports strategic environmental sustainability goals 2. Investment decisions for the production of environmentally sustainable products 3. Extended competence- building to manage sustainability issues from versatile perspectives 4. Internal strategy dialogue for unifying the strategic direction towards environmental sustainability 5. Collaborations with partners who share environmental sustainability values and vision Model for strategic renewal process towards environmental sustainability
  10. 10. Thank you! Questions & Comments? jenni.kaipainen@tuni.fi

Editor's Notes

  • Hello everyone.
    My name is Jenni Kaipainen. On behalf of myself, Leena Aarikka-Stenroos, Valtteri Ranta from Tampere University, I am presenting our proceeding titled ”Strategic Renewal Process towards Environmental Sustainability – A Longitudinal Case”
  • Our study is conducted as part of CICAT2025, which is a large 5 year project with a funding of 5 million euros from the Academy of Finland. Briefly, the aim of the project is to study and advance the Circular Economy Transitions.
  • This particular study targets the practical need of firms to become more and more sustainable. This is because of the sustainability megatrend and its pressures. Also, the perceived opportunities of environmental sustainability make firms to rethink their strategies.

    As we looked at the theoretical background of the issue, it is clear that strategy literature itself has made lots of progress with examining strategic change and renewal. More recently, strategic renewal literature has expanded to consider sustainability, too, but in a rather fragmented way. It remains unclear what are the best practices for integrating sustainability into firm strategies, especially when these processes can last for decades? Research by far lacks conclusions on how to achieve best results in sustainability throughout longitudinal strategic renewal.

    Motivated by the pragmatic need and research gap, We certainly need to develop new understanding on the firm-level strategic renewal process in environmental sustainability context.
  • To approach the practical need and theoretical research gap, we take a processual and longitudinal approach to answer the research question:
    "How strategic renewal process towards environmental sustainability is characterized and structured over time through critical incidents and eras?”

    By answering this research question, our objective is to advance the theoretical understanding of strategic renewal as a process that integrates environmental sustainability into firms’ strategies over time.
    This, then again, enables innovation managers to harness the strategic renewal processes for sustainable and innovative technology business.
  • So, what did we actually do to answer our research question and meet the objective?
    the study follows qualitative research design. We chose an extreme case, Neste oyj, from oil & energy industry to uncover the successful strategic renewal process.
    We gathered longitudinal and multisourced data between years 2000-2019. As you can see in the table on the right, the multisourced data included top management interviews, group discussions, annual reports and secondary data. I’d like to highlight the great access to top managers, which enabled fundamental understanding of the case.
    The data was analysed with critical incident technique.
  • Here you can see the visualized results that we produced with highly detailed mapping of the strategic renewal process.
    During the mapping, we categorized the critical incidents to relate to 9 data-driven categories, which you can see on the left side of the timeline.
    With this rich and detailed findings I am not going through the entire timeline.
    Instead, I settle with highlighting the most critical incidents. They are major strategic updates, marked with blue. These major updates revealed how the process is divided into certain eras. Next, let’s have a closer look on the characteristics of each era.
  • Depending on the critical incidents and ecosystem change during the eras, they had different characterestics.
    Finally, we named the eras so that they conclude the key characterestics of each eras:
    First, Neste had to face an era of foreseeing and risk-taking. With the bold decisions made based on the early visions, Neste proceeded with building the base with persistence, even if they faced difficulties with some stakeholders. Building the base included a great variety of competence building as well as investments, which finally paid of in the third era. During the third era, after 10 years of strategic renewal, visionary finally turns into profitability. Thanks to the strategy dialogue conducted inthe third era, Neste aligned its internal vision and headed to the fourth era of sustainable growth. The last era is characterised by increased strategic partnerships and new technological openings.
    Now that we have briefly looked at the characteristics of the eras, I am going to show you the structures of the eras.
  • Even if the characterestics of each era are varying, their structures are similar. Because major strategic updates are repeated in each era, we looked more closely into the patterns of critical incidents. We noticed that there are, in fact, shorter sub-processes of formulation, implementation and evaluation during the overall strategic renewal process; One for each era.
  • Finally, we took a step back from the micro-level to propose an initial model for strategic renewal towards environmental sustainability. You can see this cyclic model on the right side. Its key steps include technology innovation, investment decisions, competence-building, internal strategy dialogue and collaborations.
    To conclude the key findings, our longitudinal critical incident mapping reveals the structure and characteristics of a 20-year-long strategic renewal process towards environmental sustainability.
    The model and our key findings contribute to the strategy process research by providing a highly detailed longitudinal case and initial model for structuring a strategic renewal process. Meanwhile, we contribute to the understanding of managing a sustainability transition in firm level.
    Practically, the study findings and proposed model enable managers to accelerate renewal towards environmental sustainability.
    We recommend future research to look more specifically into the drivers for the renewal process. Further, a multiple case design would extend the generalizability of our findings.
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