Strategic innovation

Strategic Innovation: New Models for the 21st Century


Pravin Asar
Florida Institute of Technology

Dr. F.D. Christopian
BUS5480/MGT5018: Strategic Management
2December 2013

Pravin Asar

Page 1

Abstract
There are different Strategic Innovation methodologies, frameworks and models that
aid organizations, particularly with technology driven, production companies. Most companies
must innovate and continually improve to maintain a competitive advantage, but how they
accomplish these process improvements differs significantly from Strategic Innovation.
Traditional strategies rely on process improvements and product development through lessons
learned, adoption of internal and external best practices, and improvements that are
incremental and nature that are often found in Total Quality Management programs. Strategic
Innovation requires a culture that can create breakthroughs within a company’s current
market, and potentially enter a new market or segment. Strategic Innovation, and the
implementation models that follow, are not for every organization, and a review of traditional
strategies and risks associated with Strategic Innovation will be covered.


Table of Contents
Strategic Innovation Introduction ................................................................................................................. 2
The Traditional Strategic Approach .............................................................................................................. 3
Serendipitous Strategy .................................................................................................................................. 4
Concept of Strategic Innovation ................................................................................................................... 5
Strategic Innovation in New Markets ........................................................................................................... 7
Strategic Innovation Models ......................................................................................................................... 7
Strategic Innovation – 7 Dimensions ............................................................................................................ 8
Strategic Innovation Framework Dimensions Explained .............................................................................. 9
5 Phase Strategic Innovation Life Cycle Model ........................................................................................... 11
Disruptive Strategic Innovation .................................................................................................................. 13
Applied Examples of Strategic Innovation .................................................................................................. 14
Risks of the Strategic Innovation Model ..................................................................................................... 17
Conclusion ................................................................................................................................................... 20
References .................................................................................................................................................. 23

Strategic Innovation Introduction
Albert Einstein is quoted as saying, “No problem can be solved from the same level of
consciousness that created it.” This statement is no truer than in relation to the way many
organizations approach strategic innovation. While the words, “strategy” and “strategic” have
become Buzzword Bingo fodder for employees; strategic leadership and initiatives in many
organizations fail to produce intended outcomes. Porter’s Five forces model, SWOT, PEST
(Political, Economic, Social and Technological analysis), PESTLE (Political, Economic, Social,
Technological, Legal and Environmental) analysis models have been traditionally been used
successfully by business to stayahead of the curve.But in today’s globally connected economy,
the way corporate cultures view the nature of innovation has had to change.Traditionally,
innovation was associated with products, many times viewed as the result of leveraged
technology and customer needs. However, researchers and practitioners have broadened the
traditional approach to include types of innovation, management of innovation and business
models designed to enhance innovation (Visnjic, Turunen, & Neely, 2012).
The reason these cultures fail strategically is often because they do not differentiate
between the organization’s purpose (what the organization exists to do) and the organization’s
constraints (what the organization must do to survive). Corporate objectives become
intertwined with strategy and implementation. This makes it difficult to know where to begin.
Compounding the problem in these situations is the presumption that planning processes lead
to new and improved strategies. The fact is, the insight needed to create value seldom comes
from planning meetings. Instead, it is usually derived from many different sources. All of this
ultimately leads to directionless strategies, confusing processes and “flat-footed” plans. This

confusing and short-sighted, strategic focus ultimately leads to less than effective
organizational innovation. (Campbell & Alexander, 1997)

The Traditional Strategic Approach
Any company using a traditional strategic approach, other than innovative or
serendipitous, is using a traditional strategy. Traditional strategy development results from the
continuous application and interaction of three fundamental thinking skills: identification of
elements and scope, analysis, and synthesis. The basic elements of a strategy for an enterprise
are: the market (comprised of customers, competitors and technology embedded in a milieu of
social, political, economic, demographic and scientific driving forces for change), stakeholders,
enterprise capability and enterprise capacity. The enterprise capability and capacity are defined
by it projects, resources and culture.
Traditional strategy takes into account today as a starting point. It has present to future
orientation. Second, using traditional strategy requires a rule-maker posture. This inhibits outof-the-box thinking. The traditional strategy accepts established boundaries and product
categories. This strategy does incorporate some level of innovation incrementally. The
traditional strategy primarily follows linear business planning models. It is aimed directly at
gaining strength through input from traditional sources and articulated consumer needs.
Traditional strategy is driven by technology and may have a one-size-fits-all organizational
model approach. (Palmer & Kaplan, n.d.)

Serendipitous Strategy
Serendipity is having an aptitude for making desirable discoveries by accident.Many
organizations rely on serendipitous acts of creativity to foster innovation. Others take an
unplanned, often unstructured approach, which results in only incremental improvements with
poor implementation that can lack sponsorship. A classic example of serendipitous strategy is
the story of 3M Post-it notes. In 1974, Stephen Silver at 3M research laboratories was trying to
develop a strong adhesive and instead created a new adhesive that was not too strong, could
stick on all surfaces and be removed easily without causing damage or leaving residue. Not
knowing what to make of this, it was four years later that his colleague Art Fry came up with
the idea to use this low tack adhesive to attach a bookmark to his hymnal. He further
developed the concept and 3M launched what became known as Post-it notes nationwide
(Bands, 2012).
A recent critique of business strategy argues that the role of serendipity has been largely
excluded from formal strategy theory. Further, it showed that there is an element of
serendipity in the fabric of all organizations and that the neo-classical model of corporate
strategy cannot accommodate this reality. In today’s increasingly complex, dynamic and
interconnected business world, business strategy cannot be perfectly planned in advance as
traditional theories of strategy would suggest, but has to evolve in response to continually
changing circumstances. This alternative and contemporary approach to business strategy
argues that the challenge for executives is to build an organization which is capable of
executing strategy in a fast changing environment by balancing both high alignment and high
autonomy (Loosemore, September).

It is important to note the difference between serendipitous strategy and synchronized
strategy. The distinction between serendipity and synchronicity is a matter of time. With
synchronicity there is an immediate recognition of the meaningful coincidence of two events
happening close in time. Serendipity, however, cannot be assessed until later when the
consequences of events are evaluated (Lawley & Tompkins, 2008). Synchronicity can become
serendipity if the effects of the coincidental events have large positive significance over time.
However serendipity can also arise out of events that are not synchronous.
Serendipitous learning will always be there and provide great anecdotal evidence for
informal learning, but serendipity is not a strategy for building a high impact, learningperforming organization. Strategic innovation is a holistic, systematic approach focused on
generating beyond, incremental, or discontinuous innovations. Strategic innovation focuses on
obtaining meaningful breakthroughs. Innovation becomes strategic when it is an intentional,
repeatable process that creates a significant difference in the value delivered to consumers,
customers, partners and the corporation. A strategic innovation initiative generates a portfolio
of breakthrough business growth opportunities using a disciplined yet creative process (Palmer
& Kaplan, n.d.).

Concept of Strategic Innovation
What is strategic innovation and why is embracing it so critical to organizational success
in today’s global market? According to authors, Derrick Palmer and Soren Kaplan, strategic
innovation is the, “…creation of growth strategies, new product categories, services or business
models that change the game and generate significant new value for consumers, customers and

the corporation”(Palmer & Kaplan, n.d.).Traditional strategic approaches focus on best
practices, operational effectiveness and incremental improvements in cost and equity.
Leadership tends to focus on imitating competitor’s actions and hyper-focus on strategic
positioning. The organizational culture often mistakes operational effectiveness with strategy.
(Sniukas, 2009)
Further, organizations tend to approach strategy using today as the starting point,
accept established industry and product positioning and categories. Leadership may also try to
use a “one-size-fits-all” organizational model. Unlike companies that embrace traditional
strategy, companies that commit to strategic innovation do not rely on serendipitous creative
acts, ad hoc, unstructured approaches to foster innovation. Instead they look for holistic,
systematic approaches; ones that generate breakthrough or discontinuous innovations. The
culture “starts with the end in mind” by identifying long-term opportunities, assume a rulebreaker mentality and seeks breakthrough, disruptive innovation. Leadership looks to create
new competitive space and may experiment with entrepreneurial or different structures to
accomplish innovation and growth. A culture that internalizes strategic innovation tends to seek
inspiration from unconventional sources. (Palmer & Kaplan, n.d.)
In this new, and ever-changing, global market, organizations that fail to heed Einstein’s
warning, will continue to institutionalize traditional strategy and fail to differentiate between
purpose and constraint. They will invest in directionless strategies and focus on short-sighted,
strategic initiatives that will make them less effective (Campbell & Alexander, 1997) than their
competition. Those companies that do heed, and utilize the seven dimensions, will realize new
sources of innovation. As they embrace and internalize strategic innovation frameworks they

will continue to take global market share (Organization for Economic Co-operation and
Development, 2008).

Strategic Innovation in New Markets
Strategic innovation that brings Improvements in emerging markets is not all about
obtaining new consumers rather it also addresses concerns of the products appropriateness,
sustainable costs, product readiness and consumer consciousness.Companies that develop new
strategies to steal market share from competitors or enter new markets often accomplish this
by introducing architectural or business-model breakthroughs. These companies identify gaps
in the organization of an industry andthen find ways to turn those gaps into profitable markets.
They find new customers, new products or services or new ways of promoting, producing or
distributing. Although most of the focus in recent years has been in economic growth in
emerging markets, most of the research on Strategic Innovation has been focused on the
already-developed parts of the world. Understand the dynamics of growth at the base of the
economic pyramid in emerging markets have significant opportunitiesto unlock the value of
Strategic Innovation.(Lacity, Willcocks, & Feeney, 1996)

Strategic Innovation Models
The following Strategic Innovation models focus on a common theme of making large expansive
changes in products and operations versus a traditional TQM approach of incremental
monitoring, assessing, and modifying. In fact many Innovation strategies refer to these

explosive growths and breakthroughs created by Strategic Innovation as discontinuous change
or disruptive change and innovation as seen in Figure 1.

Figure 1: Levels of Change(Abraham & Knight, 2001)

Strategic Innovation – 7 Dimensions
For a company or organization to initiate strategic innovation, it must create a
framework to support it. Theseframeworkscan vary, but all are designed to produce outcomes
that drive organizational growth. In their soon-to-be-published book, The Executive Guide to
Innovation: Turning Good Ideas Into Great Results, Jane Keathley and co-authors present a
framework withseven dimensions forstrategic innovation and identify them as:

Dimension 1: Managed Innovation Process
Dimension 2: Strategic Alignment
Dimension 3: Industry Foresight
Dimension 4: Consumer/Customer Insight
Dimension 5: Core Technologies and Competencies
Dimension 6: Organizational Readiness
Dimension 7: Disciplined Implementation


Figure 2: The 7 Dimensions of Strategic Innovation

Strategic Innovation Framework Dimensions Explained
Managed innovation processes are at the core of any strategic approach. An
organization’s goal is to find the equilibrium between external perspectives and an
organization's internal capabilities. It must look beyond the obvious in order to create a culture
that explores new possibilities. (Keathley, Merrill, Owens, Meggarrey, & Posey, 2014)
Strategic alignment involves internal support and commitment among key stakeholders.
This commitment is necessary for strategic innovation. It engages the organization around a
unifying vision and goals which align its strategies and business models. (Keathley, Merrill,
Owens, Meggarrey, & Posey, 2014)

Industry Foresight is a top-down perspective used to understand the complex forces that
drive change, it includes emerging and converging trends, the latest technology, competitive
dynamics, and alternative scenarios. (Keathley, Merrill, Owens, Meggarrey, & Posey, 2014)
Consumer/Customer Insight is mirroring, bottom-up perspective, a deep understanding
of both articulated (explicitly stated) and latent, or unrecognized, needs of current and
potential customers and business segments. (Keathley, Merrill, Owens, Meggarrey, & Posey,
2014)(Palmer & Kaplan, n.d.)
Core Technologies and Competencies are a set of internal capabilities, competencies
needed deliver value to the organization’s customers. Understanding these capabilities and
competencies, as well as the organization’s gaps in technologies, intellectual property, brand
equity and strategic relationships are critical for creating strategic innovation. (Keathley,
Merrill, Owens, Meggarrey, & Posey, 2014)
Organizational Readiness is the determination and ability for an organization to
implement new ideas and strategies, as well as, to successfully manage and sustain those ideas
and strategies once initiated. It is typically made up of three areas of readiness; cultural,
process, and structural.
Disciplined Implementation is the organization’s capability to effectively sustain the life
cycle of innovation. The sustainment of which is dependent on the organization's repeat each
step of the innovation life cycle over and over again.(Keathley, Merrill, Owens, Meggarrey, &
Posey, 2014)(Palmer & Kaplan, n.d.)

5 Phase Strategic Innovation Life Cycle Model
Jay Abraham and Daniel Knight have proposeda 5-phase Strategic Innovation Life Cycle
Model. The first phase is ‘generating’ the new idea(s) and expanding on the ideas through the
shared knowledge and background of the team members. The second phase of
‘conceptualizing’ takes the general concepts from phase one and begins to identify gaps and
inconsistencies in their knowledge of the idea, and begin the added research to more clearly
define the idea. Phase three,or ‘optimizing’phase, compares explicit concepts with explicit
criteria. This allows the organization to analyze and justify the chosen solution(s) as the best
possible selection(s). “In this phase, people take the explicit concepts from the previous phase
and evaluate them to begin converging on potential solutions. They derive evaluation criteria
from their vision, mission, values, goals, and relevant business measures. These criteria enable
them to select the concepts with the most promise and translate these concepts into solutions
or projects. [The organization can] then figure out the most likely sources of support and
resistance before moving to the next phase” (Abraham & Knight, 2001). The fourth phase of
strategic innovation is the actual implementation phase. This is where the actual product or
concept is developed, prototyped and tested. Selected solutions from phase 3 are turned into
tangible models. Not only are the team members involved developing the product but in the
process they are also learning and becoming more knowledgeable on what it takes to create
this breakthrough.This provides additional launching points for future ideas and innovations,
which is the beginning of phase 5 of ‘capturing’ the knowledge and experience gained through
the process along with mistakes, lessons learned, and gaps that may still exist. Abraham and
Knight see these 5 phases as having a spiral-like life cycle that becomes a continuous and

embedded process in an organization, and not just a one-time project to solve a specific
problem.

Figure 3: Strategic Innovation Spiral(Abraham & Knight, 2001)

Robert Wood, an associate professor of strategic management, studied various
companies that were and were not successful in implementing strategic innovation, and was
able to capture the 5 leadership steps that supported repeated success. The first step is to
recognize the crisis and the need for radical transformation. This step is slightly different than
other frameworks in which Innovation is not necessarily driven by a specific event. Step 2 is to
create inspiring but necessarily vague goals. This is a fundamental attribute of all Strategic
Innovation strategies, which is to think outside the normal confines of what has been done in
the past. Step 3 is to innovate without clear principles. This is directly tied to step 2, in that it
seeks to drive innovation without a set of rules. Step 4 is to learn from initial innovations
(Wood, 2007). This is very similar to Abraham’s and Knight’s model in which Innovation is a

learning process during the implementation phase in which the knowledge, experience and
lessons learned must be captured. Finally, step 5 is to encourage emergent strategy innovation
routines. In other words, this step is about driving and encouraging the organization to see
Innovation as an expected and key part of the overall business success.

Disruptive Strategic Innovation
Disruptive Strategic Innovation, proposed by
ConstantinosCharitouandConstantinosMarkides in their article in the MIT Sloan Management
Review, is a specific type of strategic innovation called ‘Disruptive Strategic Innovation’ that is
not only a different way of playing the game (Strategic Innovation) but is also in conflict with
the traditional way of doing business. Examples provided include; Internet, low-cost airlines,
direct insurance, online brokerage trading, online distribution of news and home delivery from
grocery stores. (Charitou & Markides, 2003)
Their review of research has shown that disruptive strategic innovations share three
common characteristics. “First, compared with traditional approaches, they emphasize
different product or service attributes. Thus traditional brokers sell their services on the basis of
their research and advice to customers, whereas online brokers sell on price and speed of
execution. As a result, innovators become attractive to a new customer segment. Second,
disruptive strategic innovations usually start out as small and low-margin businesses. That's
why they rarely gain support or long-term commitment from established competitors. The
innovations are small and are not attractive until they start growing. Third, disruptive strategic
innovations grow to capture a large share of the established market. Over time, they improve

to the extent that they are able to deliver performance that is good enough to meet the
previously established attributes. Inevitably, their growth attracts the attention of established
players. As more customers (both existing and new) embrace the strategic innovation, the new
business receives increasing attention from the media and established players. Soon,
established companies cannot afford to ignore the new way of doing business anymore and
begin to consider ways to respond” (Charitou & Markides, 2003, p. 55).

Applied Examples of Strategic Innovation
Strategic Innovation models are being embraced more and more by organizations
wishing, not just to survive, but to thrive in what is becoming an increasingly more complex and
highly competitive global market. These companies have to change the way they think
strategically in order to innovate and develop products and services faster than the
competition. Increased competition and research and development (R&D) costs have made it
nearly impossible for companies to survive solely on their R&D efforts. More and more,
companies are looking for new, more open, sources of innovation (Organization for Economic
Co-operation and Development, 2008). Companies, like General Electric (GE) for instance, have
increasingly embraced the concept of Strategic Innovation. GE’s six-part growth process (Figure
4 below) contains theSeven Dimensions Model of Strategic Innovation within it.


Figure 4: General Electric’s six-part growth process (Stewart, 2006)
Many of Elon Musk’s projects and companies can be linked back to disruptive
innovation. Using SpaceX as an example, which was founded in 2002 to “revolutionize space
technology, with the ultimately goal of enabling people to live on other planets.” In several
short years SpaceX has developed new engines, new launch vehicle, achieved successful
launches, including docking with the International Space Station, which had resulted in both
NASA and commercial customers signing on to 40+ manifests. These accomplishments are
amazing in themselves, but SpaceX has focused on Disruptive Strategic Innovation that has
completed gone against the mainstream launch vehicle business in their costs savings processes
that they have developed to lower launch costs. SpaceX is developing the Grasshopper vertical
takeoff and landing (VTVL) vehicle which is a leap beyond what any competitors are doing to
develop a “fully & rapidly reusable rockets that will further transform space exploration by
radically reducing cost” (SpaceX, 2013).

Companies like Dell Inc., IBM and Canon Inc. have benefitted from successful Strategic
Innovation endeavors. In all three cases, Strategic Innovation was the creative force behind
departures from historical practices at each company.In the case of Dell Inc., the departure
occurred as part of the redesign of the company’s direct-sales model (end-to-end value-chain
architecture).IBM changed its historical practice of independently selling hardware and
software to selling complete solutions (conceptualization of delivered customer value). Canon
Inc. used Strategic Innovation to identify and focus on developing photocopiers for small offices
instead of large corporations (identification of potential customers)(Govindarajan, 2004).
When Eastman Kodak turned over the majority of its information technology (IT)
operations to outsourcing partners in 1989, outsourcing was a $4 billion a year business(Lacity,
Willcocks, & Feeney, 1996). Other companies such as Continental Bank, General Dynamics,
Continental Airlines, and National Car Rental have transferred IT employees, facilities, hardware
leases, and software licenses to third-party vendors via seven- to ten-year contracts (Lacity,
Willcocks, & Feeney, 1996). Today, IT outsourcing has grown to nearly $40 billion a year,
according to the estimates by Frost & Sullivan, an outsourcing service company. More and
more, companies like Xerox, Delta, and British Aerospace have taken a ‘selective sourcing’
approach to IT outsourcing.Selective sourcing are based onshort-term contracts of less than five
years for specific activities.
AirAsia, Easyjet and Ryanair are good examples of companies that have implemented
strategic Innovation to enter a very difficult and competitive market. If these airlines had tried
to compete with the dominant players in the market such as United, American and British

Airways, they probably would have never survived. Instead, each of these companies broke out
of the traditional full-service, hub and spoke strategy of the major airlines, and introduced a
low-cost, point-to-point, no frills strategy that has been successful in the United States, Asia,
and Europe. “Before long, they had captured a large segment of the market, and established
airlines in Europe were searching for answers to the threat”(Charitou & Markides, 2003).

Risks of the Strategic Innovation Model
Researchers have, over time, tried to understand and improve the process of
innovation. The simplest way to analyze this was to delve into product innovation. The study of
product innovation produced a number of valuable concepts such as innovation portfolio
mapping, innovation roadmaps, the innovation funnel, stage gate innovation and, more
recently, open innovation (Markides, 1997).
Recently, researchers have broadened the concept of innovation to include other types
of innovation, such as process innovation, design innovation, management innovation and
business model innovation. One important development has been a move to understand
innovation in a service context. This is partly as a result of increasing numbers of organizations
adopting a business model that incorporates the delivery of solutions and experiences and,
therefore, by extension, delivery of services. Indeed, anecdotal evidence suggests that several
highly innovative service firms have succeeded in disrupting competitors by radically innovating
their overall business model, and obtained a competitive advantage as a result. Low-cost airtransportation, such as Southwest, is a good example of such a service (Porter, 1996).

Research suggests that companies are often less innovative in a service context than
they are innovative in a product context. This is a disadvantage considering 75% of the
economies in developed countries are selling services (Visnjic, Turunen, & Neely, 2012). The
nature of risk and reward in service innovation is analyzed differently from product innovation.
The service provider may invest in the infrastructure necessary to provide the new service, but
in contractually committing to pay regular service fees, the client effectively finances the
innovation process. There is limited market risk for the service provider since they have already
contracted for the service. Instead, the service provider must address the risk inherent in
delivering a novel service, whether that is higher service costs, contract penalties, loss of
profits, or damaged reputation (Markides, 1997).
There is limited market risk to this contractual agreement; the service provider still faces
uncertainty regarding the exact nature of the delivery process and associated risks, estimating
the performance levels of the service outcomes that it commits to. The delivery or production
of the service is simultaneous with consumption, and subject to contracted performance
standards, the service provider is exposed to delivery risk in the form of higher service costs
that lead to penalties and losses, or simply reputational losses in the face of a dissatisfied
customer (Visnjic, Turunen, & Neely, 2012).
To capture the benefits of innovation across an organization as a whole, companies will
need to avoid adopting a singular mentality in the way that they are organized. There are a
number of organizational elements that increase the chances of making a success of service
innovation. These include, for example, an entrepreneurial culture, corporate incentives to
innovate, and knowledge management systems that capture related data and knowledge

(Porter, 1996).In order to effectively mitigate risk, companies must include a series of events in
order to utilize strategic innovation effectively. Specifically;
Preparing for service innovation. Companies contemplating strategic innovation should
consider whether their business model, infrastructure, and operations, are suitable. If
not, they will benefit from making the appropriate preparations. These might include
hiring managers with service innovation experience, or setting up a separate unit to host
the new business model, for example.(Visnjic, Turunen, & Neely, 2012)
Mastering the learning challenge. Service innovation, and thus the learning, takes place
at the same time as delivery of the initial service. Organizations need to change the way
they think about innovation. They must be ready to capture the knowledge gained during
that first service delivery in the field, from the people involved in its collaborative
creation and delivery. (Visnjic, Turunen, & Neely, 2012)
Customer collaboration. The intellectual input of the client is essential in the process of
collaborative creation and research and development. Firms not used to collaborative
open innovation should consider involving customers in the product innovation process,
before engaging in innovation on ‘live’ services.(Visnjic, Turunen, & Neely, 2012)
Risk and investment assessment. It is important for everyone to recognize that the
investment made in innovating initial service delivery may not produce a return straight
away. It may even produce a loss for a while. The benefits materialize when the lessons
from that initial service are applied in the same or even subsequent service contracts, or

inform other types of innovation. (Visnjic, Turunen, & Neely, 2012)
Set up to leverage the knowledge gained. The truth is that an organization may not be
able to obtain the full benefits of strategic innovation at the level of the single service.
Instead it needs to leverage the knowledge acquired during that first service, not only in
later services, but right across the organization’s platform of services. (Visnjic, Turunen, &
Neely, 2012)
Cross-functional decision-making. Decisions about proceeding with innovation, should
involve finance managers, innovation managers, service sales managers, service
technicians, and many others. New decision-making processes, realigning corporate
structures to allow cross functional teams, company-wide incentives to innovate, and
knowledge management systems that capture related data and knowledge, may be
required.(Visnjic, Turunen, & Neely, 2012)

Conclusion
Strategic Innovation has risen to the top of the agenda for senior managers and
academia in recent years. Based on dynamic stakeholder value, this paper systematically
explored the antecedents, components, processes and consequences of strategic innovation.
We argue thatstrategic innovation: is driven by the external environment and stakeholder value
change, can be decomposed into strategic innovation thinking, strategic innovation formation,
strategic innovation implementation and monitoring, and can provide potential position and

dynamic customer value. However, current studies still fall short of providing effective guidance
for standardized strategic innovation practices.
Since the strategic innovation process is not entirely a controllable and standardized
practice, the risks associated will never be entirely eliminated. To create risk awareness and
ensure risk reduction, the organization must identify as many controllable or preventable risks
as possible. Thus, it is also important to identify the sources of these risks and explore effective
risk management countermeasures to enhance the success of strategic innovation. It is not
enough to calculate or find the processes and results of strategic innovation through qualitative
case studies and experimentation, but it also needs more systematic quantitative explorations,
especially in these turbulent times.
In thenew global market place, any organizationstill using a traditional strategy or
relying on serendipitous acts of creativity to foster innovation will realize incremental
improvements with poorimplementation (Bands, 2012). They will invest in directionless
strategies and focus on short-sighted, strategic initiatives that, at best, will make them less
effective than their competition(Campbell & Alexander, 1997). Meanwhile, their competition
will be looking for holistic systematic approaches; ones that identify long-term opportunities,
assume rule-breaker mentalities and seek breakthroughs. These organizations will have
leaderswho want cultures that have a “different level of consciousness”, that will internalize
the concepts and applied practices of Strategic Innovation and seek inspiration from
unconventional sources. (Palmer & Kaplan, n.d.)The cultures of these organizations will
understand that to articulate and realize strategic innovation, engineers and managers will
need to collaborate as a whole, one engineering-management team.

Gary Hamel summarized the importance of breakthrough innovation compared to
incremental improvements when he said. “We’ve reached the end of incrementalism. Only
those companies that are capable of creating industry revolutions will prosper in the new
economy.” (2002)

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