Why You Can’t Do Strategy Without Innovation

In business, and in marketing and advertising, the word "strategy" is held aloft. It’s as if it is the most prized of all skill sets: It speaks of intellect and cleverness, of brilliant logistical planning and goal fulfillment. Occasionally, it even has a militaristic whiff about it, conjuring up images of attack formations and plans on how to outflank opponents. But the word can also lose its meaning when it’s used in a vague and cavalier fashion. Too often, strategy is used as a catch-all term for "some things we think we could do." In fact, many who think they have a strategy might actually only have a laundry list of disparate goals. Or, worse, an amorphous corporate vision that will forever remain dormant on a PowerPoint slide. Furthermore, a strategy may be set and understood but left unchecked. Humans and their institutions have a tendency to drift from the point. Burdensome bureaucracy, competing agendas and management turnover means—like a satellite whose orbit rapidly decays when thrust is not maintained—strategy often burns up in the atmosphere early on. Strategy is hard. So how then do we do it properly? To answer this, it’s worth revisiting the work of three strategy "purists," Lawrence Freedman, Peter Thiel and Richard Rumelt—purists because their work focuses on the naked, quintessential elements of strategy. These are the fundamentals to which every strategist should aspire, not diluted into mere tactics or a routine series of executions that maintain the status quo. Most important, however, is that when it's understood in this most elemental state and translated into a set of bare-bones principles, strategy is inextricably bound up with innovation. The latter is the vehicle to convey the former. A return to the basics Let’s take three intersecting views on what strategy is, in its purest form. Innovation is often an effective way to help deliver that required unexpectedness or uniqueness.—Phil Rowley, head of futures, Omnicom Media Group EMEA Historian of strategy Lawrence Freedman thinks, intrinsically, it is about planning ahead. It is the act of foreseeing a future opportunity, making predictions about your opponents’ response and making preparations in advance to outmaneuver them. Strategy is about preemptively calibrating your position to counter the anticipated position of your adversary. Thus, good strategy delivers a competitor's defeat. Strategic luminary Richard Rumelt says strategy is leveraging a point of difference or identifying an advantage that is also simultaneously an opponent’s disadvantage—and building a clear, focused plan to exploit the gap. Thus, good strategy delivers competitive advantage. Silicon Valley titan Peter Thiel talks of strategy hinging on what he calls "secret knowledge"—an insight that no one else has spotted. For him, whereas conformity and convention lead to unremarkable outcomes, secret knowledge agitates for revolution. Thus, good strategy delivers disruption. The thing all three viewpoints have in common is an unexpectedness or uniqueness of action. For the purists, the bold and decisive acts of famous strategists, from Alexander the Great to Steve Jobs, show that strategy can never be perfunctory, predictable or prosaic but instead must always pivot on a point of difference, hidden insight or unique advantage. However, to adopt this definition of strategy—to foresee the future and to deliver differentiation—you’re going to need another complementary skillset: innovation. Innovation is a vehicle for strategy When attempting to pursue this more distilled or concentrated form of strategy, then, innovation is often an effective way to help deliver that required unexpectedness or uniqueness. After all, the "nov" in innovation means "new"—and can be found in "renovate" and "novel." Notably, we can see the interplay of strategy and innovation in modern success stories. Netflix’s strategy was built on the progress of technology—specifically, exponentially increasing broadband speeds and falling data costs. Using tech innovation to maneuver themselves into position in advance, they initially cornered the market for streaming and soon wiped out the entire video home rental market. SpaceX’s strategy was built around recognizing that cost was the main barrier to becoming a space-faring planet. Unique innovations in materials and manufacturing processes to make rockets reusable was their point of difference. It created a competitive advantage over a lumbering and profligate NASA and secured contracts to resupply the International Space Station and deliver better value for the taxpayer. Airbnb and Uber’s strategy pivoted on the secret knowledge that, globally, the number of hotels and taxi cabs, respectively, were relatively small versus the total number of privately owned rooms and cars that could be brought into service and monetized. Innovations in peer-to-peer technology helped deliver a new service to consumers that redefined the category. Naturally, not all strategies need to be about disruption or challenger behavior, and the examples above represent outliers in their field. However, what can be said is that, regardless of category, pursuing the opposite of these principles can heighten the chance of strategic failure. Whether it’s failing to think ahead, duplicating competitors’ products and services or blindly accepting convention, none of these are likely to deliver strategic success. Instead, strategy is about exploiting difference and advantage, all realized as a plan of action. Innovation is the discipline that can help you deliver on those principles. Namely, understanding where things are headed next can help you plan future maneuvers, and using innovation to deliver a bold and confident play can deliver differentiation, as in the cases of Netflix, SpaceX and Uber. In short, innovation makes your strategies explode into life—so strategize its inclusion whenever possible. Marketing Is Powered by Our People, Not Just Our Data