Marketing Strategy and Competitive Positioning pdf ebook

CHAPTER 12 COMPETING THROUGH INNOVATION
narrow-mindedness and risk aversion that provide barriers to true innovation – what Bernd 
Schmitt calls ‘big think strategy’ (Schmitt, 2007). For example, the launch of the iPhone by 
Apple – an attractive mobile phone, though based on out-of-date technology – achieved 
mixed sales results. On the face of things, the iPhone was a straightforward extension of 
the iPod and iTunes music business, with the prospect of competing against the BlackBerry 
in the business market. In fact, as the underlying iPhone strategy unfolded, a very big idea 
became apparent. By allowing software manufacturers to create applications, or ‘apps’, 
custom-built for the iPhone – freed by the iPhone’s breakthrough touch screen from the 
constraints of fixed buttons and small screens – the goal was to allow the iPhone to develop 
into the ‘third great platform’ for software makers, after the personal computer and the 
Internet. This was now a ‘big idea’, not just another mobile phone (Allison, 2008).
In another example, after a history of missing out on some of the most important big 
ideas when they arrived, IBM is putting some of its brightest and best talent behind new 
ventures that break free of the existing business. Because new ideas fall between organisa-
tional boundaries and sometimes conflict with existing business units, they are managed 
differently. ‘Horizon Three’ businesses, as opposed to Horizon One businesses (mature 
businesses such as mainframe computers) or Horizon Two businesses (current growth busi-
nesses), are protected from the rest of the organisation. They are put in separate organisa-
tional units with dedicated teams, providing visibility and management sponsorship. The 
young Horizon Three business units are insulated from traditional management methods 
and performance yardsticks – efficiency measures can squeeze the life out of a promising 
new idea. There is a clear understanding that Horizon Three businesses benefit from per-
sonal sponsorship by senior managers, to prevent middle managers using their power to 
block new developments that might not fit their personal agendas (Waters, 2001).
There is also a compelling argument that sustainability is, and should be, a key driver 
of innovation. For example, Nidumolu and colleagues argue that sustainability is linked to 
lowering costs and increasing revenues and should be part of all thinking about innovation. 
They believe that only companies that make sustainability a goal will achieve competitive 
advantage (Nidumolu et al., 2009). Certainly, sustainability is one of the ‘big ideas’ that 
executives should consider when planning and making innovation choices.
Generally, growing emphasis is being placed on developing an ‘ideas culture’ in compa-
nies (Overell, 2005). However, in IBM as in many other companies, the search for big ideas 
as the basis for radical innovation increasingly relies on collaboration with others and open 
source approaches, rather than relying on in-house development.
12.1.10 Innovation networks
The growing emphasis on collaboration and cooperation (see Chapter 15) in radical inno-
vation strategies is underlined by Lynda Gratton’s research into ‘hot spots’ of energy and 
innovation in companies (Gratton, 2007). Gratton sees hot spots as points where people 
work together in exceptionally creative and collaborative ways. For hot spots to emerge, 
they need: (1) a cooperative mind-set; (2) an ability to span boundaries; and (3) a successful 
igniting of purpose – followed by making productive capacity available to create real value. 
The old, protective barriers set up by businesses around themselves are increasingly a bar-
rier to the new open business models that underpin radical innovation (Chesbrough, 2006).
For example, Procter & Gamble sets high targets for the proportion of its new products 
developed with external partners, and there are many other examples of effective innovation