Innovation Strategy: Overcome Dogma-imposed Constraints

By Victor Cascella and Edoardo Monopoli

By taking time to identify dogmas (or biases) and dominant logic, companies can bust the behaviors that limit their views of opportunities. By understanding and confronting dogmas, a business can stimulate dialogue and analysis that is free from bias and constraints, and is more likely to generate truly innovative approaches to capturing new value. This is the third in a series of articles identifying dogmas and how to conquer them. Find the first article here, Leave Dogmas Behind to Meet Unmet Market Needs and the second here, Seven Strategies for Disabling Dogmas or Biases.

The strategy formulation process is as varied and diverse as the organizations that apply it. Several basic tenets, however, cut commonly across the more effective approaches. These are best described in terms of the key questions organizations believe should be both asked and answered by a strategy – namely:

• Who are the customers (markets) we serve and what are the needs we fulfill?
• What is our value proposition and how are we choosing to compete?
• What is our business model and how do we appropriate value?
• How do we execute on our strategy?

As a rule, an organization's strategy development process is heavily influenced by:

1. Its most recent experiences in strategy formulation,
2. The senior leader's preferences,
3. The participants involved in its application and
4. The beliefs and values of these participants.

The approach is often inherited from previous leaders who may have unintentionally embedded constraints into a strategy's ability to explore opportunities more expansively. Out of habit, these constraints can be carried forward by the core strategy development team, thereby limiting the questions strategy is designed to ask. In doing so, the limits unwittingly shrink the size of the opportunity horizon investigated.

According to Merriam-Webster, a dogma is "something held as an established opinion; especially: a definite authoritative tenet." Most companies operate under these broadly accepted – but often unidentified – dogmas (or biases) about the world in which they do business.

Lingering Dogmas

Historically, dogmas represent respected solutions and responses to community problems. If a response to a business challenge worked well once, why not keep using it? Remnants of valued perspectives linger in organizations worldwide. Legacy stories of big wins; cultural attributes and beliefs; attitudes derived from particularly influential leaders or company heroes – all contribute to the thinking and values a business espouses.

Over time, these beliefs form the foundation of how the business of an organization is taught to newcomers and how its challenges are best tackled. Competitors emulate a leading company's successes and adopt its approaches. Eventually those organizational dogmas permeate and dominate the thinking of entire industries, becoming the dominant logic.

Whether within individuals, work groups, organizations or entire industries, a variety of dogma breeds can rest quietly and frequently remain unnamed. Not always overtly negative or harmful, they can help to maintain the everyday buzz of the business and uphold values. Dogmas can also contribute to productivity by providing a sense of stability across organizations.

The basis for a dogma may be valid or not. Regardless, it is worth systematically identifying and then examining their very real and potential implications. Abiding by dogmas that led to past success does not guarantee success in the future. As such, it is especially important early on to identify and question dogmas that relate to the process for setting business strategy.

How Dogmas Affect Strategy Formulation

Within the process of strategy development, biases affect a company's view of opportunities in a variety of ways:

• The strength or fragility of market reputation
• The rationale behind customer buying decisions
• The best way to obtain value from suppliers
• The strength of core competencies compared to the competition
• The features customers want to see most in a product
• The factors that influence profitable growth

An effective strategy is developed by asking, and intelligently answering, key and often difficult questions about the identity of a business. The table below illustrates typical questions and the resultant constraints that may be imposed by unfettered dogmas.

Strategies and Their Dogma-imposed Constraints
Questions the Strategy Should Answer	Common Constraints Imposed by Dogmas
Who are the customers (markets) we serve and what are their needs?	Considering only the customer experience with our product or service rather than the entire network of individuals that may be affected by that experience throughout the product life cycle.
What do we know about our customers?	Accounting only for our standard approaches or the same market analysts to understand customer needs rather than newer views or means for gathering "true" customer insights.
Where do we innovate?	Assuming that innovation applies only to product development and differentiation rather than our entire business model, e.g., channels, supplier relations, processes, financing, distribution and acquiring talent.
In which ways do we compete?	Limiting ourselves to cost-reduction or product-based differentiation rather than a portfolio of strategies involving 1) product or service offering, 2) customer bonding opportunities and 3) lock-in opportunities within the systems that house our value chain.
How do we innovate?	Assuming closed in-house R&D rather than open product or service architecture and design.

Handling Dogmas

Dogmas emerge and solidify for a number of reasons; understanding these reasons is an important step to preventing a myopic view of the opportunity landscape.

The degree of an organization's centralization can contribute to the solidification of biases. The more freedom employees have to think and act at the local level, the more they develop an on-the-ground, "guerrilla" approach to their environment and the challenges it presents. People see the same things differently and may create different solutions, rather than employing the usual approaches buried in heavily centralized organizations.

Formal and informal operational mechanisms – such as communication flows and best practices sharing – invite people to understand challenges and work them out together. This, in turn, limits the solidification of dogmas and tends to lessen the degree to which people develop inflexible opinions about the way business should be done.

Many managers resist innovation and change for a number of reasons. For instance, if a manager perceives himself to have little influence beyond his department, he may attempt to protect his processes from change by dismissing what is perceived as a threat to his control. Dogmas that lead to a perception of shared problem-solving as an unpredictable risk can bring innovation to a grinding halt. Risk aversion occurs more frequently in highly regulated industries where the uncertainty and potential hazards of change may be greater.

Dogmas will not surface until threatened; an industry newcomer can leash them in months simply by changing the rules of the game. Economic volatility in an industry could be the catalyst for exposing a dogma. A leadership-level change could send the organization reeling into uncertainty, stimulating recognition of the need to take a different view. But until made vulnerable, biases generally continue to support the foundation of how business has been done.

Dogma Warning Signs

Under what circumstances should organizations sniff the air for dogmas or see if they are learning new tricks?

The answer lies in the company itself – its overall behaviors, decision-making styles and level of excitement about minimizing barriers to innovation. For instance, when the reaction to strategy planning sessions becomes boredom rather than enthusiasm, and the result is more of the same as last year, it is time for a dogma check-up. If the strategy remains a mystery, or if the accountability for strategy development creeps over from executive leadership's realm to that of R&D or the marketing department only, dogmas have taken hold.

Leashing dogmas can have win-or-lose implications. It takes bold, hard work to dig down to dogma-level and smooth out the oldest and most stubborn obstacles to an innovative view of opportunity. Yet more organizations accomplish this every day. Developing fine-tuned antennae sensitive to internal and external pulses, while tolerating diverse opinions and risk-seeing is not easy, but organizations are finding these qualities increasingly imperative to success and investing time and effort to instill them.

Conclusion

Leaders involved in strategy development inside organizations can benefit by pausing at each waypoint on the strategy formulation journey and reflecting on the biases that influence their perspectives. By taking time to identify the dogmas and dominant logic, they can bust the behaviors that limit an organization's view of opportunity. By understanding and confronting dogmas, a business can stimulate dialogue and analysis that is free from bias and constraints, and is more likely to generate innovative approaches to capturing new value.

About the Authors:

Victor Cascella is a director with Grant Thornton's Global Public Sector and is responsible for developing excellence in mission performance for the firm's Federal Government clients. As an expert in strategy and operations consulting, he works with executive-level leadership teams to translate business strategies into operational goals and helps them develop measurement systems to improve strategic clarity and accountability for performance. Cascella has worked in a wide range of industries, including government, pharmaceuticals, manufacturing, services and financial. He is based in Washington, D.C. Contact Victor Cascella at victor.cascella (at) valeocon.com or visit http://www.valeocon.com.

Edoardo Monopoli is the managing partner with Valeocon Management Consulting and leads the Innovation practice. His clients include Pfizer, Whirlpool, Johnson & Johnson, American Standard and Novartis. He is based in Milan, Italy. Contact Edoardo Monopoli at edoardo.monopoli (at) valeocon.com or visit http://www.valeocon.com.