Strategy + falsehood = error

An otherwise great column in HBR It’s Time for the 3-D MBA about improving MBA programs starts well by urging more breadth and depth, then calling for more ‘dynamics’ than static prespectives. [I’d hardly disagree with that!]. But it then asserts that “The vast majority of value created in business comes not from applying existing models, but from creating new models that do not now exist. It comes from creativity; from innovation.” – which is either completely false, or else meaningless, depending on how you take it.

In any year, the vast majority of value is created by companies exploiting business models they have had for years or decades, rather than ones they just invented. On a longer view, though, all value ever created comes from business models that were new at some point in time. The article seems to be taking the first meaning – implying that most value is created by recently-new business models – and urges business schools to focus MBAs on innovation. This may be useful in some cases, but should not take precedence over strategy delivery. If this comment leads to MBAs learning less about how to deliver strategy as a result of focusing on innovation, it will be a great example of how an entirely false premise can lead to fundamentally wrong strategic choices [and this from a business school that is supposed to be teaching the rest of us how to do strategy well!]

So … when reading an article that seems persuasive, do put on your ‘skeptical’ hat and just check that it’s built on accurate foundations.

4 thoughts on “Strategy + falsehood = error

  1. I agree with your analysis of this.

    I thought the following (I am a recent MBA) might be of interest.

    The HBR article you quote follows its statement on innovation with …

    “In an initiative we call DesignWorks, our MBA students work hand in hand with design school students and design professors”.

    I also attended a product design course at business school with design students from a reputed design school.

    However, on this course one concept (should that be ‘hypothesis’?) proposed was a distinction between creative activities and process driven activities; between the early stages of product design, and later stages of production; between smaller entrepreneurial businesses and larger process driven organisations; and between the respective cultures of such departments, and businesses. Another (strategy) course highlighted this as a distinction between Innovation, and Discipline. Yet another (entrepreneurship) suggested a distinction between creating new businesses, building and growing business, taking care of established businesses, (and winding down declining businesses?), and the different skill-sets and personalities of people who enjoy and thrive in working in these different areas.

    I might fall into the same trap as the HBR article if I promoted this view as a truth or “simple rule”, rather than as the hypothesis that it clearly is, but thought it an interesting counter perspective to the HBR article, which allows room for some value outside innovation and creativity.


    1. Thanks for this – the distinction you note between creating, growing, sustaining and winding down looks fine to me. It highlights that ‘creating’ is only the first step, and supports the argument that most value is delivered by the later 3 stages. Plenty of great innovative business ideas fall short of delivering that value because of failure in those later stages. I hope I have laid out these stages adequately in the extended opening to my book at Kim

  2. absolutely true.. ringing true with the adage ‘ if it ain’t broke don’t fix it ‘.

    I have seen quite a few companies obsessed with innovation and falling short on milking working/existing business models. OTOH i have also seen companies neglect innovation to their own peril resulting in subsequent loss of market share. But in any case any strategic model, shiningly new or reliably old, is no use if not implemented and delivered properly. Having said that Innovation is also very necessary for sustained and continuous improvement, staying ahead of the market, etc; Thus balancing between the two aspects creativity-innovation and delivery should be taught in B-Schools, along with evaluating on which of the two should the spotlight be focussed on depending on the dynamics of the market. A workshop or two with simulations and case studies would be nice 🙂

    – an aspiring strategist

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