It is important to differentiate between strategic planning and strategy innovation. Most corporations indeed have defined processes only for carrying out the former, basically studying historical data and making extrapolations for the future. This method has one big flaw, however, because it relies on the assumption that the future will follow alike the past.
Strategic planning involves creating a fit to the current business model, it is a process centered on the company and it aims to extending the value creation already in place. Strategy innovation, on the other hand, creates new business models, it is centered on the market and it aims to find new ways of value creation. Overall we can say that strategic planning is a big analytical process while strategy innovation is a creative one, and as the guru Henry Mintzberg said “…nobody in the history of the world has ever created a strategy through an analytical process”.
The fact that strategy innovation is more suitable for dynamic markets does not mean strategic planning is an obsolete managerial tool, though. The two can perfectly co-exist; companies should first carry out strategy innovation in order to identify future business opportunities and trends in the market. Afterwards they transfer what they discovered into the analytical process, making sure the action plan will fit the company’s resources, processes and values.
Below you will a table provided by Professor Robert Johnston, which summarizes the differences between the two approaches.
|Strategic Planning||Strategy Innovation|
|Today to tomorrow||Tomorrow to today|
|Extend current values||Create new values|
|Fit the business model||Create a new business model|