Every company needs to continuously retool its strategy in order to remain competitive—but how can leaders effectively meet this demand? Harvard Business School (HBS) professors Cynthia A. Montgomery and Srikant M. Datar propose an answer in their Reimagining Strategy program, a new offering that takes a fundamentally different approach to designing a winning strategy. We sat down with the faculty cochairs to learn more about why this program is distinct—and why it’s so essential right now.
Cynthia: Strategy was transformed in the 1980s when HBS professor Michael Porter brought the tools of economics into what was once a largely qualitative field. This way of thinking about strategy generated substantial benefits. We now know far more about the role market forces play in industry and firm profitability, and the implications of the same for managers. It was a huge pivot in the strategy field, and it started here at HBS.
The merger of economics and strategy added much-needed theory and empirical evidence to strategy's underpinnings. Yet a host of unintended consequences have followed. Most notably, strategy has come to be associated with analytical rigor and left-brain thinking—which in themselves are very good things, but problematic if they crowd out insights and approaches typically associated with the right brain, most notably creativity. Yet most strategy programs out there tend to do just that. We now see that it’s not enough.
The killer question in strategy asks: "Is this business relevant; is it providing and will it continue to provide something distinctive that customers care about?" This isn't a question that must be asked and answered once; it's one that must be confronted again and again over the life of a business—as customers' needs evolve, as competitive conditions change, and as a company's own resources develop. Yet, in my experience, it is the question leaders find most challenging to answer, in part because it requires them to think in new ways and go where they—and others—have not been. And their existing "bag of tools" won't get them there.
What we are doing with Reimagining Strategy is distinctly different from the predominant paradigm. While we deeply value classic, left-brained work, we also emphasize the essential role for creativity in formulating strategy. Here’s why: When leaders only focus on the former, their organizations tend to get stuck in a strategy that’s worked in the past that may be irrelevant or ineffective today. It can be very difficult to break free from this fixedness. This program gives executives the opportunity to step back from their day-to-day work, see their strategic challenges with fresh eyes, and gain the inspiration and, most importantly, the tools they need to revitalize their strategy. Ultimately, our goal is to give participants a new playbook for formulating a powerful and unique strategy.
Cynthia: A lot of organizations struggle to revitalize their strategy when it stagnates. This program takes a fundamentally different approach to solving that problem. We do it through design thinking—a method that's typically been used for innovating products—and through other approaches for idea generation. That's where differentiation begins. But the goal is not just to produce a host of creative ideas; it's to use those ideas to identify and address significant market needs through a unique business model that is effective.
The reason why design thinking is so effective in this context is it places customers' needs at the center of a product, service, process, and business model. That helps leaders reframe their strategic challenges and see potential solutions in an entirely new light. More specifically, this method helps leaders to tackle these challenges using both right-brained creativity and left-brained analytics.
Contrast this with what you might find in any standard strategy text or academic article on strategy. Almost every strategy text talks about the importance of competitive advantage and differentiating a business from its competitors. And, increasingly, they may emphasize that that process should be dynamic, not static. Where they fall short is in enabling you to achieve those vaunted ends. Giving you the tools to find a difference that will matter—the tools to reinvent a business. To be a winning company you need to be different in meaningful ways. That means taking a different approach to how you think about strategy.
What we have is a unique offering in the market that hits the intersection of right-brained thinking, left-brained thinking, and strategy. You can find many courses on strategy, and you can find many courses on design thinking. What's unusual is this combination. This program gives you a process to identify and explore more creative ideas. It's inspiration, ideation, and implementation—not just for products, but also for services, processes, and strategies.
Srikant: First, the program's approach is unique. As Cynthia said, it integrates the best of strategic thinking with cutting-edge techniques in design thinking. Second, and this is critical, the program's format is especially conducive to generating breakthrough ideas. It integrates the classic executive education experience with an interactive component that allows you to tap into the insights of HBS faculty and program peers. In other words, you'll engage in case studies, group discussions, and hands-on exercises, but you'll also spend time discussing strategic issues in your organization and applying design thinking principles to those scenarios. By exchanging ideas and perspectives with faculty and fellow executives in the program, our participants are better equipped to identify their own strategic challenges, ideate solutions, and understand the importance of prototyping in taking their businesses forward.
Srikant: When you first heard of Airbnb, you might have balked—but now many can't imagine traveling without it. You probably didn't realize then that hotels weren't fully meeting your needs or that there was a market for underutilized space in your home. You probably also didn't realize that social networking could foster introductions between strangers on a worldwide basis, ease the risk of transactions, and provide a platform for building reputational capital that could help your personal brand thrive. This, at its core, is what design thinking is about. It focuses on identifying and addressing latent user needs, because that’s what leads to a home run in strategic innovation.
In keeping with these principles, our customers, our employees, and our partners should be the focus of our innovative efforts. At the end of the day, your goal should be to uncover what's not being delivered to those users. Through deep observation, you can discover what a user needs but is not getting, which helps you understand pain points or unmet user needs. The most genius strategies are those that recognize latent user needs. These strategies and innovations require you to uncover insights that don't fit neatly into existing models. In this program, we look at techniques from design thinking for observing deeply and effectively, identifying pain points, and creating and testing possible solutions.
Srikant: When your goal is to imagine a problem in a new way, you first have to understand how you think about it now. One thing we focus on is functional fixedness, which is the assumption that you're going to use a business model, set of resources, or network of relationships in just the way you've used them in the past. Through a process called task unification, participants make the case for completely repurposing assets—either their own assets or others' assets, as Airbnb did.
We also consider structural fixedness, which is the tendency to think of an object or process as a whole with a defined structure that cannot be modified or rearranged. We look at techniques that encourage you to break apart your strategy, move things around, or subtract them. By practicing systemic inventive thinking we will open new fields of possibility.
At the conclusion of the program, you will have the confidence to move more quickly to develop breakthrough solutions. You will understand how to make decisions in accordance with your users' needs, and you will learn to accept failure as part of the process of testing and iterating an idea. It's necessary to develop these capabilities in order to accelerate innovation and develop a leading-edge strategy for your organization.
Cynthia: In the last 10 years, my perspective on strategy has changed in fundamental ways. That is mostly due to my interactions with HBS Executive Education participants. As they talk about their businesses and think about their roles as leaders, they try to truly understand what it means for them to be a strategist. Often they say they understand that their business has to be distinctive, but they don't understand where the distinction comes from. I realized that in the field of strategy, we don't address this shortcoming. We have many frameworks, but frameworks mostly operate inside the box. When something more is required, how do you find it? I thought, let's tackle that fundamental question of distinction. Where does it come from? And how can leaders increase the odds?
Srikant: My work with business leaders around the world generated two major insights, and we’re addressing both of them in Reimagining Strategy. One major insight was that certain topics were important to participants but, as Cynthia pointed out, they want to learn them within their own context and probe what they mean for their businesses. Second, they wanted to leave with tools for engaging others in their organizations to develop strategies and business models.
In Reimagining Strategy, we define innovation as novel and useful, and we apply those two tests to all strategies. When I'm executing a particular strategy, it's okay to apply a rule. It's okay to apply a particular framework. But let's also keep asking the deeper questions—the ones that lead to speculation, connection making, development thinking, prototyping, experimenting, and a deep understanding of our customers. These are the questions that help make a strategy novel and useful.
