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Management article
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Reference no. SMR3921
Published by: MIT Sloan School of Management
Published in: "MIT Sloan Management Review", 1998
Length: 10 pages

Abstract

Why, asks Gary Hamel, has the strategy star begun to dim? Why is strategy no longer a ''big idea'' in most companies? Strategy innovation is key, he says, to creating new wealth. Only those companies that are constantly able to reinvent themselves will survive in a discontinuous world. Hamel points out that, while strategists spend a lot of time thinking about the changing context and content of strategy, they pay little attention to the conduct of strategy - the task of strategy making. No one seems to know how to develop innovative strategies that create wealth. He calls for the development of a theory of strategy innovation and offers several propositions: that strategy is emergent, much like life itself; that strategists have been working on the ''strategy,'' rather than on the preconditions that give rise to strategy innovation; that strategy is poised on the border between perfect order and total chaos; and that great strategy is both luck and foresight. Hamel offers five preconditions for the emergence of strategy: (1) the entire organization, not just top management, should have a voice in creating strategy. The process must be pluralistic and participative; (2) conversations about strategy must cut across industries and organizations so that knowledge can be combined in new ways; (3) people will embrace change when they see opportunities for rewards and growth; (4) managers must help companies reconceive themselves, customers, competitors, and opportunities; and (5) companies must do some market experimentation to determine which new strategies work. In the end, Hamel says, we must spend less time working on strategy as a ''thing'' and more time understanding what gives rise to new strategy. Only then can we discover the source of corporate vitality.

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Abstract

Why, asks Gary Hamel, has the strategy star begun to dim? Why is strategy no longer a ''big idea'' in most companies? Strategy innovation is key, he says, to creating new wealth. Only those companies that are constantly able to reinvent themselves will survive in a discontinuous world. Hamel points out that, while strategists spend a lot of time thinking about the changing context and content of strategy, they pay little attention to the conduct of strategy - the task of strategy making. No one seems to know how to develop innovative strategies that create wealth. He calls for the development of a theory of strategy innovation and offers several propositions: that strategy is emergent, much like life itself; that strategists have been working on the ''strategy,'' rather than on the preconditions that give rise to strategy innovation; that strategy is poised on the border between perfect order and total chaos; and that great strategy is both luck and foresight. Hamel offers five preconditions for the emergence of strategy: (1) the entire organization, not just top management, should have a voice in creating strategy. The process must be pluralistic and participative; (2) conversations about strategy must cut across industries and organizations so that knowledge can be combined in new ways; (3) people will embrace change when they see opportunities for rewards and growth; (4) managers must help companies reconceive themselves, customers, competitors, and opportunities; and (5) companies must do some market experimentation to determine which new strategies work. In the end, Hamel says, we must spend less time working on strategy as a ''thing'' and more time understanding what gives rise to new strategy. Only then can we discover the source of corporate vitality.

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