Strategy Inversion: Engaging with the Counterculture

Abstract

A counterculture is a subculture whose values, ethos, and aspirations differ substantially from those of mainstream. When oppositional ideas of a counterculture reach a critical mass and spread into main culture, it can trigger dramatic cultural, economic, and societal changes. The innovation counterculture operates in opposition to incremental change and maintenance of status quo; those in counterculture pursue radical ideas and seek to change world. Prominent examples of innovation countercultures include Homebrew Computer Club that spawned Apple and about 29 other companies and MIT Media Lab, which gave us touch screens, netbooks, and children's programming. Executives need to engage with innovation countercultures to understand what unnoticed things will create opportunities or impose perils for their businesses. But before heading out to make contact with innovation counterculture, executives should think twice about how they'll integrate what they learn from those contacts into their company's strategy processes. Firms can develop strategies and initiatives in different ways, and path chosen can have a big impact on company's success, both at profiting from its connections with innovation counterculture and as a business in general. A strategy is made up of three things: an objective, a strategy concept, and means. The means must be deployed according to strategy concept for objective to be achieved. Often, executives begin by defining business objective and strategy concept, and then look for means to fill gaps. But I've found that winning strategies are really created by inverting this typical strategy development process-first developing a deep understanding of emerging means and then formulating strategy concepts, rather than looking for means to fill gaps after defining business objective and settling on a strategy concept. In other words, most executives look around and ask, What's out there to support our strategy? That's a very different question from Steve Jobs's famous query to Steve Wozniak, about their homemade computer: How can we make a business out of this? The answer to first question is an upgrade to your strategy--that's filling gaps. The answer to second question is a disruption--that's strategy inversion. For example, take Uber. That company's objective is to deliver an exceptional experience from instant a customer orders a ride to moment he or she is dropped off, and make a profit doing it. The means for achieving that objective are an app and a fleet of drivers with cars. The strategy concept is how app connects customers and drivers, and how drivers are managed, to deliver an exceptional experience while promoting ridership and handling billing and payment. The lynchpin of Uber's strategy is app's ability to deliver a ride within five minutes. When Uber first rolled out in New York City, company relied on Google's API to predict arrival times. But those ETAs were off, with actual time to a car's arrival sometimes more than 350 percent different from predicted arrival time. Ultimately, company hired a team of mathematicians and scientists, drawn from outside traditional computing industry, to develop its own ETA algorithm. That capability was quickly recognized as foundation for company's success. As Lacy (2011) noted, the company lives and dies on its 'Math Department,' as they call team in house. Uber learned that it couldn't succeed by assembling pieces of technology it didn't understand. Its move to build deep understanding of new means--predictive data analytics--prevented company's collapse and set stage for growth. But as important as it is that executives understand new means deeply, there is scant discussion about that aspect of business strategy. Neither Porter's Competitive Strategy (1980) nor very popular Profit from Core (Zook and Allen 2001), both central works on strategy development, say much about means and need to start with a deep understanding of them. …