Five Competitive Forces of Effective Leadership and Innovation
Five competitive forces of effective leadership and innovation
Charles McMillan
Charles McMillan is
Professor of Strategic
Management at York
University, Toronto,
Canada.
Introduction
How do organizations innovate? Are the main drivers the external environment impacting the organization, or a set of practices and processes within the organization? The unprecedented change in the global environment affects both organizational survival and management’s capacity to innovate. Climate change, the war on terrorism, digitization of production, global information flows, and the rise of new competitors such as India and
China add to the mix of uncertainties, which Peter Drucker presciently called The Age of
Discontinuity.
Organizations can apply uncertainties, some predicable or relatively probable, into their decision models, but most do not. Corporate managers take seriously the five competitive forces leading to organizational rivalry first articulated by Porter (1985) and widely adopted in corporate management and investment analysis. Despite the application of competitive forces and calculations for industry positioning, other factors determine corporate survival and success. Indeed, as long as firms focus on competitive rivalry, there may well be an economy of focus on organizational processes. What often separates many firms bordering on the precipice and those that innovate constantly stems from internal configurations of decision processes and design. This paper sets out a model of corporate innovation and the implications of the management processes of innovation.
The basic model
Organizational innovation forms the core metric of both organizational efficiency (more outputs from fewer inputs) and organizational effectiveness, i.e. long-term survival. In general, there is a difference between invention, the discovery of an idea, or innovation, the exploitation of ideas into organizational practice. The distinction between invention and
Charles McMillan
Charles McMillan is
Professor of Strategic
Management at York
University, Toronto,
Canada.
Introduction
How do organizations innovate? Are the main drivers the external environment impacting the organization, or a set of practices and processes within the organization? The unprecedented change in the global environment affects both organizational survival and management’s capacity to innovate. Climate change, the war on terrorism, digitization of production, global information flows, and the rise of new competitors such as India and
China add to the mix of uncertainties, which Peter Drucker presciently called The Age of
Discontinuity.
Organizations can apply uncertainties, some predicable or relatively probable, into their decision models, but most do not. Corporate managers take seriously the five competitive forces leading to organizational rivalry first articulated by Porter (1985) and widely adopted in corporate management and investment analysis. Despite the application of competitive forces and calculations for industry positioning, other factors determine corporate survival and success. Indeed, as long as firms focus on competitive rivalry, there may well be an economy of focus on organizational processes. What often separates many firms bordering on the precipice and those that innovate constantly stems from internal configurations of decision processes and design. This paper sets out a model of corporate innovation and the implications of the management processes of innovation.
The basic model
Organizational innovation forms the core metric of both organizational efficiency (more outputs from fewer inputs) and organizational effectiveness, i.e. long-term survival. In general, there is a difference between invention, the discovery of an idea, or innovation, the exploitation of ideas into organizational practice. The distinction between invention and
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