Technological innovation has significant governance dynamics. Linked to the governance dynamics are offensive and defensive innovation strategies. Offensive strategies encompass reconfiguration, redefinition and pure spending. Reconfiguration occurs when the challenger performs an activity innovation in the value chain or the configuration of the entire business. Redefinition arises when a challenger redefines the competitive scope compared to the market leader. Pure spending transpires when the challenger buys a market position through superior resources utilization or greater willingness to invest.
Conversely, a defensive strategy focuses on lowering the probability of competition from new entrants pursuing innovation monetarization or from established competitors seeking to reposition a line of business. Defensive strategies encompass technology licensing, selective retaliation, entry deterrence and forming coalitions. The principal objective of implementing a defensive plan is to influence new entrants or established competitors to conclude that market participation is an unattractive organizational commitment.
An enterprise’s strategy converges on managing the envisioned destiny and achieving the articulated objectives. Michael Porter’s updated 5 Forces paradigm aids in studying market competitiveness through assessing the power of buyers, the power of suppliers, availability of substitutes, threats of new entrants and industry rivalry. These 5 forces assist in determining if an opportunity exists to enhance the organizational state, based on what is occurring in the marketplace and anticipated potential threats. Nonetheless, of importance is dynamic capabilities viewed as strategic options that give firms a choice to pursue new directions when opportunities arise.
Technological innovation efficacy depends on usage within a value chain. Offensive or defensive strategies can affect short-term profitability, depending on the available resources and the macro environment in which the enterprise operates. Thus, to achieve effective technical innovation, manager-leaders should govern technological innovation considering complex adaptive system theory to ensure strategic viability. Proper management regulates participating parties in a collaborative relationship through governance mechanisms reflecting technology innovation dynamics. My Journal article presents how to manage technical innovation-related risk and obtain support for technological innovation projects based on an offensive or defensive strategy decision.
Read Robert E. Davis’ recent Journal article:
“Technology Innovation Dynamics: Innovation Governance,” ISACA Journal, volume 4, 2018.