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In a glass-walled boardroom overlooking the Hudson River wrapping around downtown Manhattan, the Statue of Liberty in the distance, our guest lecturer flicked on one of the strangest slides I’ve seen. Juxtaposed against a sleek, modern room were two medieval paintings. One of a fortress. The other of a ship.

This was one of our Outthinker Strategy Network Roundtables. Fifteen heads of strategy of Fortune 500 companies were discussing the challenges and methods for managing innovation with Kellogg professor Rob Wolcott. What Wolcott said next had all our CSOs scribbling notes.

Numerous frameworks abound to help people understand the challenges of simultaneously managing a stable core business and seeking innovation: “three horizons,” “dual operating system,” “three-box solution,” etc. But Wolcott’s simple analogy captures the challenge more elegantly.

He suggests you can think about your business as composed of a fortress and a ship. The fortress is your stronghold, around which you build walls to protect the gains you have accumulated. The ship represents your activities to seek out new lands. If you just protect your fort, you will miss out on future lands and will eventually find your fort attacked and taken over. Your core business will eventually erode into a commodity.

As Bruce Greenwald of Columbia Business School puts it, “In the long run, everything becomes a toaster.” Everything commoditizes as alternatives proliferate and margins fall.

Strengthen your fortress walls

You can slow the slide into commoditization by strengthening your fortress walls in three ways:

  1. Expanding and leveraging economies of scale by building larger factories so you can produce at a price others cannot match, for example, or creating assets you can use over and over without significant margin costs.
  2. Increasing customer captivity through strategies like raising switching costs or making it undesirable for customers to leave you.
  3. Increasing your control of key inputs including tangible ones (e.g., owning the diamond mines) and intangible ones (e.g., intellectual property and brands as Disney does when it acquires and controls characters).

In the fortress, you play defense. You ironically are motivated to slow down the pace of innovation.

But the mindset of those on your ships exploring new territories is in many ways the opposite. You are seeking change, not stability, which comes with risk rather than certainty. You are seeking to change the order of things rather than defend it.

Leading your ships

Leading your fortress and your ship simultaneously is challenging because each requires a different leadership approach across at least seven dimensions (this is drawn from Chapter 10 of my upcoming book, Driving Innovation from Within):

Fortress leaders Dimension Ship leaders
Driven by controlled resources Your strategic orientation Driven by perception of opportunity
A single stage with complete commitment out of decision How you commit resources In stages with minimal exposure at each stage
Hierarchy Your management structure Flat, with multiple informal networks
Responsibility and seniority The basis on which you assign rewards Value creation
Safe, slow, steady The type of growth you seek Rapid growth with acceptance of risk
Risk should be minimized Risk orientation Risk should be comparable to pay-off potential
Coordinating Your primary skill Designing new organizational structures and processes

The challenge of simultaneously adopting such different leadership styles may make you want to throw up your hands and give in to the commonly accepted belief that established companies cannot innovate, that entrepreneurs are the disruptors, that large corporations should resign themselves to acquiring innovations that others create.

But as we sat in the conference room, high above the city, far away from our offices, we came to realize that we were doing it already. These roundtables are like our ship. They give us time to step away from the fortress, climb the crow’s nest, and peer into the future. You can walk and chew gum, you can work and play, you can play defense and offense, you can relax in the comfort of your home and explore the wilderness.

To begin doing this, simply sit with the “fortress and ship” analogy, and:

  • Ask yourself, “Who are my fortress protectors and who are my ship explorers?”
  • In every meeting you are in and in every interaction you have, ask if this is a fortress or ship discussion.
  • Then adjust your leadership approach accordingly.
“8Ps” of StrategyOpportunity
for Disruption
Recommended Leverage Points
Position- The farmers, individual and corporate, that you are targeting.

- The need of the agricultural industry that you seek to fill.
3- What technologies do you control that can help you tap into market
segments that you previously thought unreachable?

- What are the potential business alliances you could think about with key players in the segment to serve your customers with integrated solutions? (Serving customers with more integrated solutions example: serving farmers with fertilizers, crop protection and other).
Product- The products you offer, and the characteristics that affect their value to customers.

- The technology you develop for producing those products.
8- What moves are your organization taking to implement Big Data and analytics to your operations? What IoT and blockchain applications can you use?

- What tools and technology could you utilize or develop to improve food quality, traceability, and

- How can you develop a more sustainable production model to accommodate constraints on arable

- What is the future business model needed to serve new differentiated products to your customers?
Promotion- How you connect with farmers and consumers across a variety of locations and industries.
- How to make consumers, producers, and other stakeholders aware of your products and services.
8- How are you connecting your product with individual and corporate farms who could utilize it?
- How could you anticipate market and customer needs to make customers interested in accessing your differentiated products?
PriceHow consumers and other members of the agricultural supply chain pay for access to agricultural products.7- What elements of value comprise your pricing? How do each of those elements satisfy the varying needs of your customers?
Placement- How food products reach consumers. How the technologies, data, and services reach stakeholders in the supply chain.9- What new paths might exist for helping consumers access the food they desire?
- How are you adapting your operations and supply chain to accommodate consumers’ desire for proximity to the food they eat?
- How could you anticipate customer expectation to make products more
accessible to customers/agile supply chain?
- Have you considered urbanization as a part of your growth strategy?
- How your food satisfies the needs and desires of your customer.
- How the services you provide to agribusiness fulfill their needs.
9- Where does your food rate on a taste, appearance, and freshness
- Could the services you provide to companies and farms in the agriculture industry be expanded to meet more needs?
- What senses does your food affect besides hunger? How does your
customer extract value from your food in addition to consumption?
Processes- Guiding your food production operations in a manner cognizant of social pressure.8- How can you manage the supply chain differently to improve traceability and reduce waste?
- How can you innovate systems in production, processing, storing, shipping, retailing, etc.?
- What are new capabilities to increase sustainability (impact on the environment, or ESG) components?
People- The choices you make regarding hiring, organizing, and incentivizing your people and your culture.- How are you leveraging the agricultural experience of your staff bottom-up to achieve your vision?
- How do you anticipate new organizational capabilities needed to perform your future strategy (innovation, exponential technologies needed, agile customer relationship, innovative supply chain)?
- How do you manage your talents to assure suitable development with exposure in the agrifood main challenges/allowing a more sustainable view of the opportunities/cross-sectors?