The Co-Existence of Strategy and Innovation: Legitimizing New Forms of Organizing Processes

Abstract

Companies increasingly need to excel both in efficiency and innovation. This means that they have to be proficient both at following strategies and cultivating innovation-led change. Whereas the former implies cultivating what they are good at and embedding it in stable structures, the latter implies exploring new opportunities. However, these two logics subscribe to two distinctly different discourses in organizations. A problem arises when the discourse of strategy and structure gets the upper hand over the discourse of innovation. This somewhat uneven battle is a question of legitimacy: Strategy and structure are part and parcel of rationalist models. Innovation, on the other hand is more often than not seen as nearsighted and intuition based. Hence, organizations will tend more towards structure and strategy than towards innovation, as pointed out by, for example, Bartlett and Ghoshal (1998). Such a tendency is potentially harmful to contemporary organizations in the sense that their potential for innovation is hampered. The idea of ‘strategic intent’ (Hamel and Prahalad 1994) as opposed to traditional models of strategy goes some way towards resolving the dilemma, because it specifies that strategies should be broad and provide ‘stretch’ rather than be controlling and inhibitive. Still, recent literature on strategy tends to prescribe from best practice, and it works from examples of very large corporations. They do not address dilemmas of ‘normal’ companies who cannot as readily accommodate competing logics of innovation and strategy. I argue in this paper that a key element is that of ‘discourse’, which serves to legitimise the one or the other logic. Therefore, for innovation led change to occupy its due space in organizations, it needs to be given legitimacy. Legitimacy comes through structure, and therefore innovation needs its own structures inside organizations.