Strategic management is very important for any company that want to gain a competitive edge. This is particularly true in industries where change and innovation is the norm, including travel, automotive and even travel insurance. It is increasingly being recognized that companies and people who are not willing to embrace change and be innovative and adaptive in their thinking, will not survive.
So what is the right balance between strategic management, innovation and adaptability? Can these be delivered in a single framework? Can these be aligned with the same principles to achieve strategic best practice? Can these attributes be aligned as they are used in different areas of policy to meet specific objectives and set the competitive edge in an industry where change is as standard a process as in travel?
One key attribute that is commonly discussed and referenced in many of these debates is that of risk management, which is a very familiar part of any company’s strategy of getting a competitive edge. In the context of strategy and innovation for travel in particular, we have seen a lot of debate on the question of whether you need to add risk management to your strategic management framework. For example, a popular example given by a leading risk management firm in their most recent white paper on innovation and change within travel was to apply this framework to all of travel, but only use risk management where there is a change in operating model, technology or product.
This approach is, in our opinion, very short-term and highly unwise. In the past, it has probably been more difficult to innovate and create a better product in the travel industry, but many major changes in travel have taken place since the advent of the internet and mobile, and major change is likely to continue. New products and innovations in technology will continue and companies need to invest in R&D to stay up to date. Companies need to think about innovation and how to do it effectively, and not only try to apply this approach to everything related to travel and in particular the travel insurance business, but also in other industries. More investment in innovation today means more competitive advantage tomorrow.
Another commonly held view is that strategic management and key principles such as adaptability, innovativeness and change are aligned to create a single framework in a way that can be applied to the different aspects of strategy and innovation for travel. This point of view is commonly related to the concept of a single overarching framework for the different roles and activities within a company (including strategy and innovation) – which we have outlined in our book, the A Framework For Creating Shared Priorities. We agree that the different aspects of strategy and innovation for a specific industry can be placed under one or more of these overarching structures.
As these four different components, strategies, adaptability, innovation and change, have a very high return on investment, it makes more sense to focus more on using these together rather than putting two or three together as separate factors in the strategy and planning process.