Emergent Strategy
One of the key features of Innosight Ventures' approach to building
new businesses is the use of emergent strategy.
Emergent Strategy is the concept in which a business model is seen
as dynamic rather than static, and as such it must evolve in order to
survive. This evolution must occur as rapidly and cheaply as possible
to ensure that the business is correctly aligned with its environment
as it starts to grow.
If the business model does not change quickly enough or does so by
spending too much money, the business will run out of money without
ever achieving market validation.
In order to grow any new business, it must be recognized that the
business plan is only a guide for how the business will ultimately
work. Just as a military leader will tell you that "No battle plan survives contact with the
enemy", we recognize that "No
business plan survives its first contact with the market"
In order to ensure success, we grow our businesses using an emergent
strategy in which we recognize that a business plan consists of many assumptions and a limited amount of knowledge. Over
time, the goal of emergent strategy is to increase this "knowledge to
assumptions" ratio as quickly and cheaply as possible, so that the
business model can be altered before too much cash is spent.
The instinct and training of many managers, however, is to pursue
a pre-determined
strategy, a
management strategy more appropriate for traditional projects in which
there are fewer unknowns, and in which markets can be analyzed and
understood before resources are committed.