When CEOs recognize the need for adding new value to their organizations and commit to the creation of new internal capabilities for growth, they are ready for strategy innovation and the exploration of their company’s strategic frontier.

Exploring strategic frontiers does not require a resident genius or a wild-eyed creative maverick. It doesn’t need to be farmed out to expensive strategy consulting firms. Great new business opportunities can be created by willing middle managers working together in a creative environment, focused on the future and supported by top management. Exploring strategic frontiers can be done with an ad hoc team or an on-going department, but it all begins with the commitment of the CEO to create a new future.

Strategic frontiers, because they are previously unexplored areas, can challenge a team on where to start exploring. The team will begin by examining what it already knows, what it does not know, and who it wants to talk to in order to further understand value on the strategic frontier. We recommend that this exploration of value take place on three different paths — customer value, market dynamics, and business model innovation.

Customer value. In the customer value path, the team will focus on customers and potential customers on that strategic frontier. While questions can center on their opinions about products and services, take time to understand who the customers are and what they really value. What is important to them? To what do they aspire? What drives their decisions? What forces do they perceive? What trade-offs do they frequently address?

The conventional practice is to conduct interviews or focus group discussions with customers. Instead, try gathering this information in a way that is different from what you have ever done before. Skip the focus group and visit customers in their homes, noting the environment in which they use products and services. Or consider having a professional with a different perspective — such as a psychologist or cultural anthropologist — do the interviewing. Such professionals may interpret the customers’ needs in a way that will provide valuable new insights to you.

Market dynamics. The second exploration path on a strategic frontier is market dynamics. This is a study in foresight, attempting to better understand the forces and factors that will change a market over time. What are the trends on the strategic frontier and how might they change in the future? What new technologies are likely to emerge from the laboratory in the near future, and what impact might they have on current markets? What events or conditions could cause a major discontinuity in the steady evolution of markets? How will the strategies of the current competitors in a market make them more or less of a factor in the future?

These questions must be answered by people who spend a lot of time studying or researching markets. We use a process we call Thought Leader Panels. We invite five or six experts that represent different aspects of a strategic frontier. For two days, this group would interact with each other and with team members to help forge a proprietary understanding of an emerging future on that frontier.

Business model innovation. The third path for exploration is business model innovation. Besides addressing customer needs or market changes, companies can create value on a strategic frontier by creating a new, more efficient business model. How can your corporate structure or value chain be reconfigured to dramatically streamline it and significantly lower your overhead allocation? How can the company leverage the Internet to increase value for your customers? Can customers play more of a role in the transaction in exchange for a lower cost?

Researching published information and benchmarking innovative companies are the two primary ways to better understand business model innovations. The frontier team can also consider working with venture capitalists, strategy consultants, or business professors to determine how your company could adjust or reconfigure elements of your current business model to create new value.

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