I’ve noticed that business school students often feel frustrated when they’re taught strategy. There’s a gap between what they learn and what they’d like to learn. Strategy professors (including me) typically teach students to think about strategy problems by introducing them to rigorous analytical tools—assessing the five forces, drawing a value net, plotting competitive positions. The students know that the tools are essential, and they dutifully learn how to use them. But they also realize that the tools are better suited to understanding an existing business context than to dreaming up ways to reshape it. Game-changing strategies, they know, are born of creative thinking: a spark of intuition, a connection between different ways of thinking, a leap into the unexpected.

They’re right to feel this way—which is not to say that we should abandon the many powerful analytical tools we’ve developed over the years. We’ll always need them to understand competitive landscapes and to assess how companies can best deploy their resources and competencies there. But we who devote our professional lives to thinking about strategy need to acknowledge that just giving people those tools will not help them break with conventional ways of thinking. If we want to teach students—and executives—how to generate groundbreaking strategies, we must give them tools explicitly designed to foster creativity.

A number of such tools already exist, often in practitioner-friendly forms. In “How Strategists Really Think: Tapping the Power of Analogy” (HBR, April 2005), Giovanni Gavetti and Jan W. Rivkin write compellingly about using analogies to come up with new business models. Charles Duhigg talks in his book Smarter Faster Better about introducing carefully chosen creative “disturbances” into work processes to spur new thinking. Youngme Moon, in “Break Free from the Product Life Cycle” (HBR, May 2005), suggests redefining products by boldly limiting—rather than augmenting—the features offered.

What these approaches have in common is the goal of moving strategy past the insights delivered by analytic tools (which are close at hand) and into territory that’s further afield, or—to use a bit of academic jargon—cognitively distant. They take their inspiration more from how our thought processes work than from how industries or business models are structured. For that reason they can help strategists make the creative leap beyond what already exists to invent a genuinely new way of doing business. Simply waiting for inspiration to strike is not the answer.

In this article I explore four approaches to building a breakthrough strategy: (1) Contrast. The strategist should identify—and challenge—the assumptions undergirding the company’s or the industry’s status quo. This is the most direct and often the most powerful way to reinvent a business. (2) Combination. Steve Jobs famously said that creativity is “just connecting things”; many smart business moves come from linking products or services that seem independent from or even in tension with one another. (3) Constraint. A good strategist looks at an organization’s limitations and considers how they might actually become strengths. (4) Context. If you reflect on how a problem similar to yours was solved in an entirely different context, surprising insights may emerge. (I wrote about these ideas more academically in “Where Do Great Strategies Really Come From?” Strategy Science, December 2017.) These approaches aren’t exhaustive—or even entirely distinct from one another—but I’ve found that they help people explore a wide range of possibilities.

Contrast

What pieces of conventional wisdom are ripe for contradiction?

To create a strategy built on contrast, first identify the assumptions implicit in existing strategies. Elon Musk seems to have a knack for this approach. He and the other creators of PayPal took a widely held but untested assumption about banking—that transferring money online was feasible and safe between institutions but not between individuals—and disproved it. With SpaceX he is attempting to overturn major assumptions about space travel: that it must occur on a fixed schedule, be paid for by the public, and use onetime rockets. He may be on track toward a privately funded, on-demand business that reuses rockets.

It’s best to be precise—even literal—when naming such assumptions. Consider the video rental industry in 2000. Blockbuster ruled the industry, and the assumptions beneath its model seemed self-evident: People pick up videos at a retail location close to home. Inventory must be limited because new videos are expensive. Since the demand for them is high, customers must be charged for late returns. (It was basically a public-library model.) But Netflix put those assumptions under a microscope. Why is a physical location necessary? Mailing out videos would be cheaper and more convenient. Is there a way around the high fees for new releases? If the studios were open to a revenue-sharing agreement, both parties could benefit. Those two changes allowed Netflix to carry lots more movies, offer long rental periods, do away with late fees—and remake an industry.

Most of the time, strategy from contrast may look less revolutionary than Netflix (which remade itself again by streaming videos and becoming a content creator) or SpaceX (should it succeed). Any organization can ask whether it might usefully flip the order in which it performs activities, for example. The traditional model in retail is to start with a flagship store (usually in a city center) and add satellites (in suburban locations). Now consider pop-up stores: In some cases they conform to the old model—they are like mini-satellites; but in others the pop-up comes first, and if that’s successful, a larger footprint is added. The Soho area of New York City has become a testing ground for this strategy.

Another approach is to consider shaking up the value chain, which in any industry is conventionally oriented in a particular way, with some players acting as suppliers and others as customers. Inverting the value chain may yield new business models. In the charitable sector, for example, donors have been seen as suppliers of financial resources. DonorsChoose.org is a model that treats them more like customers. The organization puts up a “storefront” of requests posted by schoolteachers around the United States who are looking for materials for their (often underresourced) classrooms. Donors can choose which requests to respond to and receive photos of the schoolwork that their money has supported. In effect, they are buying the satisfaction of seeing a particular classroom before and after.

In some industries the status quo has dictated highly bundled, expensive products or services. Unbundling them is another way to build a contrast strategy. Various segments of the market may prefer to get differing subsets of the bundle at better prices. Challengers’ unbundling of the status quo has been facilitated by the internet in one industry after another: Music, TV, and education are leading examples. Incumbents have to make major internal changes to compete with unbundlers, rendering this approach especially effective.

• Precisely identify the assumptions that underlie conventional thinking in your company or industry.
• Think about what might be gained by proving one or more of them false.
• Deliberately disturb an aspect of your normal work pattern to break up ingrained assumptions.

What to Watch Out For

Because the assumptions underlying your business model are embedded in all your processes—and because stable businesses need predictability—it won’t be easy to change course. Organizations are very good at resisting change.