Strategy as innovation

Building on research in strategy formation and organizational innovation, this paper reports on a field study of a young company in the sustainable cities industry. We examine how company founders, facing the high ambiguity inherent in very early phases of a new industry, formed a strategic goal. Our data show goal formation as a phased social process. By aggregating previously encountered solutions to known problems, the founding team formed an emergent goal that presented an innovative solution to a new problem and the basis of the new company's business model. We analyze this process to explain how, under conditions of ambiguity, organizational goals can form through a collaborative social exchange that resembles the innovation process. Our research suggests that, under particular conditions, novel ideas can be generated and ambiguous contexts navigated without great foresight. Instead, entrepreneurs can arrive at innovative ideas through the collaborative integration of a disparate set of local problems and solutions. By illuminating the goal formation process in a nascent industry, we contribute to organizational literatures on strategy, decision-making, and innovation.