On October 8, 2018, Professor Michael Porter received what we believe to be a long overdue honorary doctorate from the KUL. Driven by a sharp analytic eye, impressive teaching and consultancy skills, tons of energy and hints of pure brilliance, the forefather of such time-tested subjects as competitive advantage, the value chain, industry dynamics (five forces), shared value, value based health care and many more deserves our highest recognition for helping to establish and advance the domain of strategy management. Later in the evening he addressed a massive audience of business leaders and delivered a speech detailing why every company needs an augmented reality (AR) vision.

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By highlighting the necessity  of digital transformation, Mr. Porter underlines the value of this technology in every company’s strategy. But, while AR most certainly stands at the forefront of this evolution, it is not the only emerging tech worth adopting. Our proposition is that ‘Shaping Smarter Businesses’ involves embracing any relevant technology, reframing your business model and consciously developing your organizational capabilities in a systemic way.

New technologies ask for a simple strategy

We assert that these challenging times of platforms, networks, customer activation and the search for zero marginal cost call for a new way of determining strategy. It is important to recognize that the complexity that threatens to overwhelm individuals, organizations and society should not be addressed with even more complex solutions. In this vein, Professor Kathleen Eisenhardt from Stanford University (2015) has for years engaged in a research stream on simple rules, showing that most successful organizations in tech and other industries do not try to match technological, competitive or market complexity with complicated strategies, but use simple rules to shape critical processes on a daily basis.

In contrast to complex models, simple rules focus on only the most critical variables. By ignoring peripheral factors and tenuous correlations, rules of thumb (heuristics) eliminate a great deal of noise. They can produce better decisions when information is limited and time is short, and they allow members of a community to synchronize their activities with one another on the fly. They make it more likely that people will act on their decisions, because they are easy to remember and less cumbersome to follow than complex guidelines for action.

10 rules for smart businesses

To assist companies in their digital transformation efforts, we developed our set of simple rules designed to help shape the smart businesses of tomorrow:

  1. Embrace the messy process of practicing, experimenting and learning.
  2. Recognize that curiosity drives the hard questions that challenge the status quo and identify technology trends that might have an impact on one’s business model.
  3. Recombine digital and non-digital resources to unlock new sources of value.
  4. Shape a culture of permanent reflection and renewal to nurture a digital evolution path.
  5. Allocate resources by smart applying the Smart Adoption Model (see white paper Scheipers et al.). Assign scarce resources mainly to technologies with (potentially) high impact on the business model.
  6. Creatively adopt multiple (technology) assets, recombine processes within and across organizations and go through digital evolution paths to build sustainable competitive advantages.
  7. Develop dynamic organizational capabilities that are not only technology or IT related, but also encompass the development of new businesses, organizational models and the nurturing of greater employee engagement.
  8. Search for relevant innovation opportunities that digitization provides and be aware of the challenges that technology trends might raise in the future competitive arena.
  9. Depict a future in which your organization continues to be a relevant value creator in society. Digitization is a means to achieve that vision. It is not a goal in itself.
  10. Be responsive to technology trends that impact your role in society and lead innovations that redefine the fulfillment of this role. Be able to adapt quickly in a fast changing environment.

“Creating Smarter Businesses is about having the right instincts to react, but also possessing the talents to lead digitization.”  

Shaping smarter business involves a continuous process of defining and redefining hypotheses regarding the impact of technology trends on current and future customer and consumer behavior, and the resultant impact on future competitor landscape. It is about gathering market evidence for market adoption of technology trends and then accelerating (or slowing down) one’s digital initiatives. It focuses on helping companies  grow smarter every day through experimentation and recombination of existing and new technologies. It is about having the right instincts to react, but also possessing the talents to lead digitization. Doing so will help organizations to flourish and enable them to fulfill a vital role in creating prosperity and wellbeing for society.

Are you interested in learning how to drive organizational performance by reinventing strategy and reshaping culture in line with changing market dynamics? 

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