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