WORKING PAPER
SHAPING
SMARTER
BUSINESSES
Geert Scheipers
Valerie Decoene
Jan Van der Steen
SHAPING SMARTER BUSINESSES
THE IDEA IN BRIEF
Is there a secret formula to shape smarter businesses? With
some hard work, a bit of luck, a few clever choices, a dash of
great technology, a few pennies to spare, and a little help from
your friends it might work out fine. Our propositions is that
‘Shaping Smarter Businesses’ is about embracing the relevant
technology, reframing your business model and consciously
developing your organizational capabilities in a systemic way.
In this paper, we describe the newest technology trends that
are rapidly reshaping the business landscape like internet of
things, artificial intelligence, robotization, advanced analytics, etc.
Furthermore we guide the reader in deploying the appropriate
resources to shape a smarter business and to unlock new
sources of value in terms of lower cost, faster time-to-market,
reinvented or revolutionized customer experience, accelerate
growth and many more. As such, the role of digital technology is
rapidly shifting from being a driver of marginal efficiency gains to
an enabler of fundamental change and progress.
To be effective, smart businesses leverage the
appropriate capabilities to enable and support
their sustainable competitive advantage. We
identified a bundle of key capabilities that serve
as the necessary catalyst for becoming a digital
leader and remaining so.
SHAPING SMARTER BUSINESSES’ IS ABOUT
EMBRACING THE RELEVANT TECHNOLOGY,
REFRAMING YOUR BUSINESS MODEL
AND CONSCIOUSLY DEVELOPING YOUR
ORGANIZATIONAL CAPABILITIES IN A
SYSTEMIC WAY.
3
TIMES OF PERIL
AND BOUNTY
HUMANS HAVE TRIED TO DELEGATE
LABORIOUS TASKS TO OTHER HUMAN
BEINGS, ANIMALS OR MACHINES SINCE
TIME IMMEMORIAL.
The industrialization that started some 250 years ago gave birth
to new manufacturing processes, shifting handcrafted products
to mass-production by automating and replacing manual
labor with machines. Progressing in waves, industrialization
historically started in the United Kingdom, gradually impacted
the Western World and Japan reaching an unseen amplitude
in the Far East in the 1990’s transforming China into a global
manufacturing powerhouse. For companies that create physical
goods, industrialization had traditionally been pretty much the
key to scale up their business. After all, ever-smarter machines
can produce non-stop while requiring fewer and fewer human
operators to keep them running.
Personal computers transformed the job content and the
activity flows of desk workers in the 1980’s.The internet grew to
maturity leading to new channels to interact with stakeholders
& new business models and it established a platform for new
markets in the 1990’s even leading to a first tech bubble in 2000.
5
At the start of the 2nd millennium, mobile communication
became the norm. These subsequent advances in technology
and automation gave rise to new forms of productivity gains,
significant changes in the value chain and growth across the entire
economy. We no longer can ignore the signs that technology will
eat manufacturing (robots and 3D printing) and transportation
(self-driving vehicles.). Nor can we be blind for how software will
eat much of the service sector e.g. by turning many of its existing
full-time jobs into a disconnected cloud of temporary gigs hence
the success of Uber and Airbnb.
There is widespread recognition among business leaders,
government agencies and academics that we are only at the verge
of a new (r)evolution due to combinatory effects of exponential
improvements in most aspects of computing conjoined with
the extraordinary large amounts of digitized information
we have access to and the capacity of humans as well as
machines collaborating seamlessly. At the same time, society
changes and customers, employees and other stakeholders
become more demanding, are willing to participate and even
contribute and insist on relevant and meaningful interactions.
Technology is moving faster than ever. Advances that took
decades to mature, sometime centuries, such as the development
of telephones now happen in years. Smartphones and social
media have come out of nowhere in the past decade and changed
the way we interact and connect. Being always connected to
each other and to our stakeholders is the new normal. The
following chart (fig 1) shows the in the increased adoption rate
of innovations. The slopes of the adoption lines keep increasing
as we move through time from left to right.
Although the speed of change as well as the impact on society is
remarkable, we are far from the end of progress and innovation.
These effects allow for or even coerce businesses to fundamentally
reframe their operating models and completely redesign the way
they interact with stakeholders. The role of digital technology is
rapidly shifting from being a driver of marginal efficiency gains to
an enabler of fundamental innovation and disruption.
Fig 1: Technology Adoption Rates
Since there is lots of lip service or visionary (practitioner)
literature but limited empirical data available (certainly in the
Belgian context), we want to assess how organizations address
these (r)evolutionary challenges and expect to prosper in
this new reality. Based on the findings of our survey we will
highlight the state of digitization and suggest a set of simple rules
organizations can adopt to thrive in this new normal.
7
DEFINING
A SMART
BUSINESS
Our proposition is that a smart business can unlock new sources
of value and therefore boost organizational performance in terms
of better offerings, lower cost and faster time-to-market with
greater impact on customer experience by recombining digital
and non-digital resources, a DNA of agility and a drive to
create meaningful value for stakeholders and society at large.
It requires the realignment of, or new investment in technology,
business models, and processes to drive new value for customers
and employees to compete in an ever-changing digital economy.
Shaping smarter businesses is an imperative for both private and
public organizations, start-ups and pure technology players as well
as ‘analog incumbents’.To paraphrase Darwin: in this fast changing
world it is not the strongest that survives, but the smartest. Even
entire industries are becoming smarter: healthcare, logistics,
manufacturing, government agencies, etc.
9
The principles that smart businesses need to adopt can be
found in the new digital age (Schmidt & Cohen, 2013), industry
4.0 (acatech, 2013), the second machine age (Brynjolfsson &
McAfee, 2014), Leading digital (Westerman et Al, 2014) and the
third industrial revolution (Rifkin, 2011). The main findings in this
stream of literature can be synthesized as: sustained exponential
improvements characterize most aspects of computing,
information is available and accessible in extraordinary large
amounts, the digitization of almost everything implies that the
status quo is a myth and all organizations need to reflect on
what the day after tomorrow will bring. And finally the digital (r)
evolution shapes opportunities for business and society and has
the potential to improve the state of the world.
A smart business embraces a culture of permanent reflection
and renewal and defines organizational performance in function
of this systemic (technology) transformation and a continuous
search to renew and flourish. Smart businesses are not just doing
things the way they did them before, they fundamentally change
the paradigm. Being smart can’t be an end state, it’s a state of
being.
Organizational performance in the new normal is a function of
the awareness and adoption of digital assets (the technology ‘fit’)
and a specific bundle of capabilities an organization can put to
use (the capability ‘fitness’) in this world of constant change. The
compounded effect of fit with technology trends and capability
fitness brings an organization into shape and enables it to thrive
in a world of technological bounty and a conscious society. In
short: Shaping smarter businesses = F(technology fit * capability
fitness). See fig 2
EMBRACING DIGITAL
TRANSFORMATION
(Awareness & Adoption)
ORGANIZATIONAL
PERFORMANCE
ORGANIZATIONAL
CAPABILITIES
THE MARVEL OF SHAPING A SMART BUSINESS
IS THAT ORGANIZATIONAL PERFORMANCE
CAN COME IN MANY DIFFERENT FORMS:
• Meeting individual customer requirements
• Involving the customer more closely
• Increasing flexibility through dynamic configuration of
different aspects of business processes
• Real time end-to-end transparency leading to more
optimal decision taking
• Increasing resource productivity and efficiency
• Value creating opportunities through new services
(smart algorithms, …)
• Enabling diverse and flexible career paths that will allow
people to keep working and remain productive longer
• Enable diverse and flexible career paths
• Creating more flexible organization models allowing a
better balance between work and private lives
• …
With platforms and networks available, knowledge that is almost
free and costs of technology that is persistently decreasing,
companies are only bound by their own vision and creativity.
In order to be sustainable, smart organizations need to reflect
on addressing customer and societal needs and they need to be
forcefully motivated to figure out how to do this without even
knowing in advance what the optimal solution might be.
Fig 2: Drivers of smarter business
11
TECHNOLOGY
TRENDS
IN THIS PAPER THE TERM TECHNOLOGY
REFERS TO THE SET OF DIGITAL ASSETS
AND PROCESSES ORGANIZATIONS USE TO
CONVERT INPUTS OF HUMAN ACTIVITY,
MATERIALS,
CAPITAL,
ENERGY
AND
INFORMATION INTO OUTPUTS WITH
SURPLUS VALUE.
Digitization of assets (converting them into bits that can be
stored on IT systems and sent over a network) provides
them unique properties which are called network effects (also
described as demand-side economies of scale) (Marshall et all,
2016, Brynjolfsson & McAfee, 2014). The network effect creates
a situation where the value of the resources for each of the users
increases with each additional user. This is due to two unique
economic properties of digital information: the information is
non rival and it has close to zero marginal cost of reproduction
We often observe the challenge for organizations to keep track of
the multitude of technology evolutions that might fundamentally
reshape their business landscape. Nowadays, things have stopped
happening gradually, the change is exponential.
The times we live in have often been characterized as volatile,
uncertain, complex and ambiguous (VUCA).While not claiming to
provide an exhaustive overview we try to give a status praesens
with a clear definition and some inspiring examples. To engage
the reader we focused on the more recent trends.
NEXT TO THAT WE DEVELOP A
FRAMEWORK TO ASSIST THE READER
IN IDENTIFYING THE DIFFERENT MODES
FOR RESOURCE ALLOCATION TO SHAPE
A SMARTER BUSINESS.
13
BIG DATA ALGORITHMS OR
ADVANCED ANALYTICS
The amount of data in our world has been exploding. Companies
capture information about their customers, suppliers and
operations. Millions of networked sensors are being embedded
in the physical world into devices such as mobile phones and
automobiles, sensing, creating, and communicating data. Social
network sites will continue to fuel exponential growth. Big
data—large pools of data that can be captured including data
from exogenous data sources, communicated, aggregated, stored,
and analyzed—is now part of every sector and function of the
global economy. Like other essential factors of production such
as hard assets and human capital, it is increasingly the case that
much of modern economic activity, innovation, and growth simply
couldn’t take place without data.
BIG DATA ALGORITHMS
IN RETAIL CAN OPTIMIZE
DECISION PROCESSES
Through 2020, we still expect 95% of decisions to be based upon
intuitions instead of analytics and significantly underestimate the
risks as a result. But, predictive and prescriptive analytics have
begun to gain momentum in the market as businesses realize
the potential of replacing/supporting human decision making
with automated algorithms, such as rule-based systems, statistical
analyses, and machine-learning techniques.
Big data algorithms in retail can optimize decision processes,
enabling the automatic fine tuning of inventories and pricing in
response to real time in-store and online sales. Manufacturing
companies can adjust production lines automatically to optimize
efficiency, reduce waste, and avoid dangerous conditions.
INTERNET OF EVERYTHING
Cost reduction of beacons and sensors in general together with
the improvement of processing technologies are spurring data
collection and information capitation to unknown heights. Given
their ultra-compact form factor and intelligence these days,
sensors are being installed everywhere.
Connected objects that contain embedded technology to sense
or interact with their internal state or external environment
enable virtually every activity to be managed more efficiently
while delivering a stable quality.
DEEP LEARNING
Artificial Intelligence is finally getting smart, with deep learning
the algorithms that the machines employ to provide more
precise results are using their own capabilities to get smarter,
learn and adapt. They not only view correlations that are seen
with classic advanced analytic techniques, but can with very
limited knowledge of the context crawl on their own for new
connections in a dataset and learn new insights to act upon and
refine the algorithm themselves.
This creates a new paradigm: the more data is fed, the more
precise the learning algorithms will become.
This technology has already become available to a broader
audience via commercial services such as Amazon and Azure
Machine Learning modules or SAP’s Automated Predictive
Library (APL). But recently even open source initiatives try to
push this further such as the recently launched OpenAI.
Sensing, location detection, data matching and pattern recognition
all aim to empower more accurate and swift decision making.
However just maximizing your data points isn’t enough, it is the
analysis and awareness of the context that makes the internet of
everything possibilities stand out from the crowd.
15
HYBRID CLOUD
MICROSERVICES ARCHITECTURE
OPEN TRUSTED DATA
At this point, cloud computing is hardly new, the key advantage
of cloud computing is ease of set-up in terms of go-to-market as
well as the radically different cost model which is mostly a usagebased license model.This in turn helps the cost scalability turning
the CAPEX into an OPEX model.
Consistent with the move to the hybrid cloud, software developers
are beginning to embrace a new approach to developing
applications. In a microservices architecture, applications are
comprised of many small pieces that communicate with each
other via Application Program Interfaces (APIs).
Open data is a term that is used to describe freely available data open to everyone to use and
republish as they wish without the restrictions from copyright, patents or other mechanisms
of control.
IDC predicts that by 2018, half of IT spending will be cloudbased. Many organizations are overcoming their security and
compliance concerns and embracing the cloud wholeheartedly.
With this approach, it does not only become easier to work
in a hybrid mode and adopt the most efficient component
for doing the job, but it becomes also much easier to roll out
frequent updates, which helps enable continuous delivery and
agile development methodologies.
Newer in this world are hybrid cloud computing models. Often
organizations need to go through a transition phase keeping
legacy systems in parallel of new cloud based systems, software
vendors are playing into this trend and are releasing a new crop
of tools designed to improve cloud interoperability and automate
management of the hybrid cloud which still has part of its legacy
data on-premise..
As Forrester analyst Randy Heffner wrote in a report, «With
increasing frequency, microservices are appearing in enterprises’
efforts to achieve better software architectures, especially among
those operating at scale, such as eBay, Google, Netflix, and WalMart.»
However a common issue with open data today is the lack of trust in the source of the data.
Data can be manipulated in many ways before finding its way to the destination. This is where
the Blockchain technology now comes in. Blockchain is a distributed database that is used to
record an ever-growing list of transactions. It doesn’t require any permission to access it, but
it’s nearly impossible to tamper with the data it holds. In other words, everyone can see what
is written there, but no one can erase or change it.
Of all the technologies on our list, Blockchain may be the least well known, but it is definitely
poised to impact data centers in the coming year. Blockchain is the technology underlying
Bitcoin, and some analysts suggest its potential enterprise uses could far exceed its helpfulness
in tracking digital currency.
IN THE FUTURE, BLOCKCHAIN
COULD BE USED TO TRACK
MANY DIFFERENT KINDS OF
DATA, PROVIDING REAL OPEN
TRUSTED DATA.
17
AUGMENTED REALITY / VIRTUAL REALITY
Augmented reality applications integrate digital information
(including images, sound, video, graphics, location data, …) with
the real world environment as an extra interaction/information
layer on top.Virtual reality applications deliver a complete virtual
experience that can be based on reality, but doesn’t have to be.
Both AR and VR are technology trends that cannot be overlooked
as they have the potential to transform a wide range of services
and processes especially in the customer experience arena. The
“phygital” customer experience, that blurs the lines between the
physical and the digital world is the next step that most firms see
taking a giant leap with this technology.
Popular and hyped products in this arena are the Oculus Rift,
Gear VR and Microsofts’ Hololens.
ROBOTIZATION
By connecting these new bots with deep learning it might be
possible to develop increasingly powerful bots in the future that
can train themselves on tasks without any programming.
DRONES
Unmanned aerial vehicles equipped with camera, sensors or
cargo. At the consumer electronics show (CES) this year, drones
were the next big thing. Given the different form factors these
devices can come in and the possibility to be ultra-controllable
in the air, they can be used for all different kind of inspections on
places difficult or dangerous to reach for humans alone.
The emerging market for the drones is especially focused on
these inspection possibilities in all kind of forms: vast area
inspection (e.g.: agriculture), firefighting, search & rescue,
industrial inspections (e.g.: oil rigs, windmills, …)
3D PRINTING
3D Printing is the additive manufacturing of making a three
dimensional solid object from a computer based digital model.
This technology helps companies reduce downtime and cost
considerably by allowing to print parts at various locations on
an as-needed basis, instead of storing spare parts in centralized
locations.
This can not only reduce the inventory costs for a company,
but can also decrease the delivery time at a certain location
since it is printed locally.
3D printing can now already handle a vast variety of
printing materials (glass, carbon, textile fibers, plastic,
biological material) and these will only continue
to expand making the growth of this technology
inevitable.
The trend of bots actually is not that new either. Robots have been
able to replicate muscle-power-driven tasks for years already, the
technology now however has evolved them into “cobots” or
collaborative bots. They now can take up also knowledge related
work and take up the automatization of back-office work learning
to replicate routine human tasks.
19
ASSESSING RELEVANT TECHNOLOGY
THE SMART ADOPTION MODEL
The multitude of options available and the need to act before
their business is being disrupted urges managers to identify
alternative strategic responses to technological change and
effectively make choices on how to best use this technology to
engage stakeholders and build a sustainable advantage (Jagoda
et al. 2010, Schiavone 2011). We developed a framework to
EXPECTED IMPACT
ON THE BUSINESS MODEL
High
EXPERIMENT & LEARN
ADOPT & TRANSFORM
FOCUS:
Future value
FOCUS:
Execution effect
OBSERVE & FOLLOW
ALIGN & EMBED
FOCUS:
Potential evolution
FOCUS:
Operational efficiency
structure the managerial implications based on an assessment
of the maturity of the digital resource and the expected impact
on the business model. (see fig 3). This framework, which we
label as ‘smart adoption model’, guides managers in identifying
the relevant technologies that might impact the organizations
value chain and helps them prioritizing their resource allocation.
To assess the impact on the business model we identify the
expected consequences digital assets might have on the activity
system within which a firm establishes a cost structure and
operating processes and works with suppliers and channel
partners in order to respond profitably to the common needs
of a class of customers.
To assess technology maturity we derived a categorical scale
from Moore’s technology adoption lifecycle (Moore, 2014).
Digital assets can be considered as immature in the initial phase
of development. Then comes a phase of exploration where
technology is being picked up by a larger group of enthusiasts and
customers start to experience the first benefits from its adoption,
the third phase is labeled as established where the install base
leads to significant benefits for clients and organizations, then
comes a phase where the technology becomes mainstream and
standardized where differentiation based on the specific asset
is harder to claim. The final phase is commoditization leading to
end of life.
As a comprehensive description of the activity chain
the business model describes the rationale of how an
organization creates, delivers and captures value; economic,
social, and/or societal.
The impact of digital assets on the business model
can be expressed in terms of significant and relevant
changes to the business model through raising, creating,
eliminating or reducing the existing business model
components.
Low
Low
TECHNOLOGY MATURITY
High
21
SMART ALLOCATION OF RESOURCES
The smart adoption model brings about four quadrants that can guide organizations to focus managerial attention and help executives to
allocate scarce resources (money, physical assets, human resources, time and data) in the most optimal way.
The first quadrant where both the technology
maturity and expected impact on the business
model is defined as low, the technology trends are
categorized as “OBSERVE & FOLLOW”, meaning
that the focus on these trends is on the potential future evolution
of them. Seeing them for example applied to an adjacent industry
in the future might change your perspective on the expected
impact. So vigilance is needed on these trends to follow them in
the broad scope of the operating ecosystem of your enterprise
as they might have side-effects that are not directly visible on
your business model.
1
The second quadrant is the one with still low
technology maturity, however more impact is
expected on the business model. In this case our
advice is to experiment & learn from these trends.
“LEARN BY DOING” is for these trends essential to see their
future value and estimate their full potential.This will already give
you a first mover advantage in case the maturity of this trends
will follow sooner and will help you embed the real business
innovation that comes from these trends.
2
The third quadrant has both technology maturity
and business model impact assessed as high. These
are trends that will transform your industry.
So our advice for these is simple: “ADOPT &
TRANSFORM”! Focus really on the execution effect: what is
the outcome/output of this transformation? Does the adoption
really strengthens your leadership role in the industry you are in?
3
The last quadrant summarizes our advice for trends
that already are mature but are expected to have
a low impact on your business model. For these
trends the focus should really be on operational
efficiency. Our advice here is to “ALIGN & EMBED”, going for
the adoption of the trend were it makes sense from an efficiency
perspective.
4
To conclude, the plotted technology trends and their respective
managerial consequences should also be considered in
combination with one another.
Organizations should attentively observe the synergetic effects
of bundling different technologies together in an integrated
program thereby achieving systemic impact. Rather than
relying on solitary, big and new innovations we see significant
opportunities in intelligently recombining technology assets.
For example a regional hospital defined a change program
labeled ‘Embrace the 3rd healthcare revolution’ by
bundling big data algorithms with Hospital ERP, hybrid
cloud and an experiment with computer assisted
diagnoses based on ‘deep learning’ for a specific
pathology. The combinatory effects of this program
are considered to be substantial in realizing the
anticipated transformation.
23
CAPABILITIES
THE EFFECTIVE ADOPTION OF
TECHNOLOGY ASSETS
will not pose an exclusively technological or IT related challenge.
It requires more profound changes than merely investing in
the latest digital technologies (WEF, 2016). It will also have far
reaching organizational implications such as the development
of new businesses and organizational models and the facilitation
of greater employee engagement. (Acatech, 2013). The capacity
to compete and to create value for customers stems from
the organizational capabilities companies effectively deploy to
capitalize on the vision and ideas defined.
The fundamental question in the digital age is how incumbent
and disruptive organizations can sustain a competitive advantage
while creating value for customers and society. In this paper we
address this question by referring to the concept of dynamic
capabilities. Organizations with dynamic capabilities have crafted
a sustainable advantage that rests on distinctive processes (ways
of recombining, within and across organizational boundaries),
shaped by the organization’s (specific) mix of technology
assets and its talent to improve, renew and learn.
25
THUS, WHAT AN ORGANIZATION CAN DO
IN DIGITAL AGE IS NOT JUST A FUNCTION OF
THE TECHNOLOGY TRENDS IT EMBRACES, IT
ALSO DEPENDS ON WHAT ORGANIZATIONAL
CAPABILITIES IT MASTERS.
Further, we argue that these capabilities should be dynamic
meaning that organizations should have the capacity to renew their
competencies so as to achieve congruence with the technology
trends that are relevant for the organization’s business model.
This is especially true for incumbent organizations.They will have
to build a set of specific capabilities that enable them to infuse
digitization in their activity model. Other organizations might have
the advantage of not needing to go through a digital evolution
path. It is imaginable that they can immediately claim a state-ofthe art digital position. New startups for example may lead digital
disruption. However, as time passes by, they also will feel the
need of developing dynamic organizational capabilities providing
them with a competitive advantage that is not vulnerable to
erosion.
DYNAMIC ORGANIZATIONAL CAPABILITIES THAT ENABLE ORGANIZATIONS TO THRIVE IN DIGITAL
AGE ARE AMONG OTHERS:
• A culture that fosters experimentation and recombination.
Such cultures are characterized by an enabling context
instead of a controlling context
• Availability of financial resources to fund experiments and
create room for learning from failures.
• Access to people with (digital) talents in the necessary
quantities. It is not always required to have these people on
the own payroll as true specialists need to be exposed to
multiple circumstances. It is about being able to make the
right mix of people and so taking advantage from everyone’s
strength
• Change, program & project management skills to accelerate
project delivery and shifting the paradigm.
• A workforce that is able and engaged to change
• Ability to establish networks and collaborate (within and
across) organizational boundaries
• Enabling leadership that shapes the appropriate business
context
• Appropriate IT Systems & Applications. Some organizations
are encumbered with legacy systems that prevent them to
flexibly respond to those technology trends that they want
to embrace
• Story telling & image building enabling organizations to claim
positions and get the reputation of being leading
• Time. Digital transformation will not immediately render
incumbent players irrelevant. Besides, digital evolution
is faster in some sectors than others. The slower the
disruption the more time for developing dynamic
organizational capabilities.
27
STRATEGY
EVEN THOUGH BUSINESSES HAVE ALWAYS
USED TECHNOLOGY
AS SUCH INNOVATION MIGHT INCLUDE
OPPORTUNITIES
to scale and improve operations, strategy in these digital times
is about updating and upgrading the capacity to compete
as well as to identify new ways to address customer needs.
Clayton Christensen calls this ‘the jobs to be done’, emphasizing
the imperative to target at the circumstances or context in
which customers find themselves rather than at the customers
themselves also allowing to address the often ignored but
substantial group of non-consumers.
from new ways of interaction among customers, suppliers &
other stakeholders
better decision making based on algorithms from social media/
social technologies and the Internet of Everything
new business or operating models such as peer-to-peer
economies or services
…
Put differently, innovative strategies and new opportunities to
create value stem from insights in the bigger picture concerning
explicit and implicit demands for products & services,
complemented with a view on the changing/disrupting impact
of technology ton these circumstances. Needless to say, these
opportunities not only result into tangible features of products
& services but also aspire new experiences, novel insights, datadriven services and purposeful interactions.
From a strategy point of view, for many organizations digitization
is not a goal in itself. It’s rather a means. Technology awareness
is a necessary but not a sufficient condition. In order to be
successful, organizations need to embrace and adopt the relevant
innovation opportunities technology provides,
BE AWARE OF THE CHALLENGES
THAT MIGHT RISE IN THE FUTURE
COMPETITIVE ARENA AND
DELIVER SUPERIOR RETURNS FOR
STAKEHOLDERS.
29
SUBTITLE WILL BE NICE
STRATEGIZING
AS ARGUED ABOVE, IT
IS OUR CLAIM THAT
SHAPING A SMARTER
BUSINESS IS NOT A ONEOFF EVENT. IT IS A STATE
OF BEING.
Organizations need to gradually evolve and build up transformation capabilities. This is not saying that all organizations need to go through
a digital maturity curve. In fact, there is no one size fits all maturity model. Mature organizations have somehow developed the capability to
continuously reinvent themselves enabling them to contribute to the development of society. Only organizations that know how to stay a
relevant value creator in society will survive digital disruption. This means that strategy should be a continuous process. Rather than using
the term strategy as a noun describing an end product or a finished piece, we should use it more as a verb: to strategize.
MAKING STRATEGY EXPLICIT
SHAPING A SMARTER BUSINESS
and mobilizing the organization to act, do, create and share should
be the mantra. But where in the past organizations often linked
their performance management cycles to the yearly calendar,
we now see a much higher frequency and a more fluid planning
process. Google for example is said to adapt its search engine
algorithms three times a day and has coined the term ‘google
year’ referring to a 90 days planning cycle.
In order to be effective strategy can no longer be just the
prerogative of top management. Instead we should adopt a cocreation approach to strategy. All employees, not just top and
middle management, work together to generate strategy. Group
participation from top and middle managers encourages the
participants to express their opinions about the appropriateness
of the different strategic options, exchange knowledge, express
concerns, and make alternative suggestions for improvement.
Research into the domain of Accounting Information Systems
Design (Hunton and Gibson, 1999) has revealed that group
participation leads to an increase in knowledge and motivation
among participating managers, so that the quality of the end
result increases. Furthermore, group participation leads to
increased ownership of the end result by the participants, and
greater willingness to implement and execute. We could say:
people embrace what they have created.
is not about following a predefined transformation path. It is all
about having a vision on the role of your organization in society
and then being responsive to technology trends that impact that
role as well as leading innovations that redefine the fulfillment of
that role. Ambitious and paradigm provoking vision statements of
successful organizations in digital age illustrate this. For example:
Elon Musk has stated that the ambitions of SolarCity,Tesla Motors,
and SpaceX revolve around his vision to change the world and
humanity. His goals include reducing global warming through
sustainable energy production and consumption, and reducing
the risk of human extinction by making life multi-planetary by
setting up a human colony on Mars.
However, we acknowledge that such type of vision statements
might be far reaching for most incumbent companies today. Staying
relevant in society implies also to continuously innovate and
reinvent customer value propositions and business models.
One characteristic of this digital age is that this is facilitated
through network constellations (Hinssen, 2015). In this regard
gaining experience with new ways of collaboration (co-creation
within and across organizational boundaries) and organizing is an
inherent part of gaining maturity.
31
OUR SET OF
SIMPLE RULES
Since these VUCA times call for a new way of dealing with strategy it is
important to know that the complexity that threatens to overwhelm
individuals, organizations and society should not be addressed with
even more complex solutions. Since a few years now Professor
Kathleen Eisenhardt from Stanford University (2015) has done seminal
research 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
used 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 thumbs (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 the reader we developed our set of
simple rules that might help shaping smarter businesses.
TO MAKE IT A CONTINUOUS AGILE PROCESS
1. Embrace the messy process of practicing, experimenting
and learning
2. 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 smart applying the Smart Adoption
Model. Assign scarce resources mainly to technologies with
(potential) 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 rise in the future competitive arena
9. Depict a future in which your organization stays 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 your role in society. Be ambidextrous in a fast changing
environment.
shaping smarter business is about defining and redefining
hypotheses regarding the impact of technology trends on
current and future customer & consumer behavior and hence
the impact on future competitor landscape.
It is about gathering market evidence for market adoption
of technology trends and then accelerating or delaying
one’s digital initiatives. It is about getting smarter day after day
through experimentation and recombination of existing and
new technologies. It is about having the right speed to react
but also about having 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.
33
ABOUT
THE AUTHOR
GEERT SCHEIPERS
has expertise in the fields ‘strategy and management control’. He combines a strong academic
interest with a daily practice in management consulting. He considers it as his mission to
translate scientifically based theories & frameworks to management concepts that helps
companies to create more added values for their customers and to grow.
In 2008, the implementation of the strategic management system
at Tessenderlo Chemie, was elected by the jury of Financial media
as ‘Best Practice in Controllership’ on their ‘Best Finance Team of
the Year’.
He has experience in accompanying executives and management groups and in searching
together for strategies for complex company issues. His interests are mainly strategy execution,
enterprise risk management, performance management & Balanced Scorecard, Value-Based
Management and Activity-Based Costing.
His greatest passion is the development, distribution and
application of knowledge whereby he is always faithful to his
theory-based frameworks and theories.
Through his career, he has worked for different Belgian and multinational companies, in the
private sector as in the public sector. He was responsible for the accompaniment of Aquafin
NV in their development of a new operating system based on the Balanced Scorecard. Aquafin
NV got international recognition and received in June 2004, as the first Belgian company, the
prestigious ‘Rising Star’ award for the input of this strategic management system.
ACKNOWLEDGEMENT
Acknowledgement; the authors like to thank Omar Mohout,
Christof Denolf, Sylvester Goetinck and Ludo Van den Kerckhove
for their input, insights and reflections that meaningfully
contributed to their thinking.
A WARM FEELING OF
APPRECIATION ALSO GOES TO
THE RESPONDENTS OF OUR
SURVEY THAT HELPED UNDERPIN
AND CONTEXTUALIZE OUR
WRITING.
35
SHAPING SMARTER BUSINESSES
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BUSINESSES
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