The study was exploratory and descriptive, and a
qualitative methodology was used. Its design was not experimental and
transversal, as the information was collected at a given moment in time.
Keywords:
Unlimited;
Business Models; Digitalization; 3D Printing; Globalization; Disrupting
Technologies; Operations; Business Analysis
1.
INTRODUCTION
Senior executives
and political levels are required to understand the business and social
environment. The old limited world is living space to an unlimited one in which
new visions, abilities
and parameters are required. The unlimited is connected with the lost of limits,
the blurred and the unknown. In this volatile and fast world, imprecise and
unpredicted factors usually abound.
Driving
forces as globalization, connectivity, digital technologies, convergence of
technologies and social networks (PRAHALAD, 2010) are transforming abruptly the
business landscape and the way value is created but it is seen that most of the
decisions are made considering the old paradigms of the limited world. In this
sense, traditional strategic and analytical tools are diminishing their impact
and effectiveness, and considerations on money, global cities and speed must be
taken into account in accordance of their tremendous impact on businesses and
society.
The
world moves fast thanks to Internet, digital technologies and digitalization. Instant
interactions, data analysis and hyper scaling are proposing decision-making
improvements, new optimized lives and complex tasks resolution through opening
and interconnecting new fields. 3D printing and other disrupting technologies
are transforming firm’s industrial sectors, business models, products and
services. Rules are being changed at an unprecedented speed.
Innovation,
an important additional driving force, is proposed as the way to create new
wealth, advancement and growth, and it is referred to products and services
which include novel interactive and collaborative experiences, processes and
business models.
This
study takes the basis of the 5 five driving forces stated by Prahalad (2010)
and expands and updates on some considerations that must be made in order to
acquire an adequate perspective on the actual moments that we are living. It
also addresses some impacts on society and businesses as a way to understand
the tremendous challenge that senior executives and politics have today.
The ultimate goal is to see the unlimited as a
vague and blurred realm in which qualitative approaches and measures are more
adapted than quantitative ones.
1.1
Objective of
this investigation
To
analyze the driving forces that are dramatically transforming the business
environment and how value is created, showing their huge impact
on actual firm’s industrial sectors, business models, and products/services.
In
addition, to refer to the disrupting technologies that are known today and will
abruptly change the future and the executive’s role.
1.2
Research
Methodology
The
study was exploratory and descriptive, and a qualitative methodology was used.
Its design was not experimental and transversal, as the information was
collected at a given moment in time.
The
unit of analysis was mainly related to business organizations. It has tried to
make every effort in order to assure that prior knowledge did not hinder the
analysis that was done.
The
research is based on the work of well known specialists on the field and
related articles. In addtion, it helped our own experience on the matter.
This
investigation was conducted in Buenos Aires, Argentina in the period Jul.
2015-Dec. 2015.
1.3
Research
Limitations/Clarifications
It
was referred relevant information from important secondary sources. As a
result, it was not used an empirical study.
The
conclusions and opinions that are expressed are strictly based on the
information obtained from the analyzed data.
As
a qualitative investigation, the results that are shown cannot be generalized,
although they are useful for decision-making purposes. The objective is to
enhance the knowledge on the matter and improve the decision-making process
with novel perspectives.
1.4
Findings
The unlimited proposes qualitative approaches
over the quantitative ones, novel measures and a different way to manage
organizations. Money, global cities, speed and new considerations on technology
and digitalization are blurring the old limits we were used to.
Talent is increasingly more
specialized on digital technologies and new sciences. Business leaders are
confronting daily with uncertainty and ambiguity and the improvement of
decision-making processes are subject to hyper scaling and huge data analysis.
New paradigms emerge in a rebellious world to the past. That is why this paper highlights the special
differences observed between the limited and unlimited worlds.
1.5
Originality and
Value
This research has been an attempt to
explore the old paradigms belonged to the limited world and the new ones
applied to the unlimited. Novel visions on society and businesses are emerging
as new sciences and technologies are shaping an unimagined landscape.
Traditional tools and ways of thinking are losing space in confront of blurred
and imprecise limits.
As
a result, the unlimited is shown as a contribution when launching novel
businesses/products and to a better understanding of those phenomenon that are
making their step in a tumultuous and unprecedented landscape.
2.
FIVE
DRIVING FORCES AND SOME CONSIDERATIONS
The
business environment is going through a profound transformation. Prahalad
(2010) understands that the following five driving forces are changing it
dramatically and proposing new ways on how value is created:
1. Globalization: As it was
stated in a prior work, it represents a combination of processes, which
transcend national characteristics and controls, declining differences and
having economic, political, social and cultural implications. Regions,
countries, companies, individuals and their relationships are subject to
endless boundaries, and economic and/or political powers are not related to the
limits of a map or the size of the country or region. As a result,
globalization should be seen as a complex, multidimensional and paradoxical
phenomenon that is configuring new limits and spaces.
2. Connectivity: +3 billion
people are connected all over the world, changing the way companies operate.
3. Digital technologies: are becoming
extremely inexpensive. The cellular phone is a starting point as it is possible
to get one for 30 dollars and many gigabits of memory in a USB. Costs are going
down dramatically, what it means that technology is not anymore a
differentiator between the rich and the poor; everybody can have the same
technology.
4. Convergence of technologies: a
cell phone is much more than a phone; is a camera, a computer, a map, a watch; technologies
are coming together.
5. Social networks: they are
becoming extremely important, as MySpace or Facebook.
With
these five driving forces the business landscape is having a difficult present
and an unknown future. Transparency, creativity and instant products and services
will be based on constant and evolved peoples’ interrelationships. New ways of
doing things are about to come from unimaginable sources.
In
reference to the first driving force, money, global cities and speed combined
with globalization are giving a difficult time to business activities and to
society, in general, as follows:
2.1
Money and global cities:
the basis for growth and advancements
Money
is going beyond the limits of countries and regions, imposing new rules to
growth and advancements. In fact, in an article of Mercado.com (2015) Sassen
asserts that:
·
Money is a new way to see development and progress.
·
Global high finances, which move billons dollars,
became the engine of global development, not necessarily technology and
digitalization, which are only necessary infrastructure.
·
Global cities
represent not only the last refuge for people without power resisting to the
destructive capacity of high finance, but also concentration centers of
economic power where worldwide economy control is exercised. In this sense,
suggests that the traditional bank sells money for an interest rate but high
finances sell something that they don’t have, having the ability to convince
everybody that they can finance everything, from elemental things to complex
ones.
·
In the last 10 years, there were 71 crises and
corporations used them to polish their terrain and to go forward. However, during
the 2008 crisis, while the US Congress struggled to assist the most affected
people, the US Central Bank transferred 7.3 trillion dollars to European banks
to rescue the global banking.
As a
result, money represents an extraordinary power and global cities become the
new centers of power concentration and economy control. Unspoken and harsh
rules are taking place in an always-surprising world.
2.2
Speed as an asset
Speed
has become an invaluable asset for many industries and companies. It is not
only referred to time-to-market, but also to the interaction with consumers and
building brands, and to the velocity in which some strategic and analytic tools
are being questioned in their ability and usefulness.
In
fact, time-to-market is one of the new words for successful competition in
difficult markets. Dyer (1998) explains that in 1980s Chrysler had a difficult
time: in 18 months (1988-1989) closed 3 manufacturing plants and in the 4Q/89
reported an historic loss of $664 million dollars.
The
revamp included good faith partnership with vendors and new processes and
procedures which among other reduced costs by 20-40%, accounting for $1700
million dollars of savings. In addition, it was reduced the time spent to
design and develop new vehicles (from 234 to 160 weeks), introducing new
successful products and increasing the profit per product to the best in USA.
Many firms rush their processes with the purpose of surprising their customers
and competitors.
But speed
is not only needed to launch a product to the market; it is necessary also to
interact with consumers and build brands. Real-time marketing (known as newsjacking) is a new way of connecting
brands with consumers. In accordance with Revista Mercado (2015) brands like
Prime, Toddy and Rexona are taking advantage of attractive brand messages
related to events and news which are happening in that precise moment.
The
objective is to generate impact and virality in the online and in the
traditional media. As an example, it is said that the fans of the famous band One
Direction invaded the network asking brands to advertise their new video clip.
Many firms discarded the request but Toddy, an Argentinean firm, did just the
opposite converting the campaign in a Twitter global trending topic.
Viralization and real-time are invading the business arena allowing new alternatives
to connect brands and products with consumers.
Moreover,
velocity is raising questions on the ability of some strategic and analytic tools
and concepts like Porter’s five competitive forces, SWOT analysis, positioning,
target market and segmentation. In addition, some authors indicate that these
tools are becoming static in front of high-speed market and strategic changes.
In this scenery, customers and employees will have a fundamental role when
intervening over processes and the 4 marketing Ps
should be reconsidered as new customers and partners’ experiences are put in interaction
(VILTARD, 2015).
Summarizing,
flexibility, agility and speed are needed abilities to stay within the competitive
landscape.
The
other four driving forces (connectivity, digital technologies, convergence of
technologies and social networks) are much more related to understanding
technologies and digitalization. The following paragraphs include some considerations
in this respect:
2.3
Technology trajectory
The
future trajectory of technologies is unpredictable and unimaginable because of
their exponential trajectory. Bilinkis (2014) says that technologies that
everybody are accustomed to use daily, progress linearly and slowly; airplanes
and cars are an example as there were no significant changes in these products
during the last 50 years. In this way, the “future of the past” seems disappointing,
as the imagined changes have not shown up yet. May be we imagined that cars or
skates were going to fly and nothing of that is happening today.
Nevertheless,
the “future of the present” has a different trajectory as it responds to an
exponential curve, not a linear one. That is why many influential people erred
seeing the future as our minds respond linearly and not exponentially. The fact
is that technology has the ability to change our lives but nothing really has
changed as it could. For example, we are using potent mobile phones only to
play games and listen to music, not to do more things that are complex.
Finally,
the “future of the future” is unpredictable as many technologies converge in
novel and unexpected ways.
As a
result, to go beyond our actual linear mind capability is the difficult
challenge that is post to us. None of the things that we are seeing in the
future is the ones that will happen, but we should be prepared to struggle in
that context.
2.4
Digitalization’s new fields
Digitalization
is entering in many new fields that were unimaginable some time ago. Apple
Computers will offer DNA analysis from their mobile devises (INFOBAE.COM, 2015)
and life will be optimized by computers offering entertainments, friendship,
sex, or what somebody could do in his/her weekends (Heffeman, 2015).
Today,
computers can refine and process uncountable data no matter the size of the
devise. As an example, Heffeman cites
the Apple Watch, launched on March, 9, 2015, as the smallest computer with some
prodigies of optimization, like tracking of physical activity (measures and
records physiological data in order to get one note and change their habits of
disorder and gluttony). Anybody could follow closely the data produced by
his/her body, knowing how much eats, how long sleeps, how much exercise it
being done and the percentage of achievement in each variable. This technology,
if it is used wisely and following closely the numbers, could give the
opportunity to achieve minimum food consumption with a maximum labor
production.
As a
result, opportunities will be at the side of firms that can manage medical data
at an unprecedented scale. This is true for many companies like Google, Apple
and Alibaba, which are managing millions of transactions a day.
Moreover,
Chui and Manyika (2015) assure that hyper scaling will probably touch more
areas as cheaper computer power, sensors, and communications accelerate the
pace at which businesses adopt digital technologies, giving some examples:
China Mobile has +760 million subscribers
in digital and voice services, Visa process billions of transactions and
thanks to Internet of Things which creates plenty of machine-to-machine
interactions, hyper scale segments are emerging (For example, the GE twin-jet
engines on a Boeing 787 Dreamliner generate a terabyte of information a day).
However,
hyper scale is not the only variable to be considered. Chui and Manyika (2015)
say that complexity that challenge
managerial conventions, is important, too as digitalization is changing
industries by lowering the costs of entering markets and allowing enterprises
to scale up quickly. Additionally, interactions are being enhanced among
suppliers, customers, employees and stakeholders by mixing media, adapting
messages for context, adding social connectivity, improving management
decisions and helping in the resolution of disputes. The authors understand
that there is a huge opportunity to reposition firms for a new era of
competition.
In
addtion, Revista Mercado.com (2015) asserts that new benefits are applicable to
firms as digitalization helps with cost reductions and more productivity. Also,
technology is growing continuously and brings new opportunities to firms as
they propose new business logics which will help in efficiencies and profits.
As a result, employers must identify and embrace digital opportunities and
guide the activities of its companies to them.
It is
said that the challenge is to invest in intangible assets (software, for
instance), not only in tangible ones (like buildings and machinery). The common
mistake is not to see technology as a possibility to reduce unnecessary
expenses and maintain budgets under control. Some examples of technology at low
costs and accessible include freemium services, open source codes and cloud
computing. Technology generates value added to the business that should be
quantified.
Consequently,
money, speed, technology and digitalization are deepening society’s course of
action. Everything, including strategic and analytic tools, is being questioned
and abilities are more connected with soft and not hard skills. In the
innovation era strategic, business and operational processes are losing their
effectiveness.
Innovation
is the new organizational blood, which connected with technology and
digitalization, are proposing unprecedented changes. That is why the next
paragraph is dedicated to a better understanding of what it implies to succeed
in this environment.
2.5
Innovation to succeed in the unknown space
The
world is not as it was before; innovation has profoundly changed it at rapid
speed. Inside the organizations, the strategic, business and operational
processes are losing their effectiveness as many more companies are mastering
them, causing a lost of differentiation. New boundaries to actual competitive
frontiers are being developed.
Difficult
to replicate abilities and capacities are needed, and science convergence (in
scale, biology, materials, among others) and IT are reshaping and increasing
the innovation flow. Technology replaces workers and gives innovation speed; it
covers the way work is done, educational areas, processes and business models.
As a
result, new management approaches and defying the status quo are needed in
order to capture opportunities. In addition, resources allocation should be
based on the future and not on the past while the future is immense and
borderless.
In a
prior study it is said that:
·
The
speed of change makes knowledge become futile in short periods of time, eroding
competitive advantages and suddenly migrating value inside and outside
industries. As a result, business models and strategies must be reviewed not to
lose pace in the actual hyper competitive markets.
·
Internet
increased productivity in USA (and we may add, all over the world). New start
ups like Facebook, Apple and Google were established disrupting many
traditional businesses like newspapers, books and universities.
·
Innovation
is the new route to growth and new wealth of nations, organizations and
individuals. This process should be understood as a value chain with associated
metrics for better management and monitoring. That is why, the objective is to
contribute to the improvement of the innovation process and consequently to the
wealth of organizations.
·
Innovation
includes products, services, processes and business models, requiring new insights
and investments. In this sense, organizations and countries must approach
innovation as new ideas and knowledge, and adequate infrastructure (I&D and
talent, among others).
·
Companies
fracture, opening opportunities to focalized specialists. Consequently,
activities disaggregate and modularity invades different industries for new and
nimble firms. Creativity, speed and flexibility are the new basis to compete in
the business arena.
·
Products
and services include interactive and collaborative experiences, and Internet
and the telecommunications are connecting +4 billion people all over the world.
·
The
future will be on open/distributed innovation or co-creation, losing
organizational boundaries, and new businesses may begin with little capital and
certain advantages over the established one.
·
Knowledge
expansion in each individual and organization will contribute to open up new
opportunities’ development. Consequently, innovation should be considered as a
powerful intangible asset.
As a result, innovation is the basic
process that produces new wealth and growth. Innovative individuals and
organizations are the ones that will succeed in the unknown space. That is why
it should be considered the 6th driving force.
In the following Table 1 it is shown
a summary of what it was referred in this section:
Table 1: Five
considerations
|
1st.
Driving force (Globalization)
|
Money
- Imposes new rules on growth and advancements.
- Global cities are the centers of power
concentration and economy control.
|
|
|
Speed
- Time-to-market.
- Interactions are needed with consumers and to
build brands.
- Strategic and analytic tools are being
questioned.
- The abilities required: flexibility, agility
and speed.
|
|
2nd to 5th
driving force (Connectivity, Digital
technologies, convergence of technologies and social networks)
|
Technology
- Future technology’s trajectory responds to an
exponential curve.
- Our minds work in a linear way. That is why the
future is difficult to be predicted.
|
|
|
Digitalization
- Offers cost reductions and increases in productivity.
It is needed to invest in intangible assets and there are new business
logics for firms and customers.
- What’s happening? DNA analysis from mobile
devises (Apple) and tracking of physical activity (iWatch).Life will be
optimized by computers offering entertainments, friendship, sex, or what
somebody could do in his/her weekends.
- Hyper scaling will probably touch more areas,
and complexity, digitalization and interactions will transform the
business landscape. There is an unprecedented opportunity to reposition
firms.
|
|
6th
driving force (Innovation)
|
Innovation
- The strategic, business and operational
processes are losing their effectiveness as innovation takes place.
- It is an intangible asset and the route for
growth and new wealth of nations, organizations and individuals.
Includes products, services, processes and business models. Products and
services include interactive and collaborative experiences.
- It is speed up by: Difficult to replicate
abilities and capacities, science convergence, IT and new management
processes.
- Knowledge becomes futile in short periods of
time, Internet increases productivity.
- The future will be for co-creators and
focalized specialists.
|
Source:
Own
3.
IMPACT
AND CONSEQUENCES
As it was stated, the
six driving forces analyzed in the prior section are transforming society and
the business world.
In the following
paragraphs there are shown some astonishing impacts and consequences that are
seen today and that producing blurred results on industrial sectors, business
models and products/services, as follows:
3.1.
The
borderless firm’s industrial sector
To
influence in the market context means not to stay in a unique industrial sector
anymore. Just to give an example, Apple Computers Inc. is not only a
technological firm; it invaded industries like music, media, health,
entertainment and education. In accordance with Clarin.com (2015) the company
of Cupertino is also one year ahead of its electric car which is not totally
autonomous. There are other companies like Google and Mercedes that are working
on autonomous vehicles, but for companies like Apple and Google, some time ago
vehicles were not intended industrial sectors.
Additionally,
Google the firm of the research engine, launched a tablet (Pixel C) which is
totally designed by them (LANACIÓN.COM, 2015); has Chromecast, a media
streaming device that plugs on a TV, simply using a mobile device and a TV to
cast favorite TV shows, movies, music, sports, games and more. In addition,
they are running a self-driving electric car program (THE VERGE, 2015).
Chui and
Manyika (2015) asserts that digital powerhouses are moving from search and
social networking into new sectors, like banking and retailing. As it was said
before, Apple and Google are good examples of firms that do not stay in a
unique industrial sector and evolve, based on refining their competencies.
Moreover,
knowledge roles will be invaded by digitalization within organizations. In this
sense, Chui and Manyika (2015) argue that software is replacing labor in
digital businesses and computers are performing complex tasks as well; even in
knowledge-intensive areas. For example, in oncology diagnostics, as computers
have the ability to scan and store enormous amounts of medical research and
patients’ MRI results, IBM’s Watson computer diagnoses cancer with much higher
levels of speed and accuracy than skilled physicians do.
In
this environment, the authors say that firms can quickly experiment on a
massive scale as they can test different new products, new marketing approaches
and customer’s demand is requiring a unified experience in B2B and B2C domains.
That is why big data has become in a new asset class, as companies can
understand much more about their customers out of analyzing their click
streams. They conclude that hyper scale businesses are part of the daily life
of many users, reshaping the business ecosystems.
In
addition, industrial sectors are influenced by other sectors blurring their old
limits. Sissons (2011) refers that the “UK mfg. industry has moved beyond just
making things. It is a complex industry that engages with customers and other
businesses in a range of ways”. As firms combine manufacturing and services in
packages selling solutions, outcomes and experiences, it is adverted a new
industrial sector that the author calls “Manu-services”.
Manu-services
involve complicated activities that require firms to coordinate a highly
skilled workforce and a strong service sector with excellent universities and
research institutions. That is why there are developed countries that are
behind others (for example, UK is behind France, Japan and Germany) and some
emerging economies are catching up at an alarming rate. To conclude, asserts
that Manu-services are not a new idea, but a new type of innovation as it represents
a vast area of soft non-technological innovation which offers new options for
growth.
Because
of what it was said in this section, unique industrial sectors are embarrassing
for firms´ development as new sectors’ invasion and knowledge roles replacement
are gaining momentum.
As
companies strictly dedicated to manufacturing need to join the services domain,
digital businesses and computers are increasingly performing complex tasks with
precision and speed, even in knowledge intensive areas. Big data analysis,
processing and smart utilization became a new asset for companies and part of
many users’ daily life. That is why, different hyper scale experiments can be
done and customers may be analyzed out of their click stream. In this order of ideas, the business
ecosystem is being reshaped as digital interrelations evolve.
Finally,
firms and industrial sectors are constantly evolving, and losing their old
shapes and limits. In the near future, it is expected that more firms will deal
with various blurred industrial sectors as the way to interact with different
marketplaces and geographies. That is why it will be very difficult to assert
in which one and with which competitors the firm competes.
3.2.
The
borderless business models
For most firms, business is not as it was before; their
business models and strategies need to be adapted and changed to stay in the
market terrain. There are many examples of firms that produced these kinds of
transformations; IBM, Apple and Amazon represent some cases.
Chui and Manyika (2015) indicate that business models are
networked and flexible because of minimum marginal costs
and huge operating advantage coming from hyper scale businesses which fuel
companies into adjacent spaces. As an example, it is referred that through
digitizing the book business Amazon could enter into new retail categories and
probably into Web services via the cloud in the future.
In
accordance with the authors, the main characteristics of these new firms are
connected to:
•
New business opportunities, coming through immense
Webs of interrelated users, devices, and organizations.
•
Massive volumes of user’s data that flow to
social-media players’ sites, allowing advertisers and marketers to be charged
for access the data that is collected on user preferences and spending
patterns.
•
Highly global ecosystems. For example, 97% of eBay’s
commercial sellers export goods to customers in foreign countries.
They
argue that technologies are invading the business arena, changing the overall
strategic context as they are altering the competition structure, the way
businesses are being done and the performance across different industries. They
conclude that under these circumstances leaders must challenge their
assumptions and test constantly their strategies.
In
accordance with the authors, digitalization offers the following additional
benefits:
·
Lowers entry barriers as many firms can approach
markets without having to build distribution networks.
·
Disaggregate value chains because of the “plug and
play” nature of digital assets, creating small and fast-moving competitors.
·
Allow entrants to scale up rapidly at lower costs as
more customers join the network.
·
Enable new businesses and operating models, like peer-to-peer
product innovation or customer service. Also, disintermediation through 3D printing and selling directly to
Amazon represent key issues for rethinking new businesses and operating models.
·
Can change competitors,
redirecting industry contexts when some capabilities may be at threat.
Bughin
et al. (2013) add that business models become transparent and innovative thanks
to real-time information, instant price discovery and quick problem resolution,
and that digitalization is constantly elevating people’s expectations. That is
why, rapid responsiveness should be considered as a core competency and
business models should be rethought for rapid responsiveness and transparency.
Finally,
business models must progress. Chui and Manyika (2015) propose that thanks to
digitalization they evolve at high speed. For example, music evolved from
selling tapes, CDs and MP3s to a subscription model like Spotify and
transportation did it to a non-ownership model, combining sensors in cars, data
in the cloud and mobile apps like Zipcar, where their members pay for the use
of vehicles by hours or days.
As a
result, networked and flexible business models are possible thanks to low
marginal costs and high operating leverage, and adjacent spaces are more
possible for many companies.
New
age firms are oriented to profit from new business opportunities coming from
immense Webs, massive volume of user’s data flow and highly global ecosystems
as new technologies are changing the strategic and business environment.
Assumptions are meant for short periods.
Finally,
low entry barriers, disaggregation of value chains, scaling up quickly,
disintermediation, peer-to-peer product innovation or customer services, rapid
responsiveness and new capabilities’ development are an important part of the
actual business context in which peoples’ expectations are elevated thanks to
transparency and innovation. Business models and strategies must progress in
order to stay attune with the changing business realities.
3.3. The borderless product/service
Product
and services are having a difficult time. They are also being blurred as
modularity, global resources and consumer experiences are shaping new
realities. These matters are central in this section but it will be also
analyzed why products/services are entering in a new era, why platforms must be
built and the importance of digital and physical experiences’ integration.
3.3.1. The
age of modularity with global resources and one consumer experience at a time
Products/services
are not designed and produced within the limits of one company anymore;
capacities and abilities are spread all over the world and, to be competitive,
companies must find them wherever they are. Prahalad (2010) refers that Ford
Model T was totally integrated within the limits of the firm: it was put iron
in one side, getting a car in the other side. At that time, all the resources
needed to create and produce the product were found within the company, and the
consumer base was undifferentiated. That is why the famous aphorism: “any color
car is okay as long it is black”. However, companies do not operate that way
today.
That
is why he invites to analyze the other extreme: it is possible to manage
hundred millions of consumers and each consumer’s experience at a time (what
the author calls: n=1). As an example, anybody can construct his/her own page
(through iGoogle) conducting one personalized experience at a time.
Additionally,
none of the contents of Google are produced by the firm; contents come from
outsiders who aggregate value and give it to Google (r=g, meaning that resources
are global). Complementing what the author says, Baldwin and Clark referrer
that Howard Stevenson (HBS) said that entrepreneurship is “pursuing
opportunities beyond the resources currently controlled". As a result, resources
may come from all over the world, what is very different from Model T workflow.
In
other words, what is boosting business and innovation today is n=1 (one
personalized experience at a time) produced by r=g (infinite global resources).
For example, Apple allows anybody to create his/her own music portfolio, but
the firm does not create the content, neither Apple produces the devise as it
is manufactured by different vendors and countries, and assembled in China
(Foxconn). Only Apple owns the design and the software. All this is happening
in what Prahalad calls the new age companies (like Apple, Netflix and Google),
and additionally in old age companies of industrial sectors like tires,
insurance, automotive and health care.
At
this point, the modularity concept, which is speeded up by technology, becomes
remarkable as it can be viewed as a strategy to efficiently organize complex
products and processes. Baldwin and
Clark (1997) refer that this principle is familiar to the computer industry as
it allows managing complex technological subjects. The firms that produce
independent modules obey to certain design rules, but all the modules function
only as an integrated whole. This concept extends beyond manufacturing to
product and service design, increasing the quantity of possible innovations.
The authors suggest that, under the modularity domain, vendors will have two
alternatives to compete:
1. Taking responsibilities over the design rules and
competing through the specification of dominant design rules: being the
architects of the whole product and should attract designers for each module,
like Microsoft, or
2. Producing modules: being the designer and
dominating superior execution and non visible rules, like Quantum
with PC disks.
In this environment, leaders will
control less and will need more specific knowledge.
The
geography of products/services is a changing game with evolving capacities and
abilities required to succeed. Modularity and n=1 / r=g are the rules that any
company should understand and implement. Technology is the vehicle that allows
connectivity at individual or team levels.
3.3.2. The
product/service’s new era
Products
and services are going through a novel phase of development. Chui and Manyika
(2015) suggest that:
·
Pressure is on prices and margins, as digital technologies
create transparency and vendors’ switching. Also, it is easy the comparison of
product performance, service levels and prices.
·
Products/services can commoditize because consumers
require comparable features and simplicity for easy purchase on mobile devises.
·
Products/services are digital in the B2B and B2C
realms. Music, movies and digital services are being commercialized all over
the world, and digitalization is transforming through global collaboration even
physical flows and digital design files for 3D printing to make product to be produced where it is
going to be consumed.
·
Online platforms are created, bringing cross-border
exchanges, efficiencies and speeds to production. E-commerce platforms allow
faster flow of goods and services around the globe, expanding global trade and
new online markets, facilitating innovation and the creation of physical goods
through 3D printers.
Additionally,
the product itself may be conceived in new ways as 3D printing is modifying not
only how they are manufactured, but also the possibilities of replicating old
products and reducing their prices to unimaginable levels, as it is described
in the following cases:
·
Local
Motors (LM) - The melted vehicle
3D
printing is a reality. Clarin.com (11/20/15) says that the firm LM manufactures
vehicles with an attractive and original idea for customers: melt their old printed pattern, recycle them and create another car that may suit
their actual preferences. The firm located in Arizona - USA is planning to offer the opportunity of melting its
“Swirl”, creating a new vehicle in a few hours. Actually, any other
manufacturer does not give this possibility. In addition and in the last
Detroit Saloon, in front of everybody’s views, they printed a vehicle called “Strati”
in only 44 minutes.
LM
uses plastic, a material that can be melted and reutilized, proposing a total product
is recycling in the automotive industry. Thanks to 3D printing, it is possible
to have a car in some hours.
However,
it is not a new technique in the automotive industry, as BMW has used it for
+25 years for concept cars and tools manufacturing. What seems incredible is to
think that a car may not be manufactured in a plant, but in a printer. The
challenge for LM is to build new plants and to substantially reduce the
printing time from 40 to 12 hours in order to conquer new markets.
·
Audi/Auto
Union (AU) – Scale 3D printing in the automotive industry
3D
printing is used only for unique objects but, in accordance with Clarín.com (2015),
Audi is using scale 3D printing to replicate a racing car AU Type C 1936, well known as Silver Arrow
(Flecha de Plata).
A
special laser melts metallic powder, process that allows the manufacturing of
complex structures that cannot
be produced by conventional methods. Audi
is improving this technique to use materials like aluminum and steel, and the challenge is to increase productivity
at scale.
·
Sports
electric car for 5,000 dollars
Productivity
enhancements and price reductions are ways to increase market presence in every industry. Clarin.com (2015)
indicates that a Chinese young boy of 27 years old manufactured a super sports
electric car with a 3D printer. It was exhibited in the International Saloon of
Hainan 2015 after manufacture it in his garage, in only 6 months and spending
5,000 dollars. Today, the only inconvenience is that this vehicle can reach 60
km/h at maximum speed.
In
the near future, it seems that we will own materials, not products, that will
take different shapes and that a product will be produced with a 3D printer in
the place of consumption at reasonable prices is not far from reality. Things
are changing at an alarming speed.
3.3.3. Building
platforms, not products
A
platform is the technology behind services, products and solutions, and it has
the ability that can be extended. It is a solution to meet customer’s
requirements but it is not a product itself. In other words, a platform offers
different alternatives that the customer may choose which to use for his/her
benefit, building products on-demand.
Android
is a platform for mobile devises. A more complex example of a platform may
include diverse tools/modules like research, assessments, recruitment,
e-learning, classroom trainings, different content, content management,
communication management, social networking, blogs, business intelligence,
publishing, production, CRM, manufacturing, program management, among others.
A
platform may evolve or integrate to other segments and solutions, connecting
new nodes in the same or different industries. For example, it is possible to
integrate ERP, Mobile and CRM for new user requirements to screen mass level
hiring and, with the help of an assessment platform, it could be predicted who
is going to be selected for a position. Thanks to platform’s capabilities,
solutions are tailored for customers in accordance with their requirements, but
a product will not have this possibility.
As
a result, platforms and products have differences, as follows:
·
It is possible to build
extensions around an existing product, but in a platform it is possible to
build a whole new product or solution without using an existing product but
with a lot of reusable components, technologies and standards. In this order of
ideas, the product gives only one approach to resolve a problem; platforms
transform customers to next levels.
·
As a platform is not a
product, it can be shown a product’s demo on the spot, but a platform’s demo
can only be shown in connection to a specific requirement, as it has to be
aligned according to the customer’s request. It is needed to have an accurate
requirement to get the desired solution. That is why, a platform can be
customized, configured, applied to specific purposes and have special workflows.
Therefore, there is no need to grow a platform to every function or feature.
·
Customers and/or partners
can use a platform. Cloud-based software will propose many more interactions
and possibilities for new developments.
·
In a product, it is
impossible to have your brand on it, but in the platform, this is possible, no
matter who developed it.
·
For products, it is not
possible to integrate all those that may be required, but in platforms, it is
possible to do it for specific segments.
·
Under a product, it is not
possible to empower others to be technology providers; it is the opposite in
platforms, helping for partnerships.
·
In platforms, global
integration is possible and it can empower and transform industry segments.
Problems are seen as opportunities and implementations can be of any degree.
Everything that somebody may imagine can be built, depending on the investments
that are made.
·
Products may have the
ability to extend as well. Extendibility is dependent on capabilities at
different levels, but from a certain level, it can be understood as a platform.
Therefore, platforms have to be products as others build on it, but products
are not platforms.
·
Building a platform is a
hard and long way. If products were built on platforms, they probably would
have the ability to last longer. There are specialists who think that products
not built on platforms will die due to: a) version controls, b) Inability to
change with major advances in technology, c) Lack of productivity as things
become more complex, and d) ability to scale across the board.
·
There are two types of
platforms: the ones that are built around a product (like iOS or Facebook) or
the ones that are built around users, customers and/or developers (like Android
or Ning, called open platforms). The future will tell us about the winners of
this race, but what it is possible to say today is that open platforms are
beyond the imagination of their creators and offer many more possibilities.
3.3.4. Integration
of digital and physical experiences
Customers
are not in search of products but of experiences. That is why customer
experience, digital products and channel management are important today. Bughin
et al. (2013) assert that the integration of digital and physical experiences
creates new ways for customer’s interactions and digital information augments
each experience. Products are becoming free, intuitive and user oriented, and
the digital commerce reduces entry barriers and opens new areas of revenue.
Governments, education and health care are pointed as
huge areas of improvement when adopting digital technologies. Productivity
gains may help aging populations to do more with less, improve health care of
every citizen and produce savings never obtained before.
Out of what it was said in this section, products are
conceived as a convergence of technologies (different products are found in one
product), if constructed as platforms offer more possibilities (allowing each
user to utilize it as he/she wants, making vendors to lose control of what the
customer does with the product) and are built as interactive experiences with novel
and recyclable materials (suggesting new pleasurable sensations when it is
used).
3.4. The borderless science: disruptive technologies that
will change the future and executive’s role.
Science
is unlimited, too. Manyika et al. (2013) say that new technologies are defying
the business and social realms, but not every emerging technology will alter them,
as only some will have the potential to disrupt the status quo, changing the
way people live and work. Surely, new values will emerge.
The
authors analyze twelve technologies that will drive massive transformations in
the coming years, with their benefits and challenges. These technologies will
impact, for example, on better products, lower prices, cleaner environment and
better health. It is not the objective of this paper to explain each of those
technologies, but to name them: advanced robotics, next generation genomics,
energy storage, mobile Internet, automation of knowledge work, Internet of
things, cloud computing, autonomous or near autonomous vehicles, 3D printing,
advanced materials, advanced oil and gas exploration and recovery, and
renewable electricity (solar and wind).
They
conclude that business leaders and policy makers should work on these
technologies’ advancements to profit from their benefits, as follows:
·
For business leaders, technologies are important to
improve internal performance, to update organizational strategies and business
models, and to shift value among producers and consumers. Scenario planning is
not dependent on risks and competition as it was before, and up-to-date
employees’ skills are needed in order to balance the potential benefits of
emerging technologies with their risks.
·
For policy makers, technologies can solve their own
operational challenges (as an example, Internet of Things may improve
infrastructure management). As the nature of work will continue to change, it
will be required better education and retraining programs. In addition, mobile
Internet may help in solving educational and public services gaps. Thanks to
technology, new and more precise metrics must be considered in order to reshape
economies and lives.
Complementing what it was said before, Bughin et al.
(2013) suggest that there are additional dramatic business trends in the 21st
century, as follows:
·
Big data and advanced
analytics, which enable management to better understand markets and make
intelligent business decisions.
·
Social technologies, which
build a better organizational infrastructure, linking and engaging stakeholders
as never before. The organizational focus in this area should be on information
and communication technologies.
·
The progressive automation
of knowledge work, promising new steps in corporate productivity.
· Up to 3 million consumers, most of emerging countries
will become digital players thanks to mobile technologies.
Nevertheless, it is very difficult to be an effective
executive in this environment. Dewhurst and Willmot (2014) point out that the
historic manager gave orders and set the criteria to the computers, which made
no decisions. Now and thanks to artificial intelligence, computers are not
stupid tools anymore; they are replacing skilled people in fields such as
architecture, aviation, the law, medicine, and petroleum geology, changing the
nature of work. The authors refer that Deep Knowledge Ventures, a Hong Kong
venture-capital firm, has gone so far as to appoint a decision-making algorithm
to its board of directors.
In this context, they insist that the contribution of
senior leaders should be directed to create worthy data sets in intelligent
machines and increase decision-making potential. The role of the senior leaders
should evolve giving a human touch to brilliant machines, which should include
deep questioning, attack of exceptional circumstances and deepening what
machines can’t do. Their capacity for self-renewal will include tolerating
ambiguity and focusing on the softer side of management.
In addition, they suggest that better and less polluted
analysis, and fewer unnecessary debates will take place if organizations
approach higher quality inputs and processes for improved decision-making in
tactical and strategic areas. The senior managers’ challenge reside on building
customized dashboards full of metadata, synthesizing important information
around the company and controlling if actual data goes in the desired
direction. For example, machines may adjust prices or produce sales data in
real time, or monitor risks, but executives must determine the parameters. More
than ever, executives will need to be near technology to get better views on
reality and encourage democratization of information for improved
decision-making.
Finally, the authors argue if brilliant machines can take
decisions that leaders take today. As a result, what will be left for top
management is:
·
Asking the right questions
to the right people at the right times, and interpreting the outputs.
·
Attacking problematic
exceptions which will probably come out in data-intensive areas, like pricing,
credit departments and call centers, or in strategic areas like competitive
analysis innovation or talent management.
·
Tolerating ambiguity, as
computers seem to be prepared to answer small questions, but for human problem
solving will be needed the bigger and broader the inquiry. In addition,
companies increasingly proceed not knowing exactly where they are going and
struggling with uncertainty, which holds new possibilities for the emergence of
new insights.
·
Giving a human touch to the
organization through employing soft skills. That is, for instance, inspire
employees, empathizing with customers and developing talent. It is cited that
it would be very difficult for an executive to say, “We’re doing this because
an algorithm told us to”. In the era of brilliant machines, the human dimension
will be a top ability for executives.
Because of this study, different
impacts and consequences are observed and are changing the social and business
environments, as follows:
·
Globalization
must be considered when doing business: it is a complex, multidimensional and
paradoxical phenomenon. Economic, political, social and cultural implications
propose endless and imprecise boundaries, which are not related to the size of
a region or country, or to the limits of a map.
·
Technology
and digitalization are creating new industrial sectors, threatening many of the
existing ones. In addition, they also offer high speed to the development and
fall of players in an industrial sector.
The cloud, Internet of things, robotic, social networks and virtual reality
are just some examples of technologies that will change how we do things today.
·
Innovation
is for every firm and everybody, and should be considered as the new blood for
wealth creation.
·
Uncertainty
and intuition are an important part of decision-making. The
definitions are narrow and do not support what it is known; it seems that
everything is possible and applicable.
·
The business vision is relevant, but it is not
available with accuracies.
·
Firms should focus on abilities’ development, not necessary
on products and services.
·
Talent and other resources may be found everywhere and
are required new ways to manage them.
·
Is key how resources are assigned and savings are
utilized. In addition, how customers are reached.
4.
CONCLUSIONS
The
unlimited world is coming out at unprecedented pace; it is referred to the
borderless and to the unknown. In this imprecise context, old paradigms are
becoming arguable.
New
courses of action are proposed by money, speed, innovation, technology and
digitalization.
Money
has an enormous power and global cities became the new centers of power
concentration and economy control. Speed is needed to launch products to the
market, to interact with consumers and to build brands, but also is raising
questions on the ability of some strategic analytic tools as they become static
in front of high-velocity changes and transformations. Customers and employees
are having fundamental roles when intervening on processes and on experiences.
Agility, flexibility and speed are new abilities for a globalized and
unforeseen world.
Unpredictability
is the arena where technologies converge in novel and unexpected ways. If we
would like to be prepared for the future, it is needed to go beyond our actual
linear mind capacity as future technology’s trajectory responds to an
exponential curve.
Globalization,
connectivity, digital technologies, convergence of technologies and social
networks are the five driving forces that are transforming the business world
and how value is created.
Digitalization,
which is not only transforming industries by lowering costs, improving
productivity and making firms to scale up quickly, but also enhancing
interactions, proposing new optimized lives and performing complex tasks, is
opening up many new fields and interconnecting them. As computers are refining
and processing hyper scale data to improve decision-making, big data analysis,
processes and their smart utilization are becoming the new organizational
intangible assets. That is why opportunities and firms’ repositioning will be
on the side of the ones that can manage complexity and hyper scaling at high
velocity. A new era of competition is being born.
Innovation
is the new word for advancement, growth and wealth; it suggests the unknown and
a difficult gambling. The strategic, business and operational processes became
part of the organizational infrastructure and of what it is needed to operate.
Technology
and digitalization in connection to innovation are leading unprecedented
changes. Innovation is on products and services which include interactive and
collaborative experiences, processes and business models. Only innovative firms
and individuals will succeed in the unlimited. As a result, innovation should
be considered the 6th driving force.
In the
unlimited, everything is being questioned and abilities are more connected with
soft and not hard skills. That is why investments in intangible assets, like
innovation and new knowledge are the new logic of the unlimited.
Impacts
on firms’ industrial sectors, business models and products/services are about
to come as science and disrupting technologies are gaining momentum. Unique industrial sectors and manufacturing
or services only activities are not advisable anymore.
By
the way, business models must be flexible and networked to capture value in
adjacent or transformational spaces; immense Webs, massive volume of user’s
data flow and highly global ecosystems are changing the strategic and business
environment. Additionally, assumptions should not be made for short periods of
time.
The
new business context includes low entry barriers, disaggregation of value
chains, scaling up quickly, disintermediation, peer-to-peer product innovation
or customer services, rapid responsiveness and new capabilities’ development.
Peoples’
expectations are elevated thanks to transparency and innovation, and business
models and strategies must evolve in order to stay attune with business
realities.
In
terms of products and services, modularity, online platforms, convergence of
technologies, global resources (r=g) and one-consumer-experience-at-a-time
(n=1) are reshaping realities as digital and physical experiences’ integration
are connecting many more individuals and organizations. 3D printing is
changing the rules of manufacturing and the way customers are reached with
reusable materials and scaled up cheaper products. The product/service’s actual
context proposes leaders the possibility to control less and have more specific
knowledge.
Business
and social realities are also defied by technology and science. New values are
emerging throughout advanced robotics, energy storage, mobile Internet,
automation of knowledge work, Internet of things, cloud computing, autonomous
cars, 3D printing, big data, social technologies, and the like.
These technologies will impact, for example, on better products, lower prices,
cleaner environment and better health. Business leaders and policy makers will
have to catch up with the novel situations that are about to come.
It is
not easy to be an effective executive in this environment. Giving orders and
dealing with computers that made no decisions correspond to the historic
manager. Now artificial intelligence and smart computers are replacing skilled
people in many advanced fields. There are cases of organizations in which
decision-making algorithms are replacing Board of Directors. As the executives’
role is changing and they should tolerate ambiguity and focused on the softer
management side, their contribution should be connected to deep questioning,
attacking exceptional circumstances and deepening what machines cannot do,
improving decision-making in tactical and strategic areas with customized
dashboards and flexible parameters.
The game is still in its early innings. Organizations
and individuals must excel the power of imagination as unwritten and harsh
rules are taking place in an always surprising world. Known frontiers are being
challenged by digitalization, new technologies and new sciences as their
boundaries are continuously under definition.
Hyper
scale competitors disrupt traditional businesses at unprecedented speed and
with a tremendous operating and financial leverage. Digitalization helps
minimizing costs of transporting, replicating and storing data, and creating
networks effects. Computing power is reducing its costs and helping in its
adoption and evolution. As a result, investments must be oriented to building
online platforms, which can reach massive scale, up sell and cross-sell
products and services without human intervention.
Key
management challenges should be directed to:
· The
wise relocation of savings from automation to the talent that could help the
digital business.
· Understand
that human talent is scarce and mobile and traditional universities cannot
provide the training that organizations require: That is why corporate
universities and
special trainings should complement them.
· Forging
flexible organizational structures based on the Internet’s model and values,
which include connectivity, decentralization, changing relationships and
nonhierarchical interactions.
· Understand
that today the unknown is part of the nature of things and it is needed to
tolerate tension and ambiguity.
The
global economy proposes discontinuity, volatility and stress. Success becomes
insecure in front of emerging markets, technological change and high speed. The
only possible approach in this environment is the one that applies to a
specific circumstance; “global and coherent” approaches are not applicable
anymore.
Competitiveness
and growth depends on innovation, which should be considered in public and
private policies. Collaborative contexts are necessary to resolve actual global
challenges as energy consumption, deforestation, carbon footprint and the like.
New paradigms should take place as the old ones become quickly obsolete.
The
limited and the unlimited worlds are coexisting today, but the future is the
realm of the unlimited.
As
a conclusion, a comparisson of both worlds is shown in the following table
which shows that firms, individuals and society, in general are
gradually exposed to the unlimited, which is connected with not precise limits,
instability, uncertainty and unclear visibility. The unlimited is the realm of
the vague and blurred; that is why, nowadays qualitative approaches and
measures are more adapted than quantitative ones.
Table 2: Limited and Unlimited
worlds’ comparisson
|
|
Limited
|
Unlimited
|
|
Referred to
|
Calm pace and
the known.
|
Velocity and unknown.
|
|
Globalization
|
Not visible
|
Represents the way to see social interactions and businesses.
|
|
Decision making
|
Tools are
needed.
|
Intuition is needed.
|
|
Resources and knowledge
|
Owned by each firm and workforce.
|
·
Dispersed in partners and developers.
·
Knowledge becomes
futile in short periods of time. Internet increases productivity.
|
|
Strategic and analytic tools
|
More adapted.
|
Inefficient
and questionable.
|
|
Workforce and talent
|
Do repetitive
tasks.
|
·
High skilled workforce.
·
Difficult to
replicate abilities and capacities, science convergence, IT and new management
processes.
|
|
|
|
|
Technology
|
Limited to each industry.
|
·
Comes from other
industries and creates new industrial sectors.
·
Importance of
digitalization.
|
|
Speed and money
|
Relative importance.
|
Very
important.
|
|
Innovation
|
Relative importance.
|
Is a must.
|
|
Future
|
More predictable.
|
·
Unpredictable.
·
The future will be
for co-creators and focalized specialists.
|
|
Investments in
|
Tangible assets.
|
Intangible assets (new knowledge, software, etc.).
|
|
Industrial sectors
|
Precise boundaries.
|
Blurred boundaries.
|
|
Business Models
|
More stable.
|
Unstable,
transparent and innovative.
|
|
Product and
services
|
Precise and more stable.
|
·
Modularity and r=g;
n=1.
·
Quickly
comoditize.
·
Online platforms,
and 3D printing modifies mfg, prices and how people access to them.
|
|
Science:
Disrupting technologies
|
Not visible and stable.
|
Extremely
visible and create unestability.
|
|
Management
|
Gave orders and set up criterias to the computers, which made no
decisions.
|
Artificial
intelligence is replacing skilled people in different fields.
|
|
Senior leaders’ contribution
|
Vision, mission and strategy.
|
·
Create worthy data
sets and decision-making potential
·
Ask the right
questions
·
Attack exceptions
and tolerates ambiguity
·
Give a human touch
to organizations.
|
Source:
Own
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