”I agree with all this, but it does not concern our industry or my firm.” Now where have you heard that before? Realizing that the absolute basics of our business today are changing often takes a long time, as we “rationally” try to prove that this isn’t so. Therefore every manager should stop and think hard which steps to take next. He or she who hesitates is lost, because new capabilities can only be learnt by doing. Of course, new capacities can be acquired at a high premium. But that is seldom enough, as the same development need may be more widespread in the present organization.
Artificial intelligence (AI) is a good example. All companies are full of data amenable to assessment by existing AI tools. Yes, the data may be incomplete and tools will improve in time, but that is no reason for delaying the process. The lead time of learning only starts when you apply the tools to achieve something that is relevant and helpful in your business.
Differing impacts of innovation
Innovation and new technologies were the source of industry dynamics long before digital technologies. Most innovations are associated with the continuous improvement that is as indispensable to any firm’s survival. A product or service innovation may have radical consequences. The shift from horses to cars…
In the same way, a business model innovation can bring about changes in the components of value creation. It can even alter the whole paradigm; the transformation from Product Business to Outcome Business is a good example. Sharing Economy, Outcome Economy or Platform Economy, and the like. Digital-age heroes, such as Amazon, Über or AirBnB, have turned renowned incumbents’ businesses upside down. The boundaries between industries have become blurred and old value chains have been replaced by agile networks.
Foresight keeps you in the frontline
The more unpredictable your business environment, the more important it is to build emerging businesses and to create viable options.In general, an unpredictable business environment requires both foresight and small, bold experiments. If a change in capabilities is indicated, companies should explore external networks and identify progressive customers in the value chain. And they should require their suppliers to mount experiments and participate in them. Generating new knowledge is one of the major tasks of universities, and active industry-academia cooperation is a powerful tool to keep companies at the forefront of future development. For decades, ATA Gears has been a dynamic contributor in the cocreation scene of Finnish industry and universities.
Strategy in action
There are many ways to link effective strategic management practices with the prevailing business environment. They can, for instance, be employed to suss out the industry’s success factors. Another way is to match them with the sector’s internal capabilities to be ready for the threats and opportunities that lie ahead. All in all, strategy is a combination of choices geared to creating value for the company’s stakeholders. The choices help in resource allocation and guide operations to bring value on a practical level. But before that, have the wisdom to stop and listen – to be able to pick up on the weak signals. And make the decision to actually want to learn. At ATA Gears, we have taken that decision.
Matti Sommarberg, Chairman of the Board