IMD-OWP22-PostEvent-Report-V11[8]

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ACTION POINTS

Rather than sticking to their industries of origin, organizations are more dynamic when pushing and crossing industry boundaries.

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Open enterprises achieve growth by intentionally breaking themselves down.

“Opening up” the enterprise is made possible increasingly by leveraging digital technology.

PATRICK REINMOELLER Professor of Strategy and Innovation

PUSHBEYONDYOUR TRADITIONAL BOUNDARIES Rather than sticking to their industries of origin, open enterprises aremore dynamic, pushing and crossing industry boundaries. Exploring adjacencies is not the exception, but appears to be an organizing principle. Growing by pursuing adjacencies results in enterprises that resemble loosely linked businesses that are less reliant on few core competences. What they often have in common is their ability to establish and growdigital platforms. Geely, one of theworld’s largest automotive companies, with units inChina and Europe, has transformed itself over the years froma supplier of equipment in one vertical to a network of mutually supporting companies in a range of verticals.

OPENENTERPRISESACHIEVE GROWTHBYINTENTIONALLY BREAKINGRIGID STRUCTURESDOWN. Open enterprises keep the size of decision-making units stable, while delivering on growth targets. Although their growth rates are considerable, the relative homogeneity of their unit sizes provides greater compatibility and preserves themotivational advantages of start-ups while benefiting fromscale. Not only Asian companies such as Haier and Kyocera have developed indigenousmodels of dynamic cooperation, companies likeGore and Buurtzorg have also shown how limiting size and complexity bears fruit elsewhere.

DON’TJUSTADDNEW MARKETSFORTHESAKE OF IT Expansive and growing as they may be, open enterprises do not just add foreignmarkets to their portfolio. Much of their growth results fromcapillary expansion in their existingmarkets by capturing a greater share of economic activity. This intense localization suggests reconsidering “small” markets. Thismaymean focusing on entertaining collectors in ingenious ways like Popmart or satisfying Indonesians’ retail needs like nobody else as GoTo exemplifies.