IMD-OWPLIVE22-PostEvent-Report

→Strategy

ACTION POINTS

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To make your organization more dynamic in the face of fast and frequent change, push and cross traditional industry boundaries.

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Limit size and complexity to achieve growth.

Establish and grow digital platforms to “open up” the enterprise.

What they often have in common is their ability to establish and grow digital platforms. Zhejiang Geely Holding Group, headquartered in China with a presence in Europe, has transformed itself over the years from a supplier of equipment to a leading manufacturer of cars. It now operates a network of mutually supporting companies in areas including automotive mobility, EVs, travel management, and air mobility.

Asian companies such as the Chinese white goods group Haier, and Kyocera, a Japanese ceramics and electronics manufacturer, have developed indigenous models of dynamic cooperation. They have also shown how limiting size and complexity bears fruit in terms of revenue growth and capturing market share.

LIMIT THE COST OF COMPLEXITY

CONSIDER A LOCALIZATION STRATEGY Expansive as they are, open enterprises do not add new markets to their portfolio for the sake of it. Much of their growth results from expansion in their existing markets by capturing a greater share of economic activity. Their success in pursuing a strategy of localization suggests that it’s worth reconsidering smaller markets that you may have already eschewed.

RECOMMENDED READING

In addition, open enterprises intentionally limit their size and complexity, even as they scale. Although their growth rates are considerable, the relative homogeneity of their unit sizes provides greater compatibility and preserves a startup culture that can boost the motivation levels of employees.

IN A CRISIS, ECOSYSTEM BUSINESSES HAVE A COMPETITIVE ADVANTAGE By Mark Greeven and Howard Yu (Harvard Business Review, 23 April, 2020)

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