The emergence of open organizations
If they want to survive, companies have to ask themselves a fundamental question - how can they acquire the agility of a start-up in structures with tens of thousands of employees? For Albert Meige, CEO of PRESANS and Academic Director of the Leading Digital Transformation program at HEC Paris, the answer to this question is to develop a new form of company that he calls an Open Organization.
Three key disruptive trends
In a white paper recently published by PRESANS, Albert Meige and his team of experts examine three underlying trends that are transforming our societies and economies. In a highly competitive global landscape, these trends are making innovation increasingly complex and have led to the emergence of Open Organizations.
Trend 1: the inflation and fragmentation of knowledge
Albert Meige asserts that the fragmentation and inflation of knowledge has transformed the way we manage innovation. Knowledge has always been the primary ingredient of innovation - in order to remain competitive, companies must be innovative. In the recent past, knowledge was rare and mainly produced by major companies and universities. However, in recent decades, the proliferation and access to knowledge is transforming it into a commodity created by an increasing number of players. It is now less expensive, less risky and faster to use knowledge that has been generated by others.
Trend 2: accelerating commoditization
Commoditization is moving at a rapid pace. Where it once took an oil and gas company eight years to develop a new molecule, the same process now takes only four or five years. Furthermore, the acceleration of commoditization has led to a shift toward "servicization". Developing products is becoming increasingly complex and, in order to differentiate themselves from the competition, companies now need to offer a complete package that integrates added-value services. Michelin and Rolls-Royce, for example, no longer only sell tires or jet engines, but also miles driven or flown. The art of innovation actually turns out to be less about generating new knowledge, and more about wisely assembling the pieces of the puzzle.
Trend 3: Digital transformation
Digital 'barbarians' create new rules that pose some serious challenges for traditional companies. One example of a digital barbarian is Apple, which transformed and disrupted the music industry. In addition to developing MP3 players, Apple created an integrated experience for enjoying music on the go. With the right ingredients – a user-centric approach, the right technology and expert talent – Apple reshaped the industry.
Now, the big players of the digital world are adopting similar strategies. As well as analyzing value chains and finding sources of inefficiency, they stay as close as possible to the final user. Albert Meige points out that digital barbarians offer valuable services (i.e., the ability to search, compare and book hotels in a few clicks on Booking.com) that enable them to foster customer relationships and grow profits.
These disruptive and transformative trends are interconnected. Accelerating commoditization and the shift toward servicization has driven companies to look for knowledge elsewhere, away from traditional sources of core knowledge. Digital transformation is also accelerating this shift toward servicization. Embracing the opportunities that Open Organizations open up can not only enable companies to increase their competitive advantage but to ultimately ensure their long-term survival.