InsightaaS: In the same confirmation bias vein as “as soon as you buy a car, you see that model everywhere on the road” (or “if you see yourself as a hammer, everything starts to look like a nail”), I’m always sensitive to posts that read on the core concepts contained in The Death of Core Competency. A new HBR article, The Self-Tuning Enterprise, does exactly that. The article examines how businesses need to embrace “algorithmic principles to make frequent, calibrated adjustments to their business models, resource allocation processes, and structures—without direction from the top.” The article then discusses “three interlinked learning loops,” (experiment, modulate, shape) and uses an extended analysis of Alibaba to illustrate how these principles are applied in a corporate context.
The Alibaba example does a great job (probably a better job than I did in the book!) of illustrating the core premise of “The Death of Core Competency” I suppose it’s not surprising that, as an Internet-native company, Alibaba has done a better job of grasping the strategic implications of cloud than conventional businesses. I’d argue that the lessons will spread into other sectors pretty quickly – an argument that gets some support from Alibaba’s market cap, which, at just over $225 billion, is roughly the same size as Wal-Mart’s.
If you are interested in hearing more about this subject, I’ll be looking at this example as part of “5 Stages: From IT Leadership to the Boardroom,” a presentation that I’m delivering on June 24 at the Weston Bristol Place hotel (by Pearson Airport). Here’s a link if you’d like to learn more:http://tinyurl.com/opozqfq
Wouldn’t it be nice if an algorithm could tell you when to develop a new business model or whether to enter a new market?
We’d be lying if we said that such an algorithm exists. It doesn’t, and we don’t imagine a time in the foreseeable future when algorithms (or other forms of artificial intelligence) will be able to answer such difficult strategic questions. But we do believe that something almost as interesting is emerging: a way for organizations to apply algorithmic principles to make frequent, calibrated adjustments to their business models, resource allocation processes, and structures—without direction from the top.
That’s a provocative claim, but it’s based on actual developments we’ve observed at internet companies like Google, Netflix, Amazon, and Alibaba. These enterprises have become extraordinarily good at automatically retooling their offerings for millions of individual customers, leveraging real-time data on their behavior. Those constant updates are, in fact, driven by algorithms, but the processes and technologies underlying the algorithms aren’t magic: It’s possible to pull them apart, see how they operate, and use that know-how in other settings. And that’s just what some of those same companies have started to do.
Read the entire article here: https://hbr.org/2015/06/the-self-tuning-enterprise
Hat tip to Shane Schick for highlighting this article in the always-excellent Dell IT Solutions Exchange!