Business Intelligence (BI Part 2). The era of knowledge and business strategy

In continuation of the first topic, Vladimir Pavlovich asked me to publish this article in Habré. Under the era of knowledge you need to understand the era of information technology. The author makes an attempt to cast doubt on the existing general principles of strategic management for their use in the modern world of information technologies. This opinion is very close to me and I gladly fulfill the request of the author.

Savchuk V.P.

Business Intelligence: ERA OF KNOWLEDGE AND BUSINESS STRATEGY

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Strategic business management in its usual form goes down in history. Those who did not tell him the last “forgive” are at risk of being late for the departure of the superhigh-speed train of the future. Business is becoming more pragmatic, planning is short-term, and innovation and science are key growth factors for almost any company.

Is it the impact of the economic crisis? More likely no than yes. The crisis in this case plays the role of an accelerator of deeper and systemic processes that underlie the transformation of the global economy. Simply put, if there was no crisis, it would have to be invented. Because it is, above all, the crisis of the industrial world we are familiar with, the usual approaches to business. We are entering a era of knowledge that changes everything: markets, management, sales ... Everything that seemed unshakable, of which we were more or less sure.

The era of knowledge - the era of instability

The word "knowledge" in this case does not mean paragraphs from the textbook. Knowledge is intellectual capital, which is a strategic factor. It is an integrated ability to create innovation and make effective decisions in the face of uncertainty. It is in this interpretation that knowledge becomes the main productive force of the economy. And beyond recognition change it.

Already, the innovations generated by knowledge form the basis of the global economy, determine its dynamics and its underlying problems. It is about innovations of three types. First, it is technological innovation. It is not necessary to prove their importance to modern man - just look at the dynamics of increasing the ability of computer processors to process all large arrays of information: not a single product in human history has developed at such a speed. Secondly, these are marketing innovations, which until recently stimulated consumption growth, forcing people to buy things that they did not quite need and use “extra” services in order to preserve the necessary level of production. Thirdly, these are financial innovations, which made it possible to increase the mass of capital not through productivity growth, but through the provision of a virtually unlimited amount of funds, including through innovative financial instruments — the notorious derivatives, which actually triggered the financial crisis.

How the situation in the global financial sector will be resolved is not yet clear. It seems that neither the tertiary financial instruments nor the consumer loans inflating bubbles in most industries, no one is going to refuse. But what can be said for sure - science, technology and knowledge will play an increasing role. If today business, figuratively speaking, "tips" science, then tomorrow science will do the same with business.

In the era of knowledge, there is no longer a stable, linear economic development: it consists of rapid ups and downs, moreover, the direction of change is not always clear. The life cycle of products and technology is becoming extremely short, and innovative, market-oriented enterprises and firms take the place of large industrial companies as drivers of economic growth. If in the industrial age the competition was going according to the “big eats small” scenario, then today the fast one “eats” the slow one.

Finally, if someone thinks that his competitors are in the nearest city or - at most - he loses without joining the game. Because competition is becoming global - just like scientific research, technology, trade, finance. Therefore, a business that enters the market is immediately confronted with a mass of competitors, which he probably will never see in person. But that can be smarter, faster and more flexible.

Disappearing strategy?

What is going through a business strategy at this moment? Recall what we're used to. A business that is built from top to bottom, or, as a classic would say, from abstract thinking to practice. Clearly defined mission, vision, strategic goals, tactical goals and action plan. This may still be good for giant corporations with a mass of small portfolio shareholders. But for a business that creates must flexibly create surplus value - including Ukrainian, the time of such heavy strategic pyramids has passed.

The new paradigm of strategic business management is based on three interrelated components. The first is the strategic intentions of the owner. They have always been and remain at the forefront. The second is the challenge that the management team creates inside the company. Those goals, which she sets for herself according to critical indicators for the owner and for the company itself. Finally, the third component is the opportunities that in the fast-moving world today open up extremely quickly, but are just as quickly intercepted by your competitors.

The dominant strategic orientation shifts towards company opportunities. This means that the company must monitor the external environment, analyze current threats and opportunities and use them, converting it into profit for the owner. Such a company plans the current time (month, quarter, year), and not a hypothetical future. It is focused on flexible reaction and adaptability and prefers tactical and active leadership as opposed to strategic. Its employees are not like industrial-age workers who are always ready to execute an order — they rather resemble entrepreneurs. The economic advantage of the company is achieved through the expansion of activities, and its actions in the market are a surprise to competitors.

"Company opportunities" have a clear strategic orientation for a short period of time, for example, a quarter. In essence, this is an orientation up to the first opportunity: see the opportunity, take advantage of it (make a business operation), then see another and reorganize marketing, business processes on the go, and if necessary, the resource base to use this new opportunity again.

Four boxes, business intelligence and new motivation

Easy and simple it looks only on paper. To achieve success in a fast-moving environment, it is necessary to adapt the approach to business planning and business as such to new conditions. First of all, companies must model the process of creating value. It is modeling that allows you to find the main foci of business development and increase its value. I think the Four Boxes Model seems to be the best, which describes this logic quite simply and clearly.



The first component of this model is the creation of value for the consumer. The company must be clear about the problems of customers that are being addressed in an insufficient way and solve these problems, paying attention not only to the content of products and services, but also to the way they are sold to their customers. The second component is the creation of business value, in fact, for the owner. It includes a model of revenue generation (price and sales of products and services), a cost structure, ensuring the necessary profitability of sales, as well as ensuring the necessary rate of turnover of assets. In the present circumstances, when lending is less available, warehouse stocks are overstocked, and buyers are doing everything to increase your receivables, the last item becomes more relevant than ever.

The third and fourth components are inextricably linked. Key resources for creating value for consumers include, above all, the human capital of a company (in the era of knowledge, this resource acquires the greatest importance, almost overshadowing everything else), technology, equipment, information, distribution channels, partnerships and strategic alliances, financial resources and naturally brand. Closing the chain of business models are processes that include not only the production and sales cycle, but also business rules and norms of behavior and key performance indicators.

Modern companies also need to rebuild the management system, using analytical approaches. The term business intelligence is becoming more and more popular, which characterizes a whole complex of program-methodical methods of business management based on current information. They help minimize the intuitive-spontaneous component of management, allowing managers to understand external threats and eliminate them in time. And to understand it in real time, not “for yesterday” and not for a hypothetical tomorrow.

Perhaps the picture of the near future business drawn here does not look very attractive. This business of the future seems too utilitarian, too short-sighted, without our usual long-term planning, setting ambitious goals on equally ambitious horizons of 5-7 years and striving for maximum scale. But the era of knowledge includes so many new opportunities, most of which today we cannot even imagine that it is worth fighting for them. In general, risk becomes a noble cause again - at least in business.