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1 Front Digital page Strategy and Leadership Who am I? Prof. Dr. Bob de Wit What concerns me? - How to best lead a firm - How to design the strategy process - How to best govern a country - How to adapt business models What do I do? - Director, Strategy Works / Strategy Academy - Professor, Nyenrode Business University - Member, Rotterdam Economic Council - Author, Strategy: An International Perspective How to reach me? (0) B.dewit@Nyenrode.nl

2 The basic strategy lingo explained Current situation Target Strategy Objective Vision

3 TODAY Digitalization drives the evolution of demand Artificial Intelligence Purpose Digital Agility Industry Efficiency Trade Scale Agriculture Survival 3

4 A S T R A T E G I S T S P E R S P E C T I V E O N C U R R E N T D E V E L O P M E N T S Examples of the five waves AI DIGITAL INDUSTRY TRADE SUBSISTENCE 4

5 A more realistic view of intelligence

6 Ontwikkeling van het ambtelijk apparaat Three reasons why today s transformations are not merely an extension of the Third wave but rather the arrival of a Fourth and distinct one: Digital space 1. VELOCITY The Digital Wave blurs the lines between the physical and digital spheres. 1. SCOPE Physical space 1. SYSTEMS IMPACT Source: Klaus Schwab, The Fourth Industrial Revolution (2016) 6

7 Why is everyone talking about digital? The speed of current breakthroughs has no historical precedent Compared to previous wave, the Fourth is evolving at an exponential rather than a linear pace Time to reach 50 million users 75 years 38 years 13 years 1. VELOCITY 4 years 3 years 1. SCOPE 1 year.75 year 35 days 5 days 1. SYSTEMS IMPACT Phone Radio TV ipod Internet Facebook Twitter Angry birds Pokemon Go Source: Citi GPS, Technology at Work (2015); Dobs, No Ordinary Disruption: The Four Global Forces Breaking All the Trends (2016) 7

8 Growth potential Growth potential Why is everyone talking about digital? Digital developments are disrupting almost every industry in every country Top mature industries by 2020 Top new industries by VELOCITY Aerospace & Defense Chemical, Materials & Food Electronics Oil & Gas Engineering & Construction Pharma & Healthcare Auto mobile ICT Energy & Power Urban Logistics Alternative energy 3D printing Cyber security Big Data Managed services Virtual commerce Cloud computing 1. SCOPE Metals & Mining Waste management Wellness industry 1. SYSTEMS IMPACT Market size potential Market size potential Source: Frost & Sullivan, Mega trends (2015); Bloomberg industry data 8

9 Why is everyone talking about digital? Digital developments are disrupting almost every industry in every country Supply chain of steel stockholdings 1. VELOCITY 1. SCOPE Suppliers Stockholding Customers No exchange on available inventory, lead time, etc. No exchange on available products, contracts, etc. 1. SYSTEMS IMPACT Source: 9

10 Why is everyone talking about digital? Digital developments are disrupting almost every industry in every country Industry platform of steel stockholdings Stockholding 1. VELOCITY Industry platform 1. SCOPE Suppliers Customers 1. SYSTEMS IMPACT 3th party platforms 3th party logistics Source: 10

11 Technologies that shape the digital age The breadth and depth of these changes herald the transformation of entire systems of production, management, and governance. What are we talking about? 1. VELOCITY Mobile Internet, cloud Technology 1 Processing power, Big Data 2 New energy supplies and tech. 3 Internet of things 4 Sharing economy, crowdsourcing 5 1. SCOPE Robotics, autonomous transport 6 Artificial intelligence 7 Adv. Manufacturing, 3D printing 8 Adv. Materials, biotechnology 9 Current impact Impact Impact Impact SYSTEMS IMPACT Source: Future of jobs survey, World Economic Forum 11

12 Mobile Internet, cloud Technology 1 1 Monitoring 1000s of sensors Processing power, Big Data 2 New energy supplies and tech. 3 Internet of things 4 3 Decentralized energy production 9 Personalized medicine 7 Companion robot Pepper 2 Personalized policy Sharing economy, crowdsourcing 5 Robotics, autonomous transport 6 8 Fab-Lab local 3D printing Artificial intelligence 7 6 Self driving car 5 Social entrepreneurship Adv. Manufacturing, 3D printing 8 4 Parking monitoring Adv. Materials, biotechnology 9 Source: Proprietary 12

13 Customers have a different understanding of value Personal Real-time Everywhere 13

14 Businesses need to create value differently Failing to be personalized, real-time and everywhere implies inability to deliver value 14

15 To meet demanding customer expectations, businesses adopt digital means Better understand end-consumers needs Involve end-consumers in the value delivery process 15

16 In the digital age, consumers can create value in three ways An employee at a company Providing access through companies platforms Creating value independently 16

17 Digitalizing businesses destroys jobs Digitalization decreases the quantity of jobs Computer & Mathematical % Architecture & Engineering Management +.97 % % Business & Financial Operations Sales +.70 % +.46 % Installation & Maintenance -.15 % Construction & Extraction Art, Design, Entertainment, Sports & Media Manufacturing & Production % -.93 % % Office & Administrative Source: Future of jobs survey, World Economic Forum

18 Portugal Ireland Finland Norway Holland Greece United Kingdom Sweden Germany Spain Belgium Denmark France Austria Italy United States Digitalizing businesses destroys jobs Digitalization impacts the quality of jobs Lower-class jobs Middle-class jobs Upper-class jobs Source: Future of jobs survey, World Economic Forum 18

19 Digitalizing businesses creates jobs Digitalization leads to the emergence of new occupations Digitalization leads to new industries Web design Preventive, personalized medicine Data mining Video streaming Professional Youtuber Virtual reality Digital marketeer Food analytics & Tech App developer Corporate Wellness Source: Oxford, The future of Employment (2015) 19

20 New occupations and industries do not address job loss and polarization Todays new industries % of new industry titles % of US employment % with college degree Internet publishing, broadcasting and web search portals 85.7 %.06 % 69.6 % Online shopping 42.8 %.08 % 49.7 % Data hosting, processing and related services 32.0 %.08 % 48.0 % Online auctions 66.6 %.01 % 52.2 % Source: Berger & Frey (2014b) 20

21 In the digital age, competences drive performance. Enable employees to continuously develop skills and competences Subject knowledge Soft skills 1 Complex problem solving Subject knowledge acquired during the first year of a fouryear technical degree Critical thinking Creativity People management 5 Collaboration 6 Emotional intelligence 50% Outdated by the time students graduate Judgement and decision making Service orientation Negotiation 10 Cognitive flexibility Source: Future of jobs survey, World Economic Forum 21

22 In the digital age, soft factors drive motivation Motivate and inspire employees towards achieving the desired results - Pay - Promotion - Recognition - Self-development - Value engagement - Work-life balance Top-down control Joint purpose Source: Future of jobs survey, World Economic Forum 22

23 Why digital strategies fail Its not just about technology It is also a management and people challenge 77% Lack of having the right skills and competences to implement them 55% Lack of having the right organizational culture in place Source: Capgemini Consulting & MIT,

24 The Vision Map & The Action Map Action map Vision map Action map How to enhance pride How to exploit opportunities How to realize dreams Current situation Pride Opportunities Dreams Objective Disappointments Threats Nightmares How to beat disappointments How to prevent threats How to fight nightmares Vision 24

25 T H E D U A L N A T U R E O F L E A D E S H I P Why duo s work: Combining change and stability CHANGE LEADER Entrepreneurial leadership Strategic effectiveness Medium and long term Managing uncertainty MANAGER Executive leadership Operational efficiency Short and medium term Managing risk STABILITY 25

26 T H E D U A L N A T U R E O F L E A D E S H I P Two leadership archetypes CEO (Chief Entrepreneurial Officer) COO (Chief organizing Officer) OUTSIDE-IN Entrepreneurial profile and focusing on external communication INSIDE-OUT Organizational profile and focusing on internal communication EXPLORATION Changing the company by introducing innovations and ideas EXPLOITATION Organizing the company to bring stability while implementing innovations and new ideas SHAPING THE FUTURE Feedforward thinking based on a future vision BUILDING THE FUTURE Feedback thinking by combining former learnings with a changing context 26

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