Invited by the Actua initiative, Professor of Information Systems at IESE, Josep Valor, gave a conference Monday on strategies for success and failure in the digital era. Having exposed his ideas to a cluster of innovation attended 75 participants; we could discuss with him many tools to understanding some business’ success and failures, as well as the strengths and weaknesses of Andorra at the time of further promoting economic activity.
In this sense, Valor highlights the role of clusters as a great initiative to observe the growth prospects from initial awareness of all Andorran actors, obtaining synergies and promoting cooperation to develop different activity sectors.
How can we succeed today in the context that you and other experts described as ‘ the digital age’?
There are many things to do, but three of them essentially. One is to understand the younger generation and learn what they expect and how they behave, ie look at what society wants. Another factor is to understand the business in which you want to enter, and how you will proceed. And a third thing is to understand the new technologies and how to use them. And all these three things must be done simultaneously .
What are the main mistakes that make a strategy in this area represents a complete failure?
A fundamental error is to enter a business unknown for us. And another typical error with difficult solution is that traditional companies find it hard to dismiss those parts of the business that are obsolete before the new technology. Then, new players do much better or much cheaper things and we end up falling behind by not reinventing our business, even though we were good. And we do not reinvent since we keep on milking the cow until the cow dies. Instead, we should have acted sooner. It would have been traumatic, but at least many companies would still exist nowadays. In many cases companies disappeared because they didn’t make the necessary transition at the right time.
Can you give us some examples of successful companies that have managed to reinvent their businesses?
For example , if we consider the field of newspapers, the New York Times is now selling subscriptions mixed with a few free news and if you want more you have to pay at a given time, so they are selling Sunday newspaper subscriptions and digital subscription weekday, which is the most successful product . And this has not led to a drop in advertising. Although selling fewer newspapers weekday in paper format, they still provide the digital version. Maybe advertising in the digital version is paid less than advertising on paper, but they have remained well subscribing sunday and this is a successful model. They are the best newspaper at this time, and managed to reinvent relatively well even if the process was hard.
But this reinvention can sometimes be difficult…
Yes. Take for example the case of record companies, none of them created a branch of organizing concerts. They actually did afterwards, but too late. Should they have done at first, when they had all the money and contracts with artists, no doubt they would be leaders. But instead, they focused on selling plastic, and weren’t able to change.
More positive examples?
For example, parcel carriers, which started buying trucks and planes and have now learned to track your shipment in real time and let you do many things that technology has been offering. Also Zara, who’s been largely evolving since Mr. Amancio Ortega started with 30 stores, increasingly using technology to connect with buyers, with the workshops, and delivering useful information to its stores about selling figures, and so forth.
Are clusters a good way to group business sectors and find synergies in areas such as innovation?
This is crucial to make people meet and work together, because industrial policies will only succeed by capitalizing your efforts in the industrial sector. You may help a little bit. The first step is always to pull what you have in your own country. Then you have to see what you have, what initiatives can have more growth and future, and adress few government resources in there. The first thing is to group people. There will always be synergies. And the lack of information, only brings negative impacts.
What do you think about Andorra, a country where the optical fiber reaches 100% of households, willing to position as a technology laboratory for tests?
My first though, without a deep knowledge, is very positive, because there is an operator that can recover the investment s done via prices, since he has no competitors. You cannot abuse it , because people would jump on, but this gives you enormous flexibility, so if you want to test a particular product, you can absolutely do it. This lab could test both the optical fiber or the 4G or whatever, as you have control over 100% of the a technological infrastructure, and you don’t find this situation elsewhere. Therefore, I think it’s a good idea to test in this field.
In the phase of economic openness and building a model to attract companies with high value added, do you consider Andorra has still room for improvement and make a step forward?
Look, if everyone spoke English in Andorra, we would be surely talking about something else. The location is good. The weather, in a way, is also fine. You have the ability to attract talent. You are two hours distance only from a spectacular airport and one hour from a small airport which is doing things. But in some ways, it would be hard for me to recommend someone to invest here if there is not a large amount of English speakers, which is important to find secretaries or any basic stuff that companies require. I know you already working on that. But it represents a huge effort, it’s a major problem, as we can see in Barcelona, although there good attempts to improve a bit in this regard.
Josep Valor is a member of the Board of IESE in charge of Executive Education. He is a Doctor of Philosophy (Operations Research) from the Massachusetts Institute of Technology, and Doctor of Sciences in Medical Engineering from Harvard / MIT Division of Health Sciences and Technology.