Business model and strategic uncertainty

This article was written in collaboration with AS Thelisson (1) on the development of business models in a crisis situation. The article analyzes how a skillful handling of paradoxical imperatives and an unprecedented and creative combination of resources made it possible to move from a crisis situation and then withdrawal to a successful innovation strategy.



Business model and strategic uncertainty


In fact, the performance of companies depends above all on the adaptation of their business model (BM) to changes in the environment. However, their development requires a creative approach of several values, which makes the theory of the paradox particularly relevant in the study of the efforts in connection with their implementation. For Smith et al. (2010), BMs were designed to respond to the tensions that may result from inconsistencies or contradictions in the products/services provided or offered by the company, the market and/or the processes in which the organization operates. , the skills required in each strategic situation: hypergrowth, innovation, coopetition… According to the authors, these BMs necessarily become “complex” and must often unite exploitation and exploration and integrate different dimensions in their approach, as the strategy led by the CEO for Analog Devices. The latter has built an ambidextrous organization in order to continue to exploit its integrated analog semiconductor chips (at the time the market leader), while at the same time developing new digital signal processors and micro-electromechanical chips. Other complex business models can also be identified, especially in the case of companies with a social and societal vocation, when these have to combine paradoxical tensions between the search for social good and the achievement of sufficient profitability.


Our article mobilizes a real-time longitudinal study over nine months of the development of BM in an SME specialized in public communication, confronted with paradoxical imperatives linked to legislative changes (budgetary restrictions, new standards and regulations) and economic (decrease in demand, market). concentration). Faced with this new reality, the organization will have to evolve its BM by dealing with these constraints differently. The grid proposed by Smith and Lewis (2010) makes it possible to better understand how a company, based on another combination of paradoxical imperatives, can respond effectively to uncertainty.


Analysis of situation A and B

In situation A (use of a merger-acquisition logic), the company favors a BM based on an economic and organizational solution of the defensive type, which comes to sanction the poor performance of the competing target company and leads to the merger of two entities (search for critical size and cost savings). The approach and the associated behavior will here revolve around the triptych: performance – belonging – execution, based on a predictive type paradigm. The tensions at the heart of this first situation are linked to the planning of the merger and include three dimensions: economic rationality (performance), organizational stability (affiliation) and operational execution. In this first situation, the dynamic is mainly based on the search for critical mass and achieving cost synergy (performance/execution). BM is influenced by the acquirer’s (affiliation) model. Managing tensions takes place within a rational framework that aims to manage and control interactions.

In situation B, faced with a lack of results after 4 months, a new BM based on a culture of uncertainty is considered. It aims to respond to an unprecedented situation, allowing us to glimpse new solutions based on the issues of learning and performance. The nature of paradoxical tensions is of two types: experimentation (tensions linked to learning) and the belief in a dynamic but uncertain future (tensions linked to learning and the notion of achievement around new innovative approaches). The company decides to question its professional environment in relation to the customers, by moving from a national and regulated market (tender, tender, etc.) to a local market (tailored offer by mutual agreement), by becoming a key player in its regional ecosystem. This new combination of resources makes it possible to reposition the company, which manages to relaunch its development, in a completely new market both from a geographical point of view and in relation to the nature of the customers and the considered offer.


Thus, our study serves as a reminder of the importance for managers to become aware of the tensions that exist in the work for a better organization and combination of strategic resources that can develop over time. It empirically shows that these conflicting imperatives are at the center of the business transformation process and can provide the opportunity, by recombining these demands differently, to innovate business growth models in a VUCA environment. Assuming, of course, that you exhibit flexibility, humility and a significant amount of creativity…


References

This article is based on a research carried out jointly on the study of an SME faced with a crisis situation that has led to an evolution of its business model and its portfolio of resources. The results of this work have been accepted for publication in the journal Research in management science (rank 3 – FNEGE) and in the negotiations for the AOM conference in June 2021.


Note

(1) Anne-Sophie Thelisson is a teacher-researcher at ESDES — Lyon Catholic University. His work focuses on public-private mergers, particularly in the context of mergers and acquisitions, alliances and strategic partnerships. She is particularly interested in the institutional logics that operate during external growth operations involving public and private actors. His studies focus on the inter-organizational and intra-organizational dynamics during mergers and acquisitions, and more specifically on the integration phase. His work has been published in journals such as Revue Française de Gestion, European Business Review, International Review of Administrative Sciences and Management Decision.





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