TOWARDS THE FUSION STRATEGY - MAKING THE NOT EVIDENT, EVIDENT:
Alvaro Reynoso
Director PCAinnovation - Presidente GT TC279 ISO 56000 - Chairman Advisory Group (CAG) ISO56000 - Director IMSP Global - Premio Nacional a la Innovación 2020 - Director del InnovaHub de la Agroindustria Azucarera
INTRODUCTION - THE FUSION STRATEGY
How are they similar to a Gatorade, a Urin, an Orange Cutter Drone, an Agricultural Tractor? All are transforming their competitive approach from physical assets to digital assets thanks to the Merger Strategy.
The Merger Strategy is transforming the old systems of measurement and execution of strategy of organizations, towards a focus on "non-obvious measurements" or measurements that were not possible before to be measured, also called "intelligent KPIs", making us forget the typical names of OKRs or MCIs or KPRs that only measure what their industry already measures (convergence of measurements) focusing efforts on monitoring and making decisions based on Measurements that maintain the "status quo" and do not give competitive advantage.
New technology is making the false prophets of strategy design and execution obsolete, as more and more organizations are transforming their measurements from a focus on data generated around "physical assets" to data from "digital assets of information" based on three profound and irreversible changes in today's world or what we know today as the "Fusion Strategy – How Real-Time Data and AI will Power" the Industrial Future, Vijay Govindarajan, HBRP. March 2024-)".
We can conclude that the Fusion is obtained thanks to the integration of Technological Convergence, Prediction Algorithms and Artificial Intelligence (F = CT x AP x AI).
In his book, Govindarajan states that: "By adopting a merger approach, companies can improve the value of their offerings to customers and develop innovative new products, novel services, and entirely new ways of solving problems. Ultimately, the combination of AI, real-time data, and prediction algorithms will lead to a new generation of business models that will drive products, strategies, and customer relationships. If companies adopt merger strategies, they will be able to capture incredible new value. If they don't, they'll be left behind."
TOWARDS NON-OBVIOUS MEASUREMENTS
In our third book of the "Diamond of Organizational Excellence" – in a world of Agility, Change and Disruption – we refer to the non-obvious measurements:
In the Diamond 3rd Edition we refer to non-obvious measures such as: "As with the definition of strategy, where we seek differentiation and competitive advantage, we can ask, what competitive advantage will we have if we measure what the industry and our competitors already measure? Generally, both senior leaders and employees in the organization are imprisoned by "chains of behavior" or managerial paradigms, which create limitations of knowledge and technology. This makes us imperceptible towards finding new different ways to generate measurements that allow us to improve and innovate our performance.
Measurements today follow the pattern of measuring what we do today, what is common and what the industry already measures, that is, more of the same or what in measurement we call "convergent decisions", that is, with equal measurements, decisions converge or do not allow competitive advantage, which represents the main problem of differential advantage and exponential growth in performance. To obtain competitive advantage we need to ask ourselves: what should we measure that we do not measure today?, what measurement is not common?, what measures would give us competitive advantage? We call these predictive measurements non-obvious.
Most of the performance measures that organizations use today are benchmarks or industry standards. How much can we improve what we already control? It's almost like asking questions for the answers we already have. Instead, we need to ask tough questions to find new predictors or non-obvious predictors that drive creativity, innovation, and impact expected outcomes. For example: what could we measure and control, that we do not control today? What measurements could have a big impact on our results, which we don't measure today? What really gives us competitive advantage, differentiation and high results is to look for measurements that lead us to answers that we do not have today.
"Non-Obvious Measurements" Are Not New, But Today They Are Key to the Strategy, Competitive Advantage, and Future of Organizations The concept of "non-obvious measurements" refers to the idea that some properties or phenomena cannot be measured directly with our conventional senses or instruments. In fields such as quantum physics, for example, we find subatomic particles whose properties are not directly observable, but are inferred through indirect effects. It's a fascinating topic that challenges our intuition and leads us to explore the limits of what we can know.
A TIRELESS SEARCH TO MAKE THE NON-OBVIOUS EVIDENT:
The search for non-obvious measurements dates back to the entire history of humanity, derived from the need to find data and information that allow us to explain complex phenomena, in order to make them visible to make decisions that allow us to "improve performance exponentially". For this reason, "non-obvious measurements" are an interesting topic. Although we usually rely on our senses and measuring instruments, there are situations in which we cannot directly observe certain properties or phenomena.
For example: blind people, those who are born without the ability to see, develop a perception of the world through other senses, such as touch and hearing. Their imagination and mental construction allows them to create a complete world from the construction of special skills.
Science is always on the lookout for "non-obvious measurements," this refers to the idea that some properties or phenomena cannot be explained (measured) directly with our senses or conventional instruments. In fields such as quantum physics, for example, we find subatomic particles whose properties are not directly observable, but are inferred through indirect effects. It's a fascinating topic that challenges our intuition and leads us to explore the limits of what we can know, which drives discovery and innovation.
TECHNOLOGICAL CONVERGENCE, PREDICTION ALGORITHMS AND ARTIFICIAL INTELLIGENCE - THE KEYS TO "NON-OBVIOUS MEASUREMENTS"
Today, thanks to sensors, the Internet of Things (IoT), augmented reality, artificial intelligence, robotics, 5G communication technology and other cutting-edge technologies, we can measure and make visible what was previously unmeasurable or not obvious. For example, in sports we can now evidence aspects such as: sleep quality, temperature, heart rate, dehydration, weight, among other variables.
Non-obvious predictive factors answer questions such as: which critical performance factors should we control, which ones have we not yet controlled?, and if we could solve this, it would surely allow us to have information that would generate greater knowledge to "make better decisions" and cause a great impact on the expected results. It is here that innovation, technological convergence, prediction algorithms and artificial intelligence solve this enigma and make it clear to us what was previously impossible to measure, visualize and make decisions about these aspects, which we know today as "digital information assets" or "intelligent KPIs".
THE FRONTIER OF DIGITALIZATION
To get out of these chains of performance created by the "convergence of measurements", which imprison organizations and do not let them leave their "status quo", you must understand the future and the competitive advantage in a digital world.
Many organizations have embarked on a digitalization process through the belief that digitizing is buying software or ERPs, decisions of enlightened people who what they do is "maintain the status quo", doing the same thing, a little faster, cheaper or of higher quality, but being strategically exposed to anyone who does something different or disruptive and be left behind in competitiveness. until leaving the market, the Netflix versus Blockbuster effect.
Recommended by LinkedIn
In addition, they indicate that companies are now with advances in hardware, software, applications, cloud, data, algorithms, generative artificial intelligence (Gen AI), mixed reality, and other technologies on the horizon. These technologies, individually and in combination (convergence), are poised to reshape the global economy. And while these technologies pose a threat to profitability, they will also be the biggest driver of how value creation and capture evolves in industries around the world.
The frontier of digitalization is represented by fusion, which is a future state in which industrial products merge with sensors, software, and real-time telematics functionalities through the seamless convergence of physical and digital domains. This allows improving the productivity of industrial assets and offering customized approaches to solving business problems with algorithms that make use of the data observed in different environments. At this frontier, industrial companies distinguish themselves not only by designing and supplying brilliant machines, but also by ensuring that their machines meet the specific needs of individual customers. At this fusion frontier, many more things could be encoded in the future, such as health and well-being records, data on the functioning of energy networks, maps of transportation in cities, occupancy of commercial and residential buildings, information on agriculture and livestock, distribution of food and supplies, and so on.
MOVING FROM PHYSICAL ASSETS TO DIGITAL ASSETS
As we mentioned before a Gatorade, a Urinary, an Orange Trimmer Drone and an Agricultural Tractor, they are all transforming their competitive approach from physical assets, towards digital assets, thanks to the Merge Strategy.
The first example of Fusion Strategy and non-obvious measurements is represented by the innovation platform "Gatorate Gx", which focuses on improving the performance and health of an athlete. The Gx platform is powered by data from a digital application obtained by a smart bottle with a sensor that measures the hydration level of each athlete and a sweat patch that calculates the amount and elements found in sweat. The information, collected in real-time, is sent to a tablet where the technical team uses this data to monitor the hydration of the players with high accuracy.
The hydration process through the Gx platform works as follows: the athlete is weighed before practice and recorded in the system containing the digital scale. During training or matching, the player consumes the Gx from a bottle with a smart cap. The technical team monitors the consumption of each athlete in real time and can adjust the hydration level instantly, depending on the athlete's sweat profile. After the match or training, the player is weighed again and the cycle continues to allow for optimisation of hydration and performance (RunMX, 2016).
With this innovation, Gatorade entered the world of wearables with a patch that measures sweat and hydration known as the "Gx Sweat Patch." This single-use patch is placed on the forearm before exercising and analyzes sweat as the routine progresses. Create a profile based on sodium loss, workout intensity, and body weight. Users will be able to analyze their results through an app that performs a patch scan with a smartphone camera. The Gx Sweat patch measures fluid loss, sweat rate per hour, and sodium level.
Depending on the results, the app will suggest the amount of protein and fluids that should be consumed in the next few hours, as well as a series of tips for recovery.
A second example of the Fusion Strategy and non-obvious measurements are the smart urinals developed by my friend Jordi Ferre, who was researching how to apply biosensors to the monitoring of people's well-being and health, they developed the first smart urinal so that people can be monitored through the real-time analysis of their urine, thus giving birth to the company Kamleon. This potty is capable of measuring people's hydration level in real time and showing the results instantly on a screen installed in the same bathroom, as well as in an app. Kamleon focuses on creating a unique user-centric technology that integrates seamlessly with our everyday lives. Technology that enhances the human experience to help people feel their best physically, mentally, and emotionally every day.
A third example of the Fusion Strategy and non-obvious measurements is the John Deere heavy equipment factory, which is preparing for a digital future through innovations such as its "See & Spray" device, which will revolutionize the use of herbicides by moving from bulk spraying to "targeted spot" spraying. The self-propelled device uses a large carbon fiber boom lined with thirty-six cameras that scan at incredible speeds. Powered by ten vision processing units that handle four gigabytes of data per second, this system uses deep learning to distinguish crops from weeds. Once a weed is identified, an order is sent to kill a nozle even as the sprinkler moves across the field at a speed of up to fifteen miles per hour. While the initial versions detected only green weeds in bare fields, the most recent version detects weeds of any color next to crops. The result: customer profits increase while herbicide use is reduced by 60 percent.
The latest example of a Fusion Strategy and non-obvious measurements is the use of drones with artificial intelligence to cut oranges. Losses due to crop failures or lack of human resources to carry out tasks in the field seem to be left behind in Israel. The company Tevel Aerobotics Technologies has developed technology based on Artificial Intelligence (AI) using drones for fruit harvesting and harvesting work. These are autonomous flying robots (FAR) that take off from a base station, pick only the ripe fruit from the tree, which is selected thanks to AI cameras that select only the oranges ready to harvest and gently lower it to pick it.
With these four examples—a Gatorade X, a smart urinal, an autonomous flying robot (drone), and an agricultural tractor—we see that all of them are transforming their competitive approach from physical assets to digital assets by using the Merge Strategy and making non-obvious information evident.
Similarly, many sectors are already using non-obvious information thanks to technology. Industry 4.0 or precision agriculture are just examples of the use of technology and innovation to provide non-obvious information that enables significant improvements in performance, better results, and competitive advantage and differentiation, at least until competitors can copy or acquire it.
CONCLUSIONS
The future is to move from physical assets to digital assets, and this is achieved thanks to the integration of technological convergence, prediction algorithms and artificial intelligence, integration that now provide us with information on "non-obvious or non-obvious predictive measurements", allowing a Fusion Strategy, that is: to move from "physical assets" to "digital assets", which will be the next "strategic turning point" worldwide.
According to: "The Future of Strategic Measurement- Enhancing KPis With Al, M. Schrage, D. Kiron, F. Candelon, and M. Chu, MIT, February 2024", organizations that manage to generate "digital information assets", making visible thanks to the technology of today's world, their "non-obvious or non-obvious measurements" have an impact on their results of:
__________________________________________________________________________________________________
ABOUT THE AUTHOR:
ÁLVARO REYNOSO, is CEO of the company PCAinnovation, which operates strategy, data, innovation and performance excellence projects in Latin America. He is Global Director of Innovation Management System Professionals – IMSP in the United States. He is president of the Guatemalan mirror team for ISO56000 regulations, the GT TC279. He holds a Master's degree in Business Administration from EAE Business School in Spain and a Master's degree in Productivity and Quality from the University of Miami. He is a certified evaluator for the U.S. Malcolm Baldrige National Quality Award for Quality and Management Excellence. He is certified in the Orange Belt in Innovation Management System under the ISO 56002 and ISO56001 standards and in the Black belt and lead auditor in the Innovation Management System under the ISO 56002 and ISO 56001 standards, by the Innovation Management System Professionals - IMSP. For 10 years he was director of the Business School of the Francisco Marroquín University of Guatemala, 20 years as Professor of the MBA programs of Texas A&M and now he is Professor of Innovation Management Systems at the Business School of the University of the Pacific of Peru, in San Francisco Quito. at the Catholic University of Chile and at others in Latin America. He has more than 20 years of experience in consulting and coaching in: strategy, high performance, planning and innovation.
He also has extensive experience in incorporating projects related to Innovation Management throughout Latin America: strategic innovation planning, innovation leadership and competencies, innovation culture, high-performance innovation teams, open innovation, idea management, design thinking, jobs to be done, intellectual property, innovation project portfolio, agile innovation, creation of innovation ecosystems and implementation of innovation management systems under ISO 56002 and ISO56001. He was a member of the global team that designed the ISO56002 standard and is now a member of the global design teams of the ISO56001 (Innovation Management System), ISO56008 (Operational Measurements of Innovation) and 560009 (Application Cases of Operational Innovation Measurement Systems) standards.
He wrote the trilogy of books on Strategic Management System, titulada el "Diamante de la Excelencia Organizacional": 1ª Edición (Editorial Santillana de Chile 2.009); 2nd Edition (Editorial Cengage Learning of Mexico and Chile 2.013) and in 2024 they published together with Professor Antonio Kovacevic, the 3rd Edition of the "Diamond of Organizational Excellence -in a world of Agility, Change and Disruption" (Editorial Contenidos Digitales de Colombia, 2024). In 2020 he was part of the PCAinnovation team that won the national innovation award for applications in augmented and mixed reality and now in 2023 he was part of the team that won the IDB award as the best agricultural innovation hub at the level of all crops in all of Latin America.