Business model and strategic uncertainty

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



Business model and strategic uncertainty


Indeed, the performance of companies depends above all on the adaptation of their Business Model (BM) to changes in the environment. Or their development requires a creative approach of multiple value, which makes the theory of the paradox, particularly relevant in the study of the stakes related to 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 delivered or offered by the company, the market and/or the processes in which the organization operates. , the skills required in each strategic situation: hyper-growth, innovation, coopetition… According to the authors, these BMs necessarily become “complex”, often having to reconcile exploitation and exploration and integrate different dimensions into their approaches, like the strategy led by the CEO of Analog Devices. The latter has indeed integrated an ambidextrous organization to continue to exploit its integrated analog semiconductor chips (then market leader), while at the same time developing new digital signal processors and micro-electromechanical chips. Other Business Model complexes can also be identified, particularly in the case of companies with a social and societal vocation, when these must combine paradoxical tensions between the search for social good and obtaining sufficient profitability.


Our article mobilizes a longitudinal study in real time over nine months of the evolution of the BM of an SME specializing in public communication confronted with paradoxical injunctions linked to regulatory changes (budgetary restrictions, new standards and regulations) and economic (drop in demand, market concentration). Faced with this new reality, the organization will have to have its BM evaluated, managing these constraints differently. The grid proposed by Smith and Lewis (2010) makes it possible to better understand, to comment from a different combination of paradoxical injunctions, a company can thus respond effectively to uncertainty.


Analysis of situations A and B

In situation A (use of a logic of merger-acquisition), 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 the two entities (search for critical size and cost savings). The approach and the associated behaviors 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 encompass three dimensions: economic rationality (performance), organizational stability (belonging) and operational execution. In this first situation, the dynamic is based in particular on the search for critical mass and the achievement of cost synergy (performance/execution). The BM is embodied by the model of the acquirer (belonging). The management of tensions takes place within a rational framework aimed at managing and controlling interactions.

In situation B, faced with the absence of results after 4 months, a new BM is chosen, based on a culture of uncertainty. It aims to respond to an unprecedented situation that allows us to glimpse new solutions based around the questions of learning and performance. The natures of paradoxical tensions are of two types: experimentation (tensions related to learning) and the belief in a dynamic but uncertain future (tensions related to learning and the notion of performance around new innovative approaches) . The company decides to question its professional environment in terms of customers, by moving from a national and regulated market (call for tenders, call for projects, etc.) to a local market (tailor-made 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 makes it possible to relaunch its development, in a totally new market both from a geographical point of view and in terms of the nature of the customers and the offer considered.


Our study thus serves as a reminder of the importance for managers to become aware of the tensions at work for a better organization and combination of strategic resources, which can be improved over time. It shows empirically that these contradictory injunctions are at the center of the business transformation process and can allow, by recombining these requirements differently, to renew business growth models within a VUCA environment. Provided, of course, that you demonstrate agility, humility and a significant amount of creativity…


References

This article is based on a research carried out jointly on the study of an SME confronted with a crisis situation, having 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 Sciences (rank 3 – FNEGE) and in the proceedings of the AOM conference of June 2021.


To note

(1) Anne-Sophie Thelisson is a teacher-researcher at ESDES — Catholic University of Lyon. 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 at work 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 the Revue Française de Gestion, European Business Review, International Review of Administrative Sciences and Management Decision.





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