Porter on the Importance of AR in Strategy
Creating value through information translation.
For IT students, acronyms have long been the standard in describing technologies or concepts. But they can be confusing. And they can keep an individual from understanding the broader meaning of an idea you are trying to propose or an explanation you are trying to give.
AI, AR, VR, ML?
This article will dig deeper into Augmented Reality with the acronym "AR" and its importance in strategy. Similar sounding technologies such as Artificial Intelligence ("AI") or Machine Learning ("ML") are discussed deeper in this article but will not be of reference here.
In contrast to the other technologies mentioned, AR is primarily designed to integrate digital information with the physical world. This is different from Virtual Reality ("VR"), which is immersing someone fully in a "synthetic" virtual environment. A Springer publication from 2006 describes the concept of AR well as it says:
"In other words, AR is a system that enhances the real world by superimposing computer-generated information on top of it. VR technologies completely immerse a user inside a synthetic environment."
- (ed. Furht 2006)
The Importance of AR in Strategy
So why AR? The hype around the technology of AI, for example, according to Gartner, does not slow down. And indeed, it has tremendous potential (as discussed in this article of mine). But in the WOBI on Strategy Event last year (World Of Business Ideas 2020) and also in an HBR article (Harvard Business Review 2017), Prof. Michael M. Porter suggests that many companies could currently better focus on AR instead.
Why would Porter suggest this?
During the conference he held last year, he explained (World Of Business Ideas 2020).
One key issue with all these emerging technologies would be the growing amount of available information to us (World Of Business Ideas 2020). They provide us with a wealth of information and introduce options and opportunities. And while they are certainly welcomed and can improve our thinking, it is crucial to remember that humans process information differently (he cites smell, touch, visual, etc.) than computers (World Of Business Ideas 2020). We have to find a way to integrate information that is available into the real world. Today's solutions often do not offer this.
While navigating South Australia, Google Maps is our trusted navigation advisor. But we still have to project the information displayed into the real world - and sometimes we still take the wrong exit.
(Source: Simon Beuse, Adelaide, 2021)
The example used by Porter included GPS navigation systems such as Google Maps. While all the information necessary is displayed on our smart device (e.g., phone with Google Maps), sometimes, you might still find yourself guessing if you need to take this exit or the one 50m behind the current one.
It is you who has to interpret the information displayed in the real world. And sometimes, this can lead to confusion.
What is a better way? Integrating the information into the real world. Such as it is the case with Google Maps AR walking directions.
Currently being in Cairns, Australia I shot this short video right outside my hotel to demonstrate basic Google Maps AR walking directions.
(Source: Simon Beuse, Cairns (Australia), 2021)
Instead of having the user translate the information displayed into the real world to make decisions, projecting the data directly into the physical world reduces errors. And this is just one small example of how AR can be of benefit for companies.
Opportunities to Differentiate
Because of this overload of information, Porter identifies AR as a critical strategic component for companies (Harvard Business Review 2017). By integrating information into the physical world, new opportunities and product differentiation are possible along with the organization's entire value chain (Harvard Business Review 2017).
Are you in sales? You could create an application that puts your product into the physical sphere, not only telling but showing your customer how a particular product would exactly look like. Watch how IKEA did this recently, further differentiating them from the competition.
Are you in service? You could show your customer how to fix a problem. Through an AR device, you display which nobs to turn or what button to press. No need for a tedious phone call or complicated manual.
Are you in operations? Give your workers the information they need to fulfill actions efficiently, meeting the increasing demand for product individualization and more. As the worker in the head image of this article could use the information on where to best weld the metal stud for increased efficiency (fewer weld points) and higher security and stability (just enough weld points on crucial spots on the metal stud).
Many more examples exist, many are yet to be explored.
This is why AR is so important.
While the information we are holding in our hand's increases and what we can do (especially considering AI) with that information will grow continuously, AR is allowing us to better use that same information.
It can give you and your company the edge of competing with others (even though you never want to do this on the exact same dimensions as others (explained in my article here).
Thus, new strategic requirements need to be considered, which is why you should include them in your strategic development process.
I certainly didn't expect AR to be a considered a 'key' here. To be honest, I almost degraded the technology in my head to be too old to be that relevant. But going through the HBR article and following along during the conference of Porter made me realize its importance in the business world today – and how crucial it is to almost any company.
What do you think of Porter's suggestions as AR being one of the critical technologies companies should adapt in strategic thinking? Do you think it makes sense? Do you disagree? Let me hear your thoughts by contacting me or leaving a comment down below.
References
Furht, B (ed.) 2006, Encyclopedia of Multimedia, Springer-Verlag, New York.
Harvard Business Review 2017, Why Every Organization Needs an Augmented Reality Strategy, 17 November, viewed 12 February 2021, <https://hbr.org/2017/11/why-every-organization-needs-an-augmented-reality-strategy>.
WOS Seminar - Seminar Summary 2020, World Of Business Ideas.
