Part 10 – From multichannel to omnichannel
When many channels were no longer enough
Digitalization gave businesses more and more ways to meet customers. First came the website. Then the online store, email, search engines, social media, apps and mobile services. At the same time, the physical stores, telephone, customer service and other established contact points continued to exist. For businesses, this could look like a significant improvement. Customers had more choices and more places to meet the business.
But for the customer, a new problem arose. The channels were not necessarily connected. A customer could find a product online, but the store did not know what the customer had looked at. The online store could show that a product existed, but not necessarily whether it was actually available in the local store. Customer service could lack information about an order the customer had already placed digitally, and an offer in one channel could be unknown in another.
The business had digitized several touchpoints without necessarily digitizing the connection between them. This was multichannel. The next challenge was therefore not just to establish another channel, but to make the channels work together. This is where the development towards omnichannel begins.
Multichannel and omnichannel are not the same thing
The terms multichannel and omnichannel are often used interchangeably, but the difference between them is important. Multichannel basically describes a situation where a business meets the customer through multiple channels. It can have a physical store, website, online store, app, phone, email and social media. The customer can choose between multiple touchpoints, but the channels can still be organized as separate worlds.
Omnichannel represents a different ambition. The starting point is moved from the channels to the customer journey across them. The customer can start in one place and continue in another. She can research a product on her mobile phone, check stock status online, visit the store, get help from an employee, order an item that is not available locally, have it delivered to her home, and later contact customer service about the same order.
For the customer, this is one continuous journey. However, the business may have organized the same journey between online store, store operations, marketing, logistics, CRM, customer service and IT. It is precisely this difference that makes omnichannel demanding. Multichannel is largely about how many channels the business has. Omnichannel is about how well the customer can move between them.
The customer does not necessarily think in channels
Much of the traditional organization of commerce and customer service has been built around the structure of the business. The online store could be one organizational unit, the physical stores another, and customer service a third. The customer has no reason to think the same way.
To the customer, the business is the same business regardless of whether the contact is via a mobile phone, on a website, in a physical store or with a human in customer service. If the customer has purchased a product from the business, it may therefore be felt strange if an employee later says that he or she cannot help because the product was purchased online. From the customer's perspective, the distinction is artificial. It exists primarily because the business has organized itself that way.
Omnichannel thus challenged not only the technology, but also the organizational chart. For the customer journey to be coherent, information, inventory, payment, logistics, customer data, employees and services must to a greater extent be able to function across organizational boundaries.
Omnichannel doesn't mean all channels should be the same.
It is also important to avoid a common misunderstanding. Omnichannel does not mean that the customer should get exactly the same experience in all channels. In many cases, that would be bad design.
A mobile phone can be perfect when the customer wants to quickly check stock status or find the nearest store. A large screen can be better when the customer needs to compare complicated products. The physical store can be best when the customer wants to see, try or feel the product. A competent employee can be important when the customer needs advice, while customer service can be the right point of contact when something has gone wrong.
The touchpoints have different properties. The goal is therefore not necessarily to make them identical, but to make them coherent. The customer should be able to use the strength of each touchpoint without having to start the entire journey over again when she moves on to the next one.
The smartphone was glued between the channels
The development we described in Part 9 about Mobile First had a major impact on omnichannel. The smartphone accompanies the customer throughout much of the day and can be present both before, during and after a physical store visit. The customer can research products at home, check stock status on the way to the store, read reviews in front of the store shelf, display memberships or offers at the checkout, pay digitally and track the delivery afterwards.
Thus, the mobile phone became a link between the digital and the physical world. The old notion that online shopping and physical shopping were two separate, competing channels became increasingly irrelevant. The same customer could use both within minutes. The question therefore no longer simply became whether the purchase took place digitally or physically, but how the different touchpoints together contributed to the purchase and the customer experience.
Click & Collect made the connection visible
One of the easiest ways to understand omnichannel is Click & Collect. The customer searches and orders digitally. Inventory information is linked to the order. Employees in or around the physical store find and prepare the item. The customer receives a digital notification that it is ready, while the actual delivery takes place physically.
This makes it difficult to describe the service through a single channel. It includes e-commerce because the customer orders online, physical commerce because the item is picked up in the store, and logistics because the item has to be found, picked, and prepared. From the customer's perspective, this is still one service.
Click & Collect therefore illustrates why omnichannel is more than marketing. For a seemingly simple customer journey to work, online shopping, inventory data, store, employees, payment, communication and logistics must work together.
Williams-Sonoma – the physical store didn't disappear
Williams-Sonoma, Inc. is a particularly interesting example because the company’s history spans from traditional brick-and-mortar retail and catalog sales to e-commerce and today’s digital commerce model. Digitalization did not necessarily make the brick-and-mortar store obsolete. Instead, the role of the store could change.
Williams-Sonoma today describes itself as a digital-first, design-led retailer. At the same time, the company has consolidated responsibility for stores and customer service under the same management and emphasizes, among other things, in-store experiences, in-home advice and the use of digital tools in customer meetings. This illustrates how digital services, human advice, customer service and physical stores can be part of a larger system around the customer.
The physical store does not have to be the opposite of the digital business. It can become an integral part of it. A store can be a place for shopping, but also for inspiration, advice, product experience, service, collection and return. The digital channel can also make the store more relevant by providing the customer with information before the visit and making it possible to continue the journey afterwards. The goal of digitalization therefore does not have to be to replace the physical point of contact. It can also increase its value. Also read the article about Williams Sonoma here on the invisible capital.
Norrøna – when the employee's competence moves between the channels
The Norwegian company Norrøna provides another very concrete example. Norrøna connects online and physical stores through services such as Click & Collect and home delivery from the store. This allows the customer to start the journey digitally, while the physical store has a role in fulfilling the order.
Even more interesting is Norrøna's digital personal shopping. The customer can contact a physical Norrøna store and receive personal help in finding products. The employee's product expertise can thus be made available to a customer who is not physically in the store, while the products can later be sent to the customer.
Something fundamentally important is happening here. The knowledge of the store employee is no longer necessarily limited by the four walls of the store. Technology makes human expertise available through a digital point of contact. This is a different form of digitalization than self-service and automation. Technology does not necessarily remove humans from the customer journey, but can expand the reach of human expertise.
For a company that sells technical products for skiing, mountaineering, outdoor activities and other activities, this can be particularly valuable. The customer not only needs access to a product, but may also need knowledge about which product suits their needs. Norrøna's physical stores can also offer functions and services beyond the transaction itself. This makes the distinction between online store and physical store less interesting than the question of how the company's combined resources can create value for the customer throughout the entire journey.
IKEA – when the customer moves between home, mobile and the store
IKEA gives us a third example because the company has a customer journey where digital and physical touchpoints can be very clearly combined. The customer can use the website at home for inspiration and planning, research products and availability, and later move on to a physical store or a pickup solution. At the same time, the mobile can follow the customer through several parts of the journey.
Click & Collect makes the connection particularly clear. The customer places items in the digital shopping cart, selects an available pickup solution, pays and is later notified when the order can be picked up. The digital order and the physical point of contact are thus part of the same service.
Again, it's difficult to fit the entire customer journey into one traditional channel, and that's exactly the point. The customer doesn't need to care which organizational unit owns the different parts of the process as long as the whole thing works.
Inventory became part of the customer experience
Omnichannel also made information that was previously primarily internal directly relevant to the customer. Inventory is a good example. When a customer researches a product digitally before visiting a physical store, the information about where the item is located becomes part of the service itself.
If the website says the item is in the store and the customer goes there without finding it, the problem is not just logistical. It’s a customer experience problem. The quality of inventory data, product information, and system integrations becomes visible to the customer.
This illustrates a larger principle of digitalization: Internal processes that might previously have been hidden behind the organization of the business become a direct part of the customer experience when connected to digital services.
Returns show how integrated the business really is
The same goes for returns. It’s relatively easy to create the impression of a seamless customer journey as long as everything goes according to plan. The real test often comes when the customer wants to change, return, repair or complain about something.
Can an item purchased digitally be returned physically? Can the employee find the order? Does customer service have access to the same information? Can the customer see the status? Does the business know where the item and payment are in the process?
Omnichannel is therefore not just about making the purchase easy. It is about creating coherence even after the purchase. This is often where the organizational and technical silos of the business become most visible.
Customer data had to follow the customer
To create coherence, customer information also had to be able to move between touchpoints. CRM systems, customer clubs, transaction data, online history, customer service and other data sources therefore became increasingly important.
But this also introduced an important limit. Just because a business can technically connect large amounts of customer data doesn't mean it should always do so. Privacy, consent, security, and customer expectations must be part of the design.
The good omnichannel experience is therefore not about the business knowing as much as possible about the person. It is about the business having the right information available when it is needed to solve the customer's needs, within legitimate and clear frameworks.
Organization is often the most difficult part of omnichannel
It’s tempting to treat omnichannel as a technology project, but many of the most difficult problems are organizational. If the online store is rewarded for digital sales and the stores are rewarded for physical sales, the question arises of who gets the credit when a customer researches an item online and buys it in-store. If a store ships an item to the home of a customer who started the journey on the website, the same problem can arise. If customer service discovers a recurring issue, the business must also have mechanisms to ensure that this knowledge reaches product development, e-commerce, or the store.
Questions like these reveal why omnichannel is ultimately about more than channels. It’s about how the business organizes itself around customer value creation. Technology can connect systems, but if the organization continues to optimize each channel in isolation, the customer experience can remain fragmented.
The employee becomes part of the digital infrastructure
The Norrøna example points to something that is easily overlooked when discussing digitalization: the employee is also a point of contact.
An experienced store associate may possess product knowledge that no product page can fully replace.
A customer service representative can understand a problem that doesn't fit into a standard form. An advisor can ask questions the customer didn't know she should ask.
When digital systems give these people access to relevant information and make their expertise available across touchpoints, technology can amplify human value creation. Digitalization therefore does not have to mean removing humans from the process. It can mean giving humans better tools and greater reach.
From channel strategy to customer journey
The evolution from multichannel to omnichannel represents a bigger shift in thinking than the terms might suggest. Multichannel starts lightly with the business and asks which channels it should be present in. Omnichannel starts more with the customer and asks what the person is trying to get done, and how the touchpoints together can make this easier.
It shifts the focus from the channel to the journey. The website is not the destination. The app is not the destination. The store is not the destination. Customer service is not the destination either. They are tools that can be combined in different ways depending on the customer's needs.
Value arises when the customer is able to solve their need.
The best channel may be multiple channels
The history of digitalization could long be described as a series of new channels. The website came alongside the store. The online store came alongside the website. The mobile phone came alongside the PC. Social media came alongside email and traditional media.
Omnichannel challenged this very way of thinking. The customer does not live in channels. She lives a life where digital and physical touchpoints are used as needed. She can start on Google, continue on her mobile, visit a store, talk to a human, order digitally, have the item physically delivered, and later contact customer service.
For the business, this journey may involve many different systems and organizational units. For the customer, it is still one experience.
Omnichannel is therefore ultimately not about being everywhere. It is about making the business connect where the customer actually moves. As more and more of these touchpoints simultaneously became digital, the journey could be recorded, analyzed and attempted to be understood in ever greater detail. Thus, the story of digitalization moves on to the next major development: ➜ the data that began to tie the digital business and the customer journey together.
Academic background and further reading
This series also builds on my own professional journey through the Web Design study , the eMarketing study , Innovation and Commercialization and professional seminars in San Francisco and Oxford . Here you will find the background, professional environments and experiences that have followed the development from the early years of the web to today's digitalization.
Recommended literature
The literature presented here spans several disciplines and periods. The books provide perspectives on digitalization, innovation and strategy , and show how technology, markets, organizations and people have been understood and developed over time. Some of the works are classics, others represent newer academic perspectives, but together they provide a useful basis for further in-depth study of the topics we work with at The Invisible Capital .
The Long Tail: Why the Future of Business Is Selling Less of More
Author(s): Chris Anderson
Short review
The Long Tail is one of the most influential books on how the internet has transformed commerce, marketing, and consumer behavior. Chris Anderson introduces the theory of the “Long Tail,” which explains how digital markets enable significant value creation through a large number of niche products, rather than relying on a few bestsellers.
The book shows how digital distribution, low inventory costs, search engines, and intelligent recommendation systems have made it profitable to offer an almost unlimited product range. Where traditional stores were limited by physical shelf space, online stores can offer millions of products and let customers find exactly what they are looking for.
Chris Anderson illustrates the theory with examples from Amazon, Netflix, Google, and the digital music industry, showing how the internet has changed the rules of competition for businesses around the world. Many of the insights have since become even more relevant through artificial intelligence, personalization, and modern search technology.
The authors take the reader through the entire process – from planning and organizing to publishing, managing and continuously improving content on websites and digital services. Although technology has evolved since the book was published, the principles of quality, relevance, management and long-term content work are at least as relevant in an era where search engines and artificial intelligence assess the credibility and usefulness of content.
Why we recommend the book
At The Invisible Capital, we consider The Long Tail to be one of the most important books in e-commerce, digitalization, and modern value creation.
The book explains why customers no longer just buy the most popular products, but increasingly find value in specialized products and services that meet individual needs. This insight has had enormous impact on the development of online stores, digital marketplaces, search engine optimization (SEO), information architecture, and content strategy.
Today we see that the theory also fits very well into the development of artificial intelligence. AI helps people discover relevant content, products and knowledge that were previously difficult to find. This has given the Long Tail principle a new dimension, where well-structured content and high professional quality are increasingly important for visibility, trust and value creation.
This is a book we believe everyone who works with e-commerce, digital marketing, customer experience, innovation, digital strategy or artificial intelligence should read.
Content Strategy for the Web (2nd Edition)
Author/authors: Kristina Halvorson and Melissa Rach
Short review
How do you create content that actually helps people – and at the same time supports your business goals? Content Strategy for the Web is considered one of the most influential books in the field of content strategy and digital communications. The book shows how good content does not arise by chance, but through a deliberate strategy where user needs, the organization's goals, structure, work processes and management are closely linked.
The authors take the reader through the entire process – from planning and organizing to publishing, managing and continuously improving content on websites and digital services. Although technology has evolved since the book was published, the principles of quality, relevance, management and long-term content work are at least as relevant in an era where search engines and artificial intelligence assess the credibility and usefulness of content.
Why we recommend the book
At The Invisible Capital, we believe that good content is one of the most important forms of invisible value creation. A website is far more than design and technology – it is the content that builds trust, creates great customer experiences and helps people find the answers they are looking for.
This book is perfect for leaders, communications consultants, content producers, web editors, UX designers, and anyone working with digital services. It shows why a clear content strategy leads to better user experiences, more effective interactions, and stronger digital results over time.
In an era where artificial intelligence is increasingly important in how information is discovered, understood, and communicated, this book is more relevant than ever. It reminds us that technology alone never creates value – it is good, structured, and relevant content that makes the difference.
Don't Make Me Think
Author: Steve Krug
Short review
Don't Make Me Think is one of the world's most influential books on usability and web design. Since its first edition in 2000, the book has helped designers, developers, content producers, and managers understand a simple but powerful principle: Good digital services should be intuitive. The user should be able to complete their task without having to stop and think about how the website works.
Why we recommend the book
This is one of the books that has had the greatest impact on my own work with digital services. Over the years – from SAS and the Norwegian Opera & Ballet to working on Bærum Municipality’s website – the principles in this book have been an important reminder that technology is never an end in itself. The goal is to make everyday life easier for the people who use the services. Despite the fact that the book was published many years ago, the message is just as relevant today.
Internet Marketing & eCommerce
Authors: Ward Hanson and Kirthi Kalyanam
Short review
Internet Marketing & eCommerce provides a thorough introduction to how the internet has changed marketing, commerce, and business development. The book combines theory and practical examples in digital marketing, e-commerce, customer behavior, value creation, and digital business models. Although written at a time when the internet was still in its infancy, many of the fundamental principles are still highly relevant.
Why we recommend the book
This book was an important part of my own learning journey in digital marketing and e-commerce. It helped build my understanding of how technology, customer experiences and business strategy are interconnected – an insight that later became very important in my work with SAS, the Norwegian Opera & Ballet, Bærum Municipality and eventually the project The Invisible Capital. Many of the ideas about customer value, digitalization and innovation presented on the website have their roots in the knowledge this book conveys.
The Innovator's Solution: Creating and Sustaining Successful Growth
Authors: Clayton M. Christensen and Michael E. Raynor
Short review
In this sequel to The Innovator's Dilemma, Clayton Christensen shows how businesses can translate innovation theory into practical strategy. The book explains how companies can identify new growth opportunities, develop disruptive innovations, and build organizations that thrive in rapidly changing markets.
Why we recommend the book
While The Innovator's Dilemma explains why established businesses are often challenged, The Innovator's Solution provides concrete advice on how to meet the challenges. The book is therefore a natural next step for anyone who wants to understand innovation, strategy and long-term value creation.
The Innovator's DNA: Mastering the Five Skills of Disruptive Innovators
Authors: Jeff Dyer, Hal Gregersen and Clayton M. Christensen
Short review
What characterizes people who create groundbreaking innovations? The authors identify five key skills – observation, questioning, experimentation, networking and association – that are common to the world's most innovative leaders and entrepreneurs.
Why we recommend the book
This book shifts the focus from organizations to the people behind innovation. It shows that creativity and innovation can be developed through deliberate training and experience. The perspectives align well with the philosophy behind Invisible Capital, where human competence and curiosity are the most important drivers of development.
Competing Against Luck: The Story of Innovation and Customer Choice
Authors: Clayton M. Christensen, Taddy Hall, Karen Dillon and David S. Duncan
Short review
In this book, Clayton Christensen further develops the theory of Jobs to Be Done – the idea that customers do not primarily buy products, but "hire" them to solve specific needs. Through practical examples, the authors show how businesses can develop products and services that address customers' real-world challenges.
Why we recommend the book
For anyone working in customer experience, service design, and innovation, this is one of the most insightful books ever written. It reminds us that value creation always starts with understanding the people we are developing solutions for – a fundamental principle of Invisible Capital.
The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail
Author: Clayton M. Christensen
Short review
The Innovator's Dilemma is considered one of the most influential books on innovation and technological change. Clayton M. Christensen introduces the theory of disruptive innovation and explains why even the most successful businesses can fail when new technologies and business models challenge established markets. Through a series of examples, he shows how companies often focus on today's customers and incremental improvements, while overlooking innovations that later change entire industries.
Why we recommend the book
This is one of the books that has had the greatest impact on modern innovation thinking. When I first read it, it gave me a whole new perspective on why some businesses succeed in transformation, while others lag behind – even when they are well led. The insight has been an important part of my own understanding of digitalization, innovation and change management, and many of the reflections in The Invisible Capital build on the ideas Clayton Christensen presents in this classic. The book is as relevant today, in the face of artificial intelligence and digital transformation, as it was when it was published.
Open Innovation: The New Imperative for Creating and Profiting from Technology
Author: Henry Chesbrough
Short review
Henry Chesbrough introduced the concept of Open Innovation and changed the way many businesses think about research and development. He shows how companies can create more innovation through collaboration with customers, universities, start-ups, suppliers and other external partners.
Why we recommend the book
Open Innovation has had a major influence on modern innovation thinking and was also an important topic during the seminars in Oxford and San Francisco. The book shows why future value creation occurs in the interaction between people, businesses and knowledge environments – not within closed organizations alone.
Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant
Authors: W. Chan Kim and Renée Mauborgne
Short review
Blue Ocean Strategy challenges businesses to shift their focus away from fierce competition and instead create new markets with little or no competition. The authors present strategies and models that help organizations develop innovative products, services, and business models.
Why we recommend the book
This book has inspired leaders around the world to rethink strategy and innovation. Instead of competing for the same customers, it shows how businesses can create new value through creativity and differentiation. The perspectives align very well with the themes of innovation, digitalization, and long-term value creation in Invisible Capital.
Outside Innovation: How Your Customers Will Co-Design Your Company's Future
Authors: Patricia B. Seybold
Short review
Patricia Seybold shows how businesses can create better products and services by actively involving customers in the innovation process. The book describes how dialogue, co-creation and close collaboration with users can provide better solutions and stronger competitiveness.
Why we recommend the book
Customers often hold the most important insights into how products and services can be improved. This book emphasizes the importance of listening, involving, and learning from users – a perspective that is echoed in many of the articles on The Invisible Capital. Innovation rarely happens alone; it is created in the interaction between people.
Blown to Bits: How the New Economics of Information Transforms Strategy
Authors: Philip Evans and Thomas S. Wurster
Short review
This book analyzes how digital information is changing competitive conditions, markets, and business strategies. The authors explain how the internet is disrupting established structures and creating new opportunities for businesses that are able to think differently.
Why we recommend the book
Although written early in the internet revolution, the book describes many of the developments that still characterize business today. It provides valuable perspective on how digitalization affects value chains, competition, and innovation – themes that are central to Invisible Capital.
Wikinomics: How Mass Collaboration Changes Everything
Authors: Don Tapscott and Anthony D. Williams
Short review
Wikinomics shows how openness, sharing and collaboration across organizations create new forms of innovation and value creation. Through a number of international examples, the authors describe how digital networks make it possible to develop products, services and knowledge together.
Why we recommend the book
This book was groundbreaking when it was first published, and many of the ideas have since become a natural part of everyday digital life. The perspectives on collaboration, knowledge sharing, and open innovation processes align very well with the philosophy behind Invisible Capital, where people and networks are at the center of value creation.
The Competitive Strategy: Techniques for Analyzing Industries and Competitors
Author(s): Author: Michael E. Porter
Short review
Competitive Strategy is Michael E. Porter's classic work on how companies can understand the competition they find themselves in and develop a position that provides a basis for long-term profitability. Porter shifts the focus from the individual competitor to the structure of the entire industry and shows how competition is affected by customers, suppliers, new entrants, substitutes and the rivalry between existing companies. This forms the basis for what has later become known as Porter's Five Forces. The book is also about how companies can choose a competitive strategy on the basis of this analysis. It thus established an analytical language for strategy that has gained great importance in both research, teaching and practical strategy work.
Why we recommend the book
We recommend Competitive Strategy because it provides the analytical foundation for much of the thinking Porter later develops in What Is Strategy?. If a company is to choose a unique strategic position, it must also understand the competitive forces, the industry structure and the factors that affect the ability to create and retain value. The book is particularly useful because it reminds us that strategy is not just about internal goals, plans and ambitions. Strategy must be developed in the face of customers, competitors, suppliers, technology and structural changes in the market. Together with What Is Strategy?, the book therefore provides a much richer picture: First, the company must understand the competitive arena. Then, it must choose how to be different.
Competitive Advantage: Creating and Sustaining Superior Performance
Author(s): Author: Michael E. Porter
Short review
In Competitive Advantage, Porter moves the analysis from the industry to the business itself. The main question is how competitive advantage is actually created. One of the book's most important contributions is the value chain, where the business is understood as a system of activities that collectively develop, produce, market, deliver and support a product or service. Competitive advantage cannot therefore be understood only through products or overall strategies; one must examine the activities that create costs, differentiation and value. This understanding later becomes central to Porter's argument about strategic fit: the activities must not only be good in isolation, but also fit together and reinforce each other.
Why we recommend the book
We recommend Competitive Advantage because it brings strategy right down to where value is actually created: in the activities the business performs. This makes the book particularly relevant together with What Is Strategy?. When Porter argues in 1996 that strategy consists of performing different activities than competitors, or performing similar activities in other ways, this builds on the thinking he developed here. For our perspective on value creation, this is particularly interesting. Value does not arise because the business has formulated a strategy on a document, but through people, expertise, technology, processes, collaboration and activities that together enable the business to create something that customers value. The book therefore provides an important connection between strategy, competitive advantage and actual value creation.
The Competitive Advantage of Nations
Author(s): Author: Michael E. Porter
Short review
In The Competitive Advantage of Nations, Porter raises the perspective from business to countries, regions and business environments. The book is based on extensive studies of the competitiveness of ten leading trading nations and examines why certain countries and business clusters are particularly successful in certain industries. A central premise is that national prosperity is not simply something a country inherits through natural resources or other given conditions. It is created, and productivity, innovation, competence, competition and the quality of the environment in which businesses operate are crucial. Here, Porter also develops the well-known diamond model to explain how different national and regional conditions can interact and stimulate competitiveness.
Why we recommend the book
We recommend The Competitive Advantage of Nations because here Porter extends the strategy perspective to the ecosystem surrounding the business itself. Value creation does not occur in a vacuum. Businesses develop in societies with education, research, infrastructure, capital, suppliers, demanding customers, competing businesses and public institutions. This makes the book particularly interesting for understanding value creation as an interaction between people, businesses and society. It also provides an important corrective to the notion that a country's competitiveness can mainly be understood through low costs or access to natural resources. Innovation, productivity and the ability to continuously develop are far more central to Porter's explanation.
Understanding Michael Porter: The Essential Guide to Competition and Strategy
Author: Joan Magretta
Short review
Understanding Michael Porter brings together and explains the most important parts of Michael Porter's strategic thinking in one accessible whole. Joan Magretta herself worked on strategy at the Harvard Business Review and organizes Porter's ideas around two fundamental questions: What is competition, and what is strategy? She explains, among other things, the Five Forces, competitive advantage, the value chain, value creation, trade-offs, fit, and strategic continuity. This makes the connection between Porter's various works clearer than when the concepts are studied separately. The book also includes an interview with Porter.
Why we recommend the book
We recommend Understanding Michael Porter because it helps the reader see the whole picture of Porter's understanding of strategy. Porter is often reduced to the Five Forces or a few models used in isolation. Magretta shows why this is too simple. Competition, value creation, strategic positioning, trade-offs, activity systems, fit and continuity are interconnected. This makes the book a particularly good supplement after reading What Is Strategy?. It makes it easier to understand why Porter does not view strategy as a plan or a collection of goals, but as a coherent system of choices about how the business will create value and compete over time.
HBR's 10 Must Reads on Strategy
Authors: Harvard Business Review, Michael E. Porter, W. Chan Kim, Renée A. Mauborgne and more
Short review
HBR's 10 Must Reads on Strategy brings together some of Harvard Business Review's most influential writings on strategy. The original collection from 2011 features Michael E. Porter's What Is Strategy? as its main article and combines it with works on competitive forces, Blue Ocean Strategy, the organization's vision, business models, strategy execution, and the Balanced Scorecard, among others. The result is not one unified theory of strategy, but multiple perspectives on how organizations can develop, formulate, and execute strategy.
Why we recommend the book
We recommend HBR's 10 Must Reads on Strategy because it places Porter in a broader strategic context. After reading What Is Strategy?, it will be interesting to encounter other central perspectives and see how they complement, challenge, or extend Porter's understanding. The collection also shows why strategy cannot be reduced to a single model. Competitive position, choice, innovation, business model, execution, priorities, and measurement must be seen in context. For the reader who wants to move on from Porter and into the strategy discipline more generally, this is therefore a very good introduction.
Creating a Learning Society: A New Approach to Growth, Development, and Social Progress
Author: Joseph E. Stiglitz and Bruce C. Greenwald
Short review:
Creating a Learning Society examines how knowledge, learning, and technological development contribute to economic growth and long-term value creation. Joseph E. Stiglitz and Bruce C. Greenwald challenge the notion that economic development is primarily about accumulating more physical capital. They argue that society’s ability to create, disseminate, and apply knowledge is crucial to productivity growth and improved living standards. A key point is that learning does not only occur in schools and universities. It also occurs in businesses, through work, production, innovation, and the interaction between people and organizations. Knowledge can also spread from one business and one part of the economy to others.
The book thus provides an important perspective on why human capital, competence, innovation and learning must be understood as central parts of a society's ability to create value over time.
Why we recommend the book
We recommend Creating a Learning Society because it expands the understanding of what lies behind economic value creation.
Machines, technology and financial capital are important, but they do not create productivity growth alone. Behind the development are people who learn, develop knowledge, improve work processes, share experiences and find new solutions.
This makes the book particularly relevant to Invisible Capital and our perspective on value creation: A significant part of society's value-creating capacity is found in the knowledge, competence, and learning ability of the people who participate in the economy.
Stiglitz and Greenwald thus provide an academic foundation for one of the most important relationships in modern value creation:
The Value of Everything: Making and Taking in the Global Economy
Author: Mariana Mazzucato
Short review
In The Value of Everything, Mariana Mazzucato asks a fundamental question: What exactly is value – and who creates it? Mazzucato returns to the historical discussions of value in economics and shows how the understanding of value creation has changed. She challenges the notion that high income, high prices or large profits necessarily mean that correspondingly large values have been created. One of the book's most important contributions is the distinction between value creation and value extraction . Mazzucato examines the financial sector, the pharmaceutical industry, innovation and the public sector, among others, and argues that we must become better at distinguishing between activities that actually create new values, and activities that primarily extract values that have already been created.
The book also challenges the traditional notion that the private sector creates value while the public sector mainly consumes or redistributes it. Innovation and economic development often arise through a complex interaction between public investment, research, businesses, capital and people.
The Power of Creative Destruction: Economic Upheaval and the Wealth of Nations
Author: Philippe Aghion, Céline Antonin and Simon Bunel
Short review
The Power of Creative Destruction is about one of the most important drivers of long-term economic growth: innovation.
Philippe Aghion, Céline Antonin and Simon Bunel build on Joseph Schumpeter's classic idea of "creative destruction" – the process by which new technologies, businesses, products and ideas challenge and replace existing solutions.
But the book is not just about the disappearance of the old. The authors examine why some economies manage to create continuous innovation and productivity growth, while others stagnate. Competition, entrepreneurship, research, education, institutions and public policy thus become important parts of the explanation.
Creative destruction also comes at a cost. New technologies and businesses create opportunities and jobs, but can also make existing skills, tasks and business models less relevant. The challenge is therefore to create societies that both promote innovation and enable people to participate in the transition.
Why we recommend the book
We recommend The Power of Creative Destruction because it shows why innovation is a fundamental driver of value creation .
Value creation is not just about producing more of what we already produce. It also occurs when people develop new ideas, technology, and ways of working that enable us to solve tasks better than before.
This makes the book particularly relevant to The Invisible Capital. Behind innovation are people with knowledge, expertise, creativity and experience. But Aghion's perspective also shows that human capital must be part of a larger system where competition, institutions, research, investment and policy create the conditions for new ideas to actually turn into economic and social development.
The book thus provides an important context in our understanding of value creation:
Knowledge → new ideas → innovation → productivity growth → long-term value creation.
Institutions, Institutional Change and Economic Performance
Author: Philippe Aghion, Céline Antonin and Simon Bunel
Short review
Institutions, Institutional Change and Economic Performance is one of Douglass C. North's most important works on why some societies are more successful than others in creating economic development over time.
North shifts attention from traditional factors of production such as capital and labor to the institutions that shape how people, businesses, and governments act and cooperate. Institutions are society's formal and informal rules of the game – including laws, regulations, norms, traditions, and established ways of organizing interaction.
These rules of the game affect the incentives that people and organizations face. They also affect investments, knowledge development, cooperation, transaction costs, and which economic activities emerge.
North also shows that institutions develop over time. History therefore matters: Today's economic opportunities are influenced by institutional choices and development paths that can stretch far back in time.
Why we recommend the book
We recommend Institutions, Institutional Change and Economic Performance because it explains a crucial aspect of value creation that easily becomes invisible:
Value creation needs good rules of the game.
People may have knowledge. Businesses may have capital. Entrepreneurs may have great ideas. A society may have natural resources and advanced technology. But outcomes are also influenced by the institutions that determine how people can collaborate, invest, compete, make deals, and develop businesses.
This makes North particularly interesting for our understanding of trust as part of invisible capital. Trust is not the same as institutions, but stable rules of the game, credible agreements, and well-functioning institutions can reduce uncertainty and make economic interaction easier.
North thus gives us another important part of the value creation picture:
Institutions → predictability and incentives → cooperation and investment → productive activity → long-term value creation.
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