Part 7 – From usability to UX
How humans became part of technology
The history of digitalization is often about machines. Processors became faster, storage capacity increased, networks improved, and software became more advanced. But each technological improvement also raised another question: How should humans understand and use increasingly complex digital systems?
A computer can work technically perfectly and at the same time be almost impossible to use. A website can contain the right information without the user finding it. An online store can have the item the customer wants, but still lose sales because the purchasing process is incomprehensible. A public digital service can automate a process and at the same time make the task more difficult for the citizen.
This gave rise to a fundamental principle in digitalization: Technology does not create value simply because it works. It must be able to be used by people for something that has value for them.
This perspective developed through several professional traditions. Human–Computer Interaction examined the interaction between humans and computers. Usability made usability a systematic field of study. Information Architecture attempted to organize ever-increasing amounts of information so that humans could understand and navigate them. User Experience gradually expanded the perspective from the actual use of the system to the overall human experience.
The story of UX therefore begins long before the term UX became common.
Human–Computer Interaction – the meeting between man and machine
Human–Computer Interaction, usually abbreviated HCI, developed as an interdisciplinary research area around the interaction between humans and computers. The field drew knowledge from, among others, computer science, psychology, ergonomics, design, and cognitive science.
The computer had long been primarily a tool for specialists. Its users were programmers, scientists, engineers and other people with considerable technical expertise. As computers were to be used by far more people, it could no longer be assumed that the user understood the technical logic of the system.
The system had to understand humans to a greater extent.
This raised questions that today may seem obvious. How do people perceive information on a screen? How many choices can be presented before the situation becomes difficult to understand? How should commands, menus and buttons be designed? How do people learn a new digital system? How are errors prevented, and how does the system help the user once an error has occurred?
HCI made such questions the subject of systematic research.
From the command line to the graphical interface
Early computers often required the user to type commands. The user had to learn the machine's language and remember what instructions to give.
The development of graphical user interfaces changed the relationship between humans and computers. Work at Xerox PARC in the 1970s was particularly important in the development of ideas such as windows, icons, menus, and pointing devices. Many of these principles were later popularized by the Apple Macintosh and Microsoft Windows, among others.
The difference was fundamental. Instead of humans having to remember and type abstract commands, actions could be represented visually. Documents could be displayed as documents, folders as folders, and deletions through a recycle bin.
It wasn't just graphic decoration. It was an attempt to make the computer's functions understandable through human mental models .
The design of the interface thus became part of the technology itself.
Don Norman and the human understanding of products
One of the most important figures in the development of this perspective is the American researcher Donald Norman. In his 1988 book The Psychology of Everyday Things , later published as The Design of Everyday Things , Norman examined how design can help or hinder people in understanding how products should be used.
Norman's perspective went far beyond computers. A door that looks like it should be pulled but actually has to be pushed is a design problem. The user is not necessarily doing anything wrong. The product is poorly communicating how to use it.
The same applies to digital interfaces.
If a user does not understand which button to press, where the information is located, or what happens after an action, it is insufficient to conclude that the user should have understood the system better. The problem may lie in the design.
This represents an important shift in perspective: When people systematically make the same mistakes, we should examine the system – not just the person.
Usability – can people actually use the solution?
The concept of usability made this question more concrete.
Usability is not primarily about how pretty a solution is. It's about how well people can use it to accomplish what they're trying to do.
ISO 9241-11 has been a central reference for understanding usability. Here, usability is linked to the extent to which specific users can achieve specific goals of effectiveness, efficiency and satisfaction in a specific context of use.
In Norwegian we can roughly talk about goal achievement, efficiency and satisfaction.
This is important because usability is not an absolute characteristic of a product. A system may work well for one user group and poorly for another. It may work in one situation and be problematic in another.
We therefore need to know who the user is, what the user is trying to do and in what context the task is performed .
Jakob Nielsen and usability on the web
As the World Wide Web began to grow, usability became even more important. Websites were built by people who were often fascinated by what technology made possible. But users weren’t necessarily interested in the technology. They wanted to find information, book a trip, read a news story, buy a product, or complete a task.
Jakob Nielsen became one of the most influential professionals in the field of web usability. His work helped make a number of principles accessible to businesses and designers far beyond the research community.
Nielsen highlighted the importance of learnability, efficiency, ease of remembering the system after a break, errors, and user satisfaction, among other things. His well-known user interface heuristics also highlighted principles such as visibility of system state, correspondence between the system and the real world, user control, consistency, error prevention, and minimalist design.
Behind these principles lies a simple idea: The user should not have to use unnecessary mental capacity to understand the interface.
Attention should be focused on the task at hand.
Steve Krug - Don't Make Me Think
One of the most famous quotes from the early history of web design came from Steve Krug. His book Don't Make Me Think , first published in 2000, made usability principles accessible to a very broad group of people developing websites.
The title sums up much of the problem.
When a user arrives at a website, they shouldn't have to stop and analyze how the page works. Navigation should be understandable. Links should look like links. Headings should tell what the content is about. Important choices should be visible.
This doesn't mean that people should never think when using digital services. It means that the interface should not create unnecessary cognitive load .
The customer should be able to focus their attention on the product they are considering, not on understanding how the online store is constructed.
User testing – stop guessing
One of the most important methods that emerged from the usability discipline was user testing.
The principle is almost banally simple: If you want to know whether people can use the solution, let people try to use it.
A participant can be given a specific task. Find the information. Book the trip. Find the product. Change the address. Make the payment. While the person tries to solve the task, you observe what actually happens.
Often, developers and designers discover problems they themselves had never seen.
This is due to a fundamental challenge. The person who developed the solution already knows the structure. She knows what the buttons mean, where the information is located, and how the system expects the user to think.
The user does not have this knowledge.
User testing therefore moves development from assumptions about the user to observation of actual usage .
Information architecture – where should the information live?
As websites grew, another problem arose. It wasn't enough for the individual page to be easy to use. The entire universe of information had to be organized.
This became the core of information architecture.
Peter Morville and Louis Rosenfeld were central to the development and dissemination of the field through, among other things, Information Architecture for the World Wide Web . Information architecture is about how information is organized, structured, named, and made findable.
A small website with ten pages may be relatively easy to navigate. A website with tens of thousands or millions of pages requires a much more thoughtful structure.
Which categories should be used? What should they be called? How should the content be grouped? How should the user navigate between the levels? How should search and navigation work together?
These are not just technical questions. They are about how people understand the world .
The business organization is not necessarily the user's organization
A classic problem arises when the website is built according to the internal structure of the business.
The business has departments, divisions, and organizational responsibilities, so it might seem natural to organize the website in the same way.
But the customer may not know the organization.
She has a need.
A citizen who needs help does not necessarily want to know which municipal department is responsible. A patient does not want to understand the hospital's organizational chart. A customer looking for a product does not want to know the business's internal categorization.
Good information architecture therefore attempts to organize information based on the user's understanding and task , not just the business's internal logic.
This is an important shift from organization-centric to human-centric digitalization.
Search or navigation?
Information architecture also created an interesting question: Should the user navigate through the structure or search?
Some people prefer to navigate through categories. Others go straight to the search field. The same person may use different strategies depending on the situation.
A good digital information environment must therefore often support both.
Navigation helps the user understand what is available and how the content is related. Search helps the user when she knows what she is looking for or when the amount of information becomes too large to navigate manually.
Part 7 is thus connected directly to Part 6.
Search and information architecture are two different ways of solving the same fundamental problem: helping people find what they need.
From usability to User Experience
Usability was crucial, but it gradually became clear that a good digital solution had to be considered more broadly than just how efficiently a task could be completed.
A website could be easy to use and yet feel cold, untrustworthy, or irrelevant. A product could be effective and yet frustrating. A service could be technically usable but provide a poor overall customer experience.
This is where the concept of User Experience – UX emerged.
Don Norman himself has described how he adopted the title "User Experience Architect" at Apple in the 1990s because concepts like usability and user interface were too narrow. He wanted to embrace the entire human experience with the system, including industrial design, graphics, interfaces, and physical interaction.
UX thus shifted the perspective from can the user do it? to a broader question: How does the person experience the entire encounter with the product or service?
UX is more than a pretty interface
As UX became a popular term, there was also a risk that it would be reduced to graphic design.
But UX is far broader.
Colors, typography, and visual design can influence the experience, but a beautiful button is of little use if it leads the user to the wrong place. A sleek website provides little value if the customer can’t find the product. An impressive app has limited value if it requires unnecessary actions to complete a simple task.
UX is about the interaction between, among other things, the user's needs, content, functionality, interaction, structure, language, accessibility, expectations and context.
The visual design is one part of the whole.
Good UX doesn't happen when the solution just looks good. It happens when the solution works well for the person who will use it.
From user interface to customer journey
As digital services became integrated into increasingly larger parts of the business, the line between UX and customer experience also became more interesting.
Think of a customer ordering a product in an online store.
The website may have excellent UX. The product search works, the information is clear, and the checkout is easy.
But if the product doesn't arrive, the customer still has a bad experience.
The customer experience doesn't stop at the edge of the screen.
It continues through payment, order confirmation, warehouse, transport, delivery, customer service, returns and any complaints.
Thus, UX meets a broader perspective on Customer Experience – CX .
UX is particularly about the human encounter with the product, system or service. CX encompasses the overall relationship and experience across touchpoints.
They overlap but are not identical.
Mobile changed UX
The smartphone created new demands on design.
A website designed for a large computer screen could work poorly on a small mobile screen. The pointer was replaced by the finger. The user could be on a train, in a store, or walking down the street.
Network speed could vary. Attention could be divided.
Thus, the design had to be adapted to both the screen and the usage situation.
Responsive design became an important approach. Content and interfaces could adapt to different screen sizes instead of businesses developing completely separate websites for each device.
But the mobile phone did more than just reduce the screen size.
It made digital services ubiquitous .
Thus, UX had to understand context to a greater extent.
Accessibility – who can use the solution?
As increasingly important services become digital, a democratic question also arises.
Who can actually use them?
People have different needs. Some have impaired vision or hearing. Some use a keyboard instead of a mouse. Some need a screen reader. Some have motor or cognitive challenges. Others may have temporary limitations or find themselves in situations that make the interface difficult to use.
Universal design and digital accessibility are therefore about more than technical compliance with standards.
It's about who gets access to the values that digitalization creates .
A public service that only works well for certain groups is not fully digitally accessible. An online store that shuts out customers due to poor design loses both customers and value creation.
Accessibility is therefore both a social, legal and economic issue.
UX became business critical
As competing services were often just a click or tap away, ease of use took on direct economic significance.
If the customer can't find the product, the sale may disappear. If the registration process is too difficult, the user may give up. If the payment process creates uncertainty, the shopping cart may be abandoned.
If a service is experienced as difficult every time it is used, the customer may choose a competitor.
Thus, UX became part of the business's value creation.
The interesting thing is that value is often created through reducing friction. An easier-to-understand button, a better information structure, or a simpler process may seem like small details. But multiplied by thousands or millions of users, small improvements can have big consequences.
Good design can save people's time.
Time is an economic resource.
From expert opinion to user knowledge
The development from HCI to usability and UX therefore also represents a change in how digital products are developed.
It is not enough that the expert thinks the solution is good.
We can observe people. We can conduct interviews. We can analyze user data. We can test prototypes. We can investigate where people get stuck. We can compare alternative solutions.
This makes development more knowledge-based.
This does not mean that the user should design the product. The user knows their needs and experiences, while professionals must use design expertise, technology and business understanding to develop solutions.
But the user can tell us something the expert should never assume she already knows:
How the solution is actually experienced in use.
Man as the invisible capital
Here usability and UX meet one of the main themes in Invisible Capital .
A good digital product doesn't just come from technology. It requires people who understand other people.
Designers, developers, information architects, researchers, analysts, copywriters, product managers, and professionals combine different forms of knowledge. They observe, test, interpret, and improve.
The value therefore lies not only in the software that is ultimately produced.
It also lies in the expertise that made it possible to understand the problem correctly .
A bad digital system can be technologically advanced. A good digital system can seem almost self-explanatory.
The latter is often the most difficult to make.
From UX to the entire customer journey
The development from HCI to usability, information architecture and UX shows how digitalization gradually shifted attention from the machine to the human.
First the computer had to work. Then the human had to be able to use it. Then the information had to be able to be found and understood. Finally, the whole experience had to be seen in context.
But as digital touchpoints began to connect with stores, customer service, logistics, payments, mobile, social media and other channels, an even bigger question arose.
How does the customer experience the business when the journey crosses all of these touchpoints ?
Then we are no longer just inside a user interface.
We are involved in the entire customer relationship.
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 .
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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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