This is the fourth installment of a five -part series on global corporate leadership. This article focuses on Information Technology
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Economics (Debt)
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Environmental Factors
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Political Factors
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Technology
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Social Factors
The series taken as a whole should help you define the answers for your company to these nine questions:
- Who are the customers of the future?
- How will my company distribute its product or service in the future?
- Who will be my competitors in 10 years? 25 years?
- What will the source of my company’s competitive advantage be in the future?
- What skills or capabilities will make my company unique?
- What role will strategic alliances/ mergers/acquisitions play in its strategy?
- How will my firm alter the nature of competition in its industry?
- How will my organization redefine the boundaries between industries?
- What can my company do to create a new industry?
The Opportunity
For many years, companies have devoted more than half of their capital budgets to information technology, and have acted under the simplistic assumption that ‘improved information’ results in increased productivity. The same companies have not based their computer investments on careful calculations of returns or added value, but rather on cultural and political concerns. Successful information systems must focus more on relationships and interaction than on the information itself.
The Solution
Tomorrow’s strategic technology investments will present more choices for organizations than they will know what to do with. Companies will be able to set up the technology that best fits their organization rather than the other way around. The value that organizations gain from these investments will depend on the foresight and intelligence that go into determining how their people will use technology.
There is a cliché that goes something like the following: If organizations only had greater quantities of cheaper, faster, and more useful information, they could increase their profitability and enhance their competitive positions in the global marketplace, etc., etc. On the surface, that seems to make sense. If you offer employees greater quantities of better information more quickly and at a lower cost, you should reasonably expect their performance to improve as a result.
Although in many situations where better performance resulted, even the improved information access often had little or no impact on people’s behavior. Most of us are aware of the risks of smoking. Yet millions of people still pick up the habit. Though there should be strong links between information and behavior in the enterprise, the real problem most executives face isn’t inadequate information, it’s the organization’s unwillingness to change behavior in the face of good information.
On an industry-wide level (micro level), some companies get strong returns on their digital technology investments. What seems true, however, is that on a macro level more money has been wasted on computerization than has been created.
No one denies that computerization and networking can add enormous value. But when we look at the numbers, it is clear that companies are not basing their computer investments on careful calculations of returns or added value. Other factors such as culture, politics, fashion, and competition also come into play. Best-practice methodologies often are irrelevant benchmarks for many companies investing tens or hundreds of millions of dollars in computers and networks.
There’s a fundamental difference between managing an information system and running a business on information, just as there’s a difference between operating a rivet gun and making airplanes. Managers intent on establishing technical systems subscribe to different values and practices than managers trying to set up productive business environments for their workers. Operating a business on information has a much broader array of interaction and interdependence than managing an information system.
When managers try to fit inflexible, mechanistic systems into organic contexts, they need new vocabularies to explain how people in organizations really use these systems.
Indeed, the word information loses its edge when redefined in business contexts; culture and politics and relationships may generally become at least as important.
Does the organization want to use its networks to centralize or decentralize responsibility? Does the enterprise want to make every bit of data accessible to everyone all the time? Or does it want to build a new information-access hierarchy into its intranet? Should individuals be rewarded for sharing information? Should people be encouraged to strike up electronic relationships with employees in other departments? Or should interdepartmental fraternization be deemed an inappropriate use of the network? For now, these rhetorical questions provide food for thought, however some of us encounter them in our daily business lives.
Conclusion
If an organization does decide to improve the way it shares information, it should focus first on changing the culture of sharing. Most information managers know little about designing incentives for enterprise collaboration, much less invoking it. That’s why responsible information departments have to insist from the beginning that effective enterprise computing and groupware don’t depend on transparency, replication, and semi-structured databases. They depend on how individuals are rewarded and punished for sharing and withholding information. They are about behavior, culture, and politics.