The very ordinariness of high tech products – affordable and accessible – means Information Technology (IT), as an industry, has succeeded. But if the latest “new thing” is an everyday thing, how useful is it as a strategic tool for organizations?
Nicholas Carr finds answers in the history of infrastructural technology. His new book Does IT Matter? Information Technology and the Corrosion of Competitive Advantage (HBS Press, 2004) probes technologies that have reshaped industry over the past two centuries, including the steam engine and railroad networks, telegraph and telephone lines, electric grid, and the highway system. Each of these developments initially existed as multiple prototypes with distinct characteristics, but as standards took hold, competitors became indistinguishable from one another.
What does this mean for organizations hoping investments in expensive technology will set them apart? Differentiation depends on doing something, having something, or knowing something the next person doesn’t do, have, or know. But that “something,” according to Carr, isn’t an IT product or process. “Any activity or process,” he tells us, “from setting type to designing [components] to providing customer service, will tend to dissipate as…best practices turn into universal practices, and performance converges.”
In the end, what determines whether you thrive, merely survive, or die, is not the medium. The thing delivered, Peter Drucker wrote in 1999, is more important than the delivery vehicle. What matters is the people who generate new ideas and communicate their knowledge. From a strategic position, basic identity questions are more important than technology: are we properly positioned, do we need to change the role we play? Only companies with a clear consensus on their brand’s meaning will find it possible to make the right strategic and operating decisions.
The starting point is figuring out what you do best, not how IT makes you strong. Apple now sells songs as well as computers. An unlikely shift? No, because Apple is clear about its core identity. Clarification establishes parameters so organizations know what strategic choices are possible and what steps to take to create new advantages. Apple’s adjustments were, according to Carr, deep, disciplined, and deliberate strategic moves that built on the past and prepared for the future.
Carr laments more companies aren’t like Apple; they “continue to make IT investments in the dark, without a clear conceptual understanding of the ultimate strategic or financial impact.” Like Apple, Dell and Wal-Mart both recognize IT is not the source of their competitive advantage. Wal-Mart spends money on IT systems that support its low price strategy. Similarly, Dell’s IT strategy reinforces its efficiency in selling computers directly to the customer.
Carr’s message reflects the central argument of Marc Braunstein’s and Edward Levine’s underrated book Deep Branding on the Internet: Applying Heat and Pressure Online to Ensure a Lasting Brand (Prima Venture, 2000): IT doesn’t invalidate existing business principles; it should be used to advance strategy, not to define it.
What’s holding organizations back from enlightenment, Carr believes, is managers’ habit of confusing “business with information processing, to want to see companies as, in essence, computers. They overlook…the physical and human characteristics of commercial organizations – all things can’t be reduced to digital code. Their skewed perception leads them to conclude that companies, like computers, can and should become components, or modules, in broad and flexible networks.”
This was the point Don Cohen and Laurence Prusak made in their excellent, readable book In Good Company: How Social Capital Makes Organizations Work (HBS Press, 2001): mechanistic ideas of how organizations work mask their deeply social nature. In Cohen and Prusak’s view, technology is not an effective social medium. Relying on it for community, connection, and understanding is a mistake. What matters are stories, because they preserve and transmit “the basic belief and nuances of culture, establishing reputation and building trust.” What are the oft-repeated stories and historical events that give your company meaning? It is these stories – the message, not the medium – that communicate know-how, “the hard-to-capture assimilated understanding of how work gets done.”
Changing these mindsets, of course, requires leadership. In the 1990s, organizations began appointing CIOs—Chief Information Officers—in the belief greater knowledge of IT would help them achieve the competitive edge. Carr believes these officers must now lead the way in thinking realistically about the strengths and limitations of IT, eventually putting themselves out of business.
Peter Drucker, in his Management Challenges for the 21st Century (HarperBusiness, 1999) agrees CIOs are destined to become “supporting cast members” – because IT has failed to meet our needs for information. We need to use information as a tool. IT is not a replacement for relevant content. How data are delivered, stored or managed isn’t as important as what you’re saying. Content is still king.
(Originally published in Muse (Canadian Museum Association), September 2004)