IT as a Competitive Advantage

1
IT as a Competitive Advantage

• Common Threads

2
The Three Articles

• IT at Rosenbluth Travel Clemons Row
• Journal of MIS 1991 Rank 4
• IT and Sustained Competitive Advantage Mata,
  Fuerst and Barney
• MIS Quarterly 1995 Rank 1
• How Information gives you Competitive Advantage
  Porter and Millar
• Harvard Business Review 1985 Rank 7

3
Background

• Porter provided the framework
• Value Chain and Five Forces Model
• IT can and does provide competitive advantage
• Rosenbluth Travel is a classic example of using
  IT to gain advantage through vision and hustle
• Its not just IT alone, it requires focus and
  execution
• Sustained competitive advantage
• Four attributes of sustained advantage
• Capital investment, proprietary technology, IT
  skills and Managerial IT Skills
• Managerial IT skills is the only real determining
  factor

4
Common Threads

• IT can provide an opportunity for competitive
  advantage but
• The company must take the initiative
• It is not just IT, but how it is used
• Appropriate applications of technology can
  provide advantage
• Inappropriate ones can diminish advantage and
  management expertise is a key factor
• IT is increasing in importance for companies
• Knowledge workers need Information they can use

5
And now for another opinion!

• Carr, Nicholas. 2003. IT Doesnt Matter.
  Harvard Business Review. (May)
• IT is now a commodity like electricity or
  plumbing
• The competitive advantage of IT has dwindled to
  nothing
• Greater spending on IT rarely translate into
  superior financial results often the opposite
  is true
• IT is an essential business resource, but not a
  strategic one
• Says some of the same things as Sustained
  Advantage article

6
Good to Great and IT

• Collins, Jim. 2001. Good to Great Why Some
  Companies Make the Leap... and Others Dont. New
  York HarperCollins Publishers Inc.
• Quest to find what makes companies move from good
  to great
• Looked at 1,400 companies and selected 11 that
  made the move. Also looked at 11 reference
  companies same industry, same market position
  but did not achieve greatness
• G2G Companies Reference Companies
• Abbott Labs Upjohn
• Circuit City Silo
• Kimberly-Clark Scott Paper
• Kroger AP
• Interesting parallel with Porter and Carr on IT
  as a competitive advantage

7
Seven Factors (6 relates to IT)

• Level 5 Leaders
• CEOs who put their companies ahead of their own
  egos
• Focus on Who before What
• Get the right people in place, then pursue a
  strategy
• Willingness to confront the brutal truth
• Know the market and risks
• Hedgehog Concept
• Hedgehogs know one strategy be the best at your
  core competency or it cannot be the basis for
  greatness
• Culture of Discipline
• Disciplined people dont need hierarchy,
  bureaucracy or excessive controls
• Technology Accelerators
• G2G companies dont use technology to ignite a
  transformation, but they find new uses for
  widely-available technology and it has to fit
  their overall strategy
• The Flywheel and the Doom Loop
• Momentum is built slowly (flywheel), changing
  strategy every few years creates a downward
  spiral (doom loop)