Competitive weapons
Napoleon said an army marches on its stomach.
The ability to provide food, supplies, and shelter to his troops was his
primary building block of success. He didn't attribute his victories to the
obvious factors of battlefield tactics, great weapons, or excellent training.
His focus on logistics was much more mundane, yet infinitely practical. He
created a simple advantage that his enemies could not match easily. Can your IT
organization identity something it does that no one else does nearly as
effectively? Strategy is about advantage, so what makes you so special that it
gives you an edge over your enemies?
Creating an effective IT strategy begins with
developing an appreciation of your own IT organization’s asymmetrical
advantages. What do you have that your competitors don't have? Such advantages can
be measured by context, influence, and tolerance. By context, I mean how deep
is your awareness of all the market forces affecting your competitive position.
Influence means how much you can affect outcomes in your chosen market.
Finally, tolerance is the degree to which you are willing accept the risks of
competing.
Big vs. lean
Let’s look at the example of a large IT
organization vs. a lean one. The lean IT organization typically has a much smaller
staff and budget relative to comparison organizations in the same industry, and
operates with a minimal margin for error. Leading a large IT organization makes
strategy easy. You can afford to "let 1,000 flowers bloom" by
experimenting, testing, and making mistakes. Your context is big, your
influence is substantial, and your tolerance is high. But a lean IT
organization does not have that luxury. These organizations need to leverage
every opportunity available and maximize their return from every investment.
The simplest comparison between big and lean is their
approach to an ERP system. A large organization can afford to buy, run, and
customize their ERP system. They can fine-tune it to every nuance of their
specialized processes. But a lean IT organization is forced to rent a
standardized version where they accommodate their business processes to fit the
system - customization is an unaffordable luxury.
Let’s assume you run a smaller lean IT group. How
do you level the playing field? You can start by thinking differently about
every aspect of your operations. No IT organization needs their own data centre
if they are willing to take the necessary precautions and make the necessary
sacrifices to move everything to the cloud. No IT organization needs to
customize their applications suite if they are willing to modify their business
processes. No IT organization needs to run its own enterprise systems like
email, content management, and collaboration software if they are willing to
use industry standard software services.
If you actively move in all of these directions,
your lean IT organization pushes the implementation, management, and support of
conventional and traditional systems out the door. Does that mean you should
shut down your IT department? Hardly. What you do with what you have left is
your asymmetrical advantage. The core IT staff members become your unique
footprint in the industry. These are the folks that understand the business
processes at the very core of your organization. These are the folks who will
integrate and leverage the low cost tools you have pushed out the door.
The ability to integrate technology and to
improve process becomes a strategic advantage of the lean IT organization. You
have the remarkable opportunity to focus the intimate business knowledge of
your subject matter experts on building unique projects, processes, and
initiatives that the big organizations are ignoring because they are too busy
running their overly complex in-house information systems.
Should, can, and control
So how do you get there? The lean IT organization
uses the concepts of context, influence, and tolerance to whittle down its list
of strategic initiatives into two piles. The stuff they can give to someone
else is in the first pile. The second pile is the stuff they are uniquely
positioned to implement better than anyone else in their industry.
Context dictates what technologies the IT
department should operate. What
market forces are buffeting your competitive position? If the industry is
consolidating, where can you collaborate with other organizations to create shared
services? Is this really an activity that gives your organization a competitive
advantage? Is this IT function really part of the core business? Ask yourself
these questions for all aspects of your information systems.
Influence determines what technologies the IT
department can operate. Sometimes you
simply may not have the right resources to operate the IT services you might
like to keep within your organization. Sometimes geographic isolation or
over-subscribed demand for specific technical skills forces you to consider
alternative delivery mechanisms outside your IT organization. Often you simply
don’t have enough budget money to do everything you would like to do. Don’t
operate the functions you cannot properly influence.
Tolerance defines how much control the IT department needs to successfully operate these
technologies. What is your risk profile? What is the probability of
success? What is the degree of impact if you fail? If you can’t stand the heat
then get out of the kitchen. Some IT initiatives are just too risky for the
culture and risk tolerance profile of your organization. Stop doing them and
give them to someone who is willing to take the risks or can mitigate the risk
through systemic factors.
An example
These three factors act like a series of
successive filters. For example, if you are considering moving a new data
warehouse system to the cloud you need to first assess context. Do you really
want to be in the business of managing the servers needed to support the new
system? Unless you are a technology company it is unlikely that you would
consider server management to be part of your core business, so your context
would indicate support for the move.
Now consider your degree of influence: do you
really have the database administration skills in your organization to manage
the new technology efficiently? A lean IT organization may not be able to
afford high-priced data base administrators or may want to focus their precious
skills on other systems. Since you would struggle to support the technology
internally, the externalization of the system makes sense from an influence
perspective.
Finally, are you willing to tolerate the risk by
placing this sensitive information in another organization's care? If can
successfully write a contract that transfers the risks associated with housing
mission-critical data to a third party, then the last filter also supports the
move.
In this example all three gates have been opened
and the move makes sense. Only when all three filters are aligned should you be
willing to make the strategic change, because then you have a conclusive
asymmetrical advantage.
Lean on your asymmetrical advantage
Becoming a lean organization is an asymmetrical
advantage despite your size. When you are forced to scrutinize every IT
investment for maximum leverage and return, you inevitably become more
efficient than the big players. For each dollar invested in IT, you gain
business improvements that outstrip your larger competitors. Ultimately, your
relative size can change your behaviour and gives you a distinct lead over the
bigger and slower competitors. You can float like a butterfly and sting like a
bee even if you a mere David to your competitor's Goliath.
As you become more effective, don't lose sight
of your core competencies defined by context, influence, and tolerance.
Remember, Napoleon conquered all of Europe with a lean military organization. But
he was resolutely defeated when he lost sight of his core competencies and let
his army starve in Russia.
~
