Swimming naked?

Buried at the tail of my seemingly off-message post about Greg Lemond’s last gasp victory in the 1989 Tour de France, was an assertion that businesses generally, and SME’s in particular, are failing to make effective use of technology as a means of providing competitive advantage. You may or may not agree with me of course, but as part of that post, I also promised a couple of theories as to why executives were reluctant to engage in this area.

Firstly, whether it’s because we as today’s executive team were not in the main raised in an era where computers populated every school room, home or desktop – or perhaps, that the industry has managed to acronym people into viewing information technology as some impenetrable dark art – there’s been a tendency to delegate all thing IT to the IT department. The heavy reliance on the IT department to drive strategy has an inherent problem, simply put the IT department’s raison d’etre has tended towards maintaining the status quo, rather than initiating major change. Major IT change is inherently disruptive. People don’t like disruption – and have a tendency to shoot ring-leaders when it happens. IT managers understand this. They, in the main, do not want to be shot. They, in the main, will be pushing for conservative, easily manageable incremental change, not bold new strategies.

Secondly, the executive team are conditioned to expect little from IT. When change does occur it seems to be mystifyingly disruptive, and of marginal incremental value. We remember the upgrade to the email system last year; the one that cost thousands, had everyone locked out of the system for two days, which gave us what? A couple more features that no-one uses. Peruse the newspaper, watch the news, there’s an article about another big government IT project, awesomely over budget, and with no delivery date in sight (the private sector ones perhaps being rather more effectively hushed up).

Thirdly, there’s a tendency towards what military strategists might identify as a proclivity to prepare to fight the last war. In other words, our strategies tend to be driven by our experience of the battlefields of the past, rather than consideration of the character of those of the future. It’s what led France, after the first war, to construct the vast static defence of the Maginot line, only to see German forces sweep around it. Advances in military technology changed the rules of the game. In the same way in business we tend to compete on the basis of what’s worked in the past, rather than what will work in the future.

While many executive teams are defensive in their use of IT, an increasing number are not. Household names like Dell and Amazon are transforming their markets through the innovative and effective use of information technology. On the SME front we see a small, but increasing cadre of companies quietly dedicated to upsetting the market status quo by deploying IT in a way that fundamentally changes the rules of the game. Interestingly, speaking to one senior executive last week, whose company is very focused on IT as a strategic weapon; he noted their gains in market share were seemingly hidden to their competitors by the general growth in the market as a whole. Perhaps the true extent of the impact of the IT innovators won’t be fully felt until market conditions get tougher. As Warren Buffet noted in his 2001 letter to Berkshire Hathaway investors – ‘you only find who is swimming naked when the tide goes out.’

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