By: Manish Sharma and Dave Guevara Issue: Vision Section: Business
Traditional Technology Strategies Will Fail to Execute Your Vision
Beware! Your traditional technology strategies are or will soon be obsolete. How can that be when the executive team already understands that vision defines the long-term view of the company to investors, customers and employees?
Executives have strategies they believe translate corporate vision into achievable, high-level goals. Technology is a part of all of those strategies. It is important to know, the convergence of mobile, social media and cloud technologies will disrupt traditional corporate information technology (IT) strategies. Walmart provides an example of how to adapt technology tactics to enable your vision and strategies.
Walmart describes themselves as a global retailer who is committed to saving people money so they can live better. Their customer vision is “to earn the trust of their customers everyday by providing a broad assortment of quality merchandise and services at everyday low prices (EDLP).”
This global low-cost retailer is also known for being a technology leader, not just in IT but also across their operations. In 2008, Walmart demanded that a supply chain strategy become standard practice for their 700-store Sam’s Club line. They mandated that all Sam’s Club suppliers comply with Walmart’s three-year radio frequency identification (RFID) inventory technology requirement or pay penalty fees.
In 2011, Walmart acquired Kosmix to form @Walmartlabs to further their digital strategy around marrying internal customer store transaction data with information patterns mined from social networks. What they are building is the “Social Genome” based on millions of tweets, Facebook messages, blog postings, YouTube videos, and community posts. As reported by Olaf De Senerpont Domis in “The Deal Magazine” (Nov. 28), @Walmartlabs continued to build their technology strategy by acquiring OneRiot, a Boulder, Colorado-based company developing target ads using social media data, and in November 2011, Walmart bought Grabble, which develops point-of-sale technology for cellphones.
So you are probably wondering what this means to everyone and the executive team. Or, how can the team find the appropriate technologies, where to apply them in terms of business outcomes, and what it means for competitive differentiation? There are three criteria to understand and apply, no matter which method or best practice you use for strategic planning when it comes to technology strategies. 1. Determine how customers, employees and supply chains use social media and mobile technologies; 2. Use an outside-in perspective throughout execution of the vision and strategies; and 3. Become flexible and adaptive to test new ideas and to respond to unforeseeable events like a global recession and slow recovery.
Use of Social Media and Mobile Technologies
Over the last five years there have been a few trends that have heavily impacted the IT capabilities landscape. The first is the growth in consumer-based IT with the advent of smartphones and smart devices that provide the user with ubiquitous access to information. The second trend is social collaboration based on social media like Facebook, LinkedIn, Wikipedia, YouTube, Twitter, blogs and community sites like OneWorldTV.
Gartner, Inc., the world’s leading IT research and advisory company, suggests that cloud, social media and mobility technologies will disrupt companies’ strategies in many industries. “Many industry business models will be challenged through 2015, as customers continue to adopt an always-connected digital lifestyle and market competitors exploit emerging technologies to achieve business growth and success,” says vice president and distinguished analyst Kimberly Harris-Ferrante in a January 4, 2012 “TechJournal” article. She adds, “Cloud computing and social media will continue to provide industries with new avenues for effective customer communication and engagement, facilitating increased revenue and sustainable interaction with key customers. New technologies such as media tablets and advances in mobile will have a disruptive impact on many industries, requiring changes to existing processes and propelling business transformation.”
In fact, technological mobility has untethered the workforce from the PC and made information access a part of consumers’ and employees’ lifestyles. Social media outlets have allowed people to collaborate in a medium that is most desirable to them without having to seek approval or wait for internal IT capabilities to be available. Although these trends do not directly affect the way IT capabilities are delivered to run a corporation, they have a direct impact on how to create a vision for IT.
These trends represent a new way of envisioning access, reach, and channels for services used by internal and external stakeholder groups. Instead of having a vision that talks about IT services and capabilities, the corporate vision and strategies must address what will please the end user. Hence, the new order is to have a vision that is derived from looking from the outside-in and not inside-out, as has traditionally been the case.
An outside-in vision strategy describes how a company engages the perspective of customers, as in the Walmart example. And while corporate vision may already be stated from the customers’ perspective, it is important to ask how many of the strategies translate that outside-in perspective into implementation plans. A key question is how well the outside-in perspective aligns with certain initiatives and programs to help execute the stated vision? Or, how many initiatives got derailed when technologies were deployed? Every executive has been cautioned to never allow vendor or technology strategies dictate business strategies. It is imperative to stop guessing and define business and technical capabilities so that the customer’s experiences are consistent with the corporate vision. When working on internal business functions, the same capabilities mapping approach will assure that your employees’ and business partner’s experiences are also aligned. But, this is so much easier said than done. It requires a shift in mindset throughout management and technology implementation leaders—both business and technical.
With regard to information systems, the outside-in approach means mapping business capabilities—functional capabilities with the required performance or quality level—to the systems capabilities delivered through IT systems. This approach considers end user satisfaction with IT capabilities, not with the “why’s” of what can’t be done. Aligning business and IT capabilities in this manner leads to an unbiased view of required IT capabilities, no preconceived notion of fulfillment, and an opportunity for reassigning ownership where it belongs.
Historically the vision for IT was internally focused on improvements that would provide bigger, better and faster services for the enterprise. This worked well when IT mostly delivered a set of enterprise services that required large investments, thus leading to an emphasis on optimizing utilization of the assets created by these investments. However, with the self-learn, self-govern and self-directed nature of social media, and the ubiquitous access to information from mobility makes these corporate assets likely to be only a part of the needed capabilities to support communities of customers, employees and business partners—like Sam’s Club suppliers. Any technology strategies must now look at the internal and external ecosystem that will provide the ability to validate, adapt and respond to customers and markets in a durable, competitive and profitable manner.
Moreover, the outside-in view needs governance, with emphasis on the speed in validating new ideas before committing to full-scale investments. Organizations should allocate budget for business units to explore their ideas using IT capabilities that can be implemented rapidly, and not necessarily using internal IT capabilities. This helps in the validation of newer technology options without the enterprise rigor that can delay realization of the expected business performance levels called for by outlined strategies. However for this approach to be successful, companies must have previously created the ability to be flexible and adaptive in testing new ideas followed by a structured migration plan to move new capabilities into full-scale production.
Become Flexible and Adaptive
Business and technical capabilities that are derived from an outside-in perspective produce the behaviors in systems and people, which create the desired experiences for customers, employees and business partners—like supply chains—both upstream and downstream. One can’t assume that traditional strategies will show how to apply the technologies described by Gartner analyst Harris-Ferrante—cloud computing, social media, and mobility. Anthony J. Bradley and Mark P. McDonald, authors of the 2011 article “The Social Organization” state, “Businesses must embrace new capabilities that allow them to test and validate ideas, adoption rates, and to tap the collective genius of customers and employees.”
Your business and technical leaders need the ability to quickly prototype and validate their ideas without the traditional timeframes and disruptions to production systems. However, a common failure is to use one-off solutions that cannot grow to full-scale production. Validating ideas on a small sample of customers—hundreds to a few thousand—is valuable, but there must be a migration path to transition to a full-scale solution for hundreds of thousands to millions of consumers. This is where the required IT capabilities need to be evaluated for the scenarios where the pilot validation programs have succeeded.
These solutions are likely to be derived from a mix of internal IT and consumer-based technologies. And because the components of these solutions are available from outside internal IT, businesses have the option to procure them directly. This helps the speed of validation and deployment, but it may not be fully scalable and the total lifecycle costs may not fit the economic model across a full-scale rollout. Thus, it is necessary to look across the lifecycle to full-scale operations early on, especially when new ideas are being validated with customers or the intended audience. Lastly, do not make the mistake of demanding this flexibility and adaptability from the business operations that are critical to sustaining your revenue base at the current profitability levels. Charter teams within, or better across, business units who are knowledgeable about your business model(s) and their economics. These teams can then explore new ideas using business and technical capabilities that are not constrained by the governance and demands of your critical business functions. Their charter should include the accountability to define a path to full-scale deployment.