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December 24, 2013

Technology Moves Management At Light Speed

Posted by Ravi Kumar S. (View Profile | View All Posts) at 9:04 AM

Kodak: From Blue Chip to Bankrupt [Source: http://www.youtube.com/watch?v=wwfwr8eYP50]

We all have strategy maxims we cherish. So it's not easy for me to challenge the well loved musings of the greatest business thinkers of our time. I'm not the only one, however. Several strategists, for instance, have been questioning the notion that enterprises must focus primarily on building up long-term competitive advantages.

Yet it seems technology has created markets and enterprises that come and go like the wind. If we concentrate on parsing Big Data and focusing on the market-related issues of the moment, it more often than not seems that there is also a need to build 'transient competitive advantage'. This idea is one of several that have come from an ingenious essay by a well-respected business strategist.

One of the most striking things he reveals is that that every two weeks a new company replaces an old one on the Standard & Poor's 500. Plus, in recent decades the average lifespan of a company has declined sharply to 20 years from 60 years. If your organization does build up a solid competitive advantage over your rivals, chances are that advantage won't last very long - whereas in the old days it would sustain the enterprise for years against all newcomers.

Another change is something that's no less amazing: the transformation of the economy to being one that relies on information rather than knowledge. What's the difference? Well, consider the fact that the Centers of Disease Control in the U.S. was accustomed to charting out where outbreaks of the flu would be each year. Not surprisingly, the effort would take some time. Crunching all that data is a big job. Then Google came along and said "Let's look at Web searches for things like "symptoms of the flu" and see where most of them originated. In the matters of hours, the company was able to plot out patterns of where the virus was appearing.

The challenge is also to rethink the whole notion of who your competitors are. Today's most formidable companies don't allow themselves to get pigeonholed into one or two sectors. They view themselves as multi-faceted and disruptive. Doing so allows them to dominate their markets but also create new ones.

The next time you have a planning session - and many of you will because it's the end of the year - try thinking about what your department does in terms of innovating. Try coming up with ways to apply existing technologies to entirely new industries. When the bookseller Amazon had to build an enormous computer to facilitate its retail network, they realized they could rent space on that computer to other organizations. The late Steve Jobs excelled at doing this. He came to the conclusion that not only could his company sell music players; they could dominate the space of the creative content on those players.

Along those same lines, the essay I recently read speaks of the fact that Google looked at its algorithms and began thinking that besides helping people search for things on the Web, that same computer power could make a care drive without a person steering it. Pretty innovative, right?

In the same vein of end-of-the-year predictions and planning, I urge everyone, while thinking about making game plans for the long-term, to also think of what their enterprise will be doing one week or one month from now. That long term competitive advantage is certainly important, though not always good enough to win opportunities on the turns and gain powerful advantage in the short term.

In today's automated world, chances are you won't even know what will be happening in the next week or month. So why act like it's 1955 and come up with ultra-traditional strategic planning documents? Time to start running our strategic missions like we belong in the here and now.

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