The Missing Technology Edge
By Richa Govil, Group Manager, Infosys Technologies
The October issue of HBR includes an insightful look into the competitive strategies of emerging companies. While the article discusses three strategies, it misses one important one.
Titled "Emerging Giants: Building World-Class Companies in Developing Countries," it covers the strategies employed by companies in emerging markets to compete in domestic and global markets. The three strategies described are: (1) understanding of unique local customer needs, (2) superior knowledge of and access to local talent and capital, and (3) filling institutional voids such as accounting firms, market data/research firms, and rating agencies.
However, I believe the article missed one important aspect – namely, the emerging companies’ ability to “leapfrog” conventional technology and operating models.
Just as consumers in emerging markets “leap-frog” technologies (e.g. consumers skip landlines altogether in favor of mobile phones), emerging companies can do the same. They have the luxury of designing their operations with the latest technologies and global operating models in mind.
A good example is ICICI Bank, which relies on its strong technology and systems to financially outperform its global rivals. The bank has recently entered the UK and has plans for further expansion. Additionally, its ability to profitably handle smaller transactions will make it possible for the bank to penetrate rural markets sustainable.
Of course all startups (whether in emerging economies or not) have the option of skipping generations of technology, but the emerging economy companies can combine technology with a forward-looking mindset and global operations to create operating models that can deliver a competitive edge across the globe.
Comments
i think lot of people will disagree with you with regard to the technological aspect of banking with icici. it is correct that they have used tech to outperform their PSU rivals .But have you ever called their customer relationship number? They have used tech to streamline their internal operations and cross selling initiatives. But their external relationship management at critical touchpoints are horrible.To take on the global gaints , they need a technology that have a human touch. it is applicable to all bankers not only icici.
Posted by: Harish B | October 9, 2006 10:36 AM
Dear Richa:
There are three main forces in a business organisation:
a) force to increase the topline (sales)
b) boost bottomline (profits)
c) evolving and strengthening the organisational discipline (ie to say conformance to predetermined standards, certain values, priniciples etc).
Adoption of necessary technologies after due diligence is a major input to enhance the efficiencies of above forces and organisational processes. Technologies boost productivity and technology is indeed a great enabler leading inevitably to flatter organisations.
ICICI is a great believer in quality and technology. Its think tank has management champions like Debashis Sarkar to champion the cause of quality. In fact the TATA group has a dedicated initiative for quality and technology through its TATA BUSINESS EXCELLENCE MODEL. Its this twin thrust on QUALITY AND TECHNOLOGY that has helped in the journey of organisational excellence.
However, just having technologies isn't sufficient. One has to have the vision and dedication to use the wherewithals creatively. For example ICICI is perhaps the only bank to send a reminder SMS to its credit card holders to pay the amount by due date and they also acknowledge receipt of cheque by SMS. Now, why is it that only ICICI bank adopts this system? In fact, they need not do it! But ICICI does!! And this service differentiates ICICI and thereby strengthens the bank. This maxim is very true: CHASE QUALITY AND QUANTITY WILL CHASE YOU.
The other obvious examples of industries where technology, particularly IT has changed the way they do business are - airlines industry (ticketing and customer interactions), and hotelling (booking, check in, check out, amounts of ingredients purchased (item wise and day wise), sales (item wise and day wise), forecasts for different days and seasons). In India the grand revolution of booking tickets in Indian Railways (the largest employer in India) has been facilitated through IT. In fact IT will revolutionise the way educational products and services are delivered, financial activity (finance depts. of companies, banks, NBFCs, share brokers, insurance companies etc), govt. functioning (e-governance) and selling and marketing activities across all organisations.
All this leads to greater levelling or flattening of organisations and the world itself. The FLAT THINK OR THINK FLAT revolution is on!!
I sincerely think this corporate blog will provide a platform for meaningful business thinking and dialogue. This THINK FLAT blog ought to remain in the public domain and a spinoff for Infosys is some great PR.
In fact, you should put out some advertorial communication to get more people to enter this blog and you could host contests, sell blog related merchandise etc.
Posted by: Sunil S Chiplunkar | October 9, 2006 11:02 AM
The ability or should I say the facility to "leapfrog" technologies is a feature of starting/conducting business in the developing world.
I am not sure how/why you call it a strategy. For me, it just seems to be an attribute. Nothing strategic about it, nothing to think about.
Posted by: swami | October 11, 2006 10:22 PM
This is regarding the point whether technology is a strategy or not, as raised by Swami. Selection of a technology is a very strategic decision. In fact, strategy is defined as the direction of resources and efforts. In this regard technology is a strategic resource that impacts the top line and bottom line.
For instance, mobile phones run on CDMA or GSM technologies. It was a strategic decision by the Tatas and Reliance to invest on CDMA. Whether it was a wise one is something different.
The greatest flat world technology has been the internet based Indian railway ticket booking technology. One can book a ticket from any counter, to any place to any station. This is a dramatic development in Indian Railways.
Posted by: Sunil S Chiplunkar | October 14, 2006 03:53 AM
The ability to leapfrog technology in emerging countries is indeed a plus. Look at where India is in terms of mobile technology adoption and how it is not so easy for US to revamp their older telecom infrastructure fast enough to make use of the cutting edge technologies in this area.
Posted by: kabir | November 12, 2006 10:00 AM