Tuesday, July 09, 2013

The intersection between technology and business strategy

    McKinsey recently published an article "The do-or-die questions boards should ask about technology" which highlights the key questions that need to be answered about the role of IT and technology strategy in the strategy of the overall business. Although this is pitched as something that boards should ask executives, it strikes me that it is just as important that technology leaders within the organisation need to know, understand and apply the answers to these questions.

    It may seem obvious that these questions are important, but I have worked in multiple organisations where technology is not considered as a means to achieve competitive advantage, but rather is thought of as a high-risk cost centre which needs to be managed in the style of an unexploded bomb. Such organisations typically have limited understanding of the role of technology amongst top management, and this lack of understanding then pervades the corporate culture. High profile IT programme failures are used as ammunition to justify this approach. What these managers fail to understand is that, unless they happen to be operating in an environment which is totally immune to market forces, if they don't work out how to use technology to enable competitive advantage, another competitor will do. Even worse, a new market entrant without the legacy cost base that existing market participants are saddled with, could totally disrupt the market.

    Conversely organisations that have a deep understanding of how technology strategy is a key enabler for business success are often at the forefront of either delivering market-leading products and services, or leading the way in reconfiguring the economics of the market by using technology to transform ways of working. Most industries have examples of such organisations. Following this approach is not a one-off programme - it needs to be embedded in the corporate culture if the competitive advantage is to be retained.

    The upshot is that technology leaders need to challenge their companies to ensure that the critical questions identified in the McKinsey article have answers that top management are in agreement about and are executing against.