The changing fortunes of Kodak, Yahoo and Research in Motion demonstrate that in the technology sector it is simply not enough to diversify into new products or occasionally re-think your strategy. Change has to become the norm. The news of Sony's troubles with its incredibly diverse portfolio of products shows that trying to be everything to everyone is also not necessarily a route to success.
Understanding how consumers use a product or technology, and listening to their needs and wants, are of course paramount. From this, a clear strategy can be created, which must then be well executed to create good performance.
But consumers are fickle. They change their minds about what they want all the time, especially as new technology platforms come into play. Steve Jobs famously argued they didn't even know what they wanted, because Apple hadn't created it for them yet. On top of this, changes to regulations that aim to reduce risk, protect consumers and deliver more consumer choices is adding additional complexities and demands on organisations. These changes are unlikely to go away in the near future.
The lesson is that unless organisations react faster, they will rapidly become outdated. To gain market share, organisations must be able to manage change all the time, not just undertake a one-off strategy shift every five years. In this world of uncertainty, organisations will increasingly have demands from customers to deliver high service levels at lower costs.
So are there answers to these challenges looking at organisations that are surviving and thriving? Two key themes stand out. Firstly, a strong, agile platform for execution is required to manage these demands with an IT and business process environment that is simplified and aligned to the short-term strategy.
Integrating the three pillars of strategy, the operating model and the project delivery engine is key to making this happen. A strong Enterprise Architecture (EA) capability enables these pillars to be integrated and, whilst historically EA has its roots in IT, it is becoming more strategic. MIT has named top performing companies like 7-Eleven Japan, ING DIRECT, Toyota, and UPS as good examples of implementing an effective enterprise architecture to reduce costs whilst increasing strategic agility.
Secondly, high performing technology businesses have embedded change in their culture and DNA, meaning innovation is not a one-off but a constant process. Most large organisations struggle to deliver one-off change, let alone constant agility. Technology firms looking to avoid the fate of Kodak should ask themselves how they can best create a culture of constant action, not reaction, and build an agile foundation for business execution. Technology companies run on a faster cycle than most other sectors, making it even more crucial to be able to respond quickly to market changes and consumer tastes.
The importance of the CIO role in an organisation has gone through waves over the years, moving between being seen as strategic, to being merely a commodity. The problem with this is that IT is not a commodity. Integration of processes and IT is absolutely fundamental to the corporate strategy. CIOs have a responsibility to make themselves heard, as they do have a voice at the table. If they do not speak up the business will be affected.
While strategy has long been King, execution is more important. It makes no sense to set a strategy and then work relentlessly towards it for the next few years, until it is deemed time for an inevitable strategy review. An agile execution needs to be built into the organisation so that the business has the capability to look at where the market is going and respond to that, adjusting strategy if necessary.
Execution is often where businesses run into trouble. Kodak, for example, was well aware of the threat digital technology posed to its film division and had even developed digital products in the 1970s. However, when it came to trying to develop these products for the market many years later, there was internal conflict between the business groups that meant time was wasted on politics, with departments fretting about how digital technology would impact on their own product sales. The execution of the strategy was disastrous.
Change is not going to go away. Companies need to accept this and ensure that their employees have the skills to embrace change. If you're using a consultancy for the kinds of jobs every year, they are clearly not up skilling your people, which is an intrinsic part of any change programme.
Company leaders need to take a hard look at their organisations and work out whether the engine that can drive change is working in their business. And if it's not, what they can do to correct this.
Article by Moorhouse Consulting, visit them at www.moorhouseconsulting.com.