Strategy is where IT leadership begins, but where do you go from there?
According to Jerry Miller, CIO of Sears, Roebuck and Co., what distinguishes an IT leader is the ability to take the right chances. That means sharpening your ability to think through strategic problems. It also means being prepared to take those chances. That requires a flexible IT organization and an equally flexible IT infrastructure.
Fortunately for IT leaders, much of the most important research and best new thinking focuses on how and where to take the right chances.
In the dot-com world, two key strategic approaches are emerging. One is “scenario planning” — the idea of working out several possible future situations and then preparing yourself to capitalize on whichever scenario comes to pass. Another is “real options,” an approach borrowed from the financial world that considers the possible returns an investment might have under various scenarios.
A thinker pointing us in that direction is N. Venkatraman, a Boston University professor with a stellar reputation for his work in IT strategy. He says dot-com strategists should build upon their current business models by lowering costs and enhancing service — the sorts of things IT has traditionally worked on. But simultaneously, strategists should experiment with scenarios so they can uncover and reality-check new business models.
Sometimes strategic thinking requires new ways of looking at old products. John M. DeFigueiredo, an MIT assistant professor, has looked at where retailers should place their bets in e-commerce. Strategically speaking, the important distinction isn’t what you sell but how buyers select a product, he says. The problems many e-tailers are experiencing are the result of their having chosen categories given to commodity pricing and first-mover advantage, such as books or CDs, or where brand reputation and the ability to feel and touch a product, as with clothing and furniture, are paramount for boosting profit margins.
Meanwhile, IT leaders should keep in mind the concept of “disruptive technology,” made famous by Clayton Christensen’s influential 1997 book, The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. The Harvard professor showed that by focusing on the needs of their most technologically demanding customers, technology strategists can be blind to emerging technologies that might overturn their business models.
Scenarios, options, disruptive technology — all this argues for IT leadership that combines strategic imagination and flexibility. You need to place IT bets that will work, whatever the future holds. The way to thrive in e-commerce is to combine observations about customer behaviour with these strategic principles and then create a technology base for experimenting with, and then exploiting, breakthrough ideas.
Leadership, of course, remains bound up in character and insight. It’s a skill, but it must be a skill serving a strategy. And it seems, as never before, serving a strategy you help create is what leadership is about in IT.