Competitive value requires information. We know this and our competitors know it too. Consequently executives everywhere are drowning in data.
To create sustained competitive advantage, the enterprise must value information in new ways. The sorts of new ways we are talking about are broad. They cover IT practices, information management, and values and behaviors. These aspects of IT are known collectively as information orientation.
The elements that make up information orientation are like the players on a team. Get all of the team playing together and it’s possible to beat your competitors consistently, even if they have one or two stars.
To promote competitive advantage through information, the CIO must influence the enterprise toward a higher information orientation.
This takes a few steps.
Advantage in asymmetry
Any enterprise hosts two common types of information: transactional data and business intelligence (BI).
Transactional data runs the business. It is the bread and butter of everyday life.
BI helps executives understand and drive the business. But the truth is that sophisticated BI tools don’t deliver the knockout blow on their own. To gain competitive advantage, an enterprise needs to achieve what some economists refer to rather ponderously as an “asymmetry”. An asymmetry is a capability that competitors can’t match.
Asymmetries may result from structural advantages, such as scale, privileged relationships, extraordinary abilities in execution, or unusual insight or foresight. If it is to last, asymmetry must be explicitly recognized and managed as a source of competitive advantage. Any data warehouse manager can tell tales about important information ignored by decision makers.
Information orientation is the gap between competitive value and competitive advantage. Based on research by management gurus Donald Marchand, William Kettinger and John Rollins, who coined the term, information orientation measures how much an enterprise is prepared, with values and beliefs, and is enabled, with information management and IT practices, to use information to create a competitive asymmetry.
Marchand and colleagues found no one factor correlates with superior business performance, but three factors combined correlate strongly: information behaviors and values, information management practices, and information technology practices.
Information behaviors and values — how the enterprise thinks about information, and the ways information is used at personal and corporate levels — are consistent with good business ethics. They include integrity; formality, or how much the enterprise relies on formal sources of information; transparency, sharing information within and sometimes outside the enterprise; and proactiveness, or how employees seek and use new information.
Information management is a process, not a technology. The aim is to ensure that individuals involved in critical business processes have the right information to make decisions and act as quickly and effectively as possible. Successful IM is rooted in business units, not in IS.
How to influence information asymmetry
Executives who understand the information needs of their strategies amplify competitive asymmetry with information. It follows that a lack of clarity in corporate strategies inhibits reliance on information. So CIOs should do what they can to increase the clarity of strategies. A proven tactic for doing so is to present your understanding of strategy to peers and to the CEO, ask if it is correct, and request corrections if it isn’t. No executive will resist the opportunity to correct a statement of strategy once it’s presented.
CIOs can’t drag their enterprises into competitive advantage through information single-handedly, but they have many opportunities to influence the organization toward better values and behaviors and better information management.
You can lay the groundwork by building strong IT practices. By delivering value and using influence, you can pave the way for changes in values and information management. The goal is an enterprise that is prepared to use information to create and amplify competitive asymmetry.
Andrew Rowsell-Jones is vice president and research director for Gartner’s CIO Executive Programs.