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Emerging Information Technology(EIT) Strategic Analysis Framework for Leading, Not Just Supporting, Business Innovation and Transformation


Executive Summary

The Emerging Information Technology(EIT) Strategic Analysis Framework introduced in this article enables a company’s executive management team (e.g. CIO/CXOs) and enterprise architects to systematically:

  • Analyze the strategic impact of an EIT on a business.
  • Identify industry discontinuities and threats created  by an EIT.
  • Create a strategic agenda to lead (rather than follow) industry changes caused by an EIT to a new business landscape.
  • Gain a competitive position benefiting the company most in the new landscape.
  • Create a new business model that would not be possible without the EIT.
As a result, the company may win the present and create the future. Without realizing the strategic impact of an EIT, an industry-leading company may only use the EIT as a supporting tool to follow the industry change caused by the EIT into a new landscape that benefits competitors or newcomers more.  The framework contains three components: 1) EIT Five-Force Industry Analysis Framework; 2) EIT Open System Company Analysis Framework; and 3) EIT Win-Present-Create-Future Strategic Agenda Framework. 

Background and Problem




Different emerging information technologies (EIT) have different impacts upon a business. Some EIT should be used as technical tools for supporting business to make business more efficient or effective; others should be used as strategic tools for leading, not merely supporting, a business to make a difference (e.g. reinvent industries, regenerate strategies, create new business models, etc.). Without realizing the strategic power of emerging information technology, a company is at risk of losing business in the present and to be pushed out a market in the future.

The internet is an obvious technology that has been effectively used as a strategic tool for changing industries. Companies that miss out on an emerging technology, such as the Internet, may drop from a leadership position to that of a follower, and may be pushed out of an industry altogether.  Similarly, Service-Oriented Architecture (SOA), cloud computing and mobile technology are additional examples of strategic EIT opportunities that should be used for leading business strategic change, not just supporting business.

Let’s take the book retailer industry as an example (refer to Fig1): Amazon utilized strategic emerging technologies to create new business models and regenerate industry winning strategies.

Fig1 What’s Wrong with B&N
  • Internet: In the second half of the 1990s, Amazon.com used Internet technology as a strategic tool to revolutionize the book industry. 
  • SOA/Cloud Computing : In the mid of 2000s,  Amazon utilized SOA and Cloud Computing as  strategic tools to create a new business model which enables other companies to access Amazon’s business operation and computing resources to market and sell non-Amazon products/services.
  • Mobile Technology: Amazon utilized mobile technology to develop the Kindle, a wireless e-book/reading device, and related services for people and companies.  Although many competitors have followed suit, Amazon has become a stronger leader in the new book and media landscape.
On the other hand, Barnes & Noble used to be a leader in the traditional book retailer industry. It has adopted Internet, SOA and mobile technologies as technical tools; however, rather than to drive strategic changes within Barnes & Noble and the book industry, the EIT has been relegated to a support role for its business. Thus, Barnes & Noble merely follows the industry changes created by Amazon, applies emerging information technologies 12-24 months later, And as a result, the business performance of Barnes & Noble lags Amazon’s in all major factors as shown in Fig 1.

Business Challenge and Solution

The business challenge Barnes & Noble faces, to identify and utilize a strategic EIT is quite common for a traditional industry leader, for example: Blockbuster vs. Netflix. On 03/17/2010, Blockbuster, a pioneering leader in the traditional movie rental industry, warned that it might have to file for Chapter 11 bankruptcy protection (source: www.huffingtonpost.com).

The strategic business challenges a company’s executive management and enterprise architects(EA) face is: How can CIO/CXO/EA systematically 
  •  Identify an emerging technology’s strategic opportunity.
  •  Create an executable strategic action plan to lead industry change, rather than passively follow it.
  •  Lead business change, rather than just support it.
To address the challenge, this article introduces an Emerging Information Technology (EIT) Strategic Analysis Framework, which a CIO/CXO/EA can use to systematically:
  •  Identify business discontinuities, threats and misfits created by an EIT.
  •  Identify an EIT strategic opportunity.
  •  Regenerate industry winning strategies.
  •  Lead industry changes caused by an EIT to a new landscape, and gain a competitive position that benefits the company the most in the new business market.
  •  Create entirely new business models or industries.
  •  Design an executable strategic agenda to lead the industry change to win the present and to create the future.
The next section will introduce the EIT strategic analysis framework. It will show how a company’s executives might use the framework to systematically analyze and identify business discontinuities, threats, misfits, or opportunities created by an EIT, as well as to utilize the EIT as a strategic tool to drive change.  

EIT Strategic Analysis Framework

The EIT Strategic Analysis Framework is shown in Fig2. A company may use it to systematically evaluate an EIT’s strategic impacts on its industry and design a strategic action plan. 

First, a company may use the EIT Five Force Industry Analysis Framework (reference#1/updated)  to systematically identify EIT-caused discontinuities in its industry and the threats the company may face in the present and future. Then the company may use the EIT Open System Company Analysis Framework (reference#2/updated) to systematically identify EIT related business “misfits” it may have. Finally, the company may use the EIT Win-the-Present-Create-the-Future Strategic Agenda Framework ( reference#3/updated) to systematically create an EIT strategic agenda to address current and future misalignments, strategic threats and discontinuities in the industry identified by the first two EIT Analysis Frameworks.

Fig2 EIT Strategic Analysis Framework

The following three sub-sections will present the three sub-frameworks of EIT Strategic Analysis Framework (i.e. EIT Five Force Industry Analysis, EIT Open System Company Analysis, and EIT Win Present and Create Future Strategic Agenda).  

EIT Five Force Industry Analysis Framework

As shown in Fig3, the EIT Five Force Industry Analysis Framework extends Michael Porter’s Five Force Industry Analysis framework. It will analyze EIT’s impact and status in the whole industry from the following five perspectives: the Bargaining Power of Suppliers, the Bargaining Power of Customers, Barriers to Entry, the Threat of Substitutes, and Rivalry among Existing Competitors. For each perspective, there are certain criteria to consider, listed in the diagram. The analysis will identify potential changes (discontinuities, value shift, etc.) caused by an EIT in the industry, and the threats created by the changes to a company in the present and future business landscapes.

Fig3 EIT Five Force Industry Analysis Framework


EIT Open System Company Analysis Framework 

Next, the analysis will shift from industry perspective to that of a specific company by using the EIT Open System Company Analysis Framework, which is illustrated in Fig 4 and Table-1, “EIT Open System Company Analysis Table”. This framework embeds the business-driven EIT model and technology into a comprehensive analysis model containing eleven key business elements affecting a company’s performance. For each of the business elements, there are related criteria as listed in the Table-1.  This framework will first analyze general business performance from the perspectives of the eleven business elements and then focus on an EIT’s impact on these business elements. The arrow from one element to the other in the diagram indicates direct and indirect influence.

Fig4 EIT Open System Company Analysis Framework

Table-1: EIT Open System Company Analysis
Key Business Elements
Business Analysis and EIT Status/Impact Items
History
·         Revenue/profit history
·         Founders
·         When the business starts
·         Major events in the business
·         Reputations
·         EIT history
Environment
·         Industry
·         Trend
·         Society
·         Politics
·         EIT status and impact
Strategy
·         Corporate
·         Product
·         Governance/
·         Management
·         Marketing
·         Operation
·         Organization
·         Finance
·         EIT strategy, status and impact
Structure
·         Organization
·         Operation
·         Governance
·         EIT status and impact
Systems
·         Strategy
·         Operation
·         Compensation
·         HR
·         EIT status and impact
Leadership
·         Company’s management/business philosophy and culture.  
·         Current CEO and management team
·         Credo
·         EIT knowledge and vision
People
·         The number of employees
·         Allocation of people resources
·         EIT knowledge and skills
Task
·         R&D
·         Product
·         Service
·         Value 
·         Social/Society responsibilities
·         EIT status and impact
Culture/Behavior
·         Culture
·         Norm
·         Relationship among people and system
·         EIT impact
Productivity
·         Revenues
·         Net income
·         Position in the industry
·         Rank among fortune 500  
·         EIT status and impact
Motivation
·         Motivation for management team
·         Motivation for employee
·         EIT status and impact

EIT Win the Present and Create the Future Strategic Agenda Framework


Finally, the EIT Win-the-Present-Create-the-Future Framework shown in Fig5 will help a company to create strategic agendas to utilize an EIT to address misfits identified in the EIT Open System Company Analysis for short-term success as well as to seizing strategic leadership to drive industry transformation and long-term success by addressing industry discontinuities, threads and opportunities identified in the EIT Five Force Industry Analysis. To create each strategic agenda, there are certain strategic questions need to be addressed, as listed in Fig5.

Fig5 EIT Win the Present and Create the Future Strategic Agenda Framework


Summary

Some EIT can be used as strategic tools to lead business strategies, not just support them. A company’s executive management (e.g. CIO/CXO) and enterprise architecture leadership can use the EIT Strategic Analysis Framework described in this document to, systematically,  analyze the strategic impact of an EIT upon its business, identify the EIT-caused industry discontinuities and threads, and design a strategic roadmap to lead (rather than follow) the industry change.  Following the roadmap, the company can gradually transform itself and  then gain a competitive position with the maximum benefit for the company in the new business landscape,  create  new business models that would not be possible without the EIT, and win  the present as well as to create the future. Without recognizing the strategic impact of an EIT, an industry leading company simply using the EIT as a supporting tool may become a follower in a new EIT-enabled industry landscape that benefits competitors and newcomers more. Although the company may only lose market share initially, eventually may be pushed out of market.  

References

1 Michael E. Porter, Competitive Advantage (New York:  Free Press, 1985)
2 Arvind Bhambri, presentation on Keep the End in Mind
3 Larry Greiner, presentation on Open Systems School and Systemic Thinking

PS: For any questions or comments, please contact support@xcresource.com.




  

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