Ten Points About Management and Information Technology
March 24, 2006
On March 24, 2006, John Hagel III, management consultant and author of several books focusing on the intersection of business strategy and information technology, presented "Technology and Talent: Reshaping Global Architecture," which contained the following excerpts:
- "Smart" objects will get smarter, with high-technology systems such as wireless communications continuing to improve both in efficiency and price performance. "Dumb" objects will also get smarter. Even analog mechanical devices will function better due to advanced information technology.
- People will become more robust, as mathematical tools and information technology are used to enhance and accelerate research in biology, particularly genomics. Personalized medicine will provide the ability to develop treatments and diagnostics tailored to an individual's genetic makeup; while body enhancements and implants will give back lost hearing, sight and other functions.
- Companies will move from traditional "push" models that depend on accurate forecasts of supply and demand so that resources can be made available where needed, to "pull" models, which concentrate on enabling people to pull resources as needed because demand is difficult to predict. Toyota's notion of lean manufacturing is a limited form of a pull model.
- Future opportunities in IT development will concentrate on how to make the technology cheaper and simpler, which runs counter to the engineering focus of Silicon Valley. China and India increasingly will be significant competitors in the IT industry, both in hardware and software.
- The most powerful innovation in the information technology arena will involve the IT architectures, which refers to the way all this technology is organized to deliver more value to users.
- The broad shift over time from highly centralized information architectures to much more distributed ones will continue, which increasingly will push power to the edge of the organization. As an example, this trend can be seen in the move from an organization having one large, specialized, high-powered computer to having many cheaper computers clustered together to deliver power in more flexible ways.
- From a business perspective, the fundamental economic impact of advances in information technology is to reduce substantially interaction costs on a global scale. Interaction costs have to do with activities surrounding a company's resources, such as coordinating, finding and negotiating for resources, as well as monitoring their use.
- While improving information technology will help businesses by facilitating the coordination of activities, it also will increase the power of customers, investors and talent, who will find it easier to switch to a company's competitor if their needs are not being met. The net effect then is to reduce barriers to market entry and intensify competition on a global scale.
- In order to create economic value, companies will have to find distinctive capabilities as sources of differentiation.
- Whereas past IT investments have focused on automation and standardization – essentially taking people out of the equation – future strategic success depends on accelerating the development of talent of people, both within and across organizations. Increasingly, organizations will need to connect into networks of talent that go beyond the boundaries of one institution.