Time to read: 5 minutes
In this article, I would be “Defining
what IT strategy would look like in hyper- competitive environment and devising
IT strategy for companies facing hyper-competitive environment”
Firstly,
Hyper competition is a term used by the industry when there is intense and
rapid competition between the companies, in which competitors must move swiftly
and remain agile to gain the advantage over others. The strategy of a company
in this situation must be to think Omni-spherically to sustain in these markets.
Research findings:
While
conducting primary research by taking interviews with many IT associates and
secondary research, I found out
- Information technology plays a primary and major role for a business to succeed in hyper-competitive environment
- Shift from physical to virtual products changed the dynamics of ‘way of doing business’
- Getting adopted to the agility and speed in which business is transformation is crucial
- Carrying out acts of mass customization would be a key driver
- Gaining competitive advantage from competition by collaboration that they cannot duplicate
Analysis:
In a
hyper-competitive world, IT if considered as a strategic initiative, plays a
crucial role in providing sustainable competitive advantage over competition.
The
utility of IT is built primarily on its architecture and supported by the its enablers
which also play a major role in devising IT strategy for hyper competitive
environment. The root of the response to hyper-competition lies in the
competitive advantage that business creates, by the unique IT strategy and fit
of the architecture in the organizational framework for both technology and the derivative business functions.
IT architecture as the basis of a strategic
response to hyper- competition
Traditionally,
companies used to keep their competitors at moat by creating bigger and better
barriers to entry, and by default this may look like tempting response to the
hyper competitive world as well. However, this will not alone prove successful.
Your competitors will surely find a way to bypass the stronghold and would
create better value proposition to themselves. After some point this may lead
to, your customers abandoning you.
Apart from aforementioned way of creating better barriers to entry, one must also do the following:
- Replace the devotion to sustainable advantages with an endless string of temporary advantages.
- Disrupt the cornerstones of others strategies by using speed, agility and the ability to maneuver quickly
- Make time as the competitor, time is the essence. Being able to compete against time leads to success.
In
ideal scenario, this means, there will only be two options, either become a
hyper competitive predator or surrender. It is a war of rapid and disruptive
movements to replace traditional strategy of defending oneself.
“One must be able to create a string of
infinite temporary advantage in their business”
To
reiterate the fact that IT architecture is crucial in hyper competitive
environment, I would like re state what John Zach-man, a renowned IT industry
expert on devising IT Architecture quoted
“We are now on the verge of IT architecture
coming into its own. In the 21st century, IT architecture will be the
determining factor — the factor that separates the winners from the losers, the
successes from the failures, the acquiring from the acquired, the survivors
from the rest.”
Deriving IT strategy:
While
every business environment is characterized by certain features and market
dynamics, a hyper competitive environment is always characterized by continuous
market disruptions enabled by technology, changing customer expectations, and
availability of newer and futuristic information.
In
light of relevance of this, I would like to mention ten lens framework for
deriving your IT strategy in general
- Global trends and challenges which impact all the industry segments in all geographies in varying degrees
- Evaluating current business model
- Business transformation needs and changing business model
- Formal business strategy and strategic frameworks
- User survey for their IT needs
- Analysis of competition
- Technology scan – in search of new/emerging technologies
- Idea scan - widely used or likely to be widely used ideas (/trends/likely future trends)
- Searching value chain for IT opportunities
- Relatively short/medium term CSFs/ Operational performance goals
Some of
the lenses have a high impact of the company’s sustainability in a
hyper-competitive environment, while some of them become less relevant.
For
instance, information of future business model becomes highly relevant due to
its susceptibility to innumerable number of changes due to market forces.
Availability of information on the current and its transition to future
business model dictates the success of a business in this environment.
But,
traditional porter’s five force analysis, analyzing and responding to the
market forces would be time consuming and might as well lead to deployment of
obsolete solutions due to differences in pace of solution design &
deployment and changes in market forces.
IT in
hyper competition should aid to demystify the myth of existence of market
players and barriers. For instance, the existence of payment, networking
add-ons and huge customer base of We-Chat should allow plastic card market
players to rethink their response to grab their market share.
While
every stakeholder is critical in every business, the customer/user is the most
critical as the business value realization occurs at this stage. An equally
important stakeholder are the people who support the business i.e. employees,
who create the business capability by enabling and delivering solutions.
Stakeholder satisfaction therefore plays a crucial role. Since hyper-competitive
environments are tightly coupled with speed, the importance of employee’s
understanding of the environment/business and feedback/acknowledgement from the
users on the acceptance of solutions play a huge role in rapid development of
the offerings. This is when the information from user surveys and ideation
within the company, irrespective of power and position, on how to deliver value
plays a crucial role.
So, in
an environment that is so fierce, it is possible to win by mastering the art of
dynamically re-positioning oneself in four key arenas: price/quality,
know-how/timing, stronghold creation/invasion and deep pockets.
The IT
strategy and IT architecture, in correlation with value proposition of the
business, defines and decides the area of focus for the business entity.
In part 2, I will try to illustrate above described concepts with some examples. Note: The above article is my personal view and opinion only.
Thanks to:
[1]Prof: Dr.Shrikant Parikh, professor at SPJIMR.
[2] Sravya Chandolu, colleague at SPJIMR.
Without you both, this would not be possible.
