Digital Matters - Issue 47

Information technology is the central nervous system of strategy. No matter what business you are in, information technology is now a core function. If you look at the IT systems at leading companies around the world, they read like a map of past priorities. Ten years ago, finance had juice, so it got its system. Five years ago, marketing was riding high, so it got its system. Then manufacturing muscled in and got its system. And none of the systems are compatible. It's not that they don't work together. It's that they can't. As a result, valuable, real-time data regarding the operational whole is lost and can't be recovered. Vital information -- about customers, inventories, and distribution -- either hemorrhages out of the corporation or sits dormant, clogged, and unmoving. The question becomes, What's the point of a COO or a CEO if the operations data is a mess? The truth is that technology and operations are the same function.

Leadership matters. Leadership always matters, but it matters most when technology disrupts and fear kicks in. Any fool can hand out stock options and keep his team together when the market is hot. But real leadership means keeping the team focused when fear is a force. If you walk through the U.S. Military Academy at West Point, you see the statues and portraits of great military leaders -- Eisenhower, MacArthur, Patton, Washington. Those leaders were, first and foremost, commanders. The ability to command is still important, but the ability to build unit cohesion among team members is what matters most. In a networked world, the edge goes to the most cohesive team. Building those teams and leading them by leveraging their skills is the key to success in the fast economy.

Values matter. There's a company called Smythe Dorward Lambert in Boston that helps companies communicate with their employees. Smythe Dorward Lambert conducts focus groups and asks what the workforce most dislikes about their corporate superiors. The answer that Smythe Dorward Lambert gets back over and over again is this: "The company says one thing and does another." I can remember sitting in a meeting room once and listening to the chief executive of a company announce that the man running his New York office was "my guy -- yesterday, today, and tomorrow." The instantaneous interpretation of this statement by virtually every person in that room was that the New York office chief would be fired within 30 days. As it happened, it took a bit longer. He was fired in 45 days. The truth matters. Loyalty matters. Lies matter. Values matter. You know a Dilbert company the minute you walk into it. Dilbert-company employees know the exact calibration of corporate dishonesty. It's what they most dislike. Experience teaches them that politics matter most. So they play along, or they retreat into a kind of sullen invisibility. In the networked world, everyone else knows what the Dilbert employees know.

The network really matters. The most dramatic effect of advanced information technologies is networking. Everyone is part of a network, and now all of the networks are interconnected. It's not six degrees of separation anymore. It's exponential connection. The Internet is global. The economy is global. The network is global. Your neighborhood is the network.

Peer-to-peer computing matters. It's no accident that the three killer Internet apps are email, instant messaging, and Napster. All three are, in practice if not in technical fact, peer-to-peer technologies. And now a wave of P2P-technology platforms and applications is coming to market that gives users at the edge of an organization -- any organization -- unprecedented power. Understanding the influence of P2P technology will soon become a management obsession. Only companies that harness the power of the edge will thrive.

Lest you think that P2P computing is some weird Silicon Valley fad, consider the death of Dale Earnhardt, which became an enormous P2P event. Millions of people rushed to the Web to post notices and to exchange messages and letters of condolence after his death. The traffic was so thick that major ISPs could barely handle the load. Consider Napster, which had no users in 1997 and 40 million users in 2000. The tool that empowers the edge as never before is P2P.

Reengineering matters. Advanced information technologies enable vast restructuring of what are called human resources. Consider the banking industry: There are millions of people who work in the banking industry. Most of what those people do can be done by advanced technology. Indeed, on an asset-based loan, there is no need for a banker to be involved at all. A car is worth $20,000. A buyer has the wherewithal to buy or to lease it. If payment is not forthcoming, the bank repossesses the asset. The same holds true for a home, a second home, even a college-education loan measured against future earnings. There's no need for human beings. The only remaining purpose of a banker in the traditional sense is to provide psychological insight into an uncollateralized enterprise. The rest is process.