Do You Know Your 'Value Discipline`?

By Jay Bahel  |  Posted 11-06-2009

How can we have an IT strategy when the business strategy is unclear?

Many business strategies have been shattered or delayed in 2009 in favor of survival "until the rebound." But what happens if what we see now is the new norm?

IT is one year older and no better. What's more, little money has gone into application development and configuration in support of business. These areas must be funded during the next 18 months, even if your business is just in survival mode.

In light of this tactical investment and this new norm, use your strategy-execution skills to get in front of the business and test assumptions about what IT really means to them. The reality is that you might not see a meaningful business strategy in this new norm.

Be bold. Assume that you are coming in fresh as the leader. Lift every stone in IT to make sure your current strategy still applies. Review your people, systems, budgets, contracts, governance, processes and so on.

Start with building assumptions based on your organization's "value discipline." I'm not big on following textbook MBA work, but I have always admired Treacy and Wiersema's "Value Discipline Model." They argue that a company must choose at least one of three disciplines and consistently and vigorously act upon it.

If the business is focused on being "operationally excellent," that typically means it provides acceptable quality at a very low price (e.g., Wal-Mart). This has implications for IT. It might mean that you focus your systems on high-volume transactions and build systems, processes and IT organization around providing significant automation to reduce business costs, errors, etc. Wal-Mart is credited for being operationally excellent through its supply-chain prowess and automation through its EDI system--connecting invoicing, shipment, inventory and pricing data to all employees.

"Product leadership" means the business is strong in innovation and marketing (e.g., Apple). To be successful, IT must be the same. Think of the systems Apple has innovated internally that nobody really speaks of. For example, the data warehouses that must exist to support the "Genius" capability in iTunes are extremely robust. In building these, Apple's folks would have worked with statisticians to correlate data from songs you purchased in iTunes to other songs that consumers purchased (and therefore suggest songs you might want to buy).

"Customer intimacy" means that a business excels in customer attention and service by tailoring its products and services to individual customers. Starbucks offers its customers different coffee features (type, size, syrups, etc.) that map to customer specifications. Its customers say, "I need my Starbucks"--the key word being "my." Starbucks has built some of these systems around customer data--giving customers a free drink on their birthdays, for example, because those customers provided that information. This is a clever way to collect customer demographics, which allows Starbucks to make good on the "customer intimacy" concept.

Find out which of these disciplines applies to your company. Test it on your peers--but test not just which of the disciplines your firm fits, but what IT might do to help make them real.

This is a time in which your business can differentiate itself and, consequently, allow IT to be a strategic asset. Use your strategy-execution skills to help make it happen.

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