In those firms, how are IT units and CIOs viewed?
Champy: Particularly in larger companies, the IT operation is viewed as a business function. It's viewed more importantly today than it was 10 years ago, but there's a great deal of variability about whether IT is considered to be truly strategic in enabling some dramatic change in the way the company operates. And there are, in some large companies, the right sensibilities about what IT can do to change the business--not make it more efficient, but really change the nature of the business.
In many of the companies I wrote about, IT was absolutely central to the business model. The CIOs were very front and center in the design of the business. Even if the companies weren't IT-based, there was a sense of IT as the great enabler that allows them to do much of what they do.
That's contrary to the notion that IT is no longer strategic because it's ubiquitous. That's a very dangerous argument, because the extension of that argument is that because it's ubiquitous and no longer strategic, it can be relegated deep into the organization.
At every one of these companies I've written about, IT was very strategic and enabled them to adapt and develop new business models. Therefore, it was critically important to the executives and the founders to understand not just how IT was working inside their company, but what it could do.
One young entrepreneur I interviewed said, "The Internet is the level playing ground for entrepreneurs in their 20s. We use the Internet as well as an established business uses the Internet. It's the great leveler. Someone who's been in the business for 50 years doesn't know more about how to use the Internet than I know."
Technology, on its own, isn't strategic. But technology, in combination with the business idea, is more strategic than ever. In fact, the ubiquity of technology is what makes it strategic.
What from your research makes you disagree with Nicholas Carr's thesis that most IT isn't strategic and will increasingly become a commodity?
Champy: If I went to the founders of the companies in my new book and said, "IT doesn't matter," they'd say: "What? Look at how central IT is to my business, and look at how it allows me to invent a wholly new business model, and how it allows me to operate and change some of the fundamentals of my industry." The dangerous extension of that argument is that an executive or manager doesn't have to pay attention to it.
The CEO of SonicBids is changing a $15 billion industry. [SonicBids is an online marketplace that connects music promoters with aspiring musicians; it's one of the companies featured in Outsmart!] He will eventually get to change the way entertainers are paid.
In the industry today, an entertainer--even a big-name entertainer--gets paid [some of the fee] in advance and the balance in cash at the end of the performance. That's the way the industry operates, because no one trusts anyone in the industry. SonicBids' CEO has the opportunity to create a trustworthy bank to change the way the industry operates. He couldn't do that without technology. It's changing the fundamentals of how that end of the industry operates.
The argument that IT isn't important is an over-intellectualization of what's going on. It lacks a complete understanding of what's going on in business today.
The dot-com bust taught us that traditional thinking isn't such a bad thing, in terms of business models and long-term viability.
Champy: It's smart to always have a little skepticism of what's possible. In the last bubble, some of the companies that were trying to build marketplaces had some very interesting business models--models that I thought were quite sound. They just didn't have enough staying power to perfect the business model, and they were spending money very foolishly.
It's important to keep asking yourself, Is this a business model that will have staying power, and can I scale it? Having a little skepticism is good.
The people I interviewed had a mix of ambition and a willingness to test ideas. You can put a product or service out there and test it very quickly to see if customers will bite.
The folks at SmartPak [a prescription service for horses that used innovative IT to expand its product and service offerings; another firm featured in Outsmart!] launched a product for dogs not long after they had their engine going for horses. The dog business didn't work initially because there were some issues with the product and how they would deliver it. But because they were using an Internet channel, they were quick to realize how and why it wasn't working. The Internet is a great enabler for testing ideas and maintaining a bit of skepticism.
Page 3: CIO Integral to Strategy
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