We still talk about new technology, to a distressing degree, as something that is happening to us rather than something that is enabling us to provide more value to the customer and carry out a strategy. In the next 50 years, it's going to be the other way around: IT strategy will be determined by business strategy. We're going to be in an environment of increasingly unpredictable change. Therefore, IT must support adaptive rather than merely efficient business models.
In the past 50 years, in what I call the make-and-sell model, things were stable enough that you could state your objective, plot a process to do it and presume you knew what the market wanted. The game against the competition involved doing what you predicted needed to be done, but doing it better than the other guy.
Now, though, with unpredictability as the premise, you can't do that anymore. You can't trust your long-range plans. You can't even trust your short-range plans. So you've got to get the business to respond profitably and rapidly to what is actually happening, and that means a fundamental change in the structure of business as well as the concept of strategy itself. That means that for IT, for example, you get better and better at creating informational representations of your business and the environment in which your business works.
I call that managing by wire. It's an analogue to flying by wirewhat the Air Force a couple of decades ago decided was necessary because technology had advanced so much that planes could fly faster than people could fly them. So they intermediated the pilot from the plane with technology that interprets the instructions of the pilot to the plane and interprets the response to the pilot.
That kind of robust representation of the business and the environment leads to a point where by changing the representation you can actually change the performance. The CEO, in other words, can act like a pilot, aided by technology to respond better and improve his or her ability to guide the organization. Over the next several decades, we're going to get better and better at capturing more and more of business in a manage-by-wire representation, and that's where IT is going to come in, to support that type of flexibility.
A second big future trend I see is this: Information architecture is going to replace the management of assets and development processes as the focus of CIOs. That's because you're going to have to respond more to what's happening now, and so you're going to be running businesses more and more in project mode. Businesses will be dispatching their capabilities like a taxi company dispatches cars, rather than scheduling them in advance, like a bus company schedules stops. That means your organization can reconfigure itself continually on the basis of what kinds of events are happening, what kind of opportunities and threats it faces.
Ubiquitous computing is going to help in this regard. Firms will be able to know earlier what's happening in the marketplace and be able to respond more quickly to market signals. Consider hockey player Wayne Gretszky. He says he knows, when he skates, where the puck is going to be. That's because Gretszky knows how the system worksnot a procedural knowledge or a predictive knowledgebut rather he sees how the players interact with each other on the skating rink.
Companies will have to use technology to keep track of what people do to produce certain outcomes and to understand how those outcomes relate to each other. That's much different than designing processes in advance, which require you to predict the outputs, the inputs and the best way of doing things. IT will help companies become more flexible and adaptive to customer inputs.
So, in the future, IT architecture will need to mirror business architecture. The problem now is that business architectures are still largely figments of IT people's imaginations. But I predict that a business is going to be designed more as a system of capabilities to define and produce values for its constituents. So the skill sets that IT architects will need will be very, very useful.
Managing that will be a key role, and it's the kind of infrastructure you have that will count. Business design in the future has to be more about managing by wire, using technology as the force. CIOs will have to represent that business context robustly in symbols so they can ensure that the execution of the business is consistent with the business design. And this business design is really an operational model that shows how we will dispatch a set of capabilities inside and outside our corporate boundaries to create value for our customers, the reward for which will be value for our shareholders. It's not here yet, but it's coming.
Stephan H. Haeckel is the director of strategic studies at IBM's Advanced Business Institute, where he teaches executive programs for IBM on business strategy and organizational culture. Comments on this story can be sent to email@example.com.
This article was originally published on 11-01-2001