Competing Through I.T.

One of the hot topics in business today is the tense relationship between business and I.T.  Of the many articles that I've read, very few try to thoroughly describe how the severity of the problem can differ from company to company, or how the solutions can vary because of those differences.  Nearly 25 years ago, Steven Wheelwright and Robert Hayes published an article in the Harvard Business Review called "Competing Through Manufacturing," which described the different levels in which a manufacturing arm of an organization could be integrated into the organization as a whole, as well as the benefits and consequences of each integration level.  Their terminology could easily be extended to the integration of an I.T. department.   Here are their original four "stages," only slightly adapted for I.T.:

Stage 1: Minimize Information Technology's Negative Potential

An Information Technology department whose role is in Stage 1 would be characterized by a lack of trust between I.T. and the rest of the business.  In Stage 1, a business feels the need to control as many aspects of I.T. as possible to avoid possible negative consequences of mistakes or misunderstandings.  A large portion of the strategic management and implementation regarding technology is left to consultants.  Internal research is discouraged because it leads to uncertainty, which in turn could lead to problems down the road.  The feeling is that anyone could manage I.T., which leads to inappropriate people chosen for leadership positions within the department.  For companies whose major focus is I.T., internal applications aren't given nearly the attention that the customer-facing ones receive.

Stage 2: Achieve Parity with Competitors

An Information Technology department whose role is in Stage 2 would be characterized by the desire to expand I.T. only to keep up with competitors.  Industry best practices are followed regarding programming languages, hardware, purchased software, etc.  Investments in the department usually come in the form of investing in hardware and software, rather than investing in the people or in the process.  Unlike Stage 1 organizations, Stage 2 organizations often look internally for leadership in IT, though leadership still sometimes comes from outside the department.  Improvements are often only made when shortcomings become obvious.

Stage 3: Provide Credible Support to the Business Strategy

Stage 3 Information Technology departments would be expected to actively support and strengthen the company's competitive position.  Stage 3 I.T. departments would make sure that all of their decisions are consistent with the organization's overall strategy and that these decisions are communicated effectively to all I.T. personnel.  These departments would be aware of long-term trends in the marketplace and would be actively considering ways to use these trends to their advantage.  Stage 3 I.T. companies often stay in Stage 3 for short periods of time to implement one or two large changes then revert back to Stage 2.  As opposed to Stage 2 companies, however, Stage 3 companies will often pursue improvements for the sake of improvement, rather than based on some external force. 

Stage 4: Pursue an I.T.-Base Competitive Advantage

A company reaches Stage 4 when the competitive strategy of that company is reliant on I.T.'s ability to implement the strategy.  In other words, I.T. is just as (but not more) important as other departments, and successful projects are largely a collaboration among departments.  What sets Stage 4 I.T. departments apart from other stages is the expectation by other departments that I.T. can contribute ideas and strategies central to the business as a whole.  Wheelwright and Hayes mention briefly that some Stage 4 firms take this idea too far – a firm that promotes one department at the expense of others is doing harm, regardless of which department is being favored.

If I could be able to state with certainty how a company could bring its I.T. department from Stage 1 to Stage 4, I would probably be making seven figures as a business consultant.  Clearly, I can't do that (yet).  But by identifying some terminology, I should be able to communicate some ideas much more easily in future posts.  For example, in a previous post I wrote about improving the job interview process.  However, I hope it's clear that a Stage 1 organization would have different needs than one in Stage 4.  A Stage 1 organization may have driven away its qualified workers, leaving only workers unable to find jobs elsewhere. Its hiring efforts would not only need to focus on finding good programmers, but also on finding programmers who would be willing to endure, and help turn around, a Stage 1 environment.  Since a Stage 4 company's I.T. department is involved in the overall strategy of a business, its management would need to focus its hiring efforts on finding personnel who can understand the business as well as the technology.