Jeff is a well known professor of management and fellow at the Said Business School in Oxford University. I happened to meet him and interact with him recently in Barcelona where he had come to deliver a lecture on “Core In-competencies”, a topic which he is very passionate about. While most managers and strategists talk about core competencies he argues that in the world that is very fast changing and unpredictable and the previous management strategies about Michael Porter’s Five Forces were researched in the 1950-60’s and published in 1972, and were great for the period of stability and Industrialization and scale but have outlived their use in modern era when industries and technologies change rapidly.
Canon was a leader in digital camera for years and Nokia and Samsung were unknowns. Now with every cell phone carrying an inbuilt camera, Nokia and Samsung have become the leaders and Canon is challenged for strategy as the camera comes free with every phone. Today face book is the largest repository of digital photographs with about 80 billion digital photographs (about 400 per average user). Most photographs were taken with non-camera digital devices, either mobile phones, or laptops. The quality of photographs delivered by professional or personal cameras is no longer as attractive as the ability to easily take a photographs with another device at hand. The vector of competition for digital photography has changed from high quality and resolution to ease of use.
Similarly, Intel had been focused for a long time on faster processor paradigm and suddenly AMD changes their strategy to move to low power consumptions chips for longer lasting battery power and captured a dominant position in cell phone market which is far larger than the earlier desktop and laptop market.
The examples show that the competition cannot be seen in only one dimension as proposed by most management strategies but should be analyzed at least in two dimensions as two by two matrix. Who would have foreseen that face book will be a competition to Kodak and Nokia and Samsung to Cannon?
Why CIOs are not invited to a good party? Most business managers think that CIOs are the destroyers of the opportunities presented to them and whenever any business managers would like to implement a change the CIOs always come in the way. They make it most difficult and take too long to make any changes to the systems. CIOs should be the architects of change and should enable technology to be applied to the external business world.
In strategy everything is contingency based and depends on time taken. Even the surgeon general warning on smoking says that one is likely to have ill effects with time. C K Prahlad in his desertion in 1992 talked about Core Competencies and suggested that strategy can be made by forgetting external factors and focusing on core competencies alone. Time has changed and no one has yet invented a general theory of strategy but one has to pick the right one for the right times. Jeff suggests that atleast one needs a two by two to define strategy in current times. One dimension is around half life of expertise – short to long and second dimension is around half life of information. Example in IT, Hardware, Software, Telecom the technology is changing very fast and so is information as it is gathered in real time, so half life of both information as well as expertise is very short and on the other hand agriculture, mining, commodities industry has long half life of information as well as expertise. The strategy for each would be different. Only 22% of the profits of a company are due to industry structures, 78% are due to capability competencies and execution.
In the value chain of Producers, Intermediaries and Consumers. The best position to be is in the bottleneck to maximize revenue and profit. CIO is the internal bottleneck of any business and hence in the most powerful and valued position.