Creating business value through IT

Harvard B-School’s Andrew McAfee has posted an article and a link to a free HBR article on Investing in the IT That Makes a Difference.

The gist of the article is that two new wrinkles in corporate IT that have sprung up in the past twenty years, the web and enterprise software, have enabled companies to take good ideas— improved business processes, sets of workflows, plans about who should get to make which decisions, etc.— and propagate them widely and with very high fidelity. Success begets success; rich companies get richer; and losers fall by the wayside. He says,

To survive, or better yet thrive, in this more competitive environment, the mantra for any CEO should be, “Deploy, innovate, and propagate”

Cisco identified several key business processes—market to sell, lead to order, quote to cash, issue to resolution, forecast to build, idea to product, and hire to retire—and configured its systems to support the subprocesses involved in each stage. The software updates and the strategy discussions the technology engendered eventually resulted in greater consistency throughout the organization and contributed to Cisco’s strong performance over the past few years.

The new enterprise IT can improve an organization’s return on talent.

The value of simply carrying out rote instructions will fall while the value of inventing better methods will rise. An effective leader and a well-designed organization will need not only to aggressively seek out and identify such individuals and the innovations they generate but also to develop and reward them appropriately.

Andy asked for feedback, “Curb my enthusiasm,” so I emailed him:

Your basic arguments hold true, but I think you’re missing a major area, perhaps because you are so close to it that you take it as a given.

Inventing and propagating processes improvements: cool. But what about the value of linking people together? Conversations among peers are the stem-cells of innovation. Customer/company conversations are the pinnacle of customer service. Web IT accelerates and enriches relationships. Isn’t that where the lasting value will come from?

Throw these macro economic changes into the mix: the rise in value of intangibles (from less than a third of the S&P in the early 80s to more than 80% fifteen years later). And the massive shift from manufacturing to service. These are things that ride networks with ease. (You can’t email me a hammer.) You know the drill: communications nets grow exponentially, and the denser their connections, the faster the networks’ cycle time. I suspect that the impact of investing in IT support of these web 2ish effects will overshadow the returns from ERP, CRM, etc. Human interaction is the ultimate process.

Just my two cents. I love your work: and am busy swiping ideas from you to incorporate into my vision of next-era learning in corporations.

jay

What does this have to do with training?

For years, I’ve been saying that it’s not the learning that matters; it’s the performance that results from the learning. I counseled training directors and CLOs to think of their objectives as increasing sales, improving customer service, cutting costs, and so on: business benefits.

Business life is no longer that simple. The objective has expanded to include sparking innovation, dealing with uncertainty, and improving processes. Hence, McAfee’s topic is vital to any of us who try to work with the big picture.