Challenges of Managing in a Network Economy
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Transcript Challenges of Managing in a Network Economy
Corporate Information Strategy and Management
Understanding Business Models [Chapter 1]
◦ Business model components
◦ Analyzing business model components
◦ Evolution of business models
IT Impact on Business Models [Chapter 2]
◦ Analyzing IT impact on business models
◦ Analyzing competitive forces [CF] and value chains [VC]
◦ Searching for opportunities using CF and VC
IT Impact on Organizations [Chapter 3]
◦ New organization design
◦ IT impact on capabilities
Understanding Business Models
What are the key components of a business model?
How will you analyze an organization’s strategy,
capabilities, and value added?
What is a strategy audit? How can it assist
organizations in positioning themselves to achieve
a distinctive and sustainable competitive
advantage?
How do business models evolve?
Organization interacts with environment to:
define strategy
attract resources and build capabilities to execute
strategy, and
create value for stakeholders
Conduct a strategy audit
Four areas to consider
Market positioning
Customers, needs, channels
Product positioning
Product/service offerings, features, price
Business network positioning
Activities in extended value chain
Boundary positioning
Markets, products, businesses not to pursue
Conduct a capabilities audit
Four areas to consider
Processes and infrastructure
Analyses of internal and external processes
People and partners
Ability to attract, motivate, and retain expertise
Analyses of performance metrics
Organization and culture
Appropriate structural design for accountability, decision
making, and coordinating mechanism
Leadership and governance
Clear vision, strategic controls, operating controls, effective
risk management
Conduct a value audit
Three areas to consider
Internal and external stakeholders
Assess interest and expectations
Business model drivers and alignment
Conduct a SWOT analysis
Identify drivers of revenue, cost, and asset efficiency
Develop the financial model
ROE = profit margin * asset efficiency * leverage
ROE = (NI/revenue) * (revenue/assets) * (assets/SE)
Four key approaches
Enhance
Incremental improvements to strategy and capabilities
Expand
New products/services, markets, capabilities
Explore
New businesses and capabilities
Exit
Exit product, market, outsource capability
IT Impact on Business Models
How will you analyze the impact of IT on the
business model?
What are the implications for design,
implementation, and management of IT initiatives
in different quadrants of the IT impact map?
How can IT be leveraged to identify opportunities
for business model strategy?
High
CORE
CAPABILITIES
Low
PROCESS REDESIGN
Goal: Improve performance
of core processes
Leadership: BU Execs
PM: Reengineering
BUSINESS
TRANSFORMATION
Goal: Transform organization
Leadership: Top Execs
PM: Change mgmt
INCREMENTAL
IMPROVEMENT
Goal: Improve local
performance
Leadership: Local level
PM: Experimentation
EMERGING OPPORTUNITIES
Goal: Identify and launch
new ventures
Leadership: Venture IU
PM: New venture dev.
Low
STRATEGY
High
Value Chain Framework and Five Forces Model
Can IT streamline processes?
Can IT change the basis of competition? [AHSC & AA]
Can IT change the nature of relationships and balance of
power in buyers-sellers relationships? [GHX]
Can IT build barriers to entry? [Amazon]
Can IT raise switching costs? [Wal-Mart, Intuit]
Can IT add value to existing products/svcs? [Boeing]
Can IT create new products/services? [GM]
IT Impact on Organizations
Why is there a need for an organization to be both
“big” and “small”?
How will you analyze IT impact on an
organization's capabilities?
What challenges do executives face in designing
modern information age organizations? How can
these challenges be addressed successfully?
Organization environment interaction
Environments are dynamic and uncertain
◦ Large firms must respond quickly to local needs
◦ Intelligence cannot be centralized
Organizations need to have a global focus
◦ Small firms must act big to survive in global economy
New business design
◦ Extended enterprise & on demand
Can IT enable agility and control?
Time synchronizing operating and management processes
[eg. Making changes to portions of operations without
considering impacts on partners, suppliers]
Can IT enable accountability and collaboration?
Access to information in hierarchical versus on demand
enterprise
Flatter information curve and redesign of collaborative
structure, culture, incentives, authority etc.