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
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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
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IT Impact on Organizations [Chapter 3]
◦ New organization design
◦ IT impact on capabilities
Understanding Business Models
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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?
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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
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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
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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)
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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
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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
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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
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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?
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Organization environment interaction
Environments are dynamic and uncertain
◦ Large firms must respond quickly to local needs
◦ Intelligence cannot be centralized
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Organizations need to have a global focus
◦ Small firms must act big to survive in global economy
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New business design
◦ Extended enterprise & on demand
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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]
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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.