CIO Thoughts

After over 20 years in IT, across quite a variety of industries, this is one of the questions which I am often asked, especially as technology has continued to offer so much over the years in this area. Unfortunately, many companies have learnt that while a lot is offered, only occasionally has it offered sustainable competitive advantage. So why is this?because certainly without new technology, an organisation can be quickly left behind and made uncompetitive.

A number of reasons can be provided as to why technologies have failed (or succeeded), including; poor implementation; poor selection; lack of project management; technology failure; inflexibility, the list goes on. All of these are reasons why a technology has failed, rather than merely failing to deliver sustainable competitive advantage.

So, let's focus on what sustainable competitive advantage is. Sustainable competitive advantage in its wider context, is the ability of a company to create a market leading advantage over a substantial period of time. Making it sustainable can be a product of the advantage thereby creating barriers to market entry, creating a sizable price differential, creating a unique selling proposition or the delivery of cutting edge products.
All of which you will note are marketing terms rather than anything to do with technology per se.

Now most of us can see the potential for technology to make a product or service cheaper or better, or add a unique selling point. So why has it failed to deliver so often? The answer lies in the technology itself - Information Technology is for the most part is easily replicable. The average lifetime of a technological innovation in information is approximately 3 months. That is, any new Information Technology introduced to the consumer market can be replicated (without infringing on copyright) within 3 months, and improved on within 6 months.

Let me give you an example - the worldwide phenomenon of facebook, which has only been around for a couple of years, can now be bought as an off-the-shelf product for websites by other providers - that is, it is relatively straight-forward to build a site with similar capabilities to that seen in the online facebook application. Ahh, but facebook is doing incredibly successfully you might say - and you would be right, it is successful - but as a result of being first to market with the concept, using excellent online marketing and PR and having captured a large portion of the marketplace as well as providing continuous innovation through an open platform for developers.

In essence, the continuingsuccess of facebook has not been due to the technology, which was certainly innovative, unique and ground-breaking when it arrived, but rather because of the underlying business model. A model which created an environment which fosters continuous innovation, generated huge market awareness and market capture in a short space of time and as a result in many ways become the default social networking tool. It will be the continuing evolution of the business model (and underlying business processes) which will ensure the ongoing survival of facebook, not the technology.

Don't believe me? Ever hear of Netscape? Microsoft proved during the browser wars that having an innovative technology (as the Netscape Browser was when it first arrived) did not assure a company of sustainable competitive advantage. The browser wars did cost Microsoft a heck of a lot of money to be sure - in the billions in fact - but it wasn't the technology which provided a barrier to entry, it was the market share which Netscape had achieved. The technology itself was replicated within 6 months of Microsoft deciding to enter the market (arguably inferior some would say, but replicated nevertheless).

So, if technology does not provide sustainable competitive advantage, how can it help companies? Well, technology can make a good process far more efficient. Basically, a company with a business model and business processes which have competitive advantage can be greatly enhanced by technology. Information Technology can also help with the rapid uptake of a new product or service going to market in many instances. But it is rarely able to provide sustainable competitive advantage of its own accord. The right people working in the right business model, with the right products and services for a well-defined market, supported by strong and repeatable business processes will always be far more sustainable than relying purely on technology.

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