Business and Technology: An Integrated View

Technology is not just for "IT people" any more.

August 20 th 2010

Business leaders are always on the hot seat—juggling customer services, product quality, costs, wages, and externalities in a way that defies priority. But today, in an age of technology, everything about business has been changed, from internal processes to products to marketing to global reach.

And as if that weren't challenging enough, most CEOs are also not technology leaders. In the old days—the 1990s—many leaders saw their technology responsibility as quite simple: find a good Chief Information Officer to manage technology deployment while keeping costs down. "CIO" came to mean "Career Is Over." But today, even this thankless task is not good enough, as technology penetrates every element of the strategy and operations of the company. What is a leader to do?

I believe that the old model of segregating each area of the business into independent pieces is no longer adequate—if it ever was. Now, more than ever, the leader must know enough about the pieces, including technology, to understand and lead the business as a whole.

Before offering suggestions for tackling this challenge, we must understand the problem. More than any other force, information technology has transformed business in the past twenty years. Some might argue that globalisation is an equally powerful force, but it's better seen as a byproduct of information technology. The path to technology-rich business environments has not been smooth. While technology has created incredible new opportunities, it has also opened the door to dramatic failures with wide-ranging impact. Yet the coming decade promises a continued deluge of technology innovation, so perhaps we ought to pause and ask what we have learned to prepare us for the future.

Remember the dot-com bust ten years ago? At the peak of technology hype, the bubble burst, and we learned that simply putting .com in a company's name was not enough to assure the founders billions of dollars. Many of these "companies" were truly bad ideas. We learned that the fundamentals of business still involved things like revenue, profit, and cash flow. More importantly, business still needed to deliver value to the customer.

Over the ensuing decade, we have seen some great business opportunities emerge, rooted in technology, along with some unprecedented disasters. We should seek to learn from these as well.

Technology Possibilities

Google was established in 1998 and went public in 2004—I know, because I Googled it. We can scarcely imagine life before this incredible search capability. Amazon.com saw through the follies of so many other ventures and has been at the forefront of creating online merchandising. eBay established the world's largest garage sale. E-books and e-publishing have finally taken off, with good business plans and enough advanced technology to make the products useful. All aspects of the media continue to be turned upside down. The application of technology is not limited to these "modern" companies. Look inside Boeing, Ford, or Johnson & Johnson, and you will see a similar internal transformation in both processes and products.

Those who don't understand technology's impact can quickly move from leader to follower to gone. Consider the business challenge of delivering media content to consumers. Stores like Blockbuster, which rented VHS and later DVDs, faced several challenges, such as keeping adequate inventory in stock and determining how to charge for material that can be reproduced at very low cost. An interim solution to the inventory problem was identified by Netflix, which created a mail-in model, greatly expanding inventory. But the cable companies that offer movies on demand create another shift in the market. Blockbuster and Neflix will be forced to navigate the same technology-based business transformation that newspapers are failing at today.

Timing is critical. Few people remember that Enron tried to create another technical solution before its time a decade ago—and this became another of their many failed business ventures. Expenditure in technology remains a challenge. It is not how much you spend, but how you spend that makes a difference.

Today, companies grapple with social media, Twitter, iPhones, and many other new products of technology. Some may believe that these are consumer rather than business tools, but according to Bonnie Wurzbacher, senior vice president of Coca Cola:

[Social media tools provide an unbelievably effective marketing vehicle—so much more effective than TV is these days. We actually have a head of social media at the company and this person's job is to ensure that we are really leveraging and using the grassroots viral marketing that occurs through the use of those technologies. We are trying to use it effectively not only to share accurate information, but also to reach consumers in a way that we couldn't by more traditional methods.

The engine that produces all of these technology products is based on continuously faster and cheaper computer chips, and the promise of this continued development looks secure for the next decade. New technology will create new products that businesses, old and new, will use to continue the business transformation.

Downsides

Many companies want to get their data flowing across all functions of the organization by implementing an enterprise system. Large-scale systems implementations remain a program management challenge, however, and a significant portion of these experience cost overruns and missed goals. The Standish Group reported 66% of such projects were late or failed completely in 2005, and the likelihood of failure rose with the size of the project.

But problems from technology are not bounded by costs within a single company. Another kind of downside is what technology has done to jobs. While many point the finger at outsourcing, technology has likely "eaten" far more jobs than outsourcing, according to Prabhu Guptara.

At the heart of the economic crisis are some technology-based models that drove the mortgage industry to sell mortgages to almost anybody, without documentation. More importantly, other models created the packaged derivatives of these mortgages that were sold to banks and pension funds around the world. Assumptions in these models were not well understood by packagers, buyers, or regulators of the financial industry, and the resulting disaster has affected people all over the world.

Similarly, drilling by British Petroleum in deep water in the Gulf of Mexico was guided by technology-based models. These models contain assumptions that developers had trouble understanding, let alone the management leaders who made decisions based on them. The result is both an environmental and economic disaster far beyond the boundaries of British Petroleum.

(I recently wrote about the relationship between the economic crisis and the oil disaster with their roots in technology in Ethix magazine).

What is a Leader To Do?

A common thread appears between those who successfully navigate the integration and transformation of the business through technology, and those who plunge not only their company but others on the shoals of technology-rooted disasters: the leader, not just the "IT people," must become much more knowledgeable about technology. It is not enough to push for cost reduction in technology without understanding the impacts of these choices. Technology is not simply a tool for automating what was previously done. It opens new ways of doing business, and leaders must understand these new ways and evaluate the potential risks. Similarly, a business's IT leadership must not simply be an order taker, implementing whatever is proposed. IT leadership must understand a great deal about the business, and what the business implications of such systems are.

Learning to anticipate the "unintended consequences" coming from technology is a new skill, but it must be made a priority.

Business leaders often resist these requirements because technology is difficult to understand and changes rapidly. But there is no choice. I often say the relationship between technology and the business must be like a marriage: if each side simply says, "I will do my part," the marriage, and the business, will fail. Business leadership in the 21st century requires a great deal more understanding, insight, and ability to deal with the tradeoffs and risks from technology. An integrated view of business—including the role of technology—is necessary, rather than one in which the parts are isolated in their own compartments.

Not surprisingly, this integrated view is rooted in Scripture.

The first two chapters of Genesis show our world as God intended it to be. Man's relationships with God, work, fellow man, and the earth are all integrated under God. Sin caused disintegration in this synthesis—each area operating as a separate area—and conflict and brokenness resulted in each individually, and in the whole. But Christ came to restore wholeness to our world—ultimately, for sure, but even now, we are given a picture of what that wholeness should look like. We are told, "God is reconciling us to himself through Christ, and has given us the ministry of reconciliation." We usually think about this in a very limited way—that it is limited to the healing of our relationship with God. But I think it has much broader application—to the healing of all broken relationships. It leads to integration, the opposite of compartmentalization.

Perhaps this principle even includes the integration (and reconciliation) of the business leadership and the technology functions within a business.

 

Albert M. (Al) Erisman is Executive in Residence at Seattle Pacific University where he teaches courses on business ethics and business and technology. He is co-founder and executive editor of Ethix magazine. In this capacity he has interviewed business leaders from around the world on issues of ethics, values, and purpose. He has been a speaker and consultant on business ethics for many companies and professional organizations. His speaking has taken him to many countries including most recently Nepal, India, Ukraine, Brazil, Indonesia, Singapore, Malaysia, Central African Republic, Austria, and China. He is engaged in developing a Micro Finance program in the Central African Republic.

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