Friday, September 26, 2008

Eight business technology trends to watch

The McKinsey Quarterly, the business journal of McKinsey & Company, published recently a good article called Eight business technology trends to watch, where they talk about the eight technology-enabled business trends will really matter.

They start the article talking that technology alone is rarely the key to unlocking economic value: companies create real wealth when they combine technology with new ways of doing business.

They divide the eight trends in three groups: Managing relationships, Managing capital and assets, and Leveraging information in new ways. They mention several books as further reading in each trend, these are good trends and also a very good list of reference for further reading.

Managing relationships
1- Distributing cocreation
The Internet and related technologies give companies radical new ways to harvest the talents of innovators working outside corporate boundaries.
Further reading:
Yochai Benkler, The Wealth of Networks: How Social Production Transforms Markets and Freedom, New Haven, CT: Yale University Press, 2006.
Henry Chesbrough, Open Innovation: The New Imperative for Creating and Profiting from Technology, Boston: Harvard Business School Press, 2003.
James Surowiecki, The Wisdom of Crowds: Why the Many Are Smarter than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations, New York: Doubleday, 2004.
Eric von Hippel, Democratizing Innovation, Cambridge, MA: MIT Press, 2005.

2- Using consumers as innovators
Consumers also cocreate with companies, and the differences between the way companies cocreate with partners, on the one hand, and with customers, on the other, are so marked that the consumer side is really a separate trend. These differences include the nature and range of the interactions, the economics of making them work, and the management challenges associated with them.
Further reading:
C. K. Prahalad and Venkat Ramaswamy, The Future of Competition: Co-Creating Unique Value with Customers, Boston: Harvard Business School Press, 2004.
Don Tapscott and Anthony D. Williams, Wikinomics: How Mass Collaboration Changes Everything, New York: Portfolio Hardcover, 2006.

3- Tapping into a world of talent
Top talent for a range of activities—from finance to marketing and IT to operations—can be found anywhere.
Further reading:
Richard Florida, The Rise of the Creative Class: And How It’s Transforming Work, Leisure, Community, and Everyday Life, New York: Basic Books, 2004.
Daniel H. Pink, Free Agent Nation: How America’s New Independent Workers Are Transforming the Way We Live, New York: Warner Books, 2001.

4- Extracting more value from interactions
Companies have been automating or offshoring an increasing proportion of their production and manufacturing (transformational) activities and their clerical or simple rule-based (transactional) activities. As a result, a growing proportion of the labor force in developed economies engages primarily in work that involves negotiations and conversations, knowledge, judgment, and ad hoc collaboration—tacit interactions, as we call them.
Further reading:
Bradford C. Johnson, James M. Manyika, and Lareina A. Yee, “The next revolution in interactions,”, November 2005.
Scott C. Beardsley, Bradford C. Johnson, and James M. Manyika, “Competitive advantage from better interactions,”, May 2006.
Thomas W. Malone, The Future of Work: How the New Order of Business Will Shape Your Organization, Your Management Style, and Your Life, Boston: Harvard Business School Press, 2004.

Managing capital and assets
5- Expanding the frontiers of automation
Companies, governments, and other organizations have put in place systems to automate tasks and processes: forecasting and supply chain technologies; systems for enterprise resource planning, customer relationship management, and HR; product and customer databases; and Web sites. Now these systems are becoming interconnected through common standards for exchanging data and representing business processes in bits and bytes. What’s more, this information can be combined in new ways to automate an increasing array of broader activities, from inventory management to customer service.
Further reading:
John Hagel III, Out of the Box: Strategies for Achieving Profits Today and Growth Tomorrow through Web Services, Boston: Harvard Business School Press, 2002.
Claus Heinrich, RFID and Beyond: Growing Your Business with Real World Awareness, Indianapolis, IN: Wiley Publishing, 2005.
Jeanne W. Ross, Peter Weill, and David C. Robertson, Enterprise Architecture as Strategy: Creating a Foundation for Business Execution, Boston: Harvard Business School Press, 2006.

6- Unbundling production from delivery
Technology helps companies to utilize fixed assets more efficiently by disaggregating monolithic systems into reusable components, measuring and metering the use of each, and billing for that use in ever-smaller increments cost effectively. Information and communications technologies handle the tracking and metering critical to the new models and make it possible to have effective allocation and capacity-planning systems.
Further reading:
Robert D. Hof, “Jeff Bezos’ risky bet,” BusinessWeek, November 13, 2006.

Leveraging information in new ways
7- Putting more science into management
Just as the Internet and productivity tools extend the reach of and provide leverage to desk-based workers, technology is helping managers exploit ever-greater amounts of data to make smarter decisions and develop the insights that create competitive advantages and new business models. From “ideagoras” (eBay-like marketplaces for ideas) to predictive markets to performance-management approaches, ubiquitous standards-based technologies promote aggregation, processing, and decision making based on the use of growing pools of rich data.
Further reading:
Thomas H. Davenport and Jeanne G. Harris, Competing on Analytics: The New Science of Winning, Boston: Harvard Business School Press, 2007.
John Riedl and Joseph Konstan with Eric Vrooman, Word of Mouse: The Marketing Power of Collaborative Filtering, New York: Warner Books, 2002.
Stefan H. Thomke, Experimentation Matters: Unlocking the Potential of New Technologies for Innovation, Boston: Harvard Business School Press, 2003.
David Weinberger, Everything Is Miscellaneous: The Power of the New Digital Disorder, New York: Times Books, 2007.

8- Making businesses from information
Accumulated pools of data captured in a number of systems within large organizations or pulled together from many points of origin on the Web are the raw material for new information-based business opportunities.
Frequent contributors to what economists call market imperfections include information asymmetries and the frequent inability of decision makers to get all the relevant data about new market opportunities, potential acquisitions, pricing differences among suppliers, and other business situations. These imperfections often allow middlemen and players with more and better information to extract higher rents by aggregating and creating businesses around it.
Further reading:
Hal R. Varian, Joseph Farrell, and Carl Shapiro, The Economics of Information Technology: An Introduction (Raffaele Mattioli Lectures), New York: Cambridge University Press, 2004.
Carl Shapiro and Hal R. Varian, Information Rules: A Strategic Guide to the Network Economy, Boston: Harvard Business School Press, 1999.

They concluded the article with: "Creative leaders can use a broad spectrum of new, technology-enabled options to craft their strategies. These trends are best seen as emerging patterns that can be applied in a wide variety of businesses. Executives should reflect on which patterns may start to reshape their markets and industries next—and on whether they have opportunities to catalyze change and shape the outcome rather than merely react to it."

This is a good article, and this is also a very good list of reference for further reading, but I would like to add two interesting books in the list:

- trend 5- Expanding the frontiers of automation
James Taylor and Neil Raden, Smart Enough Systems: How to Deliver Competitive Advantage by Automating Hidden Decisions, Prentice Hall PTR , 2007.

- trend 7- Putting more science into management
Wayne W. Eckerson, Performance Dashboards: Measuring, Monitoring, and Managing Your Business, Wiley, 2005.

I think with these two books, the list is more complete.

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