Tuesday, March 1, 2016

Running IT as a Niche Player

Running a niche player IT means IT is agile enough to adapt to changes and nimble enough to ride above the change curves, and IT is the business competency.

Digital provides significant opportunities for business growth and innovation, and IT plays a significant role in digital transformation. That means IT has to reinvent its brand from a cost center to a value creator; from an order taker to an idea shaker, and from a commodity service provider to an innovation engine and digital whole brain. But more specifically, what are perspectives to run IT as a niche player?

CIOs’ niche leadership: As information is the lifeblood and technology is often the innovation driver, The CIO as "Chief Initiative Officer" has become necessary to manage strategic alignment from concept to post-implementation of all initiatives from the C-level to the front lines. Hence, digital CIOs have to understand both business and technology well. Historically CIOs have been frontrunners in business transformation initiatives, and it is anticipated that they'll bring their learning, best practices and knowledge and expertise of past transformations into newer initiatives. CIOs are also quite eager and enthusiastic to drive challenging transformation initiatives. Most of the executive peers do not have a deep understanding of technology or business processes while effective CIOs have to know both the business and the technology side of things. You cannot know only one piece of the equation. It means the CIO’s niche leadership is based on the strategic mindset, multifaceted knowledge & business understanding, anticipated leadership styles, and further, CIOs need to present high “PI” -the Paradoxical Intelligence, because CIOs need to deal with constant ambiguity, they naturally gravitate to a leadership role when things are unknown, things will change, technology is involved, a tough problem has to be solved, etc. As when things go wrong, and they usually do, the CIO can be blamed. The strong CIO leadership needs to close the business-IT gaps and innovate IT to unleash its potential and maximize its value.   

Core capabilities: Running a niche player IT means you need to build a set of core capabilities which underpin strategy implementation and bring a business advantage. The business capabilities cut across all functional pillars, they are fundamental building blocks for digital transformation. The capability is a useful composite concept that is fairly specific in its bounds and can be used as an analysis tool. Processes underpin business capabilities, and culture nurtures capability coherence. The “core” capabilities can be determined via the questions and reasoning: (1) Is a capability core because it offers a competitive advantage in delivering the products or services? The core capabilities could be those which are identified as delivering the business competency, or customer experience than competitors. (2) Is it core because it supports your strategic direction and enables strategy implementation? Senior leadership defines a strategy, and IT strategy is an integral part of business strategy. In order to meet that strategy, management and technique expertise should describe a set of capabilities needed to enable the strategy. This involves some decision on tactics, etc. The current environment is evaluated to understand which capabilities already exist and which must be developed or changed. (3) Is it core also because the company excels in delivering that capability than competitors?  Must the core capability be delivered by the company itself? In today's multi-sourcing in the cloud era, the core capability does not have to be delivered by the company itself; the key point is the speed of delivery and overall business agility and maturity. Hence, a niche player IT should become more capability-based and customer-centric, to bring value to the organization growth.

Competitive uniqueness: Digital is the age of customers. Running a niche player IT also has to be customer-centric, in IT’s case, includes both internal users and end customers. From a customer perspective, if the business is not different, you are a commodity, either for IT or the business as a whole. Assuming the company has a great product, creating meaningful, relevant, and compelling differentiation in the mind of customers is the challenge. This is the foundation in which brands are built. This is the strategy that "helps" to protect the brand and products from the low-priced competition. Today’s digital business environment is unprecedentedly dynamic, complex and uncertain. There are always players starting with different resources and competitive position. And there are always different complexities at a different time. Thus, the organizations have to build the two sets of business competency: The competitive necessity and competitive uniqueness. More often, technology is a differentiator and creative disruptor. The differentiation provided by innovative technology usually is more long-lived than differentiation provided by marketing actions that can be copied easier. It just means that opportunities for cost-leadership as a strategy are now much harder as everything moves so much more quickly. At the same time, the differentiation provided by innovative technology allows companies to reach the "long-tail" customer that previously was impossible or uneconomic. And technologies can push you out of business if you are not agile enough to change your business model. Hence, running a niche player IT means IT is agile enough to adapt to changes and nimble enough to ride above the change curves, and IT is the business competency.

A niche player IT is not a business “guru,” but the glue to integrate, innovate, optimize and modernize the business and make the business more responsive to the increasing speed of changes. A niche player IT also focuses on achieving business intelligence, building a value proposition, and improve organizational maturity, etc. It is the way to run a digital IT and ultimately grow into a high-performing digital leader.


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