Best IT Strategy is Knowing What Not to Do

Enthusiasm and new tech are not enough to make a new business effort work.

“The essence of strategy,” according to management guru Michael Porter, who came up with the idea that unique technical or organizational capabilities could lead to an unbeatable competitive advantage, “is deciding what not to do.”

Even tech executives with backgrounds in business and experience giving customers what they want can make enormous, debilitating decisions whose answers seem clear to everyone else.

Failing to re-orient to accommodate dramatic but obvious shifts in the PC and mobile-computing industries brought down top executives at Acer, BlackBerry and Microsoft this year, as Slashdot editor Nick Kolakowski pointed out Nov. 5.

For datacenter- or IT managers pulled into business decisions about which of an array of tech-enabled business ventures to approve – using training and experience that is almost exclusively technical – deciding what not to do can be particularly difficult, if only because most of their focus has to be on the present or the past rather than the future, according to Rachel Dines, analyst at Forrester Research.

However well-aligned IT may be with the strategy of the business, technology managers are always one step behind business leaders, and probably should be, Dines said.

CIOs, like COOs, CFOs and other executives responsible for internal corporate operations, have to spend most of their time fixing, tuning, patching or replacing technology and processes that are already in place rather than what strategic direction the business as a whole should take next, Dines added.

Nevertheless, years of experience spec’ing IT projects, using hours of feedback from end-user representatives and department managers, can serve as timely warnings to business managers more enamored by the potential of a new business venture than aware of how it might be received.

Even though the market for mobile electronic payments is growing at 48 percent per year and will grow from 12.8 billion in 2012 to $90 billion in 2017, according to a January report from Forrester, there’s no guarantee consumers will accept every new form of mobile payment, no matter how convenient.

For example, 64 percent of consumers believe smartphone-based tap-to-pay systems using Near-Field Communications (NFC) to authenticate a credit- or debit-card payment will eventually replace plastic, according to a survey of 2,577 adults published Nov. 15 by Harris Interactive. Fifty-nine percent said they believe tap-to-pay will eventually replace cash as well.

In the 2013 version of the annual poll, 24 percent of all consumers told Harris they’d be interested in using tap-to-pay systems; 37 percent of smartphone users said the same thing.

Those numbers make tap-to-pay look like a slam-dunk IT project for corporations with retail outlets, but the survey shows consumer interest actually dropping. In 2012, 27 percent of consumers and 44 percent of smartphone users wanted tap-to-pay – a drop that is noticeable among the general populace but higher among smartphone users who are more likely to have personal experience with it.

Fifty-three percent of all respondents said security issues keep them from wanting to store sensitive data on a phone: 47 percent didn’t want to save sensitive data on their phone and 53 percent didn’t want to send it to a retailer’s system via NFC.

Motivation is a bigger reason, however. Fifty-three percent of all users said they saw no reason to want to switch from debit cards to smartphone-based tap-to-pay; among smartphone users that number rose to 58 percent.

The percentage of consumers who said they’d try tap-to-play for the right offer of incentives – getting the same bonuses for tap-to-play that they do for card transactions via loyalty programs, use of digital wallets, or other ways to protect their own information, for example – dropped in 2013 by between 5 percent and 10 percent, depending on the incentive program.

“Right now, the bottom line is that consumers don’t yet feel as if they’re being presented with a compelling enough reason to switch their payment habits, nor are they confident that these new methods are secure,” according to Aaron Kane, senior research director at Harris Interactive, in a statement announcing the poll.

Changing a corporate web site to integrate aspects of social-networking sites already used by customers, on the other hand, poses far fewer security concerns or changes of habit, making it look like an even more obvious choice for IT-enabled business projects.

It might even be. A survey of investors and members of the media, released Nov. 15 by global business-strategy consulting firm FTI Consulting, showed 50 percent of investors and 88 percent of the media agreed it would be useful for companies to break corporate news on social-network sites.

Of media members polled, however, only 41 percent were able to locate relevant corporate information from the company’s social-networking site; only 13 percent of investors were successful.

Members of the media, in fact, were three times more likely to search for company information via social network (51 percent) than investors (16 percent) and three times more likely to consider social media an important means of communication (16 percent) than investors (5 percent).

Press releases and other forms of traditional communication, on the other hand, were rated credible by 18 percent of investors, but only 10 percent of the media.

Investors are also far more likely (40 percent) to go directly to social networks to get analysis and other content from third-party financial analysts or investor services than they are to go directly to a company’s social-network site (14 percent).

There is so much digital content available to investors, they take for granted that they can get basic information directly from the company, and spend more of their energy looking for original perspectives or analysis from third-parties including analysts, other investors, or the media, according to Elizabeth Saunders, senior managing director of the Strategic Communications practice at FTI Consulting.

Consequently, it’s more important for a company to direct the effort it puts into social networks primarily at the media and spend extra effort to form relationships with third parties, she said.

In neither of these cases is the technology the main issue. Consumers want mobile electronic payments and access to corporate information via social networks; they just don’t want either one in the way corporate strategists might assume by looking at polls showing generic enthusiasm about a particular technology.

Success or failure in these two cases appears to have more to do with where and in regard to what function the system is implemented – and at whom it is aimed – than specifics of the technology itself.

Michael Porter wasn’t the first to say that the devil is in the details, but he likely was the first to say details most decision makers overlook are the ones successful business people use to decide what not to do. marekuliasz