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Three Lenses for IT Strategy, IT’s effect on industry, Firm vis-à-vis …
Three Lenses for IT Strategy
Five forces model ( Telescope )
Nuances about the Five Forces Model
• Bargaining power is about who’s got more clout to force prices down
• Substitutes rarely come from your own industry
• A mere threat of new entrants caps prices and raises costs
It analyzes an industry, not an individual firm
The Bottomline
• Fiercer competition squeezes margins…
– Must pass on more value to customers
– or must spend more competing
• Can make an attractive industry unattractive
– A high-growth industry is unattractive if margins are unsustainable
Value Chain ( Magnifying Glass )
•Strategy = How’ll you deliver more value than your archrivals to explicitly IDed
•Value creation = Making outputs worth more than inputs
•Value chain = lens for understanding this ~ prevailing business mod
•Each activity can crosscut functions
• Each step has physical + informational components trifecta increasing it
• Building blocks of strategy undergird all costs and differentiation
– IT instrumental to tailor value chain to your firm’s strategic aspiration
Differentiation by Coordination
Departmental specialization creates functional silos
– But business processes crosscut functions
• Need coordination
• IT ≅ can overlay a connective tissue
Among siloed functions
Among upstream and downstream value-stream partners
– Substituting inventory with information
– Anticipating shifts in demand with analytics
Competitive litmus test ( Microscope )
Valuable but not rare a temporary competitive advantage
– e.g., most IT infrastructure
– Many analytics initiatives
– Operational—but not strategic—value
– Merely creates competitive parity
Valuable and rare
– e.g., purchased apps can often be imitated destroys their rarity
– Solution: Creating new apps faster than they’re imitated
– But often financially exhausting and unsustainab
IT’s effect
on industry
Firm vis-à-vis
archrivals
Competitive advantage in individual IT assets