Strategic Information Technology Plan

CHAPTER 9 Building Capabilities for MTI Success

OVERVIEW

The ultimate goal of a technology-focused firm, whether it seeks to obtain technology internally or externally, is to create value for the firm and the firm's stakeholders. The best way for a firm to create value that will continue over time is through a sustainable competitive advantage, a fact we noted earlier in  Chapter 2 . The foundations for this sustainable competitive advantage come from the capabilities of the firm. This chapter will integrate ideas developed earlier in the text to discuss these issues. The topics examined in this chapter include:

· • Capabilities and how they are developed

· • How a firm develops a sustainable competitive advantage

· • Value creation for the firm through competitive advantage

· • The role of the creation of industry standards

· • The fundamentals of venture capital

· • How to turn around a troubled firm

INTRODUCTION

Parts Two and Three examined the two major ways to obtain technology: internally through innovation and externally through alliances or mergers/ acquisitions. Regardless of the method employed to obtain technology, the organization must have the necessary capabilities associated with that technology if the firm is to gain or maintain a competitive advantage. Capabilities, you will recall, are those internal resources like leadership, culture, and training that allow a firm to implement a given strategy. The capabilities necessary are not only for today's competitive advantage but also to build and ensure that there is a competitive advantage in the future.

   The development of the capabilities necessary for such success begins with the initial steps taken by the organization. It was noted in Part One of this text that the successful management of technology and innovation requires that an organization maintain a clear view and understanding of where it gains its competitive advantage and creates value for important stakeholders. From this understanding, the organization targets resources and skills that it needs to employ a given strategy. If the necessary capabilities are not present, regardless of whether the organization uses internal or external efforts to obtain the technology, it will not be able to build a competitive advantage. The goal is to have a sustainable competitive advantage that is hard to imitate and as a result, it remains a strength over a period of time. Although developing a competitive advantage is a conscious process for the firm, the competitive advantage should be something that occurs because of the firm's capabilities and their management. As a company strives to develop its capabilities, there are several ground rules.

· 1. Success depends on a clear strategic logic for processing information and sharing knowledge.

· 2. The appropriate structures and processes must be in place for both technical and nontechnical activities.

· 3. Employees must be motivated to develop and take advantage of capabilities.

· 4. Organizational fit must allow resources to be captured by the right people at the right place at the right time to make a competitive difference.

    Figure 9.1  illustrates the successful building blocks for developing capabilities. Reviewing the model, the external environmental factors shape the resulting capabilities of the firm. The elements of the external environment discussed in  Chapter 2  included: economic, social, political, and technological as well as the competitive environment itself. For example, as the economy slows, demand for many products declines. This decline in demand intensifies competition initially and may cause some firms to look for other opportunities or to change their competitive mix. In Chapter 2 , we also discussed how a firm's industry influences the competitive actions of that firm. The specific model examined was that of Michael Porter and was referred to as the five-forces model.

AUDIT EXERCISES

· 1. If your organization were to enact new technology, what actions would you suggest to ensure your firm would get the results it hopes for? How would you determine whether your process for implementing the building of capabilities is fair, timely, and successful?

· 2. Earlier in the text ( Chapter 2 ), we discussed measuring performance using financial data. Capabilities do not lend themselves well to such measurement. In  Figure 9.1 , there is a list of strategic capabilities. How would you measure each of the capabilities? Be specific.