"Strategy remains elusive partially because managers do not know the difference between ‘sustainable advantage' and other business objectives. It also remains elusive because managers do not appreciate how many things can create sustainable advantage."

Strategy Writ Large

Nothing is as important as a clear understanding of what constitutes a company's sustainable advantage. This must be developed by the company leaders and clearly articulated to everyone. With its unique knowledge of technology, IT can offer innovative ways for the business to accomplish its objectives, thus enabling the things that make the organization unique.

Strategy Writ Small

A company's strategy is a complex mixture of issues, including not just what makes the company unique, but also attention to hidden factors that enable the company to continue. IT has a key responsibility to ensure these hidden infrastructure issues do not get ignored in a rush to focus on this year's favorite opportunity.

Opening Statement

The explicit question in this issue's call for papers -- "How should IT enable business strategy?" -- netted a broad range of responses, covering not just different techniques, but also different views of strategy, and even different views of the world in which we live. What this month's articles all have in common is that each advocates a technique for improving the dialogue between IT and other business decision makers as a means of better focusing corporate resources. Depending on your own interpretation of "strategy," you will see some as focused on strategy and some not, but all are focused on improving the dialogue between business and IT and on aligning resources with the needs of non-IT management. Depending on your view of the real world, some submissions will resonate with you, some will not. Thus, what you will find in this issue is a smorgasbord of techniques -- select those that appeal to you, and leave what you don't like for others.

THE SEARCH

Since I assume most readers are searching for better communication with management, I started this issue off with a contribution from Bonnie Cooper, project director of the Massachusetts Medical Society's IT project management office (PMO). What makes Cooper's article unique is that it does not advocate a technique per se; what it does is walk you through the history of one IT executive's attempt to understand how to dialogue with management. She begins the story with a PMO that has largely internal objectives (what she calls "project health") and moves through her experiences in upgrading the PMO to try to capture top management interest. Along the way, she tries various forms of scanning, a business fitness landscape model based on Michael Porter's Five Forces, a few portfolio techniques, and a concept of mine called "well-formed strategy statements," eventually weaving them into her own four-phased approach to alignment.

Cooper uses the term "strategy" only as part of her inquiry and search. Not only does she not pick one of the many uses and misuses of the word, but she really does not care about precise meaning. To her, strategy is a general term, covering whatever management values but has not yet conveyed to her. She lives in an environment where the standard answers of cost, schedule, and market information do not get top management attention, so her search continues. We thoroughly enjoyed this installment and look forward to her future publications.

THE HIGH-LEVEL (IF ELUSIVE) GOAL

While Cooper used a grounded approach to finding her CEO's strategy and was open to almost any answer, Niel Nickolaisen, Pollyanna Pixton, and Todd Little go to the opposite pole in explicitly delineating a very aggressive definition of strategy. They begin by defining strategy as the "sustainable advantage" and separating it from all other business activity such as infrastructure. In other words, the strategy of the company is the choice of values and process that the market will see as differentiating that company from others in a good way. In the authors' context, it follows that the answer to the question "Should IT enable business strategy?" is "It depends." It depends on what the company chooses as its sustainable advantage and whether IT has anything to contribute to that one aspect of the business.

In their article, Nickolaisen et al. acknowledge that "strategy remains elusive. It is difficult to define what constitutes sustainable competitive advantage (if it weren't, more organizations would do it)." They then present a model of business strategies that classifies strategy according to "product leader," "cost leader," or "best customer solution" options. Such models, called typologies, separate subjects (in this case, strategies) based on their resemblance to ideal types and illuminate how strategies sharing the same general purpose likely share similar problems. This typology accents the important difference between "sustainable advantage" and infrastructure. However, we readers must remember that typologies only cover strategies that fit the chosen ideal types, and many (if not most) sustainable advantages lie outside these boundaries.

I bring this up not because it in any way reduces the authors' argument or subsequent technique. I mention it only because I so often see managers ask their CEO which of the strategy types is the chosen one, and then these managers reject the direction of the CEO who answers outside the typology. Strategy remains elusive partially because -- as the authors point out -- managers do not know the difference between sustainable advantage and other business objectives. It also remains elusive because managers do not appreciate how many things can create sustainable advantage. Let us consider just a few examples:

1. Network coverage (including standards). In many fields, value depends on how many other clients share the service. This applies not just to phones and the Internet, but also to software (otherwise, why deal with Microsoft?) and media (e.g., VHS). Lawyers, consultants, and investment bankers work in social networks, and their value often rests on connecting their clients to each other or representing all clients before the same regulatory body.

2. Client transaction cost (including brand loyalty). Many companies profit from services the client buys non-competitively because a relationship is already established. For example, accountants sell the audit and then profit from a continued stream of non-competitive minor services. Branding and channel control exhibit the same dynamic (consider Colonial Penn's creation of the American Association of Retired People [AARP] as a vehicle to sell insurance).

3. Needs management. Many products and services fill secondary needs (e.g., without cars, we would not need car insurance), and these needs can be managed directly. One sole supplier of a part used in fire extinguishers spends significantly on lobbying US states to change the laws requiring fire extinguishers. Each change multiplies its sales.

These are only three of the many forms of sustainable advantage that might be the essence of your company's success. Nickolaisen et al. suggest that IT should try to identify such a sustainable advantage, then either and support it or accept the situation where IT has no strategic role to play. The authors also offer a collaborative leadership technique for the organization to use in dealing with IT -- whether or not IT is a part of sustainable advantage.

THE MODEST GOAL

My article "Power of Drudgery, Power of Agency, Power of Strategy" is similar in some ways to the contribution by Nickolaisen et al., but it seeks a more modest goal. Where they explicitly choose an aggressive standard for strategy, I explicitly choose the modest "plan to convert specific resources you have (or can get) into specific resources you really want or need, within the real environment." With this definition of strategy, I try to introduce strategic concepts into everyday life. My technique, like theirs, is a collaborative one, but whereas theirs is collaborative leadership, mine is collaborative followership. The article seeks a technique whereby you can make your function strategic without relying on the organization to intentionally help you. It discusses where you can get proper power and how you can wheedle cooperation out of management. I assert that if you express your ideas in strategic terms, then managers and management will listen. This has been my personal experience -- but not everyone will agree.

THE MIDDLE GOAL

Next, Glen Alleman presents a currently popular collaborative structure for aligning IT with company plans. The balanced scorecard is one of a class of techniques called portfolio management, and for those interested in the broader subject, Cutter IT Journal devoted an entire issue to project portfolio management (see Vol. 16, No. 4, April 2003).

One beauty of the balanced scorecard is that it encourages collaboration without actually asking for it. What it does is provide a framework that allows for (and actually encourages) differences of opinion without translating those differences into conflict. I have a lot of personal problems with the analytic justification for the balanced scorecard, but it is important to recognize that in action it works better than one might think it should. When I first learned of the technique, I was stunned, because the key designer, Robert Kaplan, had in his earlier work (e.g., Relevance Lost: The Rise and Fall of Management Accounting) attacked the overquantifying and overmonetizing of business analysis. However, I think I have finally figured out the connection. His underlying position is that people seem fascinated by trying to reduce complex concepts to numbers and then to shave them into impossibly small slices. In his early work, he identified himself as an accountant and noted that this practice lacked meaning. Then, in his later work, he identifies himself as a behaviorist and suggests that if this is what people want to do, let's go along and use numbers to keep their attention. The bottom line? The balanced scorecard seems to keep people's attention and reduce conflict in setting priorities.

AND THE SEDUCTION OF INFRASTRUCTURE

Nancy R. Mead, Dan Shoemaker, and Antonio Drommi close our review of IT and strategy by hitting the question of choices head-on. The authors start by pointing out that IT has two distinct roles and that it is hard to simply drift between them. While it is popular to want to be part of the strategic activities, it is just too easy to get caught up in daily activities and opt out of the strategic dialogue altogether. If IT passes on such dialogue, management simply leaves it out, and IT becomes known for its conservative positions without ever having been sought for aggressive new ideas.

After reading this article, I looked back and concluded that, with the exception of the brief age of the minicomputer (1975-1985), I have never seen IT as a willing supporter of new strategy. I have seen individual system designers who stretched the envelope, but they always had trouble hiring people who supported this view. IT always seems to see the risks clearer than the opportunities, and whenever I was a CEO, I followed the pattern these authors observe and did not include IT when I wanted aggressive new ideas.

The technique the authors suggest for aligning IT's two roles is COBIT, a very detailed and formal model that will be familiar to many of you. This approach completes our menu of choices, as it clearly differs from collaborative leadership, collaborative followership, and structured collaboration; instead, it relies on a high-control governance model (but one still allowing for broad communication and collaboration). I must state honestly that while I love the provocative insights in this article, I cannot see how the technique presented can support living strategy. Yet that only makes it more important to place on the smorgasbord, because it is an in-use model with strong advocates, and it may be the one for you.

IN CLOSING

As guest editor of this issue, I have enjoyed reviewing all these good articles on different techniques for approaching strategy and different ideas as to what was being approached. When I started, I thought the articles would get hung up on the never-ending debate over what strategy really is. Thus, I was happy to find that our authors weren't all that concerned over strategy per se; they were more concerned with how to align their work with anything that management would recognize as important to the company's future.

Defining strategy would be hard; it is much easier to appreciate ways we can improve our efforts without arguing over words.

ABOUT THE AUTHOR

Victor Rosenberg is currently a dilettante and expensive computer consultant, but this article relies on his 45 years of executive experience in the investment, insurance, and computer industries. He holds a doctorate in strategy and a master's degree in technology planning (both from Boston University), as well as a bachelor's degree from MIT. He has been a professor at Northeastern University and the CEO of several successful financial and technical companies. Over the years, he has also been a consultant to such clients as NYNEX, MCI, Northern Telecom, Xerox, Kodak, Lockheed Martin, and Pacific Edge (the obsolete names suggest over how many years). Dr. Rosenberg can be reached at Vrosenberg@rcn.com.