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IT and
Competitive Strategy


                 © copyright 2007, youngjin yoo
how do I align my
technology to my
 firm’s strategy?


               © copyright 2007, youngjin yoo
strategy question




               © copyright 2007, youngjin yoo
strategy question

how do you build sustainable competitive advantage?




                                          © copyright 2007, youngjin yoo
Michael
   Porter




© copyright 2007, youngjin yoo
Michael
                    Porter

it’s all about
 positioning



                 © copyright 2007, youngjin yoo
Michael
                    Porter

it’s all about
 positioning
      five
     forces




                 © copyright 2007, youngjin yoo
Michael
                      Porter

it’s all about
 positioning
        five
       forces
   three generic
     strategies


                   © copyright 2007, youngjin yoo
Threat of
                         new entrants




Bargaining power      Rivalry among        Bargaining power
of suppliers       existing competitors    of buyers




                    Threat of substitute
                    products or services




                                                         © copyright 2007, youngjin yoo
© copyright 2007, youngjin yoo
CK Prahalad




 © copyright 2007, youngjin yoo
CK Prahalad


it is about unique
     resources



                © copyright 2007, youngjin yoo
CK Prahalad


it is about unique
     resources
      capabiliti
         es




                    © copyright 2007, youngjin yoo
CK Prahalad


it is about unique
     resources
       capabiliti
          es
         core
     competencies


                     © copyright 2007, youngjin yoo
Kathleen
Eisenhardt




  © copyright 2007, youngjin yoo
Kathleen
                 Eisenhardt

it is about ability to
       innovate



                   © copyright 2007, youngjin yoo
Kathleen
                     Eisenhardt

it is about ability to
       innovate
         dynamic
        capability



                       © copyright 2007, youngjin yoo
Kathleen
                     Eisenhardt

it is about ability to
       innovate
         dynamic
        capability
          hyper
       competition

                       © copyright 2007, youngjin yoo
© copyright 2007, youngjin yoo
how can you exploit
    IT to build
   sustainable


                © copyright 2007, youngjin yoo
it depends!



              © copyright 2007, youngjin yoo
positioning



              © copyright 2007, youngjin yoo
Wal-Mart and EDI



              © copyright 2007, youngjin yoo
create unique
  resources


                © copyright 2007, youngjin yoo
© copyright 2007, youngjin yoo
IT + culture




               © copyright 2007, youngjin yoo
IT + culture
IT + ownership structure




                           © copyright 2007, youngjin yoo
IT + culture
IT + ownership structure
 IT + access to capital




                           © copyright 2007, youngjin yoo
IT + culture
IT + ownership structure
  IT + access to capital
IT + operation excellence




                           © copyright 2007, youngjin yoo
IT + culture
IT + ownership structure
  IT + access to capital
IT + operation excellence
       IT + brand



                           © copyright 2007, youngjin yoo
IT + culture
IT + ownership structure
  IT + access to capital
IT + operation excellence
       IT + brand
         IT + HR

                           © copyright 2007, youngjin yoo
first mover



             © copyright 2007, youngjin yoo
Amazon
      vs
Barns & Noble


                © copyright 2007, youngjin yoo
Me First
  vs.
Me Too


           © copyright 2007, youngjin yoo
Amazon




         © copyright 2007, youngjin yoo
Amazon

Introducing new feature




                          © copyright 2007, youngjin yoo
Barns & Noble




                © copyright 2007, youngjin yoo
Barns & Noble
integration with inimitable resources (physical
                    stores)




                                      © copyright 2007, youngjin yoo
it’s personal beliefs



                  © copyright 2007, youngjin yoo
technology optimists



                 © copyright 2007, youngjin yoo
technology alone can and will be the source
   of sustainable competitive advantage

             build proprietary
                 systems

              keep it secrete



                                    © copyright 2007, youngjin yoo
© copyright 2007, youngjin yoo
Mrs. Fields Cookie




                     © copyright 2007, youngjin yoo
Mrs. Fields Cookie

American Airline




                     © copyright 2007, youngjin yoo
Mrs. Fields Cookie

American Airline

    City Bank




                     © copyright 2007, youngjin yoo
Mrs. Fields Cookie

American Airline

    City Bank
 IBM-Mayo Clinic




                     © copyright 2007, youngjin yoo
Mrs. Fields Cookie

American Airline

    City Bank
 IBM-Mayo Clinic
HyperActive Bob


                     © copyright 2007, youngjin yoo
technology pessimist



                 © copyright 2007, youngjin yoo
technology is a
commodity utility


               © copyright 2007, youngjin yoo
others



         © copyright 2007, youngjin yoo
they will copy it



                © copyright 2007, youngjin yoo
if not the same
     system


              © copyright 2007, youngjin yoo
similar enough is
     enough


               © copyright 2007, youngjin yoo
IT value will
 evaporate


                © copyright 2007, youngjin yoo
first mover makes all
    the mistakes


                 © copyright 2007, youngjin yoo
second mover will
      learn


               © copyright 2007, youngjin yoo
price will go down



                © copyright 2007, youngjin yoo
consumer will
   benefit


                © copyright 2007, youngjin yoo
ATM
Airline reservation systems

           ERP




                         © copyright 2007, youngjin yoo
socio-technical
  perspective


              © copyright 2007, youngjin yoo
© copyright 2007, youngjin yoo
Technology
(Efficiency)




              © copyright 2007, youngjin yoo
Managerial
 Capabilities   Technology
(Uniqueness)    (Efficiency)




                              © copyright 2007, youngjin yoo
Managerial
 Capabilities   Technology
(Uniqueness)    (Efficiency)




                              © copyright 2007, youngjin yoo
Managerial
 Capabilities   Technology
(Uniqueness)    (Efficiency)




                              © copyright 2007, youngjin yoo
Managerial
                Technology    Sustainable
 Capabilities
                (Efficiency)   competitive
(Uniqueness)                   Advantage




                              © copyright 2007, youngjin yoo
Some statistics




                  © copyright 2007, youngjin yoo
creative destruction
       people


                 © copyright 2007, youngjin yoo
Joseph Schumpeter




               © copyright 2007, youngjin yoo
Joseph Schumpeter
creative destruction is the engine of
           the capitalism



                               © copyright 2007, youngjin yoo
Sustainable
             Competitive
IT-enabled
             Advantage
innovation

                Time &
                History

                           © copyright 2007, youngjin yoo
it’s like a garden



                 © copyright 2007, youngjin yoo
time matters!



                © copyright 2007, youngjin yoo
© copyright 2007, youngjin yoo
• technology optimist




                        © copyright 2007, youngjin yoo
• technology optimist
• technology pessimist



                     © copyright 2007, youngjin yoo
• technology optimist
• technology pessimist
• socio-technology
 perspective



                     © copyright 2007, youngjin yoo
• technology optimist
• technology pessimist
• socio-technology
 perspective

• constructive
 destructionist
                     © copyright 2007, youngjin yoo
© copyright 2007, youngjin yoo
all of these are valid
     perspectives


                   © copyright 2007, youngjin yoo
© copyright 2007, youngjin yoo
choose what works
 for you and your
     company


               © copyright 2007, youngjin yoo
© copyright 2007, youngjin yoo
understand your
company’s strategic
  orientation first


                © copyright 2007, youngjin yoo
IT architecture is too
important to leave to
      the geeks


                  © copyright 2007, youngjin yoo

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Session 4 It And Competitive Strategy