A sideways look at IT and IS strategy and VRM

I’ve been reading quite a bit of Umair Haque this past year. He makes me think. Take his latest post, Saving Strategy from the Strategists. You don’t have to agree with everything he says, but the following excerpt shows where his head’s at:

Perhaps the meaning of competitive advantage, when all the games have been played and the gears of the economic machine have finally stopped moving, is this: privatize benefits and socialize costs.

That might have been sustainable in a disconnected, asset-heavy industrial economy. But it cannot hold in a hyperconnected edgeconomy. When all of us can trade ten billion times a day, if everyone’s simply trying to claim benefits from everyone else, while shifting costs and risks to everyone else, the result is economic implosion.

In an edgeconomy, chasing competitive advantage is like playing a game of economic musical chairs – one where you leave a grenade on your chair every time the music starts up again. Sooner or later, everyone gets blown up.

The problem is simple. As we’re finding out the hard way – yesterday’s approaches to strategy simply cannot power the economies or businesses of the 21st century.

So the question is: how do we save strategy?

Umair then goes on to make the following points while looking at how market participants, acting “strategically” can cause serious implosion:

  • Strategy isn’t arbitrage
  • Strategy isn’t dealmaking
  • Strategy isn’t an arms race
  • Strategy is about long-term “best interests” of all stakeholders

Now that’s a ridiculously short summary because I would prefer you to read the real thing rather than any attempt at summary from me.

But in the meantime. I started mulling over what would happen if I transplanted what he was saying to a different context, IS and IT strategy. And , in trying to paraphrase while transplanting, this is what I came up with:

1. IS/IT strategy isn’t arbitrage: Don’t build applications that do nothing but “capture value” from other existing applications in your environment. Those applications are embedded within existing people and processes. Organisational immune systems will therefore kick in and push back against the value migration. Instead, build applications that create demonstrable new value; “old value” will migrate of its own accord as adoption takes place.

2. IS/IT strategy isn’t dealmaking: We’ve spent decades insisting on trying to build applications that seek to share costs between business units. Like bad deals, what tends to happen is that the “shared” piece grows bigger and bigger, until it overbalances and crashes down under its own weight and volition. As Umair says, we have to concentrate on how our resources and competencies will fit together tomorrow, not just how to share costs today. We have to move the debate from “business unit” views to those of competencies and capabilities.

3. IS/IT strategy isn’t an arms race: We have to make architectural choices that lead to sustainable differences, not just cost leadership in a me-too environment. One could argue that the reason why we keep having dominant players in the IS/IT vendor world is because we insist on this me-too-ness. Nobody got fired for buying IBM. Nobody got fired for buying Microsoft. Nobody got fired for buying Google. Whatever. Nobody got fired full stop.

Which leads me on to VRM.

Too often enterprises walk down the “arms race” aisle, consummating Stockholm-syndrome marriages. That’s not sustainable any more, at the very least because we keep creating systemic risks and monoculture weaknesses across entire market sectors as a result.

If we want to create sustainable differences within a market sector, we’re going to need to work with other market participants, work more closely with other market participants. Sometimes, when I look at what tends to happen, the only analogy that comes to mind is this: Market participants are like people living in the same neighbourhood. The lock-in vendors of old are like burglars in the neighbourhood. And what we’ve been doing is, rather than creating neighbourhood watch schemes, we’ve been trying to negotiate individually and bilaterally with the burglars. With predictable results.

I’m sad not to be able to go to the VRM workshops taking place right now. If you want to participate vicariously, like I am, check out vrm08 at twitter. Better still, start with this article by Doc and this one by Adriana.

Let me know what you think