Information Technology or IT is a byword in business or organizations. A foundational understanding of IT is however essential before the strategic planning task is to begin. Information technology or IT refers to the collective means to assembly and electronically store, transmit, to process and retrieve words, numbers, images, and sounds, as well as to electronic means to control machines of all kinds, from everyday appliances to vast automated factories. This simplified definition according the MIT Center for Information Research is helpful in a better understanding of IT.
The implications of IT in strategic planning and as a strategic weapon are profound. Part of this is the fact that new technology redefines the nature of competition entirely. Since most business or organizations possess an IT backbone and have the means and the control via these tools, strategic plans have to be tailored to maximize the potential of such a backbone or infrastructure.
The modern marketplace calls for the competitive positioning through IT. The general approach that business or organizations have to employ in strategic planning will be any of the following: advance and attack, avoid and stay clear, acquire and seek advantage, alter and transform.
Advance and attack refers to head-to-head competition. It is meeting competitors on a level playing field. Strategic planners seeking competitive positioning and long term advantage must take caution for this may not be effective against strong industry leaders. But laziness, greed, miscalculating customer values and psychology may just be an open door for such kind of strategy. The often-quoted classic example is the transistor, originally invented by Bell Labs but licensed to Sony for a measly US$ 25,000. The rest of course is history; the tube-based radios of Bell proved no match to Sony’s transistor powered radios.
Avoid and Stay Clear
Avoiding and staying clear simply means to go where the competitors refuse to go. Not a particularly macho strategic stance but very viable. The strategic planner must utilize IT to select industries, needs categories and geographical areas where there is far less investment. This strategy may not be as lucrative in the initial stages but in the long term it certainly pays off. The reason is clear. By occupying what is unoccupied territory, one is assured of establishing a strong presence in the future.
Today it is difficult to locate unoccupied territory but they exist somehow in certain market niches, needs categories, and market segments. A psychological approach to identifying needs categories might be helpful. Since man basically is affected by his surroundings, his surroundings somehow create a need that in return creates segments and market niches. Business or organizations may be able to identify such unoccupied territory but must make provision for a rise in competition once others take notice. Industry giants might choice to compete head-to-head and this might be too costly. The strategic planner must take these into consideration.
Despite the difficulties and the accompanying risks, avoiding competition by going elsewhere is a strategy worthy of serious consideration. Toiling alone and undisturbed in an unidentified market niche is such an incentive to work faster and to work longer. It is also an incentive to work in anticipation of the expected returns. Long-term preparation and good resource allocation may be the best tool to prepare, when you go elsewhere. Simply because when the business or organization starts reaping the harvest, the competition comes. Excellent homework by the strategic planner may just be the factor to aid in survival.
Acquire and Seek Advantage
Acquiring and seeking advantage is actually specialization. It means that the strategic planner must seek niches, market segments, market spaces where it can create advantage. Niches, segments, spaces are customer groups with a specific set of needs to be fulfilled. Once the specific needs have been identified, the strategic planner must use IT to cater to that need.
The niche, segment or space by its characteristic requires specialized service, specialized approaches and specialized knowledge. These are things that are difficult if not impossible for broad-based competitors to provide economically. They would think twice, thrice, before trying to move in because the cost might be astronomical and the results anemic.
Specialization also provides a distinct advantage to the strategic planer. It provides opportunities for cost advantage. This cost advantage cannot be easily matched by broad-based competition. Competitors have to hurdle the handicap of time, space and cost if they attempt to compete head-to-head with a specialized business or organization.
A very advantageous characteristic of specialization is its narrowness. The segment is small; the space is small and the niche narrow. Once it is occupied there is very little incentive for the competition to pour in necessary investment. Specialization is not similar to avoidance. Specialization due to the characteristic of concentration leads to advantages where the leading competitors will find difficult to match unless of course they are willing to forego their typical profit figures.
Alter and Transform
Altering and transforming are actually another term for innovation. When you alter, when you transform yourself, you are creating new needs and exploiting them. IT is the perfect tool to change the rules of the game. Changing the rules to your advantage is an offshoot of IT. When the strategic planer starts the process of redefining the playing field and the business terrain, he is actually innovating.
Business or organizations can innovate by: addressing new customer groups. New customer group are actually being created in a regular fashion. The yuppie is an example. Business or organizations can also innovate by: addressing new sets of needs previously unfulfilled. The playroom is an example; single parents needed a place to bring their kids while they work.
Innovation can be pricing a product or service so as to increase its value. Pricing a product through another base like cost per unit instead of cost per equipment will be of a great help.
Lastly, innovation can be utilizing new technology. Since almost everyone wants new technology, the strategic planer has to strike while it is hot. But utilizing new technology for technology’s sake is wrong.
New technology must be utilized to satisfy needs that could not be satisfied before or utilized to dramatically change the economics of the business or organization through product or process innovation.
An innovation that the mobile phone has strongly focused on needs like combining different features into a single product can satisfy mobility. Economics in process innovation like breaking up processes to make them simpler and outsourcing them is also an example.
Innovation can also take the form of organizing and managing the firm in way that it will now create competitive advantage. Business or organizations can take advantage of innovation by creating a host of organizational forms and structures.
Depending on the strategic plan, one can design an organization that is composed of very small units that can be fitted into a larger unit that in turn can be fitted into business or organizations. Imagination is the limit. As long as the organizational form creates the desired advantage, no need to worry if it is not the books, it will be there soon.
Innovation is an elegant looking strategy but it is also the most difficult. It involves the implementation of the exact timing. The timing of innovation is critical to success as the innovation itself.