Whoever characterized guerrilla warfare as “conflict that does not determine who is right, but who is left,” could have been describing life as a CEO in today’s technology jungle. As pathfinders for their organizations, CEOs must be appropriately equipped with the computer equivalents of mosquito netting, quinine, and the machete to survive. Indeed, a CEO’s chances for survival are totally dependent upon how well he masters the “elements” and uses them to his advantage.
Five years ago, before it became fashionable to talk about information technology as a competitive weapon, CEOs dealt with their own perceived inadequacies by avoiding contact with computers and all those who used them. However, recent trends in business-the globalization of markets, the use of information for competitive advantage and the pressure to provide timely customer service-have made that behavior akin to walking through a field of land mines blindfolded. This is not something you’d do and live to write about.
Survival in the intensely competitive 1990’s will necessitate that a CEO combine his breadth of business experience with a sense of what I call “computer intuition.” Distinctive from “computer literacy” (the basic understanding of bits and bytes), computer intuition is the ability to visualize the competitive impact that creative applications of information technology could have upon your business. CEOs who lack computer intuition, stand to fall behind as the Information Age moves forward.
War stories detailing the spectacular results of such innovation abound. Take, for example, the case of American Airlines and their Sabre reservations system. In the 1960s, American observed the potential power of connecting on-line information for all airlines; however, because statistics revealed that travel agents would pick a flight off the first screen 70 percent of the time, they listed their own flights on that screen. Thus, they were able to influence travel agents’ purchasing decisions by aggressively managing electronic shelf space.
There is also the well-known Federal Express story. In the early 1980s, FE observed that there were multiple, competitive sources of overnight delivery with proven reliability. FE innovated their operations by aggressively investing in an information system that tracks the precise status of everyone’s package. Today, their competitive advantage lies in the fact that they can trace the status and location of a package from the moment of pickup, to the minute of delivery. In addition, this timely information allows them to prepare their distribution system for sudden, unpredictable surges in package volume in particular regions.
Finally, American Hospital Supply-by tying into individual hospitals, providing them with terminals by which they can electronically order supplies-allows them to electronically hook into customers’ needs. Therefore, they gain a greater share of customer purchases that reduce order processing costs, and increase the barriers of switching to competitive suppliers.
In 1988, other examples of technological innovation abound, but what is perhaps even more interesting than the examples themselves, is how each of them came about. In all three of the situations cited, the innovative idea came, not from the systems staff, but from the senior business executives who knew enough about computers to foresee the future.
ARMED AND READY
The message for CEOs is that innovation is generated from people in business, not technology. It is people, with the use of computer information, that put technological innovations in motion. Therefore, the ongoing question for CEOs to answer is, “What can I do as a CEO to create a culture of innovation with these new electronic tools?” One answer is leadership by example. It is the CEO who sets the tone for the entire organization.
If the generals lead the way to the front, the troops will follow. I can’t overemphasize the importance of this, particularly when considering requests for computers and software. The following questions are key: Who will use this technology? CEOs should know the positions and functions of groups for whom computers and software are being purchased. What will they use it for? Having your own computer is often seen as a status symbol within companies. Make sure that there are real and current applications for the use of machines and the software. How will it impact your business? Make sure that in addition to a current need, adequate thought has been given as to how to measure the success or failure of the investment. Request that technologists show evidence that assertions made about the impact of technology are true. How will it influence our competitive position? Force technologists to talk business; not computerese. Request that they tell you what the competition is doing in the area of technology and how what we are doing now will differentiate us within three years’ time. What specific behaviors and skills must our people demonstrate in interacting with this technology? Request a specific plan of action that will accomplish critical behavioral changes. The plan should cover the education of senior executives, as well as the administrative and junior management ranks.
BEWARE OF TECHNO-LINGO
There are numerous terms often bandied about by technologists, of which you need to be particularly wary. Some of the most often used are:
· MIPS: An anachronistic form of measuring computer capacity that has nothing to do with the business aspect but serves to justify multi-million dollar investments.
· Gigabytes: A description of more capacity than you really need.
· Token ring: One of several architectures for a local area network. This focuses attention on the speaker’s superficial understanding of the business purpose.
· “At the push of a button”: This highlights the speaker’s attempt to mislead you with a false sense of security. Nothing worth having is available at the push of one button!
· “You don’t need to know this”: A form of “friendly fire,” that translates to, “You’d better learn this.”
· Artificial Intelligence: An expensive way of capturing in a computer, yesterday’s way of making a decision.
Last, but not least: Proceed with total confidence in your ignorance.
Would you follow the battle instructions of a general who had never actually picked up a pack and rifle? It is your responsibility to begin to develop an understanding of computers and their impact, and the way they will change business as we know it today.
You cannot learn about computers by listening to people talk about them. There is no better way for a CEO to learn how to use a PC than to use one to solve an actual business problem from his own desk. Using that first application as a starting point, CEOs quickly move from the tactical level of computer comprehension (knowing which button to push), to the managerial level (knowing what this information means), on to the intuitive level (wondering if there is a better way).
One of my favorite examples of computer intuition at work concerns a senior executive in the chemicals industry. He was involved in overseeing the sales of processed chemicals to paper mills. At the end of one of my company’s three-day programs for senior executives-during which he used the PC to work with data from his own business-he was introduced to laptop computers and portable printers. Suddenly, a light shone in his eye as he asked, “Wait a minute, does this mean that my salesmen can specify a solution, calculate and negotiate a volume-discount schedule, and print a proposal for signature on the spot? That would turn three sales into one!”
Senior executives bring enormous assets to computer/information technology. Ultimately, though, it is the crucial combination of business experience with computer intuition that will lead the survivors out of the guerilla wars of the technology jungle and into the competitive, global marketplace of the 1990s.
Eric E. Vogt is founder and president of MicroMentor, a Cambridge Mass.-based leading management education company providing customized executive-level programs that integrate the use of personal computer technology with business problem solving. Prior to founding MicroMentor in 1982, Mr. Vogt was a management strategy consultant with the Boston Consulting Group and he has been a member of the faculty of the Harvard Business School.