In 1998, Shawn Fanning, an 18-year old student at Northeastern University in Boston, couldn’t access all the music files he wanted to download. So Fanning looked for an easier and better way to access MP3, or music files. By 1999, the file sharing technology that became better known as Napster was driving recording industry executives crazy. Rather than embrace the technology and make it their own, industry executives started to prosecute Napster users who downloaded and shared music without paying royalties. According to Maryam Alavi, vice dean and chaired professor of information strategy at Emory University’s Goizueta Business School, “Suing 14 and 15 year olds wasn’t really going to work,” she says.

As a result, technology completely changed the recording industry and nearly a decade later, the industry is still grappling with ways to profit and remain competitive. If the industry had embraced what was happening with music on the Internet, it might have harnessed the technology to its benefit rather than allow college students and others to dictate its course, notes Alavi who spoke on leveraging technology during the Executive Women of Goizueta Conference held recently in Atlanta.

Although the recording industry’s troubles are well documented, Alavi reminded the packed audience that technology is a constantly evolving medium and though technological resources are available to most businesses, recognizing how best to use them can make a significant impact on a company.

According to Alavi, executives can utilize technology to achieve competitive and organizational advantages by consistently auditing whether their business model and processes are in alignment with technological capabilities. “Technology can really change, diminish or render your business model obsolete,” explains Alavi. “If your business model and technology are misaligned, it’s going to have negative consequences.”

Even established brands are not protected from technology-induced changes, warns Alavi. Take Encyclopædia Britannica, which published its first encyclopedia in 1768, and had been in business for well over 200 years, when Microsoft put its Encarta product on a CD for use in PCs in the early 1990s. Executives at Encyclopædia Britannica ignored the move and as a result nearly went out of business.

And it’s not just big businesses that need to pay attention. Alavi tells the tale of “Mr. Harmel,” a freelance photographer who specializes in images related to the healthcare industry. A museum wants to use images of people sneezing for an informational kiosk. Harmel directs them to some of his stock photos and sells the museum six shots at $150 each. Then the museum discovered istockphotos.com. At that site, the museum could purchase very similar shots for about $1 each. So they cancelled the order with the photographer. “Mr. Harmel now has to rethink his strategy,” notes Alavi.

The value of IT alignment
Although all firms have access to technological resources, the differences in what organizations gain from using information technology depend on the management of technology. Performing IT alignment audits on a regular basis is essential, contends Alavi, and provides the key to achieving competitive and organizational advantage. Regular audits give executives a better understanding of their business’ technological capabilities and enables them to better identify technology-driven business innovation. According to Alavi, executives and business owners will be more apt to make smart investments in technology if they ask themselves the following key questions:

• Can IT help me reach new markets?
• Can IT reduce barriers to entry in my business?
• Can IT make my business processes faster or smarter or both?
• How might IT impact who performs a process and where it’s done?

“There are all kinds of ways technology can enhance a business model and create opportunities,” stresses Alavi. Technological advancements can allow existing businesses to reach existing customers in new ways, reach new customers, increase customer loyalty via value-added services, and use data to create new sales opportunities through cross-selling and the like.

For example, technology allows airlines to send customers a message—via email, text or voice mail—to notify them if a flight has been delayed or cancelled. These value-added services help create customer loyalty, notes Alavi.

When an existing customer logs onto Amazon.com, the retailer uses data collected from the user’s past purchases to greet the customer with items “recommended” for him or her. Amazon also uses technology to exploit cross-selling opportunities. If a customer researches a certain book, Amazon provides details and reviews as well as links to similar books.

Entire business ecosystems are spawned by new technologies, adds Alavi. Online auctioneer eBay was founded in 1995 and the infrastructure of eBay made all kinds of new businesses possible (eBay hosts over 300,000 online stores worldwide and claims more than 220 million registered users).

Let Technology Propel your Business
Technology can also refine business processes and make business models more efficient. For instance, Cisco Systems, Inc. is a top provider of IP-related networking equipment, but Cisco doesn’t operate a single manufacturing plant, explains Alavi. Cisco relies on a handful of contract manufacturers for the bulk of its production. A single enterprise extranet connects manufacturers and distributors. By creating electronic links instead of physical ones, Cisco is able to reduce the number of steps necessary to obtain and fulfill customer orders.

Technology can also improve the ability of companies to manage process knowledge. Cisco provides the data collected by its customer service department to equipment designers and manufacturers. Through this process, Cisco’s been able to trouble shoot, identify design and marketing flaws and correct them. “Companies can slice and dice data to create insight,” notes Alavi.

Although it’s a huge multi-year undertaking, many hospitals either plan to or have already revamped their electronic patient record systems so that patient information can be quickly accessed when needed to enhance quality and/or efficiency of patient care. For example, when a doctor prescribes a medicine, he or she will be alerted if that particular drug could have negative consequences when taken along with another medication the patient is already taking. The technology even suggests a similar drug that won’t cause complications.

Technology can also affect what processes a business decides to keep in house. According to Alavi, technology is the impetus behind outsourcing and the emerging phenomenon of “crowd/expert sourcing.”

Crowd/expert sourcing refers to a situation in which information technology allows a large number of individuals to participate in design and development of a product or service in an ad hoc fashion. InnoCentive is an example of expert sourcing. InnoCentive is a web-based system that matches R&D projects of about 35 Fortune 500 companies with about 90,000 registered scientists and engineers from around the world. InnoCentive was set up by Eli Lilly in 2001. Other companies that use the system pay a fee to Lilly to list their project on the system. The registered expert who solves a listed problem gets paid $10,000 to $100,000 based on the scope and complexity of the problem. For example, when Colgate-Palmolive faced a challenge in injecting fluoride power into its toothpaste tube without it dispersing it into surrounding air, the company posted its problem on InnoCentive. A physicist in Canada solved the problem and was paid $25,000. “Could Colgate/Palmolive have solved that problem on its own? Sure, but quickly and for $25,000? Probably not,” notes Alavi. “Technology allows us to change the boundaries of an organization when it makes sense and adds value.”

Alavi advises business executives to monitor regularly what processes are best kept inside the organization, which ones are best outsourced and which ones should be kept somewhere in between.

Remaining competitive is an ongoing process and maintaining that momentum should include regular technology assessments. According to Alavi, business owners and executives “should be constantly thinking about the alignment of technology with their organization’s business model and business processes.”

The Executive Women of Goizueta’s (EWG) mission is to provide a forum for executive level businesswomen to interact and support each other. EWG provides its members the environment in which to share experiences and business strategies, to learn about recent business trends and research, and to motivate one another to be successful women leaders in business. EWG’s Vision is to provide an atmosphere of “Women empowering Women.” To this end, EWG holds regular events including informal discussion forums, an annual conference, and breakfast meetings with business leaders.

David Dell, research director for capabilities management and HR at The Conference Board, has observed, “Both HR and IT have many new issues to address and many decisions to make and implement. But the speed of change in both areas makes the challenge more difficult as it increases the promise.”

Why do people resist change? Leslie Smith, a clinical psychologist and former Web designer in McLean, Virginia, outlines these reasons:

• Fear of making mistakes or looking foolish.
• A lack of understanding or confidence about the new system and its benefits.
• Anxiety about doing more. Employees often feel overworked already, and resist learning something new when it’s layered on top of their existing duties.
• Change fatigue. Once people learn something new, they’d like to stick with that new knowledge and take a rest.

Jeanie Daniel Duck, author of The Change Monster: The Human Forces That Fuel or Foil Corporate Transformation & Change, writes, “The knee-jerk answer (to failed change efforts) is the people ‘resist change,’ as if ‘resistance to change’ were some kind of sorry genetic code that, if it could be reengineered, would magically produce people instantly eager to do things differently whenever anyone asked. The ‘resistance to change’ answer… is appealing because it takes the blame off the leaders and puts it on those ‘no-good followers.’”

Leaders must take charge of change. There are many things that you can do to ensure a more successful initiative, including:
Communicate. Explain what benefits you expect from the new system and how people’s roles might change. Also make sure that change is championed from the top of the organization and communicate that support.

Collaborate. Involve prospective users in change decisions and choices. Duck says it’s not the change that’s the problem, but the way it comes down. “People are changing all the time, but those are changes of their own choosing,” Duck says. “People resist being told they have to change.”

Demonstrate. As Duck observes, people are powerfully motivated by self-interest. Technological change is likely to be more successful if people are shown what’s in it for them. “When they’re motivated, it’s amazing what people can do,” she says.

Evaluate. Look at the whole corporate culture, not just IT, to determine how many other changes people are being asked to deal with at the same time, such as a merger or reorganization. Perhaps it’s time to give them a breather.

Commiserate. Let people know it’s okay to complain, Duck advises. It provides a useful outlet. Although IT may feel like the corporate whipping boy, “that’s the nature of the beast. IT departments have a checkered past,” she says. “They must accept that and be more careful.” Further, allowing complaint and disagreement might enable you to measure resistance before you spend millions of dollars on that new initiative.

Don’t denigrate. Mary Lynn Pulley, Ph.D., is a faculty member at the Center for Creative Leadership in Greensboro, North Carolina. She maintains that the learning curve is upside down: “It’s more of a valley than a hill,” she says. “Whenever you learn anything, your performance actually declines before it improves.”

She refers to that performance dip as the Valley of Chaos, and urges learners to remember that chaos and creation go hand in hand. “Things have to fall apart or disintegrate in some way so that they can come back together in a new way.” Managers must make it clear that mistakes are okay and avoid any kind of punishment for error in a learning environment.

Eradicate. “You must allow for the notion of un-learning as people abandon old ways,” Pulley says. Know that people have to rid their minds and routines of that which no longer works, but be aware that getting rid of the old and familiar can engender fear and confusion.