CIOs Can Play a Big Role in Business Evolution
Well-known business models (Avon, Netflix and Best Buy) are under siege, underscoring the point that IT plays a more central role than ever before in the rise and fall of almost any company.
Wed, January 30, 2013
CIO — Develop entrepreneurial spirit. Incubate new businesses. Borrow ideas from other industries. Barrage the marketplace with innovative products.
If that list sounds like a load of business-school babble to you, consider the real-world example of a company once called Mohawk Fine Papers (now known just as Mohawk), which is doing all of the above to great effect.
In a world gone digital, a company whose very name signalled "business model in trouble" is staving off obsolescence by deliberately disrupting its revenue model. "We had to do something radically different or we'd be out of business," says Paul Stamas, VP of IT at the paper manufacturer. "You can't walk away from who you are or what you did, but you need to evolve."
The dire necessity of business evolution--and the critical impact CIOs can have on that process--is the focus of our cover story, "CIOs Can Help Their Companies Survive Industry Disruption." Managing Editor Kim S. Nash uses examples of well-known business models under siege (Avon, Netflix and Best Buy) to underscore the point that IT plays a more central role than ever before in the rise and fall of almost any company.
"CIOs need to heed the law of the business jungle: Disrupt or be disrupted," she writes. "It's a familiar pattern--disrupter moves in, flies high, then becomes disrupted as markets and technologies evolve. Competitors emerge from unexpected places."
While fine-tuning business processes delivers laudable results for IT leaders in the short term, that work rarely positions your company to make any dazzling leaps into new businesses. CIOs are overly fond of best practices, which are, by definition, tried-and-true, not innovative.
One compelling example in our story highlights how pharmaceutical giant GlaxoSmithKline (GSK) is looking outside its own industry to partner with big-data experts at UK-based McLaren Group, a collection of high-tech companies best known for Formula 1 race car engineering. GSK plans to leverage McLaren's predictive analytics tools to make faster decisions about drug inventory and pricing.
Another interesting story is unfolding at OfficeMax, where bigger rivals like Staples and Office Depot are no longer the main focus. As players like Target and Amazon invade the office-supply space, OfficeMax's chief digital officer now thinks more broadly about competitors. "We're all just a click away from each other," he points out. "We have to pick our game up."
Disrupt or die.