I just finished working with my colleague Tom Wailgum on our package of articles about how Wal-Mart lost its technology edge. There’s a big lesson there about IT strategy, and not just for big companies.
Wal-Mart placed the right bets on supply chain technology at a time when it could provide them with competitive advantage. I think the reason that Wal-Mart’s management recognized the bang they would get from their supply chain had mostly to do with it’s meta-story–the overarching story the company told about itself as a low-cost retailer. Supply-chain dominance became a logical chapter in that story.
It certainly worked in their favor to be first with a lot of the technology. But if you look at the technology timeline that accompanies Tom’s article, it’s pretty clear that almost every major breakthrough Wal-Mart made with IT supported who they believed they were. I think you can trace its recent problems to the persistence of that vision despite massive changes in the retail industry in the past 10 years.
Nick Carr writes in his blog that Wal-Mart’s decline, and its recent decisions to choose packaged software from SAP, HP and Oracle, is a triumph of commodity software over homegrown legacy systems. But I think the significance of Wal-Mart’s decision isn’t only, or even primarily, to do with packaged software being as good or better than what they build themselves. They need new IT, and fast, to tell a new story about themselves. Whether they’ll figure out what that story is, and whether they are able to use it to put themselves back on the map as innovators remains to be seen, of course.
But getting the story – the strategy – right is the big key here. I interviewed Gary Hamel recently and his argument, that managing for efficiency won’t get you competitive advantage anymore, seems apropos to me here. If efficiency is the price of entry into the marketplace now, then IT departments, like the rest of management, have to start looking elsewhere to put their companies on the map, whether or not they invent the technology that fulfills their vision.
Would love to know what others think about this.