I am excerpting on this blog roughly 10% of my next book, The New Technology Elite due out in late March (and available for pre-order on Amazon – see badge on left) . This is the final summary chapter in the book.
Charlie Feld, whom we introduced in Chapter 15, should be long retired. In the past three decades, as CIO at Frito-Lay, then at the firm he founded, The Feld Group, he influenced IT at countless companies. He has since formed the Feld Group Institute, which tells his view of the technology world on its website:
“The journey of (technology) innovation and sophistication has been nothing short of breathtaking. What has not been so spectacular has been the evolution and maturing of a management framework that would enable the efficient application of these rich technologies within large enterprises. Every
decade these enterprises have become more dependent on IT but the potential still far exceeds the ability of most organizations, industries and governments to harvest IT.”
He says, in an interview, IT in most companies has become one dimensional, and is often just cost or compliance focused. “In the big leagues, you cannot choose to play just defense or just offense. You have to build teams with multiple roles and skills.”
“Welcome to the NFL,” says Feld.
Elite Technology Teams
The National Football League is a good analogy for building elite technology
teams. In the NFL, for any given play a team cannot have more than 11 players on the field. A team roster is 53 players, although on game day only 45 can be declared active. There are offensive units, defensive units, and special teams. There are at least 20 different roles including quarterbacks, guards, defensive ends, and placekickers. There are countless coaches who help hone the skills of the already elite athletes who play at the professional level.
Beyond the IT skills where Feld calls for attention, as we have seen in earlier chapters, an elite technology team needs great industrial designers like Jonathan Ive at Apple. It needs superb talent like Tony Prophet at HP to manage logistics in the complex global technology supply chain. It needs more of those operational geniuses like Jim Miller at Google to manage hyperefficient data centers and real estate in a world where physical presence continues to be hugely important. It needs economists like Todd Stockard at Valence Health who are comfortable with morphing business models, financial executives like Gordon Coburn at Cognizant, who can drive out massive waste in technology spending. It needs attorneys like Benjamin Kern because legal design often trumps product design in technology markets. It needs marketing folks like Jerry Grasso at Lexmark who are socially savvy. It needs “crossover” executives who have experiences at technology vendors and users like Tony Scott at Microsoft and Vijay Ravindran at The Washington Post Co.
The NFL is an appropriate analogy in other ways. The league defines rules for drafting players and recruiting free agents. It has other rules for player decorum on the field and off. It has rules for everything. We are about to enter a phase of more tech-savvy regulators and market watchers. We saw glimpses of government efficiency and innovation in the examples of the country of Estonia, the Hillsborough County Tax Collector’s Office, and Roosevelt Island. As Robert Hoffman points out in Chapter 18, “Tech-savvy policymakers are coming of age. The twentysomethings that first connected Capitol Hill to the information superhighway are now in positions of authority.”
NFL commentary has evolved significantly with instant replays, Skycam angles, and other technology. When 3M showcases its “Periodic Table,” with its 46 technology platforms, technology analysts can only become savvier. There are plenty of blogs and smaller specialty analyst firms that are defining new rules for the watched and the market watchers.
The NFL analogy rings true even more after the 2011 owner-player dispute. As the months-long lockout ended, the Players Association issued a video featuring 13 players from various teams delivering personal messages to fans thanking them for their patience and support. The society surrounding the NFL with fans and their “fantasy leagues,” the players union, the cities that host the stadiums, and the charities the teams support all significantly influence the game. In the same way, the society around technology is complex and varied. There are thorny ethical, legal, and other issues we will increasingly have to factor in to our technology design.
Any Given Sunday
Chapter 20 showed a letter that Jeff Bezos, CEO of Amazon, sent to his shareholders and it is full of technology terms and trends. Amazon is definitely a technology elite company. It is the largest online retailer. Its Kindle, eBook sales, and Amazon Web Services revenues make up 10 percent of its revenues and are some of the fastest growing products in its store. It would be fair to say that Amazon focuses today as much on Apple and Google, as it does on Walmart or Sears or Barnes & Noble.
To net it out, Amazon has a wide range of attributes that allow it to compete on multiple fronts: offense, defense, and special teams. The seesaw battle between Amazon and Walmart has been fascinating to watch. In 1999 Walmart sued then fledgling Amazon for hiring several of its technology and logistics executives. Nonetheless, Walmart seemed unstoppable. BusinessWeek asked in 2002, “Will Wal-Mart Take Over the World?,” giving credit to its extremely sophisticated use of information technology.
By 2007, that technology advantage had shrunk. A technology fund manager observed, “For years,Walmart was held up as a shining example of cutting-edge thinking in retail technology. But today, when I hear about a retailer doing something cutting edge, it’s never Walmart being talked about.”
For a while, Walmart’s online business sputtered while Amazon’s exploded: “Walmart’s lackluster online history has deep cultural roots. The organization has long been dominated by store managers who feared e-commerce could cannibalize in-store sales, and thus their bonuses, according to a former Walmart.com senior executive.”
Now, in a turnaround, Venky Harinarayan and Anand Rajaraman, are running @Walmartlabs “to speed with innovations such as smartphone payment technology, mobile shopping applications, and Twitter influenced product selection for stores.” Yes, these are the same executives who founded Junglee, which Amazon acquired in 1998, and were influential in those formative days at Amazon. Walmart, Sears, Barnes & Noble, and other traditional retailers are also trying to fight Amazon (and other Internet retailers) by lobbying for taxes on Internet sales (an attractive proposition to many states in these fiscally strapped times) and on sales by its affiliates. They are also wooing its affiliates to join their ecosystems.
And that brings us to another concept the NFL has encouraged— “parity.” It has salary caps across teams. Weaker teams get to draft better players the next year. There are few “dynasties.” So, Amazon’s advantage may be as fleeting as was Walmart’s. Technology may have its own version of parity. This is giving rise to “Phoenix” strategies.” In Chapter 3, we saw several examples like Aircell, Delta Airlines, GM, and others where technology is giving them a fighting chance to regain past glory.
The Coming Upheaval
We live in exciting times. To some degree the current landscape is the throwback to the 1960s and 1970s, when we dreamed of competitive advantage through technology. Sabre, the American reservation system, and American Hospital Supply were spoken of fondly for changing their industries.We have a similar opportunity now, but in most organizations the IT group is much more focused on the back office, not on product or revenue or growth.
In reverse, we have technology vendors with an entitlement mindset. Even as Apple and Amazon have shown dramatic business model innovation, too many technology vendors continue with older business models, and feel entitled to their compensation levels. So they cling to 90 percent software gross margins, $5,000 a gallon for printer ink, and 50 percent margins on so-called cheap offshore talent. Either they learn to disrupt themselves or they will get disrupted.
Dramatic changes are needed if you aim to become one of the technology elite.
And a Final Word from Coach Bear Bryant
Coach Paul “Bear” Bryant, one of the most revered football coaches, was quoted as saying: “Show class, have pride, and display character. If
you do, winning takes care of itself.” Unfortunately, technology, with the riches and recognition it brings, also seems to bring plenty of arrogance. Coach Bryant’s words are more good advice for building an elite technology team.
Beyond the 12 attributes we discussed in Part II, more demanding regulators
and market watchers and changing societal expectations are all going to influence our definition of technology elite in the near future. 3M’s “Periodic Table,” Amazon’s technology-rich shareholder letter, UPS’s self-definition of being “half a transportation company, half a technology company,” Apple’s benchmarks for retail excellence are the language the technology elite will increasingly use with many of their stakeholders—their customers, investors, regulators, and society at large.