Monday, June 22, 2009

It really is getting harder to outpace the other guys

It’s not just you. It really is getting harder to outpace the other guys. Our recent research finds that since the middle of the 1990s, which marked the mainstream adoption of the internet and commercial enterprise software, competition within the U.S. economy has accelerated to unprecedented levels. There are a number of possible reasons for this quickening, including M&A activity, the opening up of global markets, and companies’ continuing R&D efforts. However, we found that a central catalyst in this shift is the massive increase in the power of IT investments.

To better understand when and where IT confers competitive advantage in today’s economy, we studied all publicly traded U.S. companies in all industries from the 1960s through 2005, looking at relevant performance indicators from each (including sales, earnings, profitability, and market capitalization) and found some striking patterns: Since the mid-1990s, a new competitive dynamic has emerged—greater gaps between the leaders and laggards in an industry, more concentrated and winner-take-all markets, and more churn among rivals in a sector. Strikingly, this pattern closely matches the turbulent “creative destruction” mode of capitalism that was first predicted over 60 years ago by economist Joseph Schumpeter. This accelerated competition has coincided with a sharp increase in the quantity and quality of IT investments, as more organizations have moved to bolster (or altogether replace) their existing operating models using the internet and enterprise software. Tellingly, the changes in competitive dynamics are most apparent in precisely those sectors that have spent the most on information technology, even when we controlled for other factors.

This pattern is a familiar one in markets for digitized products like computer software and music. Those industries have long been dominated by both a winner-take-all dynamic and high turbulence, as each group of dominant innovators is threatened by succeeding waves of innovation. Consider how quickly Google supplanted Yahoo, which supplanted AltaVista and others that created the search engine market from nothing. Or the relative speed with which new recording artists can dominate sales in a category.

Most industries have historically been fairly immune from this kind of Schumpeterian competition. However, our findings show that the internet and enterprise IT are now accelerating competition within traditional industries in the broader U.S. economy. Why? Not because more products are becoming digital but because more processes are: Just as a digital photo or a web-search algorithm can be endlessly replicated quickly and accurately by copying the underlying bits, a company’s unique business processes can now be propagated with much higher fidelity across the organization by embedding it in enterprise information technology. As a result, an innovator with a better way of doing things can scale up with unprecedented speed to dominate an industry. In response, a rival can roll out further process innovations throughout its product lines and geographic markets to recapture market share. Winners can win big and fast, but not necessarily for very long.

CVS, Cisco, and Otis Elevator are among the many companies we’ve observed gaining a market edge by competing on technology-enabled processes—carefully examining their working methods, revamping them in interesting ways, and using readily available enterprise software and networking technologies to spread these process changes to far-flung locations so they’re executed the same way every time.

In the following pages, we’ll explore why the link between technology and competition has become much stronger and tighter since the mid-1990s, and we’ll clarify the roles that business leaders and enterprise technologies should play in this new environment. Competing at such high speeds isn’t easy, and not everyone will be able to keep up. The senior executives who do may realize not only greatly improved business processes but also higher market share and increased market value.

How Technology Has Changed Competition

The mid-1990s marked a clear discontinuity in competitive dynamics and the start of a period of innovation in corporate IT, when the internet and enterprise software applications—like enterprise resource management (ERP), customer relationship management (CRM), and enterprise content management (ECM)—became practical tools for business. Corporate investments in IT surged during this time—from about $3,500 spent per worker in 1994 to about $8,000 in 2005, according the U.S. Bureau of Economic Analysis (BEA). (See the exhibit “The IT Surge.”) At the same time, annual productivity growth in U.S. companies roughly doubled, after plodding along at about 1.4% for nearly 20 years. Much attention has been paid to the connection between productivity growth and the increase in IT investment. But hardly any has been directed to the nature of the link between IT and competitiveness. That’s why, with help from Harvard Business School researcher Michael Sorell and Feng Zhu, who’s now an assistant professor at USC, we set out two years ago to compare the increase in IT spending with various measures of competition, focusing on three quantifiable indicators: concentration, turbulence, and performance spread.

Sidebar Icon The IT Surge

In a concentrated or winner-take-all industry, just a few companies account for the bulk of the market share. For our study, we focused on the degree to which each industry became more or less concentrated over time. A sector is turbulent if the sales leaders in it are frequently leapfrogging one another in rank order. And finally the performance spread in an industry is large when the leaders and laggards differ greatly on standard performance measures such as return on assets, profit margins, and market capitalization per dollar of revenue—the kinds of numbers that matter a lot to senior managers and investors.

Friday, June 12, 2009

Lo que es imposible para los hombres

Lucas 18:27: "Èl les dijo: lo que es imposible para los hombres, es posible para Dios".

En este momento me cuesta trabajo escribir explicando por qué pongo esta cita Bíblica en mi blog.

Sin embargo, yo sé que hace un año era imposible que algunas cosa en mi vida se configuraran tal como lo hacen hoy, llenas de fuerza y vivacidad, de entusiasmo para mí y para mi familia. Mañana comienza un gran proyecto y le pido a Dios fuerza y sabiduría para llevarlo a cabo.

Era imposible para mí, pero no fue imposible para Dios.

Hoy cumple años Guadalupe, la mujer a quien amo. Felicidades, amor.

Tuesday, June 9, 2009

Flexible vs Traditional

8 días sin escribir :'( caray, eso sí me da tristeza. Pero bueno, creo que estoy invirtiendo bien mi tiempo en todo lo que poco a poco les platico.

Una de las cosas en las que estoy invirtiendo mi tiempo es en la preparación de GRE para poder estudiar un posgrado en Estados Unidos.

A modo de práctica del Analyitical Writing Assesment, mi profesor, Steve West, un australiano bastante bueno, (aunque un poco aburrido en su manera de hablar) nos sugirió que escribiéramos un ensayo acerca de dos estilos de trabajo: Flexible vs Tradicional.

Pues aquí va mi ensayo que tendré que mandarle por mail hoy en la noche.

P.D. Creo que sé menos inglés del que creía :S esta parte de los antónimos en el GRE está más difícil de lo que creí. Además, ahora que he tenido que hablar más inglés con extranjeros, me está constando trabajillo. Pero bueno, nunca es tarde para aprender y yo nunca me doy por vencido.


Flexible vs Traditional

There is no way in which somebody could talk that doesn't have its own behavior. No matter if he or she is traditional or flexible in his or her working manner, the alone way of writing or speaking can reveal if someone is flexible or traditional.

Although flexible, I'll try to be impartial in order to really analyze what is the best way of working.

It's difficult to absolutely say if being flexible is better than being traditional and vice verse. Perhaps, this sentence reflects a flexible way of thinking but let us say that the thought is true.

I think there is a paradox when talking about both ways of working: "The paradox of being flexible" and "The paradox of being traditional".

Let us start with the explanation of the easy one.

The paradox of being flexible.

Flexible people always look for practicality and freedom. They usually have a good capacity of reaction and dislikes receiving orders. But the paradox presents when an extreme flexible person, lose practicality when does not have good organization and becomes slave of the extra tasks that emerged about that disorganization, losing the wished freedom.

The paradox of being traditional.

By the other side, being traditional has its own paradox. Traditional people always look for security. Actually they feel stressed when things are not made in the way they thought. The paradox is when a very traditional people lose security when they have to react quickly but can’t do it because of their way of doing.

Despite the paradoxes, there are clear advantages and disadvantages of both ways of thinking. For example, being flexible, allows you to interact with many kinds of people despite flexible or not while traditional people are usually stressed when they work with flexible people. However, traditional people are usually more accurate and precise when working, they like to observe and can easily catch errors that normal people can’t. In addition traditional people are well organized and in that way they are more free than flexible ones, because usually are strict with their schedules and say “this is my resting time, and this is my working time” while very disorganized and flexible people could fall in the temptation of losing time for themselves.

However, being flexible means that a person can add the most important issues of traditional people. Being flexible and wise you can take those things of the traditional way of doing that are good and help you to be freer. In this way being flexible is better than being traditional because with a bit of discipline, flexible people can be more productive and, of course, happier than traditional ones.

Monday, June 1, 2009

¿Cómo saber si mi dinero está bien invertido? (3) - El coche de Arturo

Hace algunos años, Arturo, uno de mis mejores amigos, pensaba que invertir bien su dinero, era comprar las cosas que mejoraran su calidad de vida. Así, cuando comenzó a trabajar, cambió de ropa, mejoró su celular y alcanzó el sueño que todo hombre de 24 años tiene: Se compró un flamante coche salido de agencia. Obviamente para él fue una gran inversión. De hecho era el hombre más feliz del mundo y la admiración de todos nosotros, sus amigos. Todos pensábamos que con ese coche, no podría más que ser para siempre un hombre pleno, rodeado de chicas y de alegrías.

Sin embargo, a pesar de todas las ventajas que Arturo tenía y que nosotros no gozábamos, hubo algunas cuestiones que no tomó muy bien en cuenta.

Para cuando compró su coche, Arturo ganaba $16,000 pesos libres de polvo y paja. De hecho era un gran salario que todos sus amigos admirabamos. Sin hijos ni compromiso pudo rápidamente ahorrar en un año, $73,000.00. Una vez que tuvo ahorrado ese dinero en el banco pensó. ¿Qué podré hacer ahora con tanto dinero? Y fue cuando decidió comprar su flamante coche convertible, último modelo. Su precio era de 364,000.00 y una gran noticia: Ya tenía el 20% de enganche, además que las mensualidades eran fijas de $6,000.00 a 5 años de modo que podría destinar sin ningún problema.

Por las mismas épocas, los cinco amigos: Mario, Luis (yo), Mike, Gustavo y Arturo comenzábamos a tener ingresos fijos. Yo ganaba $7,500 y era el más pobre de todos y Mario y yo los únicos que para entonces, no se habían comprado coche :(