CASE STUDY
The following case study shows how to use the above frameworks to ask and answer the question as to the strategic role of IT in an organization.Life Brands develops and sells nutraceutical products through multiple channels (wholesale to big-box and specialty retail, retail call center and retail Internet). LB’s rapid growth required an overhaul of its IT systems (business applications and hardware). As LB began to sort through its IT choices, the CEO of LB started to ask questions about the role and contribution of IT. First, was IT an enabler of strategy? If not, the goals of the system overhaul might be different than if IT is a strategic enabler. When LB’s CEO asked these questions of his CIO, she responded that in order to answer the question, it would first be necessary to define LB’s strategy (otherwise, what strategy should IT be enabling?).
The executive team met several times to determine its strategy. There were wide-ranging opinions as to strategy. Each meeting ended without a conclusion and mounting frustration. The team then started over with a different approach. They used strategic intent and the Process Purpose model to identify which of their business activities were “differentiating’ and which were “parity.” While this, too, generated healthy discussion, it allowed the team to quickly classify entire blocks of business activities that were clearly “parity” (and thus not their strategy). Using the collaboration model in a two, two-hour sessions, the executive team defined its strategic intent as ‘best customer solution’ (as they focused on a market niche rather than a broad market) with a strategy of delivering proven products into multiple channels without creating channel conflicts (this is what makes them unique, or differentiates them from others in the marketplace). This strategy provides them with sustainable competitive advantage (their competitors rarely validate product performance and claims and limit their multiple channel advantage by setting up inherent channel conflicts). Since strategy is about choices, the executive team defined and now uses the decision filter: “Will this improve our ability to deliver proven products into multiple channels without channel conflicts?” when sorting through options and projects and allocating resources.
With the strategic foundation in place, the team once again used the principles of collaboration to identify what aspects of IT, if any, enabled this strategy. The team identified product, customer, and channel analytics as a way for IT to directly enable their strategy. All other aspects of their IT replacement project were tactical enablers and were treated accordingly in the software selection and implementation. Since all other system functionality supported “parity” business processes, their system selection and implementation project required a standard, best-practices configuration and severely discouraged any customizations or exceptions to a standard configuration. For example, LB determined that its customer relationship management (CRM) processes, while mission critical, were not differentiating. Its CRM capabilities did not create a sustainable competitive advantage but were parity activities. However, LB’s current CRM capabilities were not at parity and needed to be improved. Based on this, LB did a “vanilla” implementation of a new CRM system rather than designing or building a custom or customized version. This approach got LB to CRM parity with the appropriate level of resources.
LB used the collaboration process to communicate its strategy and decision filters throughout the organization. This increased the likelihood that those making the myriad decisions required to run a business will make decisions that are better aligned with the strategy. Every quarter, the executive team dedicates the time to review their stated strategy and perform a gap analysis on how the strategy is being and could be implemented in LB. Are there new opportunities that will improve the implementation of strategy? Have some of its differentiating activities become parity? Has the strategic-enabling role of IT changed? Using the collaboration process, the team creates its next set of action plans and priorities. The net result of this approach is accelerated growth while reducing the complexity and costs of its parity processes. In other words, a market-leading, agile company with the role of IT properly defined.
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