If sameness is a recipe for losing, how do you win?

An organizational structure is all about command and control of subunits - manufacturing, engineering, sales, whatever. Within each such sub-unit IT use will have co-evolved with what they do, and be correspondingly difficult and dangerous to change. The system you use to tie it all together tends, however, to be invisible and ignored - meaning first that it's a critical component you can change for the better and second that most of the risks in doing that will be technical, not organizational.

Kind of obvious, isn't it? but lets do an imaginary walk on the wild side: lets imagine that you just got a letter from Walmart notifying you that your manufacturing company is one of about thirty being asked to bid on supply of some retail product line they've been sourcing in China and now want to get locally.

It's a big opportunity - even being one of the five or so they'll pick for the initial retail trial could add significantly to your volume for the year and beyond that; well, margins might be thin but Walmart shelf space really is a lot like money in the bank.

You make a great line in widgets, but so do most of those other guys - and, like everybody else, you know you'll face design and process compromises somewhere between the stuff coming into your inventory and final packaging to meet Walmart's rather predatory pricing expectations - but it's all do-able, and the negative impact selling at Walmart will have on your premium lines will be manageable. So it's good business, and you want it: but how do you win?

Somebody's brother in law probably does work near the top ranks in Walmart purchasing, but not yours -and you're not a haloed national brand either, so as far as they're concerned you're just another over-priced supplier.

So if the real meaning of the statement that you're as good as the other guys is that they're as good as you, where do you get a real competitive advantage? Not from check-marks on the bid summary: yes you use qualifying ERP/SCM software; yes, you can serialize by promotion; yes, you can load RFID tags and customize packaging; yes, yes, and yes - and it all looks great until you realize the other guys got on the list because they can too.

And it's not going to be in product costing either - Walmart does not buy retail: every supplier comes under pressure to cut Walmart's total costs including those of products, inventory, delivery, marketing, returns, and warranties. Worse, while a tiny percentage difference can cost you the business, you have to remember that price cutting is ultimately a self-limiting process - start down this road and eventually every product going out the door will carry away a tiny bit of your company's value to its owners, its employees, its lenders, and its community.

So where do you look for that unique edge: the thing Walmart's buyers are going to carry back to their bosses because you're the guy that's getting them promoted?

I think the generic answer is unique innovation: in product engineering, in packaging, in manufacturing and in anything you can do (and the other guys can't) to reduce Walmart's cost without reducing your own margins beyond the point of no return.

To some extent your ability to innovate is constrained by your financial strength but that will be true for most of the other guys too - and Walmart's people know perfectly well that even divisions of larger companies don't have an easy time getting at the money. The bottom line is that banks lend money on business track records and opportunities: meaning that as long your ability to spool up deliveries isn't at obvious risk, the financial strength issue will be more of a check-off box for their auditors than a real decision factor.

To some extent your ability to innovate is driven by the people you have - but that's true of the other guy too. You all hire from pretty much the same pool and it's usually true that a majority of the more senior people in each company worked for a competitor before coming on board. As a result most companies will have individual stars: you've got a packaging genius, he's got some great manufacturing people, and the next guy has someone with an intuitive grasp of distribution logistics that nobody else can match - but no single player is likely to have a long term human resource advantage.

So what that leaves is organizational structure: not so much the people and tools you have, but how you deploy them.

Look at your individual cost centers: sales, engineering, manufacturing, purchasing, distribution, finance, executive; and within each group you'll find that the tools they use dictate the local structure - so both what you do and how you do it in each of these organizational units are pretty much standardized across your industry.

So what does that leave? Probably the most important organizational bit of all: the communications and control structure under which all of these groups interact for the common good. And not only is this critical to overall success, but it's almost invisible - meaning that your competitors will be slow to understand what happened and adapt if you can find a way to gain a competitive edge by making advances in this area.

Look closely at it, and the chances are good that effective change is possible and will meet few, if any, entrenched organizational barriers - meaning that for most companies in your position this is a good place to put some serious management attention.

Look at the processes by which a customer opportunity eventually becomes a contributor to net earnings and what you see is essentially an interlocked set of communications and memory processes - things IT can be really good at. Imagine your company's information processing and communications infrastructure as its nervous system and you see the point: make it faster, make it more accurate, give it finer point control in the way that some people have finer muscle control than others, and you have the basis for a real competitive advantage - one you can hope to implement without upsetting operations inside each of the groups you're tying together.

The opportunity here is simple and critical: if you can use IT to distribute responsibility - to free your guy to take action while his counterparts in competitor companies are drafting memos or scheduling meetings, then you've got an organizational competitive advantage.

In theory you can do this with any IT toolset, but in practice the management baggage that goes along with each IT toolset means that your technology choices can work for you, or against you. Most of your competitors, for example, will be using either Windows or OS/400 based systems - and both of those have strong centralizing tendencies that will work against what you're trying to do, and like tide waters hammering on rocks, eventually wash your efforts away.

Now while this doesn't mean that you can't use these toolsets within a larger organizational effort to distribute responsibility and control to the people who do the actual work; it does mean first that you're fighting your own tools and, more importantly, that you can't beat the other guy doing it - because something like nine out of ten of your competitors use the same ideas, the same software, the same hardware, and the same inter-changeable people and once you succeed they'll be doing exactly the same things in same ways.

Bottom line: the real meaning of market monopolies in IT is averaging - you can keep pace by copying your competition: but you can't beat them doing it.

And that's the problem: IT innovation is spelt R-I-S-K, but without it you're going nowhere - and there an IT architecture that's internally consistent with the desire to push authority out the edges as a way of giving your organization a long term competitive advantage: Unix, with smart displays like Sun Rays.

The Unix/Smart display architecture gives you the cost and risk minimizations that go with highly centralized processing - and enables the organizational edge that goes with distributing control to the people who do the work. When it works, it gives you the best of both - and you get a real, long term, competitive edge by enabling your people to react faster; to focus more on the customer; to just use, rather than work against or around, their IT tools; and, to avoid much of the management overhead incident on centrally controlled organizations.

You can also, of course, lose big trying this - building momentum for positive cultural change is enabled by technical choices, but made to happen by your people. Get the right people, and you'll get good results - get the wrong people and you'll get set back after set back. But that's always the bottom line in business: if you can win, you can lose. But if you win, you win big: get off the level playing field, break out of the technology ruts the other guys are stuck in, and you'll be golden all the way to the top.


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