Introduction
Information Technology includes
information that businesses create and use and the integrated system (hardware
and software) for information management (Porter and Millars, 1985). Since
information is a potential strategic resource for competitive advantage (Porter
and Millar, 1985), it is a likely source of competitive advantage. However,
there are conditions for this to take place. According to researches based on the Resource-based View (RBV) of the firm,
IT can constitute sustainable competitive advantage if complemented with other
internal organisational elements that are inimitable due to social complexity
(requiring a mix of intangible firm elements), causal ambiguity (cannot be
easily traced to a particular element of the organisation) and path
dependencies. Alone, IT does not offer much differentiation as most firms can
access common IS resources i.e. ERP, CRM, social media platform, etc. Other conditions include
alignment with core processes and strategies, scalable and adaptable IT
infrastructure, skilled human resources, IS managerial knowledge, general infrastructure/telecommunications,
industry standard/partners as well as sensing and experimentation (Ravichandran
& Lertwongsatien, 2005; Melville et al., 2004: 311; Tallon and
Pinsonneault, 2011; Carlo et al., 2012).
As a valuable resource, IT is much more beneficial when geared towards
revenue-generation more than cost reduction (Mithas et al., 2012).
General Electric
General Electric exemplifies the
above point very well. The company’s IT investment and use is remarkable,
earning it a place among 21 most admired companies making IT a competitive
advantage along with Google, P&G, Microsoft and Mayo Clinic (Columbus,
2013). GE’s case is noteworthy as it is not an IT company. It operates in
complex, heavy-duty industries involving oil and gas, aviation, healthcare,
manufacturing and power generation. Two areas where GE has effectively used IT
are in data visualization and social media.
GE uses data visualization to
communicate complex activities and information to internal and external
stakeholders. According to Linda, executive director of global brand marketing,
GE has recorded huge success and media attention since it began using this
medium six years ago to show major causes of death across different races (Gavett,
2013). It used it to compress the whole history of summer events since 1900
into a simple illustrative chart. Also, data from its 713 gas turbines are
gathered every 15 minutes and displayed in graphical chart indicating power
state (on or off), capacity and maximum output of each turbine.
GE’s adoption of online social
networking has equally received attention. The conglomerate uses its own social
media platform called GE Colab which ‘combines the capabilities of Facebook,
Twitter, and other social applications, allowing easy networking, information
sharing, instant communication, advanced search, blogging, videoblogs, and more’
(Deiser and Newton, 2013). This has increased media literacy, leading to more
flexible interaction among senior and junior staff across divisions,
departments and countries.
Theory Validation
GE’s story validates two
theoretical models. Firstly, it supports the theory that alignment between IT and business strategy is positively associated
with agility (Tallon and Pinsonneault, 2011). Established 130 years ago, GE
is still agile, exuding the ease and speed commonly found in relatively new
comers like Google and Amazon in experimenting and encouraging technology use.
Through reverse mentoring (Deiser and Newton, 2013), management executives sit
with techies at Silicon Valley to be taught latest technological trends.
Secondly, it validates the Ravichandran
& Lertwongsatien’s (2005) RBV-based research model regarding pre-conditions
for effective IT use. Summarily, the model implies that IT can only yield sustainable
competitive advantage if used strategically, integrated with core competencies
and combined with internal firm’s capabilities and resources. One of the ways
GE integrates IT into its work processes is in using data visualization to
narrate complex stories and make its activities easy for everybody to
understand. Matched with its capabilities as a leadership factory with good
management records whose former employees usually become CEOs in other firms (Lehmberg
et al., 2009; Deiser and Newton,
2013), it is no wonder that GE makes the list of companies making IT a source
of competitive advantage.
Lessons
Companies aspiring to adopt IS
should ensure the IT solutions fit their organisational objectives and
strategies. IT should be actively used for work with a view to generating more
revenue. For example, a bakery company could use IT to manage orders and
inventories and maintain customers’ profile including such details as their
interests and purchase behaviors (how often they buy or eat bread weekly). This
information will aid projection and help to target specific customers on
particular days.
References
Carlo, J. L.,
Lyytinen, K., & G. M. Rose, (2012) ‘A Knowledge-Based Model of Radical
Innovation in Small Software Firms’, MIS
Quarterly, 36 (3) pp.865-895.
Columbus, L., (2013) 21 Most Admired Companies Making IT a
Competitive Advantage. Available at http://www.forbes.com/sites/louiscolumbus/2013/04/01/21-most-admired-companies-making-it-a-competitive-advantage/
(accessed: 24/05/2014)
Deiser, R. and S. Newton, (2013),
'Six social-media skills every leader needs', Insights & Publications. Available at http://www.mckinsey.com/insights/high_tech_telecoms_internet/six_social-media_skills_every_leader_needs
(accessed: 26/05/2014)
Gavett, G., (2013), ‘How GE Uses
Data Visualization to Tell Complex Stories’, Harvard Business Review. Available at http://blogs.hbr.org/2013/05/how-ge-uses-data-visualization/
(accessed: 25/05/2014)
Lehmberg, D., Rowe, W.G., White,
R. E., and J. R. Phillips, (2009) 'The GE paradox: competitive advantage
through fungible non-firm-specific investment', Development and Learning in Organizations, 24(3)
Melville, N., Kraemer, K., &
V. Gurbaxani, (2004) ‘Review: Information Technology and Organizational
Performance: An Integrative Model of IT Business Value’, MIS Quarterly, 28(2) pp.283-322
Mithas, S., A. Tafti, I. Bardhan,
& J. Mein Goh, (2012) ‘Information Technology and Company Profitability:
Mechanisms and Empirical Evidence’, MIS
Quarterly, 36 (1) pp.205-224
Porter, M., & V. E. Millar,
(1985) ‘How Information Gives you Competitive Advantage’, Harvard Business Review, pp. 1-13
Ravichandran, T., & C.
Lertwongsatien, (2005) ‘Effect of Information Systems Resources and
Capabilities on Company Performance: A Resource-Based Perspective’, Journal of Management Information Systems,
21(4) pp.237-276
Tallon, P. P., and A.
Pinsonneault, (2011) ‘Competing Perspectives on the Link between Strategic
Information Technology Alignment and Organizational Agility: Insights from a
Mediation Model’, MIS Quarterly,
35(2) pp.463-486
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