Friday, October 9, 2009

STEVE BALLMER SAYS IT’S UTTER HOGWASH!

If looks could kill, the outrageous way my seven year old cellphone looks could have killed anybody a mile around with a ten mile collateral radiation damage. I have been supremely chided by friends, families (neighbours’ included), philosophers and tour guides about the villainously repellent profile my cellphone seems to have inherited after so many years of use, misuse, and abuse. I had been completely insulated from all these ‘change-to-a-modernphone- dear-junkie’ diatribes, till one evening, for the first time, my wife with quite a rancid look on her face accosted me the moment I entered the house, and steamed away, “It’s not anymore about you, but about how outsiders have started perceiving us all due to that schlock of a contraption. Why can’t you buy a new phone? Even the car cleaners have better handsets. Don’t you think buying new technology actually improves productivity?” The thundering sword of a question was pretty haunting in nature: Critically, how valuable do the world’s greatest organisations consider investments in new technology? How well do these investments improve profits, sales etc...?

When the famed Jim Collins wrote a few years back in his best seller, Good To Great, that “none of the Good-To-Great [world class] executives put technology as one of their top 5 drivers,” not many believed that that would be the way it would be in the future. A year back, when I researched the outstanding NYSE CEO Report 2008, it stunningly corroborated Jim’s findings by showing that only 5% of CEOs now thought that new technology would be “the most important internal factor affecting profitability...” 67% of CEOs believed that “the ROIs from technology investments have failed to meet expectations till date!” In fact, the factor considered most important by CEOs for revenue growth was ‘management team’, rather than technology. Now, when I study the most recent NYSE CEO Report 2010, it brilliantly states, “As was the case [previously], operational efficiency and management stand out as the internal factors expected to have more impact on profitability. CEOs have downgraded the importance of new technology and products...” 70% of CEOs now say they would not increase their investments in technology.

A lucid and provocative speaker on business and technology, Nicholas G. Carr, in his most celebrated and controversial HBR article titled, ‘IT Doesn’t Matter’, proves through extensive research how, “As Information Technology’s power and ubiquity have grown, its strategic importance has diminished. Technology’s potential for differentiating one company from the pack – its strategic potential – inexorably diminishes.” While experts and media houses from around the world called the work “A bombshell” (Forbes), “Provocative” (NYT), “Firestorm!” (BusinessWeek), “Accurate description of the technological world...” (CNN Money), “...and of today’s tech landscape” (WSJ), Steve Ballmer, CEO of tech-giant Microsoft, predictably called the article a “hogwash!”

A famed letter from John Seeley Brown (former Chief Scientist, Xerox) and John Hagel III to HBR had this epitaph of a warning, “Businesses have overestimated the strategic value of IT. They have significantly overspent on technology in the quest for business value. IT-driven initiatives rarely produce expected returns...” And for those companies believing in being at the forefront of innovating new technology, I present PwC’s most recent Annual Global CEO Survey 2009, which shows that ‘technological innovation’ does not feature even in the top five factors for CEOs as a “critical driver of long-term success” (The most important factor was “Access to, and retention of, key talent”). Even when it comes to ‘Immediate threats’ that are driving CEOs’ priorities, ‘technological disruptions’ are ranked at a lowly #13; second from last! ‘Terrorism’, ‘Climate Change’, ‘Inadequacy of natural resources’ and other such factors are ranked higher in importance by CEOs. From the IBM Global CEO Study 2006 to the peerless thesis titled Economic and Technical Drivers of Technology (March 2006) by Dr. P. Yin (HBS) and Dr. Timothy F. Bresnahan (Stanford), from the superlative Economist Intelligence Unit 2007 report to McKinsey’s classic 2007 report (The Next Frontiers in IT Strategy), study after study has now proven that investments in technology have not only left a humungous majority of CEOs completely unconvinced about their effectiveness but are also atrociously useless in many cases.

So what do you do when on one side you have all the research in the world screaming away to you to not invest in a new cellphone, and on the other side you have a pressure cooked wife shouting at you to invest thousands in the latest thingamajig?... You buy the cellphone! Period!!!


Share/Bookmark