Jokes apart

1
Competing to gain a strategic
advantage using Information
Systems
Session 2
5 competitive strategies
Cost Leadership
Strategy

Alliance Differentiation
Strategies Strategy

Growth Innovation
Strategies Strategy
Adapted from O'Brien, J. A., & Marakas, G. M. (2007). Introduction to information systems (Vol. 15). New York City, USA: McGraw-
Hill/Irwin
Other Strategies
Erect Build Leverage
Switching
Barriers to Strategic IT Investment
costs
Entry Capabilities in IT
Cost for Discourage or
Take advantage
customer to delay other
of strategic
switch to companies from Develop
opportunities
competitors entering the products and
when they arise
products/ market service that
services and would not be
reduce possible without
customers & Increase the Improve a strong IT
suppliers technology or efficiency of capability
bargaining investment business
power needed to enter practices
 Ten ‘antipatterns’ that are derailing
technology transformations
Technology choices Technology road map Technology management Managing technologists

• Force-fitting technology • Initiating big-system- • Focusing on outputs • Outsourcing your core

solutions: Are you replacement programs: rather than business value streams: Are
choosing technology out Are you focusing on outcomes: Are your vendors doing the work
of context? system replacement technologists focused on that creates the most
• Adopting cutting-edge rather than improving output instead of value for your business?
tech that’s not fully existing systems in a way business/technology • Building up an army of
mature: Are you adopting that is faster and more outcome? managers rather than
new technology that cost-effective? • Managing IT purely for developing an
seems promising but • Focusing on architecture cost: Are you sacrificing engineering culture: Do
doesn’t have a proven and tooling significant value by you value your managers
track record? improvements without overindexing on price and more than your
• Building out your own enhancing process and cost? engineers? Career
cloud infrastructure delivery discipline: Did • Investing in developing
without sufficient you re-architect and new platforms without
capabilities: Have you let implement new tooling involving the business
security and regulation but forget to adapt the
block your adoption of delivery processes?
public cloud?
The material is intended for educational purposes only 5
Blumberg, S., Delaet, T., & Swami, K. (2020). Antipatterns that are derailing technology transformations. Retrieved from https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/ten-antipatterns-that-are-derailing-technology-transformations
 Large economic potential is linked to digitization—
and much of it yet to be captured....

The material is intended for educational purposes only 6

McKinsey Global Institute. (2019). Twenty-five years of digitization : Ten insights into how to play it right.
 In all sectors, businesses are very vulnerable to
digital disruption

McKinsey. (2021), “Digital strategy in the post pandemic era”, 26

May, available at: https://www.mckinsey.com/business-
functions/mckinsey-digital/our-insights/the-new-digital-edge-
rethinking-strategy-for-the-postpandemic-era (accessed 1 October
2021).

7
The material is intended for educational purposes only
 ….however Too little of IT’s resources go
toward business-differentiating activities.

Bommadevara, N., Jansen, S., Klak, L., & Subherwal, M. (2019). Flip the ratio : The material is intended for educational purposes only 8
Taking IT from bottleneck to battle ready.
 Digital superstars are rising far beyond the US
big four and China’s big three
US big four of Google,
Amazon, Facebook and
Apple.

China’s three digital

giants Alibaba, Baidu,
and Tencent

The material is intended for educational purposes only 9

McKinsey Global Institute. (2019). Twenty-five years of digitization : Ten insights into how to play it right.
 Digital natives are calling the shots

The material is intended for educational purposes only 10

McKinsey Global Institute. (2019). Twenty-five years of digitization : Ten insights into how to play it right.
 Digital changes everything—even industry
boundaries

The material is intended for educational purposes only 11

McKinsey Global Institute. (2019). Twenty-five years of digitization : Ten insights into how to play it right.
Agile is the new way to compete and …..
Digital natives are not only increasing the number of firms that are competing
within each sector, but are also competing more profitably than incumbents.

Indeed, agile incumbents have higher profits growth than those that are not.
Companies that integrate product development with their IT operations—
commonly known as DevOps—and focus on continuous delivery tend to be
more effective when making bold moves to reinvent themselves.

In the DevOps approach, teams automate tests for software, establish systems
that roll back failures in seconds, and make fixes without putting significant
parts of the business at risk.

The material is intended for educational purposes only 12

McKinsey Global Institute. (2019). Twenty-five years of digitization : Ten insights into how to play it right.
 ….An agile operating model can reduce IT
administration

Bommadevara, N., Jansen, S., Klak, L., & Subherwal, M. (2019). Flip the ratio :
Taking IT from bottleneck to battle ready. The material is intended for educational purposes only 13
 Playing the platform economy is an “in the
money” option and …..

McKinsey Global Institute. (2019). Twenty-five years of digitization : Ten insights The material is intended for educational purposes only 14
into how to play it right.
….Incumbents are only about half as likely as
digital natives to have launched their own
platform.

Bughin, J., Catlin, T., & Dietz, M. (2019). The right digital-platform The material is intended for educational purposes only 15
strategy. In McKinsey Quarterly.
 Self-cannibalization and innovation
are a necessity for digital reinvention
Incumbents have often been cautious about launching digitization
programs because they know that a large share of the revenue
generated from digital may simply be revenue that the company would
have generated anyway.

Moreover, digital versions of many products may have lower prices,

reducing the profit generated by nondigital sales. This cannibalization
may be material at up to 30 percent of their revenue due to digitization.

Among superstar incumbents, 40 percent of digital revenue already

comes from new products and services.

The
McKinsey Global Institute. (2019). Twenty-five years of digitization : Ten insights into how to play material
it right. is intended for educational purposes only 16
Going after the right M&A is key

The material is intended for educational purposes only 17

Effective management of digital
transformation is vital-but challenging..

McKinsey Global Institute. (2019). Twenty-five years of digitization : Ten insights into how to play it right.

The material is intended for educational purposes only 18

 ..and Use the right metrics to measure what
matters

The material is intended for educational purposes only 19

Bommadevara, N., Jansen, S., Klak, L., & Subherwal, M. (2019). Flip the ratio : Taking IT from bottleneck to battle
ready.
 Leveraging, and transitioning from, digital to
new frontier technologies is an imperative

McKinsey Global Institute. (2019). Twenty-five years of digitization : Ten insights into how to play it right.

The material is intended for educational purposes only 20

 Successful technology transformations span three
vectors of activity, each consisting of a specific set
of plays.

Dhasarathy, A., Gill, I., Khan, N., Sekar, S., & Kuiken, S. Van. (2020, November 2).
A technology-transformation approach that works. Retrieved October 1,
2021, from McKinsey & Company website:
https://www.mckinsey.com/business-functions/mckinsey-digital/our-
insights/how-to-become-tech-forward-a-technology-transformation- The material is intended for educational purposes only 21
approach-that-works
Six Signals stood out as essential to the future
success of organizations

The material is intended for educational purposes only 22

 Eight early-stage failure patterns

World Economic Forum, & Bain & Company. (2018, September 18). The Digital
Enterprise: moving from experimentation to transformation. Retrieved October 1,
2021, from https://www.weforum.org/reports/the-digital-enterpise-moving- The material is intended for educational purposes only 23
from-experimentation-to-transformation
Reference and additional material
• Blumberg, S., Delaet, T., & Swami, K. (2020). Antipatterns that are derailing
technology transformations. Retrieved from
https://www.mckinsey.com/business-functions/mckinsey-digital/our-
insights/ten-antipatterns-that-are-derailing-technology-transformations
• Bughin, J., Catlin, T., Hirt, M., & Willmott, P. (2018). Why digital strategies fail. In
McKinsey Quarterly.
• Deakin, J., LaBerge, L., & O’Beirne, B. (2019). Five moves to make during a digital
transformation. In McKinsey Digital.
• Bughin, J., Catlin, T., & Dietz, M. (2019). The right digital-platform strategy. In
McKinsey Quarterly.
• Bommadevara, N., Jansen, S., Klak, L., & Subherwal, M. (2019). Flip the ratio :
Taking IT from bottleneck to battle ready.
• McKinsey Global Institute. (2019). Twenty-five years of digitization : Ten insights
into how to play it right.
The material is intended for educational purposes only 24
Disclaimer
• The lecture notes have been created for the classroom / online discussion
• The material is intended for educational purposes only. Reproduction of
the material for any purpose other than what is intended is prohibited.
• The lecture notes should NOT be distributed outside of the class.
• All the information presented in these notes are presented in good faith
and for general information purpose only. All efforts have been made to
ensure the content provided in these notes is not in violation of copyright.
The faculty does not claim ownership of any materials or Intellectual
Property presented in the notes unless specified. The Faculty does not
provide any warranties about the completeness, reliability and accuracy of
this information. The lecture notes may contain materials from other
sources (books and papers). They may not be properly referenced,
because they are prepared in a hurry, and strictly for teaching purpose.

The material is intended for educational purposes only 25