I recently finished reading Does IT Matter? Information Technology and the Corrosion of Competitive Advantage by Nicholas G. Carr.
The main premise of the book is best summarized by the author in the preface: “Through an analysis of its unique characteristics, evolving business role, and historical precedents, I will argue that IT’s strategic importance is not growing, as many have claimed or assumed, but diminishing. As IT has become more powerful, more standardized, and more affordable, it has been transformed from a proprietary technology that companies can use to gain an edge over their rivals into an infrastructural technology that is shared by all competitors. Information technology has increasingly become, in other words, a simple factor of production—a commodity input that is necessary for competitiveness but insufficient for advantage.”
The outline of the book is as follows: “I open with a brief introductory chapter, “Technological Transformations,” that provides an overview of my thesis and underscores the value of examining IT from a strategic perspective. I stress in this chapter what I see as the central—and positive—message of this book: that IT’s transformation from a set of proprietary and heterogeneous systems into a shared and standardized infrastructure is a natural, necessary, and healthy process. It is only by becoming an infrastructure—a common resource—that IT can deliver its greatest economic and social benefits. The second chapter, “Laying Tracks,” introduces and explains the critical distinction between proprietary and infrastructural technologies…In Chapter 3, “An Almost Perfect Commodity,” I examine the technical, economic, and competitive characteristics of IT that lend it to particularly rapid commoditization…Chapter 4, “Vanishing Advantage,” looks at the history of the use of IT by companies, showing how closely it follows the pattern established by earlier infrastructural technologies…Chapter 5, “The Universal Strategy Solvent,” steps back from the close examination of IT management to describe how the emergence of a new business infrastructure can change the basis of competition in markets. I discuss the corrosive effects of the IT infrastructure on some traditional forms of competitive advantage and describe how business success increasingly hinges on the simultaneous pursuit of both sustainable and leverageable advantages…In Chapter 6, “Managing the Money Pit,” I turn to the practical managerial implications of the commoditization of IT. Stressing the importance of controlling cost and risk, I offer four guidelines for IT investment and management: spend less; follow, don’t lead; innovate when risks are low; and focus more on vulnerabilities than opportunities…The final chapter, “A Dream of Wonderful Machines,” explores the broader consequences of information technology for economies and societies. I describe how our natural enthusiasm for a new technology, with its promise of renewal. can lead us to exaggerate its benefits and overlook its costs. and I examine how this bias has influenced our perceptions of the so-called computer revolution.”
Below are two additional key excerpts that I found particularly insightful:
1- “The most successful business executives ignore such academic distinctions, of course. They realize, intuitively, that successful strategy is about both achieving a privileged industry position and exploiting unique internal capabilities. They know, in other words, that business success derives from a continuous and purposeful mediation between what lies inside and what lies outside. The maturation of the IT infrastructure, with its corrosive effects on competitive advantage, demands more such acts of practical synthesis. It requires that managers see a competitive advantage as both a goal and a passageway, an end and a means. And it requires that they defend their company’s integrity as a stand-alone business even as they exploit the tighter connections to other companies made possible by computer networks. Agility must be balanced with stability, openness with guardedness. Those executives who are able to master such bifocal vision without losing their ability to take forceful action will be the ones that build the great and lasting companies of the twenty-first century. ”
2- “Although we’re now five decades into the so-called computer revolution, it remains difficult to judge with any precision the extent and shape of IT’s effects. Has it been truly transformative? Will it become truly transformative? The fact is, we can’t yet answer those questions with any certainty. The best we can do is to separate what we do know from what we don’t, and to look ahead with a mix of curiosity, skepticism, and humility. ”