Unit one achieving Business Success



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Business Driven Technology - Instructor’s Manual


UNIT ONE

Achieving Business Success


Information is everywhere. Information is a strategic asset. Without information, an organization simply could not operate. This Unit introduces students to several core business strategies that focus on using information to gain a competitive advantage, including:



  • Competitive advantages

  • Porter’s Five Forces Model

  • Porter’s three generic strategies

  • Value chain

  • Supply chain management

  • Customer relationship management

  • Business process reengineering

  • Enterprise resource planning

  • IT efficiency metrics

  • IT effectiveness metrics

  • Organizational structures

  • Ethics

  • Security

Many of these concepts and strategies will be new to your students. Be sure to explain to your students that this Unit offers an introduction to these concepts and they will gain a solid understanding of the details of these concepts as they continue reading the text. For example, customer relationship management is introduced in Unit One and discussed in detail in several additional chapters and in the business plug-ins. The chapters in Unit One include:



  • Chapter One – Business Driven Technology

  • Chapter Two – Identifying Competitive Advantages

  • Chapter Three – Strategic Initiatives for Implementing Competitive Advantages

  • Chapter Four – Measuring the Success of Strategic Initiatives

  • Chapter Five – Organizational Structures That Support Strategic Initiatives



UNIT ONE OPENING CASE – Additional Case Information

Apple – Merging Technology, Business, and Entertainment

Please check the MISForum for case updates – www.baltzanandphillips.com/MIS


Nike + iPod = Privacy Issue
If you enhance your workout with the new Nike+ iPod Sport Kit, you may be making yourself a surveillance target. A report from four University of Washington researchers reveals that security flaws in the new RFID-powered device from Nike and Apple make it easy for tech-savvy stalkers, thieves and corporations to track your movements. With just a few hundred dollars and a little know-how, someone could even plot your running routes on a Google map without your knowledge.

There is a great video on the site that shows how the technology can be used to track people.


http://www.cs.washington.edu/research/systems/privacy.html

Peter Burrows, a writer for BusinessWeek, had a discussion with Clayton Christensen outlining why Apple’s proprietary strategy might fail. This opposing perspective on Apple’s innovative strategy works well as a classroom discussion or debate.

http://www.businessweek.com/technology/content/jan2006/tc20060109_432937.htm
Peter Burrows, BusinessWeek, January 9, 2006

How Apple Could Mess Up, Again

The Innovator's Dilemma author Clayton Christensen outlines his case for why Apple's proprietary strategy will soon fail, just as it did before

These days it's hard to find a pundit willing to question Apple Computer's long-term prospects or the calls of its famous CEO, Steve Jobs. After all, Apple's fortunes have been on the rise for nearly a half-decade now, and they seem to be only gaining steam.


That has caused even some of the most devoted skeptics of years past to stop fretting over Apple's future. For years, many felt that Apple's past mistakes were bound to come back to haunt the Cupertino (Calif.) company -- the refusal to license the Mac OS in the 1980s; the stale products, bloated expenses, and management turmoil that hobbled it in the mid-1990s; the software availability and falling market share that plagued it right into the 21st century. These days, with Apple's stock price the talk of Wall St. and its products once again defining techno-chic, all that's a distant memory.
That is, unless you're Clayton M. Christensen, the Harvard professor and author of the seminal 1997 book The Innovator's Dilemma. Christensen, who more recently wrote Seeing What's Next: Using Theories of Innovation to Predict Industry Change, isn't willing to jump on the Apple bandwagon just yet. As well as Jobs & Co. is performing now, Christensen fears that success is built on a strategy that won't stand the test of time. Christensen spoke with BusinessWeek Computer Editor Peter Burrows on Jan. 5. Edited excerpts follow:
Apple is doing phenomenally well these days. It seems it's doing a textbook job of maintaining huge market share in digital music players, long after most experts thought that share would erode. And it's doing so with the same proprietary strategy that many thought would never stand up to an onslaught from the likes of Microsoft, Wal-Mart, and Yahoo!. Can Apple keep it up?
I don't think so. Look at any industry -- not just computers and MP3 players. You also see it in aircrafts and software, and medical devices, and over and over. During the early stages of an industry, when the functionality and reliability of a product isn't yet adequate to meet customer's needs, a proprietary solution is almost always the right solution -- because it allows you to knit all the pieces together in an optimized way.
But once the technology matures and becomes good enough, industry standards emerge. That leads to the standardization of interfaces, which lets companies specialize on pieces of the overall system, and the product becomes modular. At that point, the competitive advantage of the early leader dissipates, and the ability to make money migrates to whoever controls the performance-defining subsystem.
In the modular PC world, that meant Microsoft and Intel (INTC), and the same thing will happen in the iPod world as well. Apple may think the proprietary iPod is their competitive advantage, but it's temporary. In the future, what will matter will be the software inside that lets users find exactly the kind of music they want to listen to, when and where they want to, with minimal effort.
But Apple has that software. It can be the one to provide that to everyone else, if it chose to, right?

I'm concerned that they'll miss it. It's the fork in the road -- and it's comparable to the fork they faced when they chose not to open up the Mac in the 1980s, when they let Microsoft become Microsoft.


How long will Apple have to make this change?

I'd be very surprised if three years from now, the proprietary architecture is as dominant as it is now. Think about the PC. Apple dominated the market in 1983, but by 1987, the industry-standard companies, such as IBM (IBM) and Compaq, had begun to take over.


But let's assume Apple has learned its lesson, and that it's intent to not repeat history.

The trick is to manage the transition. [As standards take over], the products always become much lower in cost and much more broadly available [from more suppliers]. So if you're the incumbent, it appears you're facing a huge threat, even though you're really at the cusp of a great new opportunity. But it's usually new companies that grab that opportunity.


So it really is a fork in the road for Apple. If they don't open up the architecture and begin trying to be the iTunes inside all MP3 players, they're going to have to keep coming up with the next cool thing.
What about in the PC business today? Apple has been gaining share for the first time in years, and most people think that will continue, given the delay of Microsoft's Vista software, widespread malware problems with Windows, and Apple's move to the Intel platform. Don't you think that will enable Apple to gain some significant share in PCs?

I don't. I think it will allow them to survive for a bit longer. I think most people are satisfied with their current PCs (using Windows and based on Intel chips) and find that the performance of their systems is good enough. Sure, there are people at the bleeding edge who want to do more. But a good Dell PC can be had for $500, and it has performance that's well beyond what most of us need.


Seems to me, given your comments, that Apple has another strategic option: to focus on continuing to develop new markets with its proprietary, innovation-heavy approach, harvest them, and move on.

We have a case about this at Harvard [Business School], about when John Sculley was the CEO of Apple in the early 1990s. He actually had remarkably clear vision about where the industry was heading. He had three priorities. First, he felt the company needed to get its price down to $1,000, from $3,000 or $4,000 at the time. The second thing was to open up the architecture, by selling the OS. And the third was that handheld devices were going to be big. He was right on all three, but the culture of Apple was just so strong that Sculley just couldn't change the direction of the ship.


So I always ask the students, "What would you do if you were on Apple's board?" And they always say the same thing: "Crucify him, and bring in a good manager."
"So who would you bring in?" I ask. And they say: "Bring in someone really strong, who can make those decisions." So what did Apple do? They brought in Michael Spindler -- a strong general manager type who was known for his operations ability. Well, that didn't work out.
So I ask, "What would you do next?" And they say: "Bring in a good manager -- someone who can turn the company around." Well, they brought in Gil Amelio, who had turned around National Semiconductor. But he only lasted 18 months or so.
So then they bring Jobs back. And why did the company prosper under Jobs? The students' instinct is to say, because he's a good manager. I think the reason is that he stopped trying to change the company. He wanted them to do what they had always wanted to do: make cool products, based on proprietary architectures.
One last question. It's clear that for Apple, and for Jobs, the product comes first. Rather than try to enter many new markets to achieve the revenue growth Wall Street expects, maybe Apple should just stay true to its focused approach -- in essence, tell shareholders that it's not going to try to achieve more than it can, stock price be damned.

I've been thinking about this a lot -- about whether managers ought even to think about what Wall Street says. In the 1960s, the average investor held shares for over six years. In that world, it made sense to frame the job of the manager as maximizing shareholder value. But today, 10% of all shares are owned by hedge funds, and do you know what their average holding period is? It's just 60 days! And another 85% of the equities are owned by mutual funds and pension funds, and the average tenure there is 10 months.


Their time horizon is shorter than even that of even the shortest-term managers. So I don't think it's right to think of [these investors] as shareholders of your company. They're investors who temporarily own securities in your company at a particular point in time. They're responsible for maximizing the stock value of their investments. You as the CEO are responsible for maximizing the long-term health of your company.
Check out a few of these videos to show students before or after you ask the questions:
http://www.youtube.com/watch?v=PQLTjiAfdLY
http://www.youtube.com/watch?v=YgW7or1TuFk




CHAPTER ONE

Business Driven Technology


This chapter provides an overview of Business Driven Technology along with anticipated learning objectives for students. Explain to your students that the goal of this chapter is to get them excited about BDT and all the different business and technology concepts they are going to learn. Let your students know that they are going to be introduced to many new concepts that they might be unfamiliar with; however, these concepts are discussed in detail throughout the text.



LEARNING OUTCOMES

    1. Compare management information systems (MIS) and information technology (IT)

MIS is not IT. MIS is a business function. IT is a computer-based tool. Most organizations have an IT Department that is responsible for performing the MIS function. This is similar to an organization having an Accounting Department that is responsible for performing the accounts payable and accounts receivable functions.


    1. Describe the relationships among people, information technology, and information.

IT in and of itself is not useful unless the right people know how to use and manage it efficiently and effectively. People, information, and information technology (in that order of priority) are inextricably linked. If one fails, they all fail.


    1. Identify four different departments in a typical business and explain how technology helps them to work together.

  • Accounting - provides quantitative information about the finances of the business including recording, measuring, and describing financial information.

  • Finance - deals with the strategic financial issues associated with increasing the value of the business, while observing applicable laws and social responsibilities.

  • Human resources - includes the policies, plans, and procedures for the effective management of employees (human resources).

  • Sales - the function of selling a good or service and focuses on increasing customer sales, which increases company revenues.

  • Marketing - the process associated with promoting the sale of goods or services. The marketing department supports the sales department by creating promotions that help sell the company’s products.

  • Operations management (also called production management) – includes the management of systems or processes that convert or transform resources into goods or services. Transportation (also called logistics) is part of operations management.

  • Management information systems (MIS) - the academic discipline covering the applications of people, technologies, and procedures – collectively called information systems.

Functional areas are anything but independent in a business. In fact, functional areas are interdependent. Sales must rely on information from operations to understand inventory, place orders, calculate transportation costs, and gain insight into product availability based on production schedules. For an organization to succeed, every department or functional area must work together sharing common information and not be a “silo.” Information technology can enable departments to more efficiently and effectively perform their business operations.


If your students are unfamiliar with any of these areas, or business in general, point them in the direction of plug-in B1 – Business Basics. This plug-in will provide students with a solid understanding of business and will help them understand the business driven content in this text.


    1. Compare the four different types of organizational information cultures and decide which culture applies to your school.

Information-Functional Culture Employees use information as a means of exercising influence or power over others. For example, a manager in sales refuses to share information with marketing. This causes marketing to need the sales manager’s input each time a new sales strategy is developed.

  • Information-Sharing Culture Employees across departments trust each other to use information (especially about problems and failures) to improve performance.

  • Information-Inquiring Culture Employees across departments search for information to better understand the future and align themselves with current trends and new directions.

  • Information-Discovery Culture Employees across departments are open to new insights about crisis and radical changes and seek ways to create competitive advantages.

This is an excellent opportunity to start a classroom debate by asking your student to determine which information culture applies to your school. Chances are the students will have different views of the school and its information culture.



CLASSROOM OPENER

GREAT BUSINESS DECISIONS – Apple’s Decision to Develop the First Saleable Personal Computer (PC)

Like all great computer companies, Apple began its life in a garage. In 1977, Steve Jobs and Steve Wozniak built the Apple 1, regarded by many as the first real personal computer. This founded the Apple Company and the invention of the Apple 2 and the Apple Macintosh. Apple’s key goal was to make computers accessible to ordinary people. Jobs and Wozniak captured an opportunity and changed the world through a combination of good fortune and technical and marketing brilliance.

Instead of writing commands in computer code, Apple owners invented a mouse to click on easily recognizable icons – for example, a trash can and file folders. Other companies were quick to copy Apple’s competitive advantage, including Microsoft.
The two founders eventually parted, with Wozniak leaving the company to become a teacher and Jobs continuing with the launch of the Apple Macintosh. Unfortunately, Macintosh captured only 20 percent of the desktop market, while Microsoft captured 80 percent of the desktop market with its MS-DOS operating system.
One newspaper described Jobs as a “corporate Huckleberry Finn” and said his early business exploits had already made him part of American folk history. John Sculley, former Pepsi chairman, removed Jobs from Apple in 1985. Sculley was removed from Apple in 1993. Eventually, after a 13-year exile, Jobs returned to Apple in 1998. The man who founded the company had come full circle and was now its only hope for survival.
Jobs’ return brought the creation of the iMac and Apple rediscovered its inventive originality. The iMac sold 278,000 units in the first six weeks and was described by Fortune as “one of the hottest computer launches ever.” The iMac and Jobs’ return contributed to doubling Apple’s share prices in less than a year.

CLASSROOM OPENER

Father Guido Sarducci’s Five Minute University

I love showing this video on the first day. I start off the class by explaining that we are going to cover hardware, software, telecommunications, and hit the lab to do some actual networking. I then explain that this video show how to take a hard drive apart and there will be a quick quiz after to see how much everyone learned from the video. Then I play the video: gets a number of laughs. http://www.youtube.com/watch?v=kO8x8eoU3L4v



CLASSROOM EXERCISE

Understanding the Relevance of Technology in Business

This is a great exercise to begin the course. It clearly demonstrates why anyone involved in business must understand technology. It can be a real revelation for students who do not see the need for taking an IT course. This exercise is included briefly in the first paragraph of the text. Having your students perform this exercise on their own is so powerful that we recommend completing it in addition to reading the section in the text.


Bring in several copies of BusinessWeek, Fortune, Fast Company, or any popular business magazine. The magazines do not have to be current. Provide a marking tool such as a small set of Post-It Notes. Ask for a few volunteers and have the students review the magazine and stick a Post-It Note on each technology-related article, advertisement, etc. When the student has completed this task, the magazine will be covered in Post-it Notes, clearly demonstrating that technology is everywhere in business, even in the popular business magazines such as BusinessWeek.
Since this task can be time consuming, you can put in the Post-It Notes prior to class and simply show your students the completed magazine. You can have one student sit in the front of the class and begin the exercise, placing Post-It Notes on a copy of BusinessWeek. After they have completed several pages on their own, you can produce the same “completed” magazine with all of the Post-It Notes. This saves classroom time and still reinforces the point that technology is everywhere in business.
Be sure to reinforce that these are business magazines, not technology magazines. Yet they are completely filled with technology – which is clearly demonstrated by the Post-It Notes. How can any business student today possibly argue that they do not need to know or understand technology when faced with a magazine, such as BusinessWeek, that is filled with technology? Read a few of the articles or advertisements. Ask how many of your students are familiar with Siebel, Oracle, or PeopleSoft and can articulate what they can do for a company?
The goal of this course is to help your students understand the business side of technology. Being able to understand all of the technology articles in BusinessWeek is one of the benefits your students will receive upon completion of the course.

CLASSROOM EXERCISE

Metrics on Business Magazines

Running metrics on current business magazines is an excellent way to demonstrate how much technology is everywhere in business.  There are so many articles where you can run metrics to see how relevant IT is in the working world from Fortune 100 companies, to Top 100 Companies to Launch a Career, to Hot Growth Markets. Just pick a current article and run the metrics comparing IT to marketing, HR, accounting, etc. and prove how hot IT is in the business environment.

BusinessWeek resource
http://www.businessweek.com/search/06brows2.htm

Fortune resource - click on the Lists dropdown


http://money.cnn.com/magazines/fortune/

CLASSROOM EXERCISE

Think Like a Genius

Think Like a Genius 3D Imaging Software http://www.metaphorming.com/ Awarded Honorable Mention at the 2008 DaVinci Institute's Colorado Inventors Showcase as a "three dimensional imagination tool for bringing new ideas to life". Think Like A Genius version 2.0 is a dynamic three-dimensional creativity software that enables kids and teens to discover and explore their genius in exciting, playful and productive ways.

  • Create vibrant art

  • Craft visual journals

  • Invent imaginative games

  • Construct intricate models

  • Build dynamic inventions

  • Develop winning science projects

  • Design A+ class presentations

I show Think Like a Genius in the class and ask the students to explain how this tool could help a business. How could it help Marketing and Sales? How could it help management? How could it help operations? How could it help customer service?




CLASSROOM EXERCISE

TED.com

http://www.ted.com/ This is the best site for videos. TED stands for Technology, Entertainment, Design. It started out (in 1984) as a conference bringing together people from those three worlds. Since then its scope has become ever broader. The annual conference now brings together the world's most fascinating thinkers and doers, who are challenged to give the talk of their lives (in 18 minutes). This site makes the best talks and performances from TED available to the public, for free. More than 200 talks from our archive are now available, with more added each week. These videos are released under a Creative Commons license, so they can be freely shared and reposted.




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