Scenario 4: Information as a Strategic Resource
The fourth scenario is about information being regarded as a strategic resource. Such enterprises are characterized by using their analyses of market strengths and weaknesses by systematically thinking about how information, combined with their strategies, can give them a competitive advantage. As illustrated by Exhibit 2.5, this is less about technical solutions and more about people competencies that are required in the strategy development process. In some cases, this may mean that the enterprise needs to ensure it has staff with both strategic and information knowledge represented at the top management level. This is not an altogether surprising conclusion, considering that we live in the age of information.
A typical example of an enterprise that focuses on information as a strategic resource is Amazon.com, which began by selling books but has expanded to other goods via the Internet. Early in their history, Amazon.com saved information about their individual customers' purchases and requests; the information was then processed, with the result that customers were subsequently greeted with offers that are relevant and of service to them. This is a case of improving the
Exhibit 2.5 Information as a Strategic Resource
relevance of offers to customers based on information, which differentiated Amazon.com in a positive way from some other Internet-based book shops. Now this trend is emerging among certain retail chains, too, where the segmentation of customers means that services can be customized to local conditions. Moreover, we see a growing sale of information from shops to the manufacturers of the goods sold in the shops (meaning the data also is a sellable commodity itself). This information describes which types of people buy their products, how price-sensitive the customers are towards products, which products are typically sold together, and so forth. This feedback constitutes essential information for manufacturers in terms of product development, pricing, and promotion in the right places with the right messages.
The strategies created by a company that uses information or data as a strategic asset can be distinguished by looking at certain elements of the company's strategy. If a company does not use information as a strategic asset, it will not, in the strategic implementation plans, have descriptions of how the competitive advantages should be gained via the use of information. If a company does use information as a strategic asset, then next to the objectives of the strategy it will also provide directions as to how the objectives should be reached via the use of information.
An organization that uses information as a strategic asset in its culture is also recognizable because its employees, according to our research, intuitively will think proactively in terms of how they can use information to overcome, for example, a new competitive situation. This sort of a culture will use the information as a strategic asset as a result of a top-down process as well as a bottom-up process. This means that if one region learns to improve its processes via the use of information, the news will be captured by the strategy team and spread as a best practice to the rest of the organization as a result of the next strategy creation process.
In Chapter 3, which focuses on business analytics at the functional level, we present a case in which the strategy at the functional level is largely managed on the basis of data warehouse information. Quality in this context is, therefore, being able to understand how the use of information can provide enterprises with an advantage in terms of key competitive parameters. Information at a strategic level must therefore be understood centrally, in connection with the strategy development process, and throughout the organization, where the implementation is carried out. As previously discussed, the use of information as a strategic resource is first about identifying central competitive parameters and second about understanding how this information can ensure that the enterprise differentiates itself from its competitors. We have chosen to introduce a tool that will help determine which information is going to support an organization's business-critical initiatives, as well as providing a number of examples of how this works in specific terms.