The Peril Of IT Overinvestment – Is It Worth Considering?

We have all been victim, at some point or another, to that familiar ‘post-modernist’ urge to consume the ever newer, better, and more satisfying product in the marketplace.  We all understand (or almost all), that there is a great deal of manipulation that goes into the making of the perfect consumer – from birth onwards – and that this effort is usually repaid by a lifetime of shopping loyalty.

Businesses are not exempt from this cycle of consumption, and consequently, this cycle of aggrandizement. How do we, as consumers (or as businesses), insulate ourselves from this potentially insidious outcome?

The answer is not simple. Why? Because so much occurs at the subconscious level, where we are programmed to expect (or want) the best of all possible outcomes or solutions. If we are dealing with the simplest of issues – like choosing a new pair of shoes – then the answer is equally simple. If we are dealing with a more complex issue – like the purchase of a plane or enterprise software – then the answer is commensurately more complex. But what of those issues that lie somewhere in between?  For example, an SME that is looking to expand its IT profile to a level that is in step with the growth of its business? How best to approach this business decision that could potentially have long term and costly implications?

This is probably as good a time as any for us to collectively say – ASK QUESTIONS!

1. Learn as much as possible about the product ahead of a vendor’s visit
2. Attempt an estimate of the utility of the product to your business in the short and medium time frame (cost of initial investment vs. growth in productivity and potential ROI)
3. Be aware of the pitfall of being oversold on a product

This final point is critical. Even when you have done your due diligence and know exactly what you want, you may not always find it. For example, in the software or services market, despite the wide selection, there are essentially two types of offerings: less than you need and more than you want. A third option is to buy a “package” and add “a la carte” options, which can quickly become very expensive. Also, “special offers” are a favorite entrapment – buy a pack of 4 pieces, even though you may only need 2 or 3. The price per piece may indeed be lower when you buy the pack, but now you have purchased additional product that you may never use.

What can you do to avoid being oversold too much and downright unnecessary product?

ASK QUESTIONS – as many as you can from all different contexts and perspectives!

Start by asking yourself, what can your business realistically afford? How much would this investment in IT contribute to the overall productivity of the company? Unfortunately, there appears to be a dearth of statistical evidence for SMEs on the productivity payoff of IT investment (Brynjolfsson, 1996).

When the time comes to sit down with a vendor, beware of sales pitches – we may be dealing with a more sophisticated product than a new pair of shoes, but the sales pitch is similar. “This is a good time to buy as prices have come down!”, “Your competition has this product! How will you remain viable?” or “It will make your business more productive and competitive”. All such claims, we know, are unsubstantiated by facts but are capable of influencing a decision that should be based on more concrete variables.

Finally, an investment in IT should not be the reason for overlooking the more ‘conventional’ strategies to reach desired objectives. According to a study by Brynjolfsson and Hitt (1996), SMEs that just invest in IT without adapting their organizational structures to make better use of existing resources, i.e. flattening their structures, empowering their workers and other related measures, could actually be worse off.

In conclusion, it is probably safe to say that the running of a business is a complex, multi-layered endeavor that deserves attention from many different perspectives. IT investment may be a powerful tool for the successful administration of a business but cannot replace or substitute the benefits of adapting a business to its present environment by ongoing organizational design and training (as examples). We strongly believe that businesses that attend to these vital areas will be in a position to enable IT to deliver the expected productivity increase to their bottom line.

By Victorgrigas – Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=20348441

Who is considered “talent” and who isn’t?

You probably already heard executives and HR gurus talking about the importance of talent for businesses. It seems that companies are actually fighting a war for talent and recently one of the most important gurus in HR/HCM/talent management Josh Bersin declared that “The war for talent is over and talent won”

The war for talent is over and the talent won. #engagement

— Josh Bersin (@Josh_Bersin) February 12, 2014

//platform.twitter.com/widgets.js

All this means that talent must be pretty important, right? But what does “talent” mean exactly? According to the Wikipedia entry on the war for talent, “While talent is vague or ill-defined, the underlying assumption is that for knowledge-intensive industries, the knowledge worker (a term coined by Peter Drucker) is the key competitive resource”

An architect is an example of a typical “knowledge worker”

“Architect” by Anonymous – From an 1893 technical journal, now in the public domain. Scanned in 600 dpi by Lars Aronsson, 2005. See http://runeberg.org/tekuke/1893/0161.html. Licensed under Public Domain via Commons.

Looking at a more general definition of talent, which is defined as the “innate ability, aptitude, or faculty, esp when unspecified; above average ability” the word “innate” seems problematic.

First, because our educational systems don’t always help children discover and develop their abilities and aptitudes. Second, companies usually need clearly defined skills and experience and don’t assess aptitudes or may not require the aptitudes that people have to offer. Does this mean that people who did not get the chance to discover their innate aptitudes or those who have abilities that are not in demand will not be considered talent?

Also, the highest-volume and fastest-growing job categories tend to be low-skilled ones (according to the Bureau of Labor Statistics) so even though there are more and more knowledge workers, this category is still a small percentage of the workforce and it will not grow very fast or very soon. It seems that many people end up taking low skilled jobs, even though they may have the “innate abilities” to be considered “talent”

So is being considered “talent” a privilege that most people cannot have or the chances of getting it are very low? Is talent management about the “human” in HR and HCM or about “resource”, “capital” and “management”? In other words, it seems that talent refers to those employees who are more likely to make a company profitable. Unfortunately, the ability of an employee to contribute to the success of a company is usually poorly evaluated. For instance, could a cashier become a manager? Yes, but that person will not be considered “talent” until he or she proves that he or she deserves it… while a mediocre person who had the chance to go to a very good school will probably be considered “talent” without proving much. Just like in the “American dream”, the cashier can end up being a manager while the mediocre educated person may not, but the reality is that this is unlikely to happen for many reasons (eg: networking and connections, social and financials situation, etc.)

Do you need to undo the harm that marketing may (consciously or not) cause to your company?

Marketing is supposed to promote the products and services offered by companies, which is also supposed to generate sales. Unfortunately, despite their good intentions, marketing people can sometimes do more harm then good to the company they work for. Here’s how:

– by setting unrealistic expectations as to the quality of the products and services delivered by the company, usually accompanied by a lack of transparency when it comes to pricing
– by promoting a brand that simply does not exist (e.g.: leader in their field, exceptional user satisfaction, etc.)
– by broadcasting irrelevant content over and over again, which may get recycled once in a while but the main strategy is to bombard people with the same ideas (e.g.: why you need us, how smart people choose us, etc.)

Another way that is more difficult to catch by most people is to misuse data and statistics. There are many ways to misuse data but the main idea is that we tend to trust statistics and usually don’t even think about questioning the data or its visual representation. One way to understand how this works is to read How to Lie with Statistics by Darrell Huff

“How to Lie with Statistics”. Via Wikipedia – https://en.wikipedia.org/wiki/File:How_to_Lie_with_Statistics.jpg#/media/File:How_to_Lie_with_Statistics.jpg

So who can “undo” the harm that marketing may (consciously or not) cause to the company? Here are several possibilities:

1. sales managers who realize that they cannot deliver on what marketing promises, which will impact their relationship with prospects or existing customers
2. CEO who needs to grow the company in a realistic and sustainable manner, which means that its brand also needs to be as close to reality as possible
3. managers involved in actually delivering the products and services promised by marketing and sold by sales, who should not exactly what can be done, what can be improvised and at what cost
4. shareholders who may worry that the success of the company may be jeopardized by under-delivering on the promises made, which may eventually drive customers away
5. PR and communication managers who may need to fight a bad reputation of the company
6. institutions which are supposed to protect consumers and companies against actions which may be misleading and cause not only financial loss but also physical damage to properties and people

In you opinion, who would be the best category of people to handle this issue? Maybe the marketing managers themselves should be the first to tackle it. Should it a team effort? Does it need to be enforced through policies and internal rules?

As usual, I welcome your feedback.