CNET Interview with Nicholas Carr on "IT still doesn't matter"

Summary

In this insightful interview, Nicholas Carr discusses his controversial views on the role of IT in business, arguing that technology has become a commodity that offers little strategic advantage. Carr, author of 'Does IT Matter?', challenges the notion that IT is a transformative force, suggesting that its impact has been overstated and that businesses should focus on managing IT risks and costs rather than seeking innovation for competitive edge.

Takeaways

• 🤖 Nicholas Carr's central argument is that IT has become a commodity, offering little opportunity for companies to gain lasting competitive advantage through technology innovation.
• 📰 Carr's initial essay, 'IT Doesn't Matter,' sparked controversy and debate, with his critics often being heads of major tech companies who may have a vested interest in promoting the importance of IT.
• 📚 His book, 'Does IT Matter?', expands on the original essay, discussing the broader impact of IT on business strategy and the erosion of competitive advantage over time.
• 🔄 Carr suggests that as IT becomes standardized and homogenized, its ability to provide a defendable competitive edge diminishes, leading to a rapid commoditization of technology.
• 🛠️ Companies like Dell and Walmart are adept at using technology, but Carr argues their competitive advantage is more about distinctive business models rather than superior IT use.
• 🏭 The trend of commoditization is extending to business processes, with IT outsourcing potentially leveling the playing field for competitors by standardizing processes.
• 🛑 Carr advises companies to focus on managing vulnerabilities related to IT rather than seeking opportunities, as IT is no longer a source of strategic advantage.
• 🚫 He recommends against being a first mover in adopting new technologies due to the high costs and risks involved, suggesting it's wiser to wait for technology to mature and costs to decrease.
• 💡 Carr uses the example of choosing between a light bulb and a computer to illustrate the overblown expectations of IT's transformative power compared to other historical technologies like electricity.
• 🌐 The rise of the internet and advances in IT infrastructure are making it easier to offshore and modularize IT services, further contributing to the commoditization of IT.
• 🧩 Carr sees the shift towards a more frictionless enterprise through IT outsourcing as consistent with the historical pattern of commoditization seen in other industries.

Q & A

What is the main argument of Nicholas Carr's article 'IT Doesn't Matter'?

Nicholas Carr argues that for most companies, IT should be treated as a commodity input, with very little opportunity to use it to distinguish oneself in a way that can be defended over long periods of time.

Why did Carr change the title of his article to a question in his book?

Carr changed the title to a question in his book to reflect a broader look at how information technology affects business and business strategy, not just IT management itself.

What does Carr believe about the ability of competitors to copy technological innovations?

Carr believes that competitors or vendors are quite adept at copying any technological innovation, which diminishes the ability to use IT distinctively and defend that distinctiveness against competitive replication.

How does Carr respond to critics like Steve Ballmer, Scott McNealy, and Carly Fiorina who disagree with his views?

Carr suggests that some of the reaction is due to the economic and marketing realities of the tech industry, as these critics represent companies that sell a lot of technology and have promoted their technologies as critical to competitive advantage.

What does Carr mean by 'corrosion of competitive advantage' in the subtitle of his book?

The term 'corrosion' refers to Carr's view that as IT becomes more standardized and commoditized, its ability to provide a sustainable competitive advantage diminishes over time.

How does Carr perceive the role of IT in business processes and Business Process Outsourcing (BPO)?

Carr sees IT as contributing to the commoditization of business processes themselves, suggesting that once a process is outsourced, it can be done by vendors for many different companies, including competitors, leading to competitive parity.

What is Carr's view on the impact of IT on the consumer market compared to the business world?

Carr distinguishes between the consumer market and the business use of IT, suggesting that while the consumer market may be on the verge of innovation, the business use of IT is more prosaic and subject to diminishing returns.

What advice does Carr give to companies regarding the adoption of new technologies?

Carr advises companies to not be first movers in adopting new technologies, but rather to wait for costs to come down and for the technology to become more standardized and reliable, thus avoiding the risks and higher costs of innovation.

How does Carr frame the discussion about the transformative impact of IT?

Carr challenges the notion that IT is the most transformative technology in history, suggesting that earlier technologies like electricity had a more dramatic impact on how we live and operate businesses.

What is Carr's perspective on the trend of companies moving offshore and becoming more modular?

Carr sees this trend as further evidence of the commoditization of IT, where companies compete on cost and seek the lowest cost supply, similar to what happened in manufacturing industries decades ago.

What does Carr suggest is the key managerial focus when IT ceases to provide a basis for competitive advantage?

When IT ceases to be a source of competitive advantage, Carr suggests that the managerial focus should shift from innovation and capitalizing on opportunities to risk management and cost management.