1、Page 1,Digital Transformations A Research Programme at London Business School Funded by the Leverhulme Trust,Session on the Industry Level Impact of ICT Michael G. Jacobides, Principal Investigator,Page 2,Reminder: Digital Transformation of Firm and Industry Boundaries,Where we started from: Motivat
2、ing questions on enduring puzzles Were the prophecies of the world being “blown to bits”, mediated by ICT, correct? How exactly does ICT affect firm and industry boundaries? Why are some sectors or countries impacted from ICT, leading to new structures and / or higher performance, and others not? Wh
3、at are the competitive ramifications of breaking up the value chain? How does ICT affect the strategic landscape?,Page 3,Reminder: Digital Transformation of Firm and Industry Boundaries,What we did, I: Study sectors as they evolve, keeping a cool head Analysis of sectors dis-integrating, refining th
4、e role of ICT: Mortgage Banking in the US as a tell-tale Analysis of sectors that failed to disintegrate, despite early hype Re-insurance: A failed transformation and millions wasted Analysis of sectors that re-integrated and the role of ICT Constructions technologically enabled face Comparative ana
5、lysis of sectors in different countries International contrasts on “how things work” and global convergence,Page 4,Reminder: Digital Transformation of Firm and Industry Boundaries,What we did, II: From the sector, to the firm, to the practice How do firms change and set their boundaries? Whats ICTs
6、role? Textile manufacturing and the process of “opening to the market” How do firms choose how to use ICT to affect their boundaries? Ongoing field work from manufacturing What makes coordination across geographic and firm boundaries? How ICT is used in outsourcing or off-shoring: Going micro Integr
7、ating findings from the practice to the firm to the industry and some modelling (and evidence) to track competitive implications,Page 5,Reminder: Digital Transformation of Firm and Industry Boundaries,What was our evidence, what were our methods Emphasis on qualitative analysis With some econometric
8、s and formal analysis or simulation Multiple sectors, multiple countries; focused on most interesting cases Ensuring we capture the phenomenon, not glorify ICT Re-phrasing the question in terms of industry and firm evolution Keeping an open mind as for “what were studying anyway” Substantial interes
9、t in developing new theory as well as debunking received wisdom not fit for purpose,Page 6,Preview of our session: Whats on the menu,Page 7,Preview of our session: Whats on the menu, contd,Page 8,Changes of Industry Architectures,The big big picture: From integration to dis-integration Value chains
10、evolve, and often dis-integrate- thanks to IT Government What we notice: Outsourcing and giving things to others Save costs (which means someone else is better) While at the same time maintain key parts of the industry (IBM) Beyond this: New players, new sectors, new capabilities New ecosystems emer
11、ge, new ways to add value are possible Which also means new entrants and new ways to fight!,Page 9,An Illustration of a Changing Eco-system: The early value chain structure in Computing,IBM,Control Data,Digital Equipment Corp,Source: Adapted from Andy Grove, 1994,Page 10,and the Brave New Dis-integr
12、ated World,Assembly,Operating System,Applications Software,Sales & Distribution,Field Service,Product Design,Components,Equipment, Material,Teradyne, Millpore, AM,Intel, AMD, Quantum,IBM, Compaq, Dell,Solectron, Celestica,Microsoft,Microsoft, Lotus, Borland,CompUSA, Dell,Independent Contractors,Sour
13、ce: Adapted from Andy Grove, 1994,Page 11,So why do sectors un-bundle? And how does this work?,Industries, as they mature, shift towards dis-integration Over time, we understand the differences between “the parts” which leads to a push to create separate entities In an effort to benefit from gains f
14、rom trade and specialization, firms try to find ways to make “trade” possible and specialize coordination is simplified, information standardized so the production process is “chopped up” with the help of those who will benefit “arms dealers” ICT helps the process, but does not drive it- still, it s
15、hapes a sector!,Page 12,4 years, 186 interviews, 1000s of pages later: Mortgage Banking, from 1960 to today,Competitors: Savings etc,Page 13,First Breakup: Securitization Second Breakup: Secondary Market for Loan Risks,Origination Securitizing Hold loan & Insurance Servicing Brokerage Warehousing Pa
16、yment processing Prepayment risk Credit Risk,Specialized Competitors: Mortgage Banks,Co-specialized Competitors: GSEs / Securitizers Holders of loans: Financial Institutions / Investors Insurance for default: Private Mortgage Insurers,1,2,Market for Loan Bundles,Secondary Loan Market,Page 14,Un-bund
17、led Competitors: Mortgage Banks Mortgage Brokers (or Retail of Banks) Specialized Servicers (or Subservicers),Co-specialized Competitors: GSEs / Securitizers Holders of loans: Financial Institutions / Investors Insurance for default: Private Mortgage Insurers,Third Breakup: Mortgage Brokerage & Mark
18、et for Closed Loans Fourth Breakup: Secondary Market for Servicing Rights,Market for Loan Bundles,Secondary Loan Market,Market for Brokered Loans,Market for Servicing Rights,1,2,3,4,Securitizing Hold loan & Insurance Servicing Brokerage Warehousing Payment processing Prepayment risk Credit Risk,Page
19、 15,ENABLING PROCESSES,MOTIVATING FACTORS,Coordination Simplification Reduction of interdependencies in the value chain allow two adjoining stages of the production process to become separated,Information Standardization Information standards allow potential transactors to understand and describe an
20、d then monitor and assess what they exchange,Intra-firm Partitioning As firms grow, increasing administrative partitioning simplifies coordination and creates separate, autonomous divisions, which are tempted to source not only internally but also externally,Inter-firm Co-specialization As the benef
21、its from relying on other firms capabilities to complement ones own becomes evident, a learning process of trying to devise effective trade and institutional arrangements begins,Gains from Specialization Managerial benefits from separating parts of the production process, due to reliance on differen
22、t knowledge bases or requisite managerial styles and incentive structures in each part of the value chain, make organizational specialization attractive,Gains from Trade Differences in capabilities between firms and along the value chain, also due to gains from specialization, make transacting attra
23、ctive. or Desire to grow in the presence of non-scalable segments in the value chain fuels the desire to trade with vertically co-specialized firms,NECESSARY CONDITIONS,When and why intermediate markets appear: Lessons from Mortgage Banking,Page 16,Standardizing Information: The dynamics of “the mar
24、ket displacing the integrated firm”,Certain means predictable with small standard deviations NOT risk free In general the earliest assets to be securitised involved long duration, certain cash flows As securitisation of assets became accepted, types of assets shifted towards less certain, shorter te
25、rm cash flows.,Page 17,What this led to: A new world,Increasing role of vertical specialization Which also allowed some firms to focus on parts of the value chain Efforts to coopt other players- a “free-for-all” for a while As the vertical structure fragments, consolidation happens Focus on capabili
26、ties and superior execution as well as good old monopolistic control. So is there life beyond dis-integration? Yes indeed. Dis-integration is part of a cycle and we may be starting to see efforts to re-integrate again,Page 18,From dis-integration to re-integration: The Bits Bite Back,In construction
27、, a nice, and very strict specialized system arose With architects, engineers, quality surveyors, contractors etc In each European country, a different way to divide labour But after a while, the system started rattling and shaking Architects increasingly artsy; quantity surveyors accountant-y; etc
28、So the opportunities (including ICT) were not fully taken advantage of Plus, when theres no room for growth, expect war! ICT led to the need to re-organize, and led to a new “topography” Re-integrated services now the rule. Try to “be the bottleneck”,Page 19,So the world shifts between integration a
29、nd disintegration. Who gives a damn?,Well, those who do end up being more profitable Either because they are the new entrants or those who adapt and change their business model accordingly Changes in scope change the nature of your competitors From tactical warfare to guerrilla fighting: think Iraq
30、Redefining your enemies and friends, revisiting your strategies When sectors change, capabilities, assets, strategies do to Figuring out what you need to have and what is valuable Reconfiguring your strategies, playing a new game,Page 20,Revisiting the role of ICT in changing industry architectures,
31、ICT is an important factor facilitating the process of dis-integration Esp. when ICT is bundled with information / coordination standards But ICT is also important by introducing new capability bases But it can also lead to re-integration / architectural change Changes in the rules of “how the game
32、is played” Which also affects who has an “architectural advantage” ICT thus shapes competitive dynamics, redefining sectors But ICT alone will not change a sector- its an enabler!,Page 21,Measuring success: What this line of research led to,Publications in the top Journals of the field AMJ and SMJ o
33、n how and why mortgage banking disintegrated (07/05, 11/05) Org studies (12/05) on textile re-integration SMJ on coevolution of technology, capabilities and scope (05/05) Org Sci on textiles and “opening up” the value chain (03/06) MDE/JIBS on global differences / similarities in sectors (09/06) ICC
34、 on theoretical a-has on “sector architecture” and design (02/06) And theres more in the works revisions, and working papers Org Sci on the way ICT catalyzes capabilities to drive scope; RP on benefiting from innovation and industry architectures WPs on ICT and “vertical architectures”; Why ICT fail
35、ed to fill its promises; How ICT is used in offshoring; ICT & coordination across geographies / firms,Page 22,Measuring success: And how this was disseminated / shared,Interactions and presentations to academics 6 symposia in the Academy of Management, 2001-6; Professional Development Workshops (AoM
36、), 2005 & 2006 Presentations to the Strategic Management Society (2003, 2005), Schumpeter Society (2004, 2006), DRUID (2005, 2006), a.o. Presentations at invited seminars at Wharton, Stanford, Harvard, MIT, CMU, LSE, Bocconi, IESE, etc. Conference and mini-conferences at LBS, 2003-2006 Managerial Impact: Sharing and co-producing knowledge Presentations or addresses to Winterthur, Zurich Financial Services, Barclays, IBM, EDS, BT, Pirelli, EADS, etc. Presentations / keynotes in events organized by PwC, BBA, MBAA, EDS, in the US, the UK, Italy, Greece,
