Three waves of IT-driven competition have radically reshaped competition in the past 50 years. The first wave of IT, during the 1960s and 1970s, automated individual activities in the value chain, ranging from order processing and bill paying to computer-aided design and manufacturing resource planning. See below for “How Information Gives You Competitive Advantage.” The rise of the internet unleashed the second wave of IT-driven transformation in the 1980s and 1990s. The internet enabled coordination and integration across individual activities; with outside suppliers, channels, and customers; and across geography. It allowed firms, for example, to closely integrate globally distributed supply chains. See below for “Strategy and the Internet.” These first two waves gave rise to huge productivity gains and growth across the economy. While the value chain was transformed, products themselves were largely unaffected.
Now, in the third wave, IT is becoming an integral part of the product itself. “Smart, connected products” - made possible by vast improvements in processing power, device miniaturization and ubiquitous wireless connectivity - are expanding and transcending industry boundaries, disrupting value chains, altering industry structure, and raising a new set of strategic choices for competitors. This transformation will unleash a new and even greater wave of innovation, productivity gains and economic growth.
by Michael E. Porter and James E. HeppelmannHarvard Business Review, November 2014
We stand at the brink of a new era of competition. Smart connect products are forcing companies to rethink nearly everything they do, from how they conceive, design, and source products; to how they manufacture, operate, and service them; to how they build and secure the necessary IT infrastructure. This article, the first in a two-part series to be published in Harvard Business Review, provides a roadmap for companies as they navigate this new competitive landscape. We define the characteristics and capabilities of smart, connected products and outline the entirely new technology infrastructure that companies will be required to build and support behind them. To understand the effects of smart, connected products on industry competition and profitability, we examine their impact on industry structure through a five forces analysis. And, we present ten new strategic choices that companies will face in a smart, connected world.
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by Michael E. PorterHarvard Business Review, March 2001
Many of the pioneers of Internet business, both dot-coms and established companies, have competed in ways that violate nearly every precept of good strategy.
by Michael E. PorterHarvard Business Review, July 1985
The information revolution is sweeping through our economy. No company can escape its effects. Dramatic reductions in the cost of obtaining, processing, and transmitting information are changing the way we do business.
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