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Digital technologies are changing the structure of many industries and the organisations operating within them. Identify and debate the opportunities and challenges for managers and employees operating within these new forms of organisation.
In labs around the world, researchers are busy creating technologies that will change the way we conduct business and live our lives. The environment in which businesses operates is changing rapidly. The ability for companies to embrace new technology and use it efficiently to sustain the competitive advantage is more important now than ever before. These are not the latest crop of gadgets and gizmos: they are completely new technologies that could soon transform computing, medicine, manufacturing, transformation and out energy infrastructure. There is tremendous influence in the near future.
In this debate we will look at some changes that have been cause by digital technology and also identify the challenges and opportunities that employees and managers are likely to face.
2. Transparency and Power of Customers:
The innovation of internet and mobile technology the power has been shifted from the seller to buyers. Never before the consumers has be empowered when they are making purchase decisions. There are many price compare sites like GoCompare.co.uk, MoneySuperMarket.com and kelkoo.co.uk, have for the consumers to use these sites and compare the prices of products and services from the different industries. This can facilitate the consumers for this better choice and effective for cost minimise.
Due to this, the "middleman" is affected most. Most of the consumers use internet to find out the best price or value deal, wholesalers, agents and brokers are suffered. Tapscott' twelve theme of new economy is "Disintermediation" in which he makes the solid point that middle men are "in the business of executing transactions, brokering or boosting communications in a pre-digital economy". As technology standards become more common place, the needs for intermediates will diminish.
Both managers and employees are much aware of that because it much affects the company in future in which they are work. In particular, managers need to ensure that the company remains part of value chain. If the purpose of the company can be easily replaced by digital technologies then the company strategy need to be analysed.
This level of transparency can also be seen when looking at the product review. Before the innovation of internet, the primary source for purchase information was store employees, traditional media and personal recommendations. The most trustful information was through the personal contacts. The internet has enabled the customers to share their views about the products and services, resulting in an information rich product review system. Statistic shows 81% holidays shoppers read online customers reviews and 86% of customers read business reviews before making purchase decisions,90% of whom say they trust these reviews.(Bazzarvoice 2009,"Industry Statistics"23May2009)
Digital technology has caused concept shift in the way in which consumer makes purchasing decisions and voice their opinion. Managers need to both grip and be cautious of this new change.
3. Continuous Development of the Product:
Reflecting Moore's Law, technology innovation has accelerated year on year. As products have become more complex, the ability for any one company to create all aspects of a product has declined. In Dan Tapscott's paper "Rethinking in a Network World", he acknowledge that many blue print companies are no longer manufactures, they are system integrators. The manufacturing process has become commoditized. Companies like Mercedes-Banz and IMB are not manufacturing their own products. They find expert contractors to manufacture their products on their behalf. However the company is sacrificing traditional sources of competitive advantage in manufacturing. They are actually adopting orientated strategy.
Companies like Dell also follow this strategy and realise that there is no competitive advantage to be gained by manufacturing their own products. Made "B-Web across industries, in which each every company focuses on it's core competence, are providing to be more supple, innovative, cost-efficient and profitable then their vertically integrated compotators" (Don Tapscott, Rethinking in a Networked World). The main thinking that has changed the way in which products are designed, manufactured, distributed, marketed and sold. Employees who are operating within these business functions be aware of this changing trend.
Rapid Advancement of Technology:
The technological revolution has electronics manufactures out doing each other almost on a daily basis. What is the best and faster today will be ancient technology tomorrow. It is a global game of "king of the Hill" Who is the best? Who can get it done the faster? Electronics manufacturing are at war with one another and we reap the benefits of it and, at the same time, we are also casualties of that war.( http://www.thecheers.org/Cheers/article_867_Technology-can-byte-my-arse.html).
4. E-Commerce Today:
E commerce refers to the use of the internet and the web to transact business. More officially e commerce is about digitally enabled commercial transactions between and among organizations and individuals. E commerce first started in 1995 when one of the first internet portals netscape.com received the first ads from major corporations and popularized the idea that the web could be used as a new medium for advertising and sales. The idea that web could be used as a new medium for advertising and sales. No one envisioned at the time what would turn out to be an exponential growth curve for e commerce retail sales which tripled and doubled in the early years.
Mirroring the history of commercial innovations such as the telephone radio and television the very rapid growth in e commerce in the early years created a stock market bubble in e commerce stock. A large number of e commerce companies failed during this process. Yet for other like such as Amazon, Expedia eBay and Google the results have been more positive. Soaring revenues fine tuned business models that produce profits and raising stock price. The overall e commerce revenue picture is very positive in 2007.
Due to rapid changes in advancement of technology, the main thing which is noticeable, change in product development is the speed at which new products are released. According to Apple's annual report 2008 that because of the personal computer, consumer electronics and mobile computing industries are characterised by rapid technological advancement. The success of any company totally depends on the ability of its company to ensure a continuous and on time realise of competitive products &Services and technologies to the marketplace.
5. New Organisational Form:
New organisational forms are geared to make organisation more receptive, adaptive and generative which always concentrate on the satisfying the needs of the stakeholders. New forms of organisations depend on the following characteristics: (http://managementhelp.org/org_thry/new_forms.htm)
i. Employees contribution:
Input to the system start from those closest to the outcome preferred by the system, from those most-in-the know about whether the organisation id achieving its preferred outcomes with its stakeholders or not.
ii. Organic in Nature:
Less rules and regulations, sometimes no clear boundaries and always-changing forms.
iii. Authority based on capability:
Ensures the organisation remains a means to an end and end in itself.
Takes advantage of economies of scale e.g. collaborations, networks, strategic alliances etc.
Shares activates to take advantage of economies of scale at the lowest levels of activates and ensures full involvement of employees at the lowest levels.
vi. Compliment, decentralized organisations:
Less middle management resulting in top management exchanging
more feedback with those providing products and services also result
in less overhead costs.
vii. Awareness of environment, changes, patterns and themes:
Priority on reflection and inquiry to learn from experience, develop "learning organisations".
6. New Organisational Structures:
New organisational forms are changing the structures of my industries. There are new organisational structures as fallow:
i. Network Structure:
This modern structure includes the linking of numerous, separate organisations to optimize their interaction in order to accomplish a common overall goals.
ii. Virtual Organisation:
This emerging form is based on organisation member interact with each other completely or almost completely via telecommunications. Member may never actually meet each other.
iii. Self-Managed Team:
These teams usually include from 5-15 people and are geared to produce the product or service. Members provide a range of the skills needed to produce the product. The team is granted sufficient authority and access to resources to produce their product in a timely fashion.
iv. Learning Organisations:
In continuous changing environments, it is very critical that organisation detect and quickly correct it own errors. This requires continuous feedback from outside as well as within the organisation. Continual feedback allows the organisation to 'unlearn' old beliefs and remain open to new feedback, uncoloured by long-held beliefs.
v. Self-Organising Systems:
Self-organizing systems have ability to continually change their structure and internal processes to conform to feedback with the environment. Some writers use the analogy of biological systems as self-organizing systems.
Their ultimate purpose is to stay alive and duplicate. They exist in increasing complexity and adapt their structures and forms to accommodate
this complexity. Ultimately they change structure dramatically to adjust
to the outer environment.
The competitive nature of today's marketplace requires a different type of organisation. Companies are responsible to delivered innovated products on the regular basis in the market. Which companies have a hierarchal structure are not well positioned to meet these needs. The main problem with hierarchal structure is middle management which in buffer layer between the quick decisions and fast action on time.
The best example is Google that operates in a rapidly changing marketplace, and much of it's future success depends on its ability to sustain innovation and update existing products on regular basis. Google has adopted perpetual beta which is updating a product so often that is remains in a constant state of flux. This type of environment requires a radical change in organisational structure. Google is best example of a flat organisation. The engineers and designers are arranged into pods of about 3-6 persons and in which one member is appointed project manager. This group is self directed and they can change direction at any stage without the approval of top management. If a Google employee has an innovative idea in his mind, he is only need to convince a certain number of his colleagues to join his pod. When the threshold of engineers is reached the project is automatically approved. This result is highly dynamic organisation which is self propagating.
Google has taken advantage of its main asset human capital and empowered them to innovate new products and services at a rapid pace. However, there are aspects of Google that have retained the traditional hierarchal structure in lieu of the former. Their Legal, HR, Investment, Financial, Sales and M&A departments have a traditional hierarchal structure. Eric Schmidt acknowledges that certain business functions are suited to nodal structure and some business functions are suited to traditional hierarchal structure.
i. New Economy and Managers:
Mangers in this new economy need to create an organisation that acts organically. Traditionally, rigid structures have been placed on organisation often stifling their dynamism. Flat or nodal based organisations are often associated with innovative, fast food paced environments. As a manager, it is very important to minimise the friction within as organisation as much as possible and allowing your human capital to innovate & contribute to strategic direction.
ii. New Economy and Employees:
Employees that plan on working in highly innovative areas should try and hone their project management skills whilst developing a keen appreciation for business. Candidates that can bridge the gap between executive and innovator will excel quickly through the ranks.
7. Threat of Disruption:
Technology is essentially disruptive and it aims to replace existing processes with more efficient and cost effective solutions. Managers much have knowledge of their companies' vulnerabilities and ensure that they take competitive advantage of emerging technology. According to Fred Wilson of Union Square Ventures, companies that are end to end digital are most susceptible to disruptive technologies. This is a logical statement. But it provides managers with a basic rule of thumb for assessing their companies' digital vulnerabilities.
As individual if u wants setup a company with little or no capital investment the internet is the easier way. The cost of software development is reducing every year and with it the threat of new entrants to the market increases. Service like Google AdSense has enabled businesses with limited advertising budgets to effectively target a specific market segment. These low barriers to entry ordinary people to easily setup a new business.
The "Net Generation" as coined by Don Tapscott, present companies with even more challenges. The N-Gens are by product of technology and they have grown up during a period of technological revolution. Because of their experiences and contract with technology, their brains have developed in a different manner to their parents. The N-Gen individual books at a computer in the same way their parent might look at a calculator. It is simply a tool for achieving an end goal. However, the N-Gen individual has an appreciation for technology that goes beyond function and towards adaption. N-Gen individual have the innate ability to solve technological problem by adapting the system they are using. This modular approach to problem solving is why the N-Gen will be one on the most disruptive by product in the next decade.
Managers must be aware of this fundamental change in human resource management. The expectation of the N-Gen are fundamentally different to that of an older demographic. The N-Gen are eager to collaborate, share information and change the status quo. They are both individualistic and collectivist whilst showing lower power different characteristic than older generations. This is understandable as the N-Gen grew up during a period where authority was not respected, illegal downloading of music was becoming the norm and traditional authoritarian were losing power.
Digital technology has not only affected the structure of industries and organisations it has altered the fundamental environment in which they operate. The internet has given the power to the customers to make informed purchasing decisions by increasing transparency and enabling the viral spreading of consumer sentiment. Contrary to N. Carr' beliefs this has added considerable value to the economy. It may be true that the internet has corroded profitability, but the very nature of shrinking the market is synonymous with increased efficiency. Managers & employees that find themselves in an intermediary position and they need to reposition themselves or the company within the value chain.
Technology has redefined what we understand product development to be. Technology has enabled engineers to design and deploy product of increasing complexity in shorter periods of time. This has been achieved through a series of technological advancements and fundamental changes in organisational structure. For instance, Computer Aided Manufacturing (CAM) has enabled engineers to stress test the wing of an aeroplane before it is even built. Open standards such as XML have enabled machines from different vendors to communicate with one another. Product Life-cycle Management (PLM) software enables companies to manage the entire life cycle of a product "from conception, through design and manufacture, to service and disposal". As organisation consist of multiple interconnected and interdependent nodes, mangers must have holistic appreciation of PLM and its relationship with other aspects of the business.
Through analysing Porter's 5 forces framework, one can see that technology has resulted in dramatically more competitive environment across many industries. Companies need to be innovative, agile, responsive and self propagating in order remains competitive. Innovative companies such as Google show that a modular, nodal or flat organisation is best suited to innovative environments. Innovate companies need to take full advantage of their human capital and enable them to rapidly innovate and contribute to the company's strategic decisions. Both managers and employees must realise that "the person at the top can't learn for the organisation anymore". (Peter Senge, MIT Sloan School of Management)
Organisations are not only being affected by technology directly- by products of technology are presenting many challenges too. The "Net Generation" is a by product of technology and will pose significant challenges to organisation over the next decade. The N-Gen have the ability to solve systemic problem by adapting technology in a modular format. Their eagerness to collaborate, ability to lead and refusal to accept the status quo make the N-Gen both a challenge and an opportunity for future organisations and managers