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Has IT Run Out of Big Ideas?

Has IT Run Out of Big Ideas?

Are ideas still flowing freely and being incorporated into strong product and service offerings, or is the IT industry stagnating? If ideas are rare, what is the focus?

Each year for the past 10 years, William Dunk has reviewed up to 700 global annual reports as he tries to get a feel for the issues business leaders choose to convey in their accountings to shareholders and the general public. Then, the founder of William Dunk Partners issues his own annual report about all those annual reports (www.globalprovince.com). His 2002 report about the 2001 batch summarised a sorry situation quite succinctly: "Long on words; short on ideas."

"This year's reports do show most company leaders to be without a 'great idea'," the US management consultant wrote of that period. "Competitive thinking atrophied during the fat-cat nineties. Perhaps this is the biggest reason business leaders feel vulnerable . . . "

In Dunk's assessment, starkly revealed in the 2001 crop of annual reports, corporate leaders were too busy announcing staff reductions, business closures and other retrenchments and cost-cutting measures to talk about new ideas. In fact, cost cutting was the only big idea Dunk saw taking hold on the corporate world. "It is all about 'how we are going to take out vast new lumps of cost'. You begin to hear everybody with the same agenda, and it is a tired agenda," he says.

What a difference 12 months can make.

Summing up the 2002 batch of annual reports this year he finds a US economy buffeted "by a powerful storm", and lots of increasingly desperate businessmen looking for glimmers of light. Suddenly ideas have currency again. "What this suggests, and what has gone largely unnoticed, is that business has turned the corner post 2000 and begun to realise it really needs a new idea," Dunk says. "What has happened is that everybody really requires a new strategy and, incidentally, every middle manager probably has to figure out a second career.

"Strategy is breaking out all over. It's the signal development in this year's crop of reports, though subdued enough that it's been missed by journalists, businesspeople, and the like. A few companies - such as Barrick Gold in Canada and Wolford in Austria - still look to expense control to turn things around, occasionally firing a chief executive who can't get enough slashing done. And yet, for the first time in years, strategy is back in the saddle."

Clearly IT should be proving central to that strategy. In the US, which Dunk says increasingly looks to have "hollowed out a lot of . . . industry and sent it packing to China", the economy is "progressively becoming a huge distribution machine, and the companies that have mastered all aspects of getting things from here to there at a reasonable price are becoming the new mandarins".

The harsh climate is why Dunk nominates Wal-Mart as arguably that nation's (and maybe the world's) most important company after its supreme mastery of supply chain management led to a record $8 billion profit in its last fiscal year. (see "Retooling Retail", for a look at how local retail giant Coles Myer is looking to emulate Wal-Mart best practice.)

Yet in the IT world more generally Dunk sees little innovation to boast about.

"Generally at big companies they are better at process improvements than startling product innovation," Dunk told CIO magazine. "In tech as well, the way they play catch-up ball is to buy in smaller units where the development work is well on the way. Largely this is driven by economics where the small guys are invaders and the large guys are protecting existing franchises and have an invested interest in keeping things somewhat the way they are."

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