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Information Technology &
Business Strategy
Ramiro Montealegre
UNIVERSIDAD
TORCUATO DI TELLA
Sesin 5:
Transformacin Organizacional
Information Technology & Business Strategy 2015 Ramiro Montealegre
Todays Agenda
2:00 3:30 Summary: IT in strategy and Biz model
3:30 3:50 Break
3:50 5:20 Case Discussion: Re/Max
+ Organizational change
5:20 5:40 Break
5:40 7:10 IT Infratructure
+ Case Facilitation: Knight Capital
7:10 7:30 Break
7:30 9:00 Case Critique: Knight Capital + Beyond
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Information Technology & Business Strategy 2015 Ramiro Montealegre
Why do you do what you do?
How do you want to get there?
What do you need to do?
Effective strategies tackle 3 questions
Information Technology & Business Strategy 2015 Ramiro Montealegre
Suppliers Buyers
Substitutes
New Entrants
IndustryCompetitors
Rivalry Among
Existing Firms
Bargaining Powerof Buyers
Threat ofSubstitute Productsor Services
Bargaining Powerof Suppliers
Threat ofNew Entrants
Five Forces Determine Industry Profitability
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Information Technology & Business Strategy 2015 Ramiro Montealegre
Enabled throughEffective Useof Technology
DifferentiationSony
Customer
IntegrationEDS
Redefining
Customer Rel.Saturn
Proprietary Standard
Microsoft, Intel
Low Cost
Southwest
Horizontal Breath
Fidelity
Exclusive Channel
Rural Wal-Mart
Dominant Exchange
eBay
Options for Strategic Positioning
Information Technology & Business Strategy 2015 Ramiro Montealegre
Exercise: Positioning Well-Known
Companies on the Triangle
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Information Technology & Business Strategy 2015 Ramiro MontealegreInformation Technology & Business Strategy 2014 Ramiro Montealegre
Exercise: Customer Segmentation
Tier Description
Information Technology & Business Strategy 2015 Ramiro MontealegreInformation Technology & Business Strategy 2014 Ramiro Montealegre
Existing Business Competencies with Respect to the Strategic Positions
1.
2.
3.
1.
2.
3.
Customer Integration
Horizontal Breath
1.
2.
3.
Redefining Customer Experience
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Information Technology & Business Strategy 2015 Ramiro Montealegre
Why do you do what you do?
How do you want to get there?
What do you need to do?
Effective strategies tackle 3 questions
Information Technology & Business Strategy 2015 Ramiro Montealegre
Technology & Business StrategyProfessor Ramiro Montealegre
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(Johnson, Christensen and Kagermann 2008)
Customer Value Proposition- Target customer- Job to be done- Offering
Profit Formula- Revenue model- Cost st ructure- Margin model- Resource velocity
Key Resources- People- Technology, products- Equipment- Information- Channels- Partnerships, alliances- Brand
Key Processes- Processes- Rules and metrics- Norms
Elements of a Successful Business Model
Information Technology & Business Strategy 2015 Ramiro Montealegre
What are you trying to do withyour digital business initiatives?
Augment current Create new
business models business
models
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Information Technology & Business Strategy 2015 Ramiro Montealegre
The Three Components of a Digital Business Model
Weill and Woerner, 2013
Information Technology & Business Strategy 2015 Ramiro Montealegre
Inbound
LogisticsOperations Service
Marketing
and
Sales
Outbound
Logistics
M
A
R
G
I
N
N
I
G
R
A
M
Firm Infrastructure
Human Resources Management
Technology Development
Procurement
The Value Chain
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Information Technology & Business Strategy 2015 Ramiro Montealegre
C
u
s
t
o
m
e
r
Physical
Virtual
Value Chain Interface Demand
Platform
Experience
Content
The Virtual Value Chain
Information Technology & Business Strategy 2015 Ramiro Montealegre
BusinessOutcomes
ITImplications
BusinessImplications
Vision
Mission
StrategicImperatives
Strategy and IT on a Page
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Information Technology & Business Strategy 2015 Ramiro Montealegre
Information Technology and Business Strategy
Information Technology & Business Strategy 2015 Ramiro Montealegre
The only person who
likes change is a baby
with a wet diaper
Mark Twain
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Information Technology & Business Strategy 2015 Ramiro Montealegre
ERP System
ERP
System
DataanalysisHuman
resources
Manufac-
turing
Finances
Supply-
chain
Sales
Services
Information Technology & Business Strategy 2015 Ramiro Montealegre
- Assumptions
- Nature and Focus
- Tactics
Organizational Change
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Information Technology & Business Strategy 2015 Ramiro Montealegre
RE/MAX,
like
any
franchise
business,
financial
viabilitybased
on
maintaining
and
growing
market
share
Keyobjectives:sellingfranchisesandhiringandretainingagents
Key
Value
proposition:
Strongbrandname
Provenbusinesspractices
Topclasssupport(trainingandeducation,IT,andtimely
market
knowledge)
Realestateprofessionalsthatareinbusiness
forthemselves,butnotbythemselves.
Information Technology & Business Strategy 2015 Ramiro Montealegre
U.S. Residential Real Estate Industry
One of the largest sector in U.S. economy ($60-70 Billion)
Highly competitive at all levels
Returns fluctuate with the health of the national economy
In the past decade, it has been a roller coaster
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0
50,000
100,000
150,000
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Agents
0
2,000
4,000
6,000
8,000
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Offices
0
20
40
60
80
100
2003 2004 2005 2006 2007 2008 2009 2010 2011
Countries
0
5,000
10,000
15,000
2002 2003 2004 2005 2006 2007 2008 2009 2010
Owners
Information Technology & Business Strategy 2015 Ramiro Montealegre
IT
at
RE/MAX,
LLC.Historically,akeycomponentofcompanysmarketingstrategy.
Ourbrokerscanrecruitandretainagentsmoreeasilybymakingavailabletothemtechnologicaltools
thatgenerateleadsandreferrals,facilitatenetworkcommunication,andtracklistingandsales
activities
FormerRE/MAXPresident,DarylJesperen(2001)
1989 RE/MAX
Office
Management
Systems
(internal)
1993
CD-ROM
Agent Roster
1998
2006
1992
1995
1992
RE/MAX
Forum on
CompuServe
2001
2005
2009
2010
RE/MAX
Agent 2000
RE/MAX
Satellite
Network
Remax.co
m
Mainstreet
1.0
Web
Roster on
Mainstreet
All listings on
Remax.com
2006
remax.com
undergoes a
major redesign
RE/MAX
University
On-Demand
Training
available
anywhere,
anytime1990 2010
2002
Mainstreet 2.0
Source: RE/MAX, LLC.
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What are the key distinction betweenSUSTAINING and DISRUPTIVE innovations?
Surviving Disruption
- SUSTAINING innovation maintains a steady rate ofproduct improvement.
- DISRUPTIVE innovation:
Often sacrifice performance along dimensions that are
not important (or dont create value) to currentcustomers
However, the new attributes can open up new markets
Disruptive Technologies: A driver
of leadership failure
Time
P
erformance
Disruptive
technology
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... In the process of transitioning
SupportingAGENTStoservecustomers
SupportingCUSTOMERSbyanenablingnetwork
from
to
Information Technology & Business Strategy 2015 Ramiro Montealegre
Illustrate a common challenge facing companiestoday: how to prepare for, and adapt to, a digitalworld
Discuss whether RE/MAX business model cancontinue to thrive in the new environment(customer-centric, rapid and unpredictabletechnological changes, and increasing internalcomplexity)
The Primary Objectives of theRE/MAX Case Study
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Information Technology & Business Strategy 2015 Ramiro Montealegre
POTENTIAL BENEFITS
Operational StrategicBusiness
Transformation Reeng. High
ProcessNATURE automate Reeng. POTENTIALOF CHANGE RISK
ProcessSimplification
Incremental Process LowImprovementInternal External
FOCUS
ORGANIZATIONAL CHANGE: NATURE AND FOCUS
Information Technology & Business Strategy 2015 Ramiro Montealegre
Transformational Incremental(Radical)
NATURE OF CHANGE
Evolutionary
SPEEDOFCHANGE
Revolutionary
Multi-organization
Multi-processes
Single Process
FOCUSOF
CHANGE
Change Tactics
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Information Technology & Business Strategy 2015 Ramiro Montealegre
Change Through Persuasion, Garvin, D. and Roberto, M., HarvardBusiness Review, February 2005.
Your Companys Secret Change Agent, Pacale, R.T. and SterninJ., Harvard Business Review, May 2005.
The Underlying Structure of Continuous Change, Lawrence T.B.,Dyck, B., Maitlis, S., and Mauws, M., MIT Sloan Management Review,Summer 2006.
Overcoming Resistance to Change, P. Michelman, HarvardManagement Update, July 2007.
From mental models to Transformation, J. Wind and C. Crook,Rotman Magazine, Spring 2009.
Immunity to Change: How to Overcome It and Unlock Potential in
yourself and your organization, R. Kegan and L. Lahey, HBS Press,2009.
Achieving Successful Strategic Transformation, G. Johnson, G.Yip, and M. Hensmans, MIT Sloan Management Review, Spring 2012.
References
Information Technology & Business Strategy 2015 Ramiro Montealegre
Please prepare:
Knight Capital Americas
For Next Class