Last year, Harvard Business Review published a now-infamous article by Nicholas Carr, “IT Doesn’t Matter,” arguing that “IT’s strategic value has diminished steadily as its presence and power have grown.” (Carr provides links to responses on his Web site.) Carr has now written a book, Does IT Matter?, which Berkeley professor and Really Smart Person Hal Varian discusses in the New York Times:
[Carr’s] basic point is straightforward. At one time, information technology was so expensive and so difficult to manage that companies could make large amounts of money simply by being able to make systems work. (Think I.B.M.)
Companies that lacked the skills to manage information technology effectively suffered compared with competitors that had mastered those skills. But over the years, as information technology has become cheaper and more manageable, this source of competitive advantage has been reduced and perhaps eliminated. Hiring knowledgeable employees is much easier than it used to be, and the tools to manage this technology are far more powerful than they were a few short years ago. Nowadays anybody can set up a Web server, or an accounting system, or an inventory management system.
The ability to manage technology effectively is no longer the barrier to entry it once was. Hence, it no longer serves as a source of competitive advantage.
But, Varian continues,
Standardization and commoditization of a technology don’t always mean that innovation stops. Once products become commodities, they can serve as components for further innovation.
In the 19th century, American manufacturers created standardized designs for wheels, gears, pulleys, shafts and screws. As such standardized parts became widely available and could be purchased “off the shelf,” there was an outpouring of invention….
Perhaps information technology is like those standardized parts. Desktop PC’s, Web servers, databases and scripting languages have become components in larger, more complex systems. As these components have become more standardized, the opportunities to create innovations have multiplied.
Brian Arthur made a similar point at a recent Institute conference (this is Ross Mayfield’s gloss on what Brian said): “Just because everybody has something doesn’t mean it doesn’t have strategic value. It’s how you put it together and what you do with it.” The technology becomes really valuable when it goes from something hoarded by early adopters, to basic infrastructure (arguably eBay is now undergoing that shift).
We’ll see what other responses the book generates.