At Newsstands Now: IT and Competition

Harvard Business Review has recently updated its Web site to reflect the contents of the July-August issue, which is the second of two issues celebrating the Centennial of Harvard Business School. This one is devoted to "Honing Your Competitive Edge" and contains an article written by myself and MIT‘s Erik Brynjolfsson called "Investing in the IT That Makes a Competitive Difference." This is a descriptive title, but not a terribly interesting or provocative one. Erik and I tried to get the editorial staff brainstorming around titles like "Deploy, Innovate, and Propagate: How to Harness IT for Competitive Advantage." or "How, and How Much, IT Matters," but no dice. 

The title aside, we’re excited to see the article in print. It builds on and expands ideas we wrote about last year in Sloan Management Review and the Wall Street Journal, and that I’ve blogged about a couple times.

We present data showing that competition in the US has become significantly nastier, or more ‘Schumpeterian,’ since the mid 1990s, and that the increase in competitive intensity is biggest in the industries that spend the most on IT. To put it a bit more precisely, we found a positive correlation between nastier competitive dynamics and IT investment at the industry level since the mid 90s; the article includes graphs that show this relationship.

To put it a bit more loosely, we found that competition started to heat up in the middle of the last decade, and that it heated up most in industries that installed a lot of IT.

We use analogies, case studies, logic, and previous theoretical and empirical work to argue that this is not just an interesting correlation, but a story of cause-and-effect. We believe that IT is a primary engine of the observed changes in the landscape of competition. The article lays out why we believe this, and what the implications for technology-fueled competition are for companies and their leaders.

I won’t try to summarize our arguments, conclusions, or recommendations here. Instead, please read the article if you’re interested in the topic; It’s available for free for the next month on HBR’s site.

And please let me and the rest of this blog’s community know what you think. Are you persuaded by our evidence and arguments?  If not, why not?  What did we overlook or get wrong? What do you think of the paper’s recommendations to executives? Are they the right ones, or recipes for disaster? What questions did the article leave you with?  Leave a comment and share your thoughts; I’ll take up feedback in later posts. There’s a lot more to be said on this topic, so let’s start the conversation.