Lecture 0A - Technology and Managing Change - PDF

Managing Businesses Under New Technologies QMB 69 30 : MANAGEM ENT INFORMATION SY STEM S : LECTURE 0A ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 1 About Me Anuj Kumar Matherly Professor of Information Systems Education PhD (2011) Information Systems Mgt. Carnegie M...

Managing Businesses Under New Technologies QMB 69 30 : MANAGEM ENT INFORMATION SY STEM S : LECTURE 0A ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 1 About Me Anuj Kumar Matherly Professor of Information Systems Education PhD (2011) Information Systems Mgt. Carnegie Mellon University Research Interest Technology mediated multichannel operations (QR Code) Online product recommendation networks (algorithm) Technology and society ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 2 The EPInc. Platform An AI-enabled peer-driven knowledge diffusion platform https://www.linkedin.com/pulse/post-5-epinc-ai-enabled-knowledge-diffusion- platform-anuj-kumar https://www.linkedin.com/pulse/post-4-optimizing-k-12-educational-production- edtech-anuj-kumar https://www.linkedin.com/pulse/post-3-integrated-framework-educational- production-anuj-kumar https://www.linkedin.com/pulse/post-2-edtech-deployment-k-12-schools-aligned- maximize-anuj-kumar https://www.linkedin.com/pulse/how-can-edtech-improve-educational- production-k-12-schools-anuj-kumar ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 3 My Research in News – Algorithmic Product Recommendations How valuable are product recommendations to consumers? https://news.warrington.ufl.edu/faculty-and-research/how- valuable-are-online-product-recommendations-to-consumers/? How to optimize online sales with a hybrid recommendation? https://news.warrington.ufl.edu/faculty-and-research/how-to- optimize-online-sales-with-a-hybrid-product-recommendation/ When a website tells you what to buy, does it work? https://www.mytotalretail.com/article/when-a-website-tells-you- what-to-buy-does-it-work/ ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 4 My Research in News Warrington professor gives TEDx talk on how online school ratings accelerate segregation in America https://news.warrington.ufl.edu/faculty-and-research/how- online-school-ratings-accelerate-segregation-in-america/ https://news.warrington.ufl.edu/faculty-and- research/greatschools-wanted-to-disrupt-online-school-ratings- but-did-it-make-neighborhood-segregation-worse/ Brick and mortar “showrooms”? How stores can survive in the digital age https://retailminded.com/brick-and-mortar-showrooms-how- stores-can-survive-in-the-digital-age/#.Xem-VehKjHo ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 5 Course Logistics Components of Course Lectures Case presentations Class discussions Assessment Final exam (40%) – short answered questions Case presentation (35%) Pop quizzes (25%) – Three to four quizzes covering the lectures, normally at the beginning of a class for material covered in the previous lectures ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 6 The “first machine age” We overcame the limitations of muscle power Factories and mass production Railways and mass transportation “Even though [the steam] revolution took decades to unfold…it was nonetheless the biggest and fastest transformation in the entire history of the world” ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 7 Is Technology Transformational? In 1850, the United States economy was small – about the size of Italy Forty years later, it was the largest economy in the world The reason – railroads Does IT qualify to be such a transformational technology? Do you often hear these words? Digital transformation Digital disruption Digital ubiquity (always connected) ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 8 The “second machine age” Three fundamental forces shaping the second machine age 1. Exponential improvement in computer gear 2. Digitization: turning all kinds of information and media into streams of bits. 3. Digitization-enabled Innovation ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 9 Exponential Growth in Computing Power Moore's law (an observation made by Intel co- founder Gordon Moore in 1965) – “The number of transistors per square inch on integrated circuits had doubled every year since their invention.” Moore's law predicts that this trend will continue into the foreseeable future – especially in the digital world ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 10 If Moore’s Law applied everywhere! Advancement in the digital world: Compared to Intel’s first- generation microchip 4004 (which came out in 1971), the fifth- generation Core i5 processor is 1. 3,500 times higher performance 2. 90,000 times more energy efficient 3. about 60,000 times lower cost Similar advancement in the physical world would mean that the 1971 Volkswagen Beetle would run 1. 300,000 miles per hour 2. two million miles per gallon of gas 3. cost 4 cents ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 11 Moore’s Law in ICT ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 12 Digitization “Encoding information into stream of bits” All kinds of information and media – text, sound, photo, video, data from sensors, and so on.. – into bits Digitization has led to the explosion in volume, velocity, and variety of data. User generated data Machine generated data (esp. machine-to-machine communication) Location data Social interactions ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 13 Digitization Affects costs Digitization lowers the following costs 1. Search costs – cost of finding and comparing information: it affects price/price dispersion, variety offered, matching, and promotes platform-based business models 2. Replication costs – zero marginal costs: bundling and price discrimination 3. Transportation costs – cost of transporting information over the Internet is near zero and consumers have zero transportation costs in online purchase 4. Tracking costs – low cost of tracking consumer activity online and hence personalization: new opportunities for advertising and price discrimination. 5. Verification costs – cost of verifying identity and reputation: online reputation mechanisms such as customer reviews ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 14 Digitization Enabled Innovation Exa and Zettabytes of a wide variety of dynamic digital data and advanced computing methods help in doing better science – better explanation and prediction of phenomena Some Examples Waze Google Translate Kayak Predicting outbreaks of natural disasters/epidemics from social network/pharmacy data Facebook, Wikipedia Dropbox ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 15 Digitization & Disruptive Innovation Why every leader should care about digitization and disruptive innovation” (McKinsey & Company, January 2014) Video link http://bit.ly/2dyBuTA ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 16 Summary of Video Digitization affects all sectors of the economy Digitization is not limited to text, image, and video but includes social interactions, our whereabouts, and attributes/activities of the physical world (IoT) Good news: high variety, volume, and quality of goods/services at low prices Challenges Employment How to capture value Claiming the Prize Access to worldwide talent and knowledge Data-driven decisions: important for CEOs to tap into talent who understands the data. Conduct tests/experiments to innovate ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 17 Competitive Advantage through IT ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 18 Competitive Use of IT – The Beginning Information Technology (IT) refers to a broad range of computer, networking, and communication technologies IT was historically used for automating back-office activities – the objective was cost reduction Now, IT used to gain a competitive advantage Two early examples of competitive use of IT American Airlines: SABRE System Merrill Lynch: Cash Management Account ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 19  American Airlines SABRE System IT Assets Nature of Competitive Action Integrated Database EFFECT of flights, routes, Agents could book flights with high efficiency, speed, and pricing of multiple flexibility – became very popular among agents airlines AA ADVANTAGE AA flights were displayed before others Software system AA earned non-operational revenue as other airlines paid that allows agents to for their flight listings (higher for preferential listing) search prices and AA gained valuable intelligence about other prices and routes and book routes to help set their prices flight WHAT HAPPENED After a regulatory intervention, SABRE, which gave AA an unfair advantage, was divested ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 20  Merrill Lynch Cash Management Account IT Assets Nature of Competitive Action Integrated Database of all EFFECT customers accounts : Integrated financial management – customers could savings, checking, dynamically maintain their desired level of liquidity brokerage (checking and savings) while sweeping daily excess cash into the high-yield brokerage account Automated decision- making software system CUSTOMER VALUE for tracking investment Deliver optimal returns by automated tracking of opportunities and market conditions and combining it with access to the executing investments financial market and financial expertise ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 21 Business Model Business strategy (model): use organizational resources in well-designed business processes to create value for customers and capture part of it as profit. Elements of a business model are What is the customer value proposition? What is the profit (revenue – cost) model? What critical resources (tangible and intangible) are needed? What business processes are needed to execute the business strategy? Business strategy versus IT strategy: Does Business strategy drive IT strategy, or sometimes IT drive business strategy? ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 22 Strategic Roles of the IT How IT enhances an existing or seeds a new business model Four types of strategic roles of the IT 1. Automation – cost reduction, better response time, higher productivity of business processes. E.g., self-service processes. 2. Control – Tighter control and more accurate handling of business processes with real-time event visibility/monitoring and business rule automation. E.g., automated alerts in the supply chain. 3. Empowerment – Effectively respond to business situations with better access to data/information/knowledge and business intelligence tools. E.g., customer support systems. 4. Collaboration – Innovation through better collaboration of skilled people across work areas, geographic areas, and organizations ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 23 Examples: Strategic Role of IT Example Business Innovation IT Role Operational Digitized merchandising, Automation, Control Excellence at Inventory business model Walmart Cross-docking process Collaboration 24x7 shopping channel Automation, Control Customer intimacy Personalization through Empowerment at Amazon.com Collaborative filtering User-generated product review Empowerment Product leadership Effective new product Collaboration , at 3M development process Empowerment ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 24 Examples of IT-Enabled Business Model Innovation Firm BM Innovation Enabling IT Google Targeted Internet Advertising Search Engine Harrah’s Customer Life Cycle Mgt. Customer Data Analytics Supply Chain Coordination Walmart Everyday Low Price Retail Store Merchandising Personal Digital Content Devices iTunes Stores Apple (iPod, iPhone, iPad) 3rd party Applications eBay Customer-to-customer exchange Auction Engine and Platform FedEx Overnight Shipping Package Tracking Product Configuration Dell Direct Model Supply Chain Coordination ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 25 IT as a Platform IT platforms offer three advantages 1. Collect real-time granular information on entities’ actions. E.g., students’ HW attempts 2. Process collected information to ▪ Generate insights. E.g., identify students’ knowledge gaps ▪ Automate corrective actions. E.g., serve students’ relevant educational content (lectures or practice questions) per their learning needs. 3. Manage information display for optimal response. E.g., nudge students toward desirable tasks Sustainability of IT enabled Competitive Advantage Competitors can quickly imitate or improve upon the firm’s actions if Competitors can acquire enabling technology, as it is readily available Competitors can learn from the first-mover’s experience and imitate (improve) actions at lower costs and in a shorter time. Competitors possessing superior technical and /or business capabilities retaliate aggressively How to analyze the sustainability of IT-enabled competitive actions? ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 27 Barriers to Erosion of IT enabled Competitive Advantage IT Resources: IT Assets (hardware, software, data) IT capabilities (Manage and implement broad IT to identify and capitalize on business opportunities) Example: Walmart’s sharing POS data with P&G from its satellite-based telecommunication infrastructure. Complementary Resources : Organizational changes required to complement IT resources Example: Harrah’s enterprise-wide CRM culture. Project Mgt. Capabilities : IT projects require the integration of unproven technologies with new business processes, products, and services that are complex and risky Example: Amazon’s Internet-based retail bookstore. Preemptive Barriers : Customer switching costs (eBay) Building and enabling a network of partners (Dell). ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 28 Emerging IT Enabled Business Trends ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 29 Two Emerging Themes Anything can be digitized (or “digitalized”) Digitization will be one of the main forces affecting any business The products and services will be increasingly digitized Sensors will inform about their usage More personalization Distinction between physical and digital will reduce How we thought about technology less than a decade back has been completely turned on its head Applying well-understood rules versus recognizing patterns ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 30 Top Trends in IT Enabled Business Social Technologies – Joining the social matrix Big Data – Advanced Analytics Internet of Things – Enlarging the network Fusion of digital and physical world – Omnichannel operations Platform-mediated business models Offering anything as a service – Cloud computing AI – Cognitive Computing, Generative AI Opportunities in emerging economies and public/social sector (Government, health, and education) Diverse ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 31 Social Technologies Connecting organizations internally and beyond their boundaries to harness the power of collaboration and wisdom of the crowd Crowdsourcing creates enormous value, often for free: Facebook, YouTube New ways of capturing innovation Innocentive, Quirky, 99designs New ways of creating value through “peer economies” Airbnb, Uber, Skillshare, Amazon Home Services ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 32 Big Data Crunching huge amounts of data with advanced analytics leads to new insights (levels of personalization) Netflix recommendations, UPS fleet maintenance, IBM, and Target stores for expecting mothers How is this possible now? Huge amounts of data collected (and stored) cheaply: IoT, user-generated content (UGC) Fast processors and distributed computing (cloud!) can crunch this data New data can be recombined with existing data for new insights (waze.com adds social and sensor data to existing GPS systems) Firms are doing A/B tests and fitting statistical models on data to design innovative product and service offerings Raise their existing performance ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 33 Internet of Things (IoT) “The Internet of Things is far bigger than anyone realizes” It is not only “smart TV” or “smart refrigerator” or “smart clothes” ◦ When we use sensors in cement to build roads, we are effectively creating smart roads ◦ These sensors can talk to the sensors in cars, thus intelligently rerouting traffic if there is ice ◦ These cars talk to each other and to central systems, thus creating smart traffic The real value of IoT lies in the ability to gather data from myriad sources, combine them using software, and derive intelligence Couple that with human ingenuity, it will be the new driver of productivity and growth ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 34 Multichannel Operations Rapid growth in technology-enabled channels (telephone, web, and mobile-based) through which firms interact with customers. Opportunities – engage customers via a variety of channels Challenges – manage product information and demand on multiple channels Physical versus digital channels ◦ Physical channel – Opportunities to touch and feel merchandise, store experience, and instant gratification ◦ Digital channels – Wide product selection, lower prices, search and recommendation tools, and content (product reviews and ratings) Technology is blurring this distinction ◦ Location-based social networking applications –Wallgreen, Saks, Loopt ◦ QR code-based viewing of online product information in store – Macy’s ◦ Augmented reality technologies are merging touch and feel information in the offline world with online content in the digital world – Google Glass, Ebay’s fashion app, and Amazon’s flow app ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 35 Cloud Computing The cloud represents the “electrification” of computing From individual generators to power as a utility Much better in terms of resource utilization Big computing is not for the few anymore The “pay as you go” model of computing Salesforce.com And it’s getting cheaper every year ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 36 Platform Mediated Business Models Platforms are products and services that tie together two (or more) distinct groups of users in a network Example: Credit card, Newspapers, HMO, Computer Operating Systems … Has technology made platforms more prevalent? Emergence of new platforms (Google, Apple, Airbnb, Uber) Traditional business reconceived as a platform (retail electricity market) ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 37 AI and Cognitive Computing “…the substitution of machinery for human labor may render the population redundant” “…the discovery of this mighty power” has come “before we knew how to employ it rightly” This was how steam engines were described 200 years ago…Is AI different? There have been many false dawns when it comes to AI – what is different this time is the phenomenon of “deep learning” Watch this Video on deep learning https://www.youtube.com/watch?v=hvIptUuUCdU ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 38 AI and Cognitive Computing A key distinction between traditional machine learning and deep learning is the amount of supervision and human intervention the AI system requires Traditional machine learning techniques, including classic neural networks, need to be supervised by humans so they can learn Deep learning is an approach to have the system learn on its own, without intervention Cognitive computing systems can understand the nuances of human language, process questions akin to the way people think, and quickly cull through vast amounts of data for relevant, evidence‐based answers to their human users’ needs ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 39 AI and Cognitive Computing Cognitive computing Computer vision: the ability of machines to recognize things Natural Language processing: ability to talk to a computer as we would to another human being Digital language translation, face recognition, voice recognition, inductive inference, and digital assistants (Amazon’s Alexa) Created intelligence now resides in machines – external to the human brain! ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 40 GenAI Most AI models are “Discriminative models” Whether a credit card transaction is fraudulent Analytical predictions based on historical data Generative AI can generate content and perform creative tasks Stable diffusion models Large language models (LLMs) Writing, design, software development ….. ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 41 Autonomous Driving We have finally digitized the automobile: Reinvents transportation Changes the model of car ownership as we know it An OECD study that modeled the use of self-driving cars in Lisbon found that shared autonomous vehicles could reduce the number of cars needed by 80-90% If Uber owns a self-driving fleet, it changes Uber too: from a digital disrupter to more like an airline, asset-heavy Changes logistics as we know it The world’s first autonomous beer run has happened (https://blog.caranddriver.com/self-driving-beer-truck-makes-120- mile-delivery-but-theres-one-concern/) Enormous implications for employment in the transportation industry ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 42 Emerging Economies and Public Sector Emerging economies: a large market growing at a fast pace High growth in Internet and mobile adoption: stimulate financial inclusion, local entrepreneurship, and opportunities for business Ex: Fishermen's market in India Government, health, and education (together account for one-third of global GDP) lagged in productivity growth due to slow IT adoption IT initiative in the government sector: Universal ID (Aadhar) in India, e-People in Korea IT initiative in the health sector: Use of mobile technology in women and childcare in India and China, Telemedicine IT initiative in the education sector: MOOC, Educational platforms such as EkStep in India, Adaptive and personalized learning software DreamBox ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 43 Each one of these trends is hugely transformative, but taken together, the extent of transformation is unimaginable today ANUJ KUMAR, WARRINGTON COLLEGE OF BUSINESS, UNIV. OF FLORIDA 44