Technology Accelerators

Technology Accelerators Team 5 Katelyn Reed Monica Longer Kristen Hodge Venessa Rodriguez

Drugstore.com-one of the first Internet pharmacies • Stock prices soared • The Internet was going to change everything and make any company successful • Drugstore.com challenged Walgreens to keep up • At first Walgreens suffered and felt pressured to react

Crawl, Walk, Run • Rather than just jump into making a website, Walgreens proceeded slowly • Crawl phase-Began experimenting with a website that fit into their Hedgehog Concept • Researched how the internet would compliment the company and the concept of convenience • Competitors thought Walgreens would fail at new technology

Walgreens Continued • Walk phase-Walgreens connected website to inventory. • Prescriptions could be filled on-line • Run phase- launched sophisticated internet site • Easy to use and reliable website • Stock prices doubled • Drugstore.com could not keep up with Walgreens

Technology and the Hedgehog Concept • Great companies adapt and endure changes • Real Question: • How do good-to-great companies think differently about technology? • Not, what is the role of technology?

Technology and the Hedgehog Concept Continued • Walgreen’s • Was already technology savvy before their website • Intercom system • Linked customer information between ALL Walgreen’s locations. • Used technology as a tool to accelerate momentum after hitting a breakthrough. • Linked technology directly to their Hedgehog Concept (convenient drugstores increasing profit per customer visit). • Their Hedgehog Concept drove its use of technology, not the other way around. • Become a pioneer in the application of technology.

Technology and the Hedgehog Concept Continued • Kroger • Scanning barcodes • Reduced inventory costs • Gillette • Manufacturing technology • Low cost, high tolerance blades • Sensor- $200 Million and 29 patents • Apple • Good to Great pages 150-151.

Technology as an Accelerator • Technology, when used right, is an accelerator of momentum, not a creator. • You can’t make good use of technology until you know which technologies are relevant. Those link directly to the three intersecting circles of the Hedgehog Concept. • Does the technology fit directly with your Hedgehog Concept? • Yes, you need to become a pioneer in the application of that technology. • No, then decide if you need the technology at all. If you do then all you need is correspondence. If you don’t then that technology is irrelevant and you can ignore it.

Technology as an Accelerator Continued • Conceptually good-to-great companies have a relationship to technology that is no different than their relationship with any other category of decision. • If a technology doesn’t fit within their 3 circles, they ignore the hype and just go about their business. • When they find which technologies are relevant, they become fanatical and creative in the application of those technologies. • Technology without a clear Hedgehog Concept, and without the discipline to stay within the 3 circles, cannot make a company great.

The Technology Trap • The 20th century will be most remembered for its advances in science and technology • Page 155, “We were quite surprised to find that fully 80% of the good-to-great executives we interviewed didn’t even mention technology as 1 of the top 5 factors in the transition, it had a median ranking of 4th”

Nucor Example • One of the most aggressive pioneers in the application of mini-mill steel manufacturing • When the CEO was asked what the primary factors in the transition from good-to-great he stated “were the consistency of the company, and our ability to project its philosophies throughout the whole organization” • Emphasized factors such as getting the right people in management positions and the simple structure and lack of bureaucracy

Nucor Example Continued • Nucor states that 20% of their success if from technology and 80% is in the culture of the company • Technology by itself is never the primary cause of either greatness or decline • In Daytona 500 the primary variable is not the car but the driver

More Examples • GE did not pioneer the AC electrical system, Westinghouse did • Despite the advanced technology of the U.S. the Vietnamese won due to their simple strategies • When linked properly with simple concepts technology can help drive a company, but if used in an improper manner then it can hurt a company

Apple The company’s business strategy leverages its unique ability to design and develop its own operating system, hardware, application software, and services to provide its customers new products and solutions with superior ease-of-use, seamless integration, and innovative industrial design.

Fear of Being Left Behind • Debated on having a technology chapter in this book • Finally settled on putting it as part of the flywheel • Discovered that companies who did not react to what others were doing were more successful • Not motivated by fear

Fear of Being Left Behind Continued • Motivated by a “deep creative urge and inner compulsion for sheer unadulterated excellence for its own sake.” • Technology alone cannot take a company from good to great • Staying true to the big picture and fundamental values mixed with technology will create a breakthrough

Technology Accelerators