InformationWeek Issue Jan. 27, 2003

1. InformationWeek IssueJan. 27, 2003 CEO Visions 2003: Looking Beyond the Storm www.Informationweek.com

2. Who is paying federal taxes? To be in the top 25% of all tax payers you need to earn: $52,965. To be in the top 50% of all tax payers you need to earn: $26,415

3. Who is paying federal taxes? Percentiles Share of AGI % of Fed. Taxes Paid Top 1% 19.5% 36.2% Top 5% 34.0% 55.5% Top 10% 44.9% 66.5% Top 25% 66.5% 83.5% Top 50% 86.8% 96.0% Bottom 50% 13.2% 4.0%

4. Chapter 5 SummaryInformation Systems Can Redefine Competitive Boundaries

5. Section 1 – The First Of Three Perspectives: The Business Environment • Chapter 1 – Business and Information Systems Management • Chapter 2 – Business Competitive Environment • Chapter 3 – Porter Competitive Model • Chapter 4 – Airline Industry Analysis • Chapter 5 – Information Systems Can Redefine Competitive Boundaries

6. Networks Cross Company Boundaries to Reap Benefit • Efficiency – maximizing output while minimizing expense and unnecessary effort. • Effectiveness – creating a strong impression in the overall scheme of the business by broadening tasks, activities and even entire jobs. • Competitive Advantage – creating Interorganizational Systems through strategic alliances (extended enterprise) and links with customers.

7. Alliances Provide Growth Opportunities • Three major markets – North America, Europe, and the Pacific Rim. • Fight your competitor in your market or face the possibility of your competition fighting exclusively against you in your own market.

8. Electronic Data Interchange • Exchange of routine business transactions in a structured, computer-processable format. • Logical extension of existing systems. • Obstacles – format incompatibility, timing windows, service cost, etc. • EDI Value Added Networks – support for electronic mailbox to address time windows, multiple routing paths, ensuring data format compatibility between systems

9. E-mail Enabled Applications • Non-simultaneous communication. • Replaces traditional paperwork as forms are filled out and submitted via electronic mail.

10. Possible Exam Questions • What advise would you give to a company that is contemplating several new strategic alliances? • How can information systems contribute to establishing successful strategic alliances?

11. Chapter 6 Introduction Business Vision

12. What we’ve covered… • Course Overview • Business Competitive Environment • Porter Competitive Model • Airline Industry Analysis • Information Systems – redefining competitive boundaries

13. What’s next . . . A Systematic Approach Section II: Company Perspective • Shown in the model are • the business and IS • factors that need to be • addressed to successfully • use information systems • to gain a competitive • advantage. Vision Strategy Tactics Business Plan • Competitive Options • Roles, Roles and Relationships • Redefine and/or Define • Telecommunications as the Delivery Vehicle • Success Factor Profile Figure 1-4

14. Primary Objective of Chapter To understand the important of establishing a well understood vision as the starting point in directing, posturing and running a business.

15. The Vision Process • To establish a clearly vision of the future • To provide a basis for sharing values and views

16. Uncertainties of a Vision • The dynamics of the market (customers). • Rapidly changing technologies that frequently offer new product life cycles. • The logic and need to address changing employee values and traditional ways that work is done. • The shift from the old to new regulatory practices in many industries.

17. USAA • Property and Casualty insurance and financial services institution based on membership of military personnel and their dependents. • General Robert F. McDermott, CEO and President and his role of the business visionary

18. Whirlpool Corporation • The World’s Largest Manufacturer and Marketer of Major Home Appliances • David Whitwam, CEO in 1987. Initiated global vision in 1988

19. Vision and Information Systems

20. Conclusions 1. Leadership is a key factor in establishing an effective vision for an organization. 2. While accomplishing this can represent a major challenge, it can be a critically important thing to do to assure the long term success of the organization.

21. Chapter 6 Business Vision

22. CEO Job Description The primary job of a CEO is deal with the long-term viability of the business. Leaders combine vision with communication that leads to a shared purpose. A leader sets the vision which is different from being a visionary.

23. The essence of competitiveness is vision, leadership and a hunger to succeed. P. R. Vagelos Chairman and CEO Merck

24. A Business Vision • A vision is a photograph of the future. • It is a self-image that deals with what the business wants to look like over the long range future. • Business visions are realistic, credible and attractive to people within the organization.

25. Jack Welch Vision for GE His vision was for GE to become the most competitive enterprise on earth. His wanted to create a small company spirit in a big company body, to build an organization out of an old line industrial company that would be high spirited, more adaptable, and more agile than companies one-fiftieth the size. He wanted GE to be a company where people dared to try new things—where people felt assured in knowing that only the limits of creativity and drive, their own standards of personal excellence, would be the ceiling on how far and how fast they move.

26. Larry Ellison Vision for Oracle To be the world leader in providing software applications over a network and hardware designed and priced to serve those needs. Ellison suggests that the software industry as we know it today will vanish and be replaced by a service industry.

27. Microsoft Vision Empower people through great software, anyplace, any time and on any device.

28. Values Beliefs Principles C u l t u r e Mission Goals Vision Strategies Tactics Objectives and Measurements Authority and Responsibility Business Plan

29. The Vision Thing Organizations are frequently brought to crisis by conflicts over basic issues of mission, values, and vision. Without these basic agreements in place, no organization is truly viable at least over a long term.

30. Mission, Vision and Values Mission, vision and values are the glue that holds an organization together. They describe what you're trying to do, how you want to go about it, and where you're headed. Knowing these things helps to keep your organization on track. These crucial factors provide a yardstick to measure present performance and plans against aspirations.

31. Mission, Vision and Values • MISSION is the reason an organization exists. • The founders' intentions. • What they intended to achieve by starting the organization. • This must be reexamined and refreshed periodically if an • organization is to remain dynamic. .

32. Vision • VISION is what keeps people within an organization moving forward, • even against discouraging odds. • Vision is the most powerful motivator in an organization. • If it's vivid and meaningful enough, people can do unbelievable things to • bring it to realization. • But if it's lacking, no amount of resources will be able to get people to • make any kind of a concerted effort.

33. Values (Culture) VALUES manifest in everything you do as a group, not only your public programs, but also how you operate. One organization may identify access as a primary value. When they plan programs, they think foremost about how to remove the barriers and encourage the widest possible participation. Another group might value product quality above all else. When they assign budget priorities, they opt for expenditures that improve quality above all others. Articulating values provides everyone with guiding lights, ways of choosing among competing priorities and guidelines about how people will work together.

34. Gerstner and IBM Lou Gerstner caused a stir two months after becoming IBM’s CEO when he declared at his major significant press conference that the last thing IBM needed was to proclaim a grand vision.

35. Culture Change Changing IBM's culture was Gerstner's most challenging long-term task. Early in his tenure, he told employees, “We've lost $16 billion in the last three years; Fortune magazine says we're a dinosaur. Don't you think we ought to change? It's pretty obvious what we're doing isn't working."

36. Gerstner Approach Gerstner constantly asked managers, "What are your customers telling you? Do you understand your market? Have you segmented your market?" He ran IBM like the customer that he used to be. He believed that five years were required to transform an enormous, far-flung organization like IBM.

37. Executive Vision If a company has restructured where do they turn for business performance and financial improvement? Job experience can easily count more than intuition. A broad grounding in a particular industry is a prerequisite to successful direction setting. Visionaries can draw a conceptual roadmap to some imagined future.

38. The most important thing that I have learned is that the time for a business to go from chump to champ to chump used to be two to three decades and now it is five to seven years. Bill McGowan Former CEO of MCI

39. A Systematic Approach Vision Strategy Tactics Business Plan • Competitive Options • Roles, Roles and Relationships • Redefine and/or Define • Telecommunications • as the Delivery Vehicle • Success Factor Profile Figure 1-4

40. A Shared Vision Positions IT 1. Achieve Strategic Synergy. 2. Put the Onus on the Owners. 3. Leverage Learning. 4. Extend Externally. 5. Chuck the Organization Chart. 6. Indulge in Information. 7. Make a Bee-line for Benefits.

41. “The Vision Trap”1 Grand, abstract visions can be too inspirational. The company may wind up making more poetry than products. Gerard H. Langeler President, Mentor Graphics

42. Implementation (Action) The Vision to Action Process Agreement & Commitment Tactics and Business Plan Strategy Feedback Vision Sensing Opportunity Figure 6-1

43. Vision Examples • Robert McDermott at USAA • David Whitwam at Whirlpool • Peter Lewis at Progressive Corp. • Gil Amelio at National Semiconductor

44. If Starting Today Robert McDermott, USAA Jack Welch, General Electric David Whitwam, Whirlpool Jeff Bezos, Amazon.com Peter Lewis, Progressive Corp. Charles Schwab, Schwab & Co. Michael Dell, Dell Computer Sam Walton, Wal-Mart Stores Fred Smith, Federal Express Meg Whitman, eBay Louis Gertsner, IBM Akio Morita, Sony Lee Kuan Yew, Singapore, Inc.

45. USAA • Financial Services Company. • Headquartered in San Antonio, Texas. • A member owned association. • Started by Army officers who had difficulty getting insurance. • Historically managed by former military officers. • Top-rated for customer service and financial performance.

46. Information systems are strategic weapons, not cost centers. Robert F. McDermott, Former USAA CEO

47. McDermott Leadership • Increased assets from $207 million to $8.5 billion. • Grew customer base from 650,000 to 2.4 million. • Significantly increased the level of customer service. • Broadened the product base. • Decreased the high annual employee turnover rate. • Redefined the business from a property and casualty • insurance company to a financial services organization.

48. USAA Videotape

49. USAA Vision 2000 An Events Oriented Organization Member (Customer) Needs Wants Key Points Security Quality Asset of Life Management Supporting Insurance Consumer Financial Systems Products Services Services Products Products Figure 6-2

50. USAA’s ultimate goal is to manage its customer relationships and not its individual products. How does this relate to information systems?