Strategic Issues of Project and
Systems Management
Jason C. H. Chen, Ph.D.
Professor of MIS
School of Business Administration
Gonzaga University
Spokane, WA 99258
chen@jepson.gonzaga.edu
Dr. Chen, Special Topic: Project Management
Learning Objectives
• Understand how to strive for business competitive
advantage from the perspective of project management
• Understand the concepts of “Porter’s Five Force
Model”
• Explain how information resources are used
strategically in context of the 5-forces model.
• Understand the concepts of “Hyper-competition Model”
and differences between Porter and Hyper-competition
models
Dr. Chen, Special Topic: Project Management
What is the
“Competitive Advantage”?
• A competitive advantage is a benefit derived from
something a company does or has that its customers
want and its competitors cannot (or choose not to)
match.
• If a company can sustain its competitive advantage,
the company will succeed in its industry – how?
• Two types of people lead a company to succeed
– Those know how to innovate the enterprise
– Those know how to execute their strategy onto the
enterprise using IS/IT.
Dr. Chen, Special Topic: Project Management
Discussion Questions
• It has been said that there are no sustainable
competitive advantages can be gained from IT
other than the capability of the IT organization
itself. Do you agree or disagree? Defend your
position.
• Based on our general understanding that
sustainable advantage is hard to come by. Just
about any advantage gained by a company
seems to be copied by another at some point in
the future.
Dr. Chen, Special Topic: Project Management
Discussion Questions - Answer
• Those who agree with this statement might argue that
the key to sustaining any advantage comes from the
way all business resources are organized and used,
and ultimately that comes down to how the managers
and the people are able to perform.
• Those who disagree with this statement might argue
that even the capability of the IT organization is not a
sustainable advantage because people come and go,
they can be bought by another organization as a move
to create the capability elsewhere, and their skills and
knowledge atrophy over time, when new capabilities
arise. Witness IT organizations who excelled at
managing mainframe applications, who are now
struggling to keep up with web-based applications.
Dr. Chen, Special Topic: Project Management
Sustainable Competitive Advantages
• Any sustainable competitive advantages?
• How can an organization sustain its competitive
advantage?
• Firms may create/improve their competitive advantages
only if they:
capacity to learn,
– have ________
revenue management
– employ ________
_________ approach
• With the service economy accounting for over 70 percent of GDP in
OECD (Organization for Economic Co-operation and Development)
countries, service firms are becoming increasingly competitive with
revenue management (RM) and pricing becoming central in their
focus for sustaining long term profitability (and competitive
advantage).
– learning to learn and learning to change (life-long
learning environment)
Dr. Chen, Special Topic: Project Management
Essential Value Propositions
for a Successful Company
• Business Model
• Core Competency
– Outsourcing
– Offshoring
• Execution
– Set corporate goals and get executive
sponsorship for the initiative
Dr. Chen, Special Topic: Project Management
What is Business Model?
• A business model is a set of planned
activities (sometimes referred to as
business processes) designed to result in a
profit in a marketplace.
• The business model is at the center of the
business plan.
• An e-commerce business model aims to
use and leverage the unique qualities of the
Internet and the www.
Source: E-Commerce: business, technology, society, Laudon and Traver, A/W
Dr. Chen, Special Topic: Project Management
N
Why New Models?
• We need some new models
– for how we go about exploring IT for
competitive advantage,
– for IT infrastructure how we create it and
manage it
– for how we acquire, manage and deploy the
skills that are needed to run that infrastructure
– Profitability (making money)
N
Dr. Chen, Special Topic: Project Management
HOW CAN INFORMATION
RESOURCES BE USED
STRATEGICALLY FOR
PROJECT MANAGEMENT ?
Dr. Chen, Special Topic: Project Management
IT Capabilities
• Four major categories of IT capabilities:
– Technical skills - applied to designing, developing and
implementing information systems.
– IT management skills - critical for managing the IT
function and IT projects.
– Relationship skills - can either be externallyfocused or spanning across departments.
– Project management skills - the role and
impact (IT) projects have on an organization.
Dr. Chen, Special Topic: Project Management
Striving for Competitive Advantage
• Firm level: Industry & Competitive Analysis
Competitive Forces Model
Competitive Strategy (has been introduced)
D’Aveni’s Hypercompetition Model (7s)
• Business level
Value-Chain Analysis (to be introduced more)
Dr. Chen, Special Topic: Project Management
PORTER’S FIVE COMPETITIVE
FORCES MODEL
NEW
MARKET
ENTRANTS
•Switching cost
•Access to
distribution channels
•Economies of scale
THE FIRM
INDUSTRY
COMPETITORS
•Cost-effectiveness
•Market access
•Differentiation of
product or service
•Selection of suppler
•Threat of backward
integration
SUPPLIERS
SUBSTITUTE
PRODUCTS
& SERVICES
Threats
Bargaining power
•Redefine products
and services
•Improve
price/performance
•Buyer selection
•Switching costs
•Differentiation
CUSTOMERS
N
Dr. Chen, Special
Topic:
Dr. Chen,
TheProject
TrendsManagement
of the Information Systems Technology
TM -13
Porter’s Five Forces Model
• According to Porter, there are five competitive
forces in any industry, and the attractiveness of the
industry depends on the strength of each force.
• Under the perspective of market structure, Porter’s
competitive forces model has been broadly adopted
as the underpinning for investigating the effect of
information technology on the relationships
between suppliers, customers, and other potential
threats.
Dr. Chen, Special Topic: Project Management
PORTER’S FIVE COMPETITIVE
FORCES MODEL
NEW
MARKET
ENTRANTS
•Switching cost
•Access to
distribution channels
•Economies of scale
THE FIRM
INDUSTRY
COMPETITORS
•Cost-effectiveness
•Market access
•Differentiation of
product or service
•Selection of suppler
•Threat of backward
integration
SUPPLIERS
SUBSTITUTE
PRODUCTS
& SERVICES
Threats
Bargaining power
•Redefine products
and services
•Improve
price/performance
•Buyer selection
•Switching costs
•Differentiation
CUSTOMERS
N
Dr. Chen, Special
Topic:
Management
Dr. Chen,
The Project
Trends of
the Information Systems Technology
TM -15
Group Work/
Discussion Questions
• Using the five competitive forces model and
value chain model as described in this
chapter to describe how (and what) IT
might be used to provide a winning position
for:
• A global airline
– Use UA as an example (Group work together)
• A bank
Dr. Chen, Special Topic: Project Management
16
The Five Forces Model and IS
• The Five Forces Model provides a way to think
about how information resources can create
competitive advantage.
• Using Porter’s Model, General Managers can:
– Identify key sources of competition they
face.
– Recognize uses of information resources to
enhance their competitive position against
competitive threats
– Consider likely changes in competitive
threats over time
Dr. Chen, Special Topic: Project Management
N
17
Part II
• Hypercompetition and
the New 7-S’s framework (D’Aveni)
Dr. Chen, Special Topic: Project Management
Hypercompetition and
the New 7-S’s framework (D’Aveni)
Every advantage is eroded.
• _______________________
• Sustaining an advantage uses too much time and
resources that can be a deadly distraction.
disruption not
• The goal should be___________,
_______________
sustainability of advantage.
• Initiatives are achieved with a series of small steps.
• Hypercompetiton occurs when technologies or
offerings are so new that standards and rules are
influx, resulting in competitive advantages that cannot
be sustained. It is characterized by intense and rapid
competitive moves, in which competitors must move
quickly to build new advantages and erode the
advantages of their rivals.
Dr. Chen, Special Topic: Project Management
D’Aveni’s Disruption and 7-S’s
Vision for Disruption
Old 7Ss:
structure, strategy,
system, style, skills,
staff, and superordinate goals.
Identifying and creating opportunities for
temporary advantage through understanding
• Stakeholder satisfaction
• Strategic Soothsaying
directed at identifying new ways to serve existing
customers better or new customers that are not
currently served by others
Market Disruption
Capability for Disruption
Sustaining momentum by developing
flexible capacities for
• Speed
• Surprise
That can be applied across actions to
Build temporary advantage
By Richard D’Aveni, professor of business strategy at Dartmouth College
Dr. Chen, Special Topic: Project Management
Tactics for Disruption
Seizing the initiative to gain advantage by
• Shifting the rules
• Signaling
• Simultaneous and sequential strategic
thrusts
With actions that shape, mold, or influence
the direction or nature of the competitor’s
response
N
Example:
• At General Electric, Jack Welch,
implemented a DYB (“Destroy Your
Business”) approach by placing employees
in the shoes of competitors to highlight
weaknesses and find fresh ways of meeting
customer needs.
• Similarly GE’s Medical Systems Division
used DYB to respond to the challenges
posed by the Internet.
N
Dr. Chen, Special Topic: Project Management
锋尚国际公寓案例
• 告别空调暖气时代
• 按照使用面积售房
• 招收 中共党员
Dr. Chen, Special Topic: Project Management
22
Summary of Key Strategy
Frameworks
• Generic Strategies: Competitive
Advantage (CA) through low cost,
differentiation or focus
• Hypercompetition: CA is temporary,
created through speed and aggression
in the market
Dr. Chen, Special Topic: Project Management
Porter’s Model vs. Hypercompetition Model
Industries
Competitive
Advantage
(Characteristics)
Competitive
Advantage
(How to)
Porter’s
Model
Relatively stable
Establish a strong,
long-term position
and defend it.
Attain a fit with the
environment as in
traditional markets
Hypercompetition
Model
Dynamic
1) Ever-increasing
competition
2) Changing
power between
players
Short-lived, take
advantage of any
small window of
opportunity that
arises (thru speed
and aggression)
1) change rules of
competition
2) create disruptions
(during which
temporary advantages
can be exploited)
Dr. Chen, Special Topic: Project Management
Disruptive versus Sustaining Technology
• Sustaining technologies – produces an improved product
customers are eager to buy, such as a faster car or larger hard
drive
– Sustaining technologies tend to provide us with better, faster, and
cheaper products in established markets
– Sustaining technologies virtually never lead in markets opened by new
and disruptive technologies
• Disruptive technologies – a new way of doing things that
initially does not meet the needs of existing customers
– Disruptive technologies redefine the competitive playing fields of their
respective markets
– Disruptive technologies tend to open new markets and destroy old
ones
– Disruptive technologies typically cut into the low end of the
marketplace and eventually evolve to displace high-end competitors
and their reigning technologies
Dr. Chen, Special Topic: Project Management
Disruptive versus Sustaining Technology
• Q?
• Please name two (or more) of Disruptive
and Sustaining Technologies on the market
now?
Dr. Chen, Special Topic: Project Management
“Be fearful when others are greedy, and
be greedy when others are fearful.”
-- Warren E. Buffett, CEO, Berkshire Hathawy, Inc.
Dr. Chen, Special Topic: Project Management
Keen’s Six-Stage Competitive Advantage
Model
Stimulus for action
First major move
Customer acceptance
Competitor catch-up moves
First-mover expansion moves
Commoditization
Dr. Chen, Special Topic: Project Management
N
When to Perform Activities
• First Movers
Advantages
Disadvantages
• Build brand recognition
• Newer technology
• Control scarce resources
• Higher development costs
• Establish networks
• Reverse engineering by
competitors
• Early Economies-of-Scale
Dr. Chen, Special Topic: Project Management
Three … for PM and Enterprise
• Three important characteristics for PM and
for an enterprise:
–
企业家
in English
Entrepreneur
 Creativity,
 Innovation
 Entrepreneur
Dr. Chen, Special Topic: Project Management
Three … for PM and Enterprise
企业家
Entrepreneur
Efficiency/ Uniques
Techniques
Dr. Chen, Special Topic: Project Management
Management
Summary
• Using IS for strategic advantage of project and
systems management requires more than just knowing
the technology.
• Remember that not just the local competition is a
factor in success but the 5 competitive forces model
reminds us of other issues.
• Value chain analysis show us how IS add value to the
primary activity of a business.
Dr. Chen, Special Topic: Project Management