1. S t r a t e g y + M a r k e t i n g + A n a l y s i s + R e s o u r c e s + T e c h n o l o g y
henry stewart
john mullins
Jan-Feb 10 VOL 9 ISSUE 1
julian birkinshaw
marianne m jennings
andrew kakabadse jonas ridderstråle
costas markides kate sweetman
bernd schmitt
mg parameswaran
marco trombetta
nirmalya kumar
nada kakabadse
oswaldo lorenzo
th
8 ANNIVERSARY ISSUE
rajni bakshi
richard d’aveni
SMART randy komisar
vj govindarajan
morgen witzel
IDEAS
peter bryant
from the masters of the game
jan-feb 10
43
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3. EIGHTH ANNIVERSARY SPECIAL: SMART IDEAS
Technology: simply described as the practical application of
science to commerce or industry
As smart ideas go, there is none superior to the magic wand of
Technology. It is befitting that Technology, ‘T’, is the last cog in
our SMART grid, because Technology starts where the abstract
principles of strategy, marketing, analysis and resource planning
end. Technology has enabled more to be derived out of less.
Technology has even shown us how less can be more. And finally,
Technology is a constant reminder—as captured succinctly in
the definition above—that business is all about ‘practicality’ and
‘application’. These attributes make Technology some sort of a
modern-day Atlas, bearing the burden of our world on its ever-
evolving shoulders.
In this section, Oswaldo Lorenzo talks about how Technology is
both the changer and the change for modern businesses.
nilesh juvalekar
in conversation: oswaldo lorenzo
by Stuart Crainer and Des Dearlove
91

4. SMART IDEAS:TECHNOLOGY
in conversation: oswaldo lorenzo
by Stuart Crainer and Des Dearlove
Most businesses get stuck dealing with short-term pressures. Often, they lose sight of the more important
long-term in doing so. Oswaldo Lorenzo warns companies against falling into this trap.
t echnology is a means to better performance but, too often, laments Oswaldo Lorenzo, it is regarded
as the end rather than the means. Lorenzo, Professor of Operations, Business Process Management and Enterprise Systems at
IE Business School, calls on businesses to take a fresh look at how they view technology and large scale projects. Even in these
difficult times, he calls on organizations to look to the future rather than becoming fixated on the present.
Stuart Crainer is editor of Business
Strategy Review and the author of The
Management Century.
Des Dearlove is a contributing editor
to Strategy + Business. Formerly,
he was a columnist for The London
Times.
One of the terms you use is ‘the long conversation’. Can you
Crainer and Dearlove are associate begin by explaining what you mean by it?
directors of the Management Innovation
Lab; creators of the Thinkers 50; and Our research has been investigating different ways to
editors of the bestselling Financial approach challenges in organizations. Many organizations
Times Handbook of Management. work on the basis of short-term objectives and short-term
actions to tackle the challenges they face. This could be good
They use their specialized network and
knowledge of thought leadership to in certain contexts but, in the long term, we think we need
provide tailored coaching, consulting, to create internal capabilities in the organization in order
media training and editorial support to survive, and creating these capabilities implies working
to individuals and organizations,
including some of the world’s leading in a different dimension with a longer perspective than the
business schools. traditional one.
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5. IN CONVERSATION: OSWALDO LORENZO By Stuart Crainer and Des Dearlove
companies, even in a CRISIS like this, should think of CREATING
and DEVELOPING a sustainable CAPABILITY for the long-term
When you look at the current crisis, model to a centralized model, while keeping the technological
you can see that there’s a temptation capabilities they had. And they decided to outsource some part
within companies to work in the short- of support to IBM, while retaining another part internally.
term, resolving immediate issues or urgent They achieved a balance of dealing with the crisis, with the
things. They often overlook that we need to urgent things, and also thinking of the future, thinking of
survive beyond the crisis. They should not keeping the capabilities and developing them beyond the
forget about creating sustainable internal current situation.
capabilities. And this can be in conflict with
short-term needs and concerns. And the other example?
For example, if you need to reduce The other example I have in mind is a bank in Latin America.
human resources, some processes or business They now have operations in four countries. During the
units, are they important for the future, financial crisis in Venezuela in 1994 and 1995, half of the
for the long-term? You could take the banks disappeared within six months. So, this bank was
option of cutting them now but it could be working on the urgent things—dealing with criticism and
a big mistake in the long term. We think challenges to their reputation. In parallel, they were working
that companies, even in a crisis like this, on internal capabilities; investing in training, investing in the
should think of creating and developing a process of engineering and in new technologies.
sustainable capability for the long- term. And from 1994 to 1998, they created something called the
That is, in general terms, the idea behind ‘the ‘Factory Project’ which was focused on the implementation
long conversation’. of manufacturing practices in the service industry. This
involved redesigning of their processes and creating
And has your research identified companies capabilities in terms of technology and human resources.
that have done this successfully? Remember, this is a bundle of things and it’s not just about
Yes, there are two companies, in particular, mastering one of them.
we could mention. One of them is Ericsson. After the crisis, they emerged stronger and merged
When you look at the way Ericsson with other banks and also acquired others. In all these
approached the technological crisis, the burst mergers and acquisitions, they had better capabilities than
of the technology bubble in early 2000, you their counterparts—better knowledge, better processes,
can see that they made big changes in their better people to manage the projects. Finally, they were the
organization, but with the intent of trying dominant bank. Now, they are the leading bank in Venezuela
to create a sustainable business model for the with operations in Panama, Puerto Rico and also in Miami.
future, not just for dealing with the crisis at And they are working on the second phase of creating new
that moment. And they were changing the capabilities relating to internationalization, to a multicultural
operational model; they were changing the framework. Of course, there’s another political and social
technologies, or using current technology to crisis in Venezuela. After doing several interviews recently,
support the future. the bank is dealing with this local context, but again, it is still
For example, in terms of technology, working on developing and keeping key capabilities.
they reconfigured the ERP system they had So, you need to work on the short-term and the urgent
worldwide, moving from a decentralized things but you should also keep working on long-term
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6. IN CONVERSATION: OSWALDO LORENZO By Stuart Crainer and Des Dearlove
you NEED to keep working on the IMPORTANT things,
AS WELL AS the URGENT things
perspectives and thinking. The crisis is going Entrepreneurship, I think, is very important. By
to end. And you want to emerge, at the end, entrepreneurship, I mean people who are creating value
with a better company, a stronger company. in different ways internally—thinking of customer needs,
thinking of how to change processes and adapting to those
Where should the long conversation happen processes, thinking of the technology needed to satisfy
in the organization? Is it a conversation heard customer needs and of the products to be created in order
in the boardroom? to do that. This is something that happens in day-to-day
Definitely you need the commitment from operations. It’s not something that can be done following a
the board, from the CEO, from the top top-down approach. You, as CEO, could say, I want to do this,
managers. And, using these two cases again, but you need the people to do it. An entrepreneurial attitude
the boards were pushing the need to create is critical.
sustainable capabilities. It was a top-down
process but with key actors or players in But there will be CEOs reading this, who think we’d all like to
the next tiers of the structure. For example, have a long conversation, but there just isn’t time in this crisis;
in the bank, they realized that they needed if I don’t do something quickly to stop losing money, I’m going
support staff to develop new capabilities so to lose my job, this company’s going to close. What would you
they created the concept of ‘Project Office’, say to them?
as part of the strategic department of I’m not saying that you need to focus only on a long
the Vice President. And the ‘Project conversation. I’m not saying that you should forget
Office’ was staffed to execute the the short-term. There’s an urgent situation in
strategy of creating capabilities many companies. Perhaps you should focus for a
related to implementation, period of time on the short-term, but you should
processes, performance, human keep one, two, three, or four projects working on
resources and skills. This group, creating or keeping your main capabilities.
working in parallel with the day- You need to work in parallel. In that sense,
to-day operations of the bank, was it’s a big challenge; it’s hard. I know that people ask
critical to the process. themselves where they are going or what is going to happen
in six months? This year and the next are going to be hard
Are there characteristics of organizations that for companies and for people, but please keep investing in the
are able to do this long conversation? important things in your companies because if you survive
Yes, they need to have a level of this crisis by working on the short and long terms in parallel,
entrepreneurship and some specific internal you’re going to be stronger.
values. In the end, you need to create To be honest, it is a gamble in the sense that you need to
capabilities, processes and technology, but put time, effort and money on both things. You need to keep
people are the ones managing processes and working on the important things, as well as the urgent things.
technology. So you need skilled people— Of course, the urgent things are pressing, but, if you have the
people with specific skills—but you also need opportunity, please don’t kill your company now.
people with an aptitude for developing long-
term capabilities.
T H E S M A R T M A N A G E R Jan-Feb 10 94 www.thesmartmanager.com