>The Three I’s and Enterprise Architecture

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One question that is frequently asked in enterprise architecture is whether new technologies should be adopted early (more cutting edge) or later (more as quick followers). Of course, the third course of action is to close ones eyes or resist change and simply “stay the course.”

The advantages to bleeding edge technology adoption is having the early advantage over competitors in the marketplace (this head start provides the ability to incorporate innovation into products early and capture a hefty market share and quite possibly dominance), while the advantage to quick followers being learning from mistakes of others, building from their initial investments and a more mature technology base (for example, with software, one where the bugs have been worked out) thereby potentially enabling a leapfrog effect over competitors. The advantage to staying the course is organizational stability in the face of market turmoil; however, this is usually short lived, as change overwhelms those resistant, as the flood waters overflow a levee.

The Wall Street Journal 5-6 July 2008 has an interview with Theodore J. Frostmann, a billionaire private-equity businessman, who tells of Warren Buffet’s “rule of the three ‘I’s,” which is applicable to the question of timing on technology adoption.

“Buffet once told me there are three ‘I’s in every cycle. The ‘innovator,’ that’s the first ‘I’. After the innovator comes the ‘imitator.’ And after the imitator in the cycle comes the idiot. So when…we’re at the end of an era it’s another way of saying…that the idiots have made their entrance.”

I relate the innovator and the early adopter in their quest for performance improvement and their sharing the early competitive advantage of innovation.

Similarly, I associate the imitator with the quick followers in their desire to learn from others and benefits from their investments. They recognize the need to compete in the marketplace with scarce economic resources and adapt mindfully to changes.

Finally, I relate the idiots that Warren Buffet refers to with those that ignore or resist change. Often these organizations mistake their early market success for dominance and in their arrogance, refuse to cede to the need to adjust to changing circumstance. Alternatively, these enterprises are truly ignorant of the requisite to adapt, grow, mature, and transform over time, and they mistakenly believe that simply sitting behind the cash register and waiting for customers is the way to run a business (versus a Costco whose warehouse, wholesale model has turned the nature of the business on its head).

In architecting the enterprise, innovation and imitation, while not without cost and risk, will generally speaking be highly rewarded by superior products and services, greater market share and more loyal customers, and a culture of success in the face of constant change. You don’t need to look far for examples: Apple, 3M, P&G, Intel, Toyota, Amazon, and more.

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