Technologies That Will Impact the Future of Business

                The first technology I picked from the list is 3D printing. I recently came across a news story about a group that produced prosthetic hands for children who were in need of them. These prosthetic hands were highly functional, came in a variety of colors, and were dramatically cheaper than traditional prosthetics. It was quite an amazing story and enlightened me to the possibilities of 3D printing technology. I have no doubt this technology will be utilized in the near future to produce many goods and will have a significant impact on how businesses operate. Companies have been using 3D printers since the 1980’s, mostly for rapid prototyping. Just as other revolutionary technology, 3D printers were very expensive and remained so for many years.

The cost and availability of 3D printers today have made them a real option for many businesses. Hewlett Packard has announced it is getting into the 3D printer market and introduced a model that is much faster and cheaper than current machines. This technology will have many significant impacts on business globally, especially in the manufacturing sector. First, 3D printing will enable more goods to be produced locally since the production costs will be much less. The costs will not be as cheap as large-scale facilities, but the savings on shipping and inventory storage will more than offset the additional expense. Next, inventory storage will be reduced for many companies since new items can be made on site, along with replacement parts for older products such as cars. Finally, customization will become much easier for products as a manufacturer would simply need to alter the software instructions instead of retooling the assembly line. 3D printers will change the global supply chain, moving away from cheap labor manufacturing to local, efficient manufacturing.

The next technology I picked from the list is The Internet of Things (IoT). I wasn’t quite sure what this meant exactly from the short paragraph in the Gartner press release. After reading more about the subject, I was fascinated with the possibilities for this technology as well.  Imagine the manufacturer of your car contacting you to tell you a part was about to fail before any problems were noticeable. This example can be applied to almost any object a person could think of. In fact, it can be applied to any person or part of a person as well.  For example, a person with diabetes could have a monitor that could give them real time information about their blood sugar sent to an application on their cell phone. I believe the main ways this will impact companies is how they will collect data and communicate with customers. The ability to monitor products a company produces will give them a large amount of critical data they will be able to use to improve current and future models. It will also give them information about how customers are using the products which could lead to more customized offerings or features. Also, companies will move to more cloud applications to connect these products to the internet and communicate with customers. This will be necessary, especially if data collection is needed across multiple countries. I think the impact of this technology is going to become increasingly apparent and will affect every aspect of our lives in the near future.

 

SOURCES:

3-D Printing Will Change the World; by Richard A. D'Aveni

http://hbr.org/2013/03/3-d-printing-will-change-the-world/

HP's move into 3D printing will radically change manufacturing; By Lucas Mearian

http://www.computerworld.com/article/2841414/hps-move-into-3d-printing-will-radically-change-manufacturing.html

Internet of Things (IoT)

http://whatis.techtarget.com/definition/Internet-of-Things

Alibaba's Challenges Moving Forward

I think the recent success of Alibaba’s IPO shows that most investors believe they will continue to grow. However, I believe Alibaba’s aspirations to become a global company will require a great deal of time and capital investment. In my opinion, I don’t think Alibaba will have much success outside of China, even if they invest the resources and time. This doesn’t mean that Alibaba will not continue to see dramatic growth in their revenues; those revenues will just continue to be almost exclusively from China.

Looking at the financials provided by Alibaba for their IPO, I see that less than 10% of their revenues for the year ended March 31, 2014, were derived from international commerce. This is down from almost 19% for the same period ending in 2012, and 12% for the period ending in 2013. Although the share of international commerce has decreased as a percentage of total revenues, the total revenue has increased each of these three reporting periods. Revenue from international commerce increased 10.4% from 2012 to 2013, and 16.6% from 2013 to 2014. These increases are not insignificant and would be excellent for any company. Compared to the total domestic income and growth over the same three year period, however, shows that Alibaba’s success is almost entirely due to its revenue from China. The total China commerce revenue over this period increased almost 300%! I believe this shows what a great market Alibaba has in China, and they can continue to see great growth in this market given the room China has for growth in its internet user base.

                Alibaba does face some challenges if it wants to continue the growth it has experienced in China over the past several years. One of the issues that came up related to its IPO was the use of a variable interest entity (VIE) to divert the laws in China of foreign ownership. Alibaba set up a VIE in the Caymen Islands to allow it to be listed on the New York Stock Exchange. This was due to both US regulators and laws in China dealing with ownership percentage from foreign investors in companies based in China. Having to structure the company this way has raised concerns from investors regarding their lack of recourse and control of the company. Another challenge Alibaba faces is competition from other companies looking to gain a share of the market Alibaba has dominated. Some very large companies are looking to get a piece of the Chineese E-commerce pie, including Baidu and Tencent. Baidu is “ the Google of China”, and as the dominant search engine, they are trying to take advantage of the large amount of traffic and turn it into customers for E-commerce. Tencent owns WeChat, and they also have a large user base they are trying to convert to E-commerce customers.

               Another challenge I think Alibaba will face moving forward will be deciding how to best use their resources to strategically grow. I noticed in their IPO documents, Alibaba stated it had over 70 subsidiaries. Several articles I read stated that Alibaba was moving into various industries through their acquisitions. It does not seem that Alibaba has a very focused growth strategy, instead opting to use their money to try and buy into every conceivable industry and try to become a leader. I’m not sure how well this will work for Alibaba, but I cannot think of any other company that has successfully done this. But then again, they are operating in a communist China where they very well may be picked as the winner. I know for certain that they will likely not face much competition from real global companies in their home country. This is why Alibaba will not be a successful global company, in my opinion. The Chinese government can shield them from competition domestically, but outside those borders the free market determines who succeeds.   

SOURCES:           

Tops in E-Commerce, Alibaba Is Now Taking On China’s Banks

http://dealbook.nytimes.com/2014/09/18/tops-in-e-commerce-alibaba-is-now-taking-on-chinas-banks/?_php=true&_type=blogs&_r=0

Why China’s growth story is helping the e-commerce market thrive

http://marketrealist.com/2014/09/alibaba-started-increase-presence-cloud-market/

Alibaba rivals redouble efforts on Single’s Day

http://www.ft.com/cms/s/0/473fae66-49db-11e3-9a21-

00144feabdc0.html#axzz3HJOGkwAc

Embracing Digital Technology

One only has to look at the brief summary of Starbucks in the article to know why it is important for companies to embrace digital technology. Digital technology has the potential to dramatically increase the competitiveness of a company in a short period of time. I believe the two main reasons why companies will have to utilize digital technology are the exponential growth in the number of customer who have smartphones; and, the access customers have to the internet from virtually any location. Although many people still interact on social medial using laptop and desktop computers, the majority of activity on social media is done via the smartphone. This enables individuals to interact with businesses more frequently, since people usually have their phone with them at all times. Companies have to embrace this and offer mobile platforms that will enable this interaction to meet customer expectations and demands. Companies will also have to make resources available to facilitate the operation of these mobile platforms and make sure they are continuously engaging the customers who are using them. Successful use of this digital technology will help create a feeling of participation from the customers and enable a more specialized level of customer service. The expanded availability of the internet, especially through telecommunication service providers, has also required companies to embrace the use of digital technology. More customers, through their smartphones and other mobile devices, now have a way to access the internet at any time and from any location throughout their day. Again, companies who embrace this technology by providing mobile platforms that allow customers to interact with them will undoubtedly create a competitive advantage.

                Many benefits of digital transformation were identified from the survey responses in the article. One of those benefits was an improved customer experience. Digital technology gives customers access to a company’s products and services with the convenience not available through traditional means. As the article states regarding Starbucks, “soon, customers will order directly from their mobile phones.” Enhancing existing products and services, and launching new products and services were also benefits discussed in the article. Making a product or service available through a mobile application will automatically enhance either, if done correctly. General Electric is used as an example of a company using digital technology to launch new products and services. They are offering customers an enhanced experience with information about maintenance services on the products they sell. If successfully implemented, customers would be able to obtain information on scheduling maintenance services and preventing part failures. This could potentially generate a significant amount of revenue for General Electric.

                Challenges in implementing digital technology were also identified in the article. The main challenge identified by survey respondents was no sense of urgency. The reason identified for this was that older managers do not place the same value on technology as younger individuals do, or as a survey respondent was quoted in the article, “they know nothing about technology and its benefits and also don’t want to learn.” There is no doubt that a majority of top managers do know the importance of implementing new technology in their business, regardless of age. However, implementing new technology can cause many problems when trying to merge it with existing older “legacy technology.” This is another challenge identified by the article that many companies are facing. The costs associated with trying to undertake some digital projects can be staggering. I can see how many managers would be risk averse to such projects given the implications an unsuccessful project could have on the entire organization.  

 

Source Article:

 

Embracing Digital Technology: A New Strategic Imperative

By: Michael Fitzgerald, Nina Kruschwitz, Didier Bonnet and Michael Welch

Social Capital and Communities of Practice at Caterpillar

From my understanding of the research done by Coleman, it seems that the basis for success of communities of practice at Caterpillar, and at other organizations, is social capital. The definitions of communities of practice and social capital are very similar, along with the benefits received by both. I do not necessarily see the Caterpillar article in a different light given the social capital theory, but it does provide greater insight into certain findings in the Caterpillar article.

I believe one important aspect presented by Coleman that relates to the effectiveness of the communities of practice (CoP) at Caterpillar is the trustworthiness of the structure. As the Caterpillar study noted, the most significant success factor in the CoP was that knowledge sharing was part of the organizational culture. The second and third most common reason given as success factors were: individuals were willing to share knowledge based on intrinsic motives; and the communities were actively supported by managers and experts. All of these reasons given as success factors can be associated with individuals viewing the CoP as trustworthy. They trust their organization in setting up the structure to effectively share knowledge and their co-workers to participate in the knowledge sharing.

Coleman also discusses information channels and norms as forms of social capital. I believe all three success factors presented above relate to both of these. Caterpillar provided a structure that facilitated the development of information channels. Caterpillar, along with employees who actively participated in the CoP, established norms of participating in knowledge sharing through corporate culture and continued support of the CoP. I believe that establishing the structure to share knowledge combined with actively encouraging participation in CoP are the ultimate determining success factors for any organization trying to establish an effective knowledge sharing environment.

Coleman next discusses social capital in the creation of human capital. Although Coleman does not look at human capital in the context of business, I think the distinction does not diminish the overall findings of the study when applied to the business setting. In fact, I believe the findings in Coleman’s study can be very useful in helping organizations that are trying to establish knowledge sharing platforms. As Coleman’s study established, the more social capital that was invested in the students’ education, in the form of active participation by the parents, increased the chances of success for the students. This highlights the importance of the organization actively participating in the knowledge sharing of its employees. As I stated previously, this was the top success factor given by employees of Caterpillar for the CoP. Simply setting up the infrastructure will not guarantee a successful knowledge sharing project.  The organization has to take an active role in establishing knowledge sharing as part of the overall organizational culture, and constantly reinforce the importance of knowledge sharing throughout the company. This investment in knowledge sharing will have a significant positive impact on the creation of human capital within the organization. My biggest takeaway from the Coleman study is that the more social capital that is invested, in any context, the more human capital is created; thus benefiting society as a whole.

Virtual CoP's at Caterpillar

1. Many knowledge management projects have failed to produce promised benefits. Why?

 

One of the main reasons knowledge management projects fail is that the organizational culture has not established the importance of knowledge sharing. For knowledge sharing to become a norm, the firm must communicate the importance of knowledge sharing to its employees. Another reason knowledge management projects have failed is the organization fails to provide a framework for employees to share knowledge, with rules and standards to guide employees. A final reason knowledge management projects fail is the lack of volunteers in the organization to act as managers and experts. This leads to the knowledge management project becoming disorganized and employees lacking confidence in the value of information contained within it.

 

2. What are the characteristics of a community of practice (CoP)? What are the pros and cons of a virtual CoP as contrasted with one that has its members meeting offline?

 

A community of practice is an informal group of individuals that share common areas of interest, professional credentials, or specific shared problems. The pros of a virtual CoP versus a traditional CoP are related to the increased knowledge sharing potential. When virtual CoP’s are used, it gives more individuals access to the knowledge and expertise of others. More access to the knowledge can lead to a larger variety of ideas and solutions to specific problems. This act of sharing information and ideas leads to a greater amount of knowledge contained within the virtual CoP than could otherwise be obtained through more traditional methods. Cons of a virtual CoP are the reluctance of individuals to contribute the same knowledge as they do in a traditional meeting and the ability of non-experts to contribute ideas to solve a specific problem.

 

3. Describe characteristics of Caterpillar's virtual communities of practice (or communities of knowledge sharing).

 

Caterpillar’s virtual communities of practice are contained within the company’s Knowledge Network, which is supported by a group of knowledge management technology experts. The Knowledge Network contains more than 600 online communities with more than 16,000 members worldwide. Most of the communities within the Knowledge Network were started by employees and relate to specific subjects or common professional activities. The typical community in Caterpillar’s Knowledge Network includes a community manager, who is elected by the team due to their experience with the subject. Communities also have one or more delegates, who are responsible for running the community in the absence of the community manager and performing certain community management activities. Experts are also contained within the typical community. They are individuals who have skills and knowledge in specific areas and participate by answering questions, posting knowledge, and reviewing information posted by others. The last element of the typical community is the subscriber. A subscriber is anyone who needs access to the information in a certain community and requests this access to view the knowledge.

 

4. What the a few selected major organizational benefits of Caterpillar's CoPs?

 

The four top organizational benefits identified by the research were: 1) the system helped new people integrate and become productive faster, 2) the system provides geographically dispersed units a place to work together and communicate better, 3) access to best practices, 4) access to a lessons learned database.

 

5. What are the critical success factors?            

 

Three critical success factors were identified in the study. The first is that knowledge sharing is part of Caterpillar’s organizational culture. This culture resulted in the majority interview respondents viewing their knowledge as a public good that belonged to the organization. The second critical success factor is that employees at Caterpillar are willing to share their knowledge based on intrinsic motives. Employees revealed their reasons for sharing knowledge were the need to establish themselves as experts, and the opportunity to mentor new employees and share their expertise. Interview participants also credited their willingness to share knowledge to the culture at Caterpillar. The third critical success factor is the knowledge sharing communities are supported by volunteer community managers and groups of active experts. It was noted that less successful communities did not have experts that actively participated.

 

6. What are major barriers?

 

The two major barriers to employees’ contributing to these communities were the employees’ reluctance to post information and increased security measures resulting in difficulties accessing the system. Employees’ reluctance to share information was not attributed to information hoarding in this study. Employees were more concerned that the information they shared would be viewed as not important, irrelevant, or inaccurate. They feared this could lead to others questioning their posts or competency in a specific area. The security measures that resulted in difficulties accessing the system were from various joint ventures of Caterpillar, contractors working for Caterpillar, and retired Caterpillar employees.

 

7. What lessons can be learned from Caterpillar by other companies?

 

 One of the most important lessons that can be learned by other companies from this study of Caterpillar is that the organization must emphasize the importance of knowledge sharing to its employees and create a framework that enables this knowledge sharing. This has a positive effect on every aspect of the knowledge management system. It will not only facilitate the sharing of knowledge, but make employees more likely to start communities, share information, and use the shared information in a constructive manner to help solve problems and expand the organizations overall knowledge base.

Sharing Global Supply Chain Knowledge

1. Why, in general, is knowledge sharing not a common practice in the work place? Identify and discuss the obstacles that keep people from sharing their professional (work) knowledge.

I believe that the primary reason for the lack of knowledge sharing in the workplace is due to individuals not wanting to lose their perceived competitive advantage and value to the firm. Most people identify themselves as separate from the organization for which they work and fear that the knowledge they bring to the company determines their relative value compared to other employees. Since employees view their knowledge as the key determining factor in their value to the firm, then it is logical that they would be apprehensive in sharing this with co-workers. I think a common belief is that once specific knowledge is shared with others in the organization, that individual becomes dispensable since the knowledge is now “knowledge of the entity”. This ties to the article since knowledge sharing benefits both parties in the long-term. Just like the hesitant suppliers, individuals will ultimately benefit from the knowledge obtained from co-workers, which increases their value to not only their current employer, but to all employers.

 

2. In global supply chain management, how may knowledge sharing create a win-win benefit for every entity involved?

As the article discussed, suppliers usually have more room for improvement than do buyers. When I first saw the title of the article, my first thought was that it would be adverse to a supplier to share knowledge outside of basic data with a buyer. As I read the article though, I was surprised to find that the suppliers were the ones who were actually benefiting more from the increased collaboration. The reasons for this, as the authors pointed out, were very logical from both the suppliers and buyers’ perspective. The buyer benefits because they are better able to meet their customers’ demands due to less downtime, higher quality products, and faster responsiveness to market conditions. Suppliers benefit because they are able to increase their operating efficiency by having more insight into customer demands, thus not producing inventory they will not be able to sell to buyers.

 

3. The article suggests that the benefit resulting from knowledge sharing may not be evenly divided among all participating parties. Identify an example, other than what's given in the article, to illustrate this situation. Discuss what can be done to effectively alleviate this situation.

I was not able to find an example of a specific company that benefited more than the other did from knowledge sharing in the supply chain. I did find a few articles that identified the benefits of both the supplier and the buyer, but they did not identify which one received the greatest benefit from the collaboration.  One example I found discussed how Chrysler collaborated with their suppliers in the 1980’s as they were experiencing difficulties. This resulted in the creation of the SCORE program (Supplier Cost Reduction ), which saved Chrysler billions of dollars. The article stated that Chrysler only asked their suppliers to pass 50% of the savings they received as a result of the program to Chrysler. All parties benefited from this program, but I am not sure who benefited the most. Long-term contracts and commitments are one way to help alleviate the situation where one party feels they will not benefit from the steps involved in setting up a collaborative relationship.

Source:

https://www.bcgperspectives.com/content/articles/sourcing_procurement_supply_chain_management_buyer_supplier_collaboration_roadmap_for_success/

bcg.perspectives  by The Boston Consulting Group

“Buyer-Supplier Collaboration : A Roadmap for Success”

August 21, 2013

By: Robert Tevelson, Jonathan Zygelman, Paul Farrell, Stefan Benett, Peter Rosenfeld, and Andreas Alsén

 

4. The article also contends that cultural difference does not significantly hinder knowledge sharing across borders. What do you think? Explain your opinion.

As the article states, “cross-cultural differences have always mattered less in business-to-business relationships than they have in business-to-consumer exchanges.” I believe this to be absolutely true, especially when dealing with multinational corporations as the authors’ study does. However, I do believe that cultural differences do have the potential to hinder knowledge sharing between certain countries. There are certain places in the world where the native culture has not had much exposure to cultural influences from other groups, which could impact their willingness to share knowledge. As a whole, I agree with the article that the worldwide cultural integration that has taken place over the past 20 years and the expanding reach of multinational corporations have made knowledge sharing across borders a non-issue.

 

5. Discuss the role of IT, esp. Internet-enabled IT, in global supply chain knowledge sharing.

I found a good article that focused specifically on how Web 2.0 technology has helped organizations, and discusses the integration of the buyer-supplier relationship. Technology has had an impact on every aspect of business since the introduction of the internet. I think knowledge sharing is the most significant product of the internet, and as worldwide IT capabilities increase, the knowledge sharing in the global supply chain will continue to influence these intercompany relationships. The article I read highlighted how companies are using Web platforms to manage their external relationships, including suppliers. Internet-enabled IT can make the collaboration discussed in the “Sharing Global Supply Chain Knowledge” article easier to achieve and at a lower cost. Platforms such as this blog are one method discussed in the Web 2.0 article I read that are being utilized by companies to facilitate knowledge sharing. The internet has given suppliers real-time access to their customers (buyers) information, which leads to better service and increased agility to meet demands.

Source:

http://www.mckinsey.com/insights/business_technology/how_companies_are_benefiting_from_web_20_mckinsey_global_survey_results

Survey|McKinsey Quarterly

“How companies are benefiting from Web 2.0: McKinsey Global Survey results”

Business Globalization

The article “The Fear Factor: Why Asian Firms Need to Take on the World” makes the argument for Asian companies to expand into international markets. The author points to Cannon as a success story of an Asian company expanding their business into other markets. Then, an argument is made that Asian firms could focus on domestic markets due to their size and the margins produced by American companies domestically. This argument is then rejected because Asian firms already face international competition that was not present when American companies began expanding. The author then discusses the difficulties Asian firms face in trying to reach new markets. This is due to the competition they already face from multinational firms, which also acts as a barrier to domestic growth. The author concludes that Asian firms will have a hard time being competitive without international expansion.

The article “Globalization's Two-Way Street: The U.S. Begins to Reciprocate” focuses more on the cultural impact of globalization. The author states "Globalization is usually thought of as a euphemism for Americanization,” highlighting the impact American culture has on consumer demand internationally. The influence that other cultures have on Americans is discussed, presented as "reverse globalization.”  Technology, mainly internet and television, are the main delivery mechanisms for this trend. The author highlights the availability of international news and television to an increasing number of consumers seeking them.

My view on the future of globalization trends is tied to aspects of both articles. I do think that the cultural impact internationally branded companies have gives them a distinct competitive advantage. As Mr. Gomes pointed out, this might not be what is in the long-term best interest for other countries and their distinct culture. There are certain aspects of American culture that I do not think are particularly good and could potentially be a negative influence on developing nations.  As has been constantly proclaimed to me in all of my business courses, the only objective of corporation is to increase shareholder value. Having stated this, I am not sure there is much that can be done to deter the influence these multinational corporations have as long as they are profiting in other markets. I would not think this to be negative if these entities acted as good citizens of the communities where they have operations. It is my opinion that many of these companies have a practice of exploiting developing nations due to a lack of regulations and their desperate need for jobs. I do think that this practice will continue to face scrutiny as it has in recent years, and this will impact how companies from developed nations expand into developing countries. This will increase the living standards in these developing nations, providing more discretionary income to the citizens, which increases demand for other products. The end result will be more companies entering these markets to provide the products and services and domestic companies expanding their offerings to compete. I think this will ultimately help Asian firms, especially those in poor and developing nations, gain some market share and possibly enable them to expand internationally if they are successful enough domestically.