Can IT Be Too in Sync With Business Strategy?

Tight alignment of a company’s IT systems with its current strategy can hamper agility in fast-moving markets — unless the right social conditions are in place.

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In the wake of the global economic downturn, price pressures forced the Chongqing Qianwei Science & Technology Group Co. Ltd., a Chinese shipbuilder headquartered in Chongqing, to reevaluate its business strategy.

For years, as the company focused on diversifying and creating new product lines, it left IT decisions largely up to the managers of its subsidiaries so they could respond nimbly to customer needs. But after the downturn, Qianwei’s top executives realized they needed to cut costs, and the company’s former distributed approach to IT “proved to be a huge obstacle,” said Zhang Jin, former CEO of Qianwei Group. It was well-aligned with the former strategy but created an obstacle of its own — it seemed to rob Qianwei of its agility.

Qianwei’s top executives thus found themselves confronting a frustrating dilemma: They had achieved the kind of IT-business alignment once considered a gold standard, but they had sacrificed something unexpected in the process.

Alignment vs. Agility

We studied the Chinese shipbuilding industry and found experiences like Qianwei’s to be surprisingly typical: Too much alignment between IT and current business strategy can hamstring organizational agility. If every IT change ripples through your entire company, no decision can be taken lightly or made without lengthy deliberation. Alignment, in other words, can produce inertia — unless it’s accompanied by the right culture and the right norms of communication.

To be sure, closely aligning IT with the rest of a company’s strategy can cut costs and improve the ability to collect data, facilitating the creation of early-warning systems and operational dashboards. Well-aligned systems can also enable quick, coordinated adjustments of business processes. That’s likely why alignment continues to be a priority for many chief information officers: In 2016, 42% of 490 CIOs in a Society for Information Management survey listed it as a critical concern. But a less regimented approach to corporate IT has its place too. It allows responses to changing business and economic conditions that are swift and creative. Sometimes a company needs the harmonic complexity of a classical master like Ludwig van Beethoven, but other times, the quirky improvisations of jazz pianist Thelonious Monk are what’s called for.

China has the world’s largest shipbuilding industry, so it seemed an apt setting for our investigation of the effects of managerial decisions about business-IT alignment.

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An MIT SMR initiative exploring how technology is reshaping the practice of management.
More in this series

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