Many of the top business books of the year have focused on the role of IT in the global economy. Two of those -- The Travels of a T-shirt in the Global Economy: An Economist Examines the Markets, Power, and Politics of World Trade by Pietra Rivoli, and The Search: How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture, by John Battelle -- approach the issues from distinct viewpoints. Both are finalists for The Financial Times and Goldman Sachs Business Book of the Year, to be awarded next week. The authors talked with Kathleen Melymuka by e-mail about IT and its place in this emerging world.
How important is corporate IT in the new global economy?
RIVOLI:Well, that is a funny question because in many ways corporate IT created the new global economy. Global trade and exchange, global flows of capital, immigration and emigration -- these are all ancient pieces of the idea of a global economy. But if you ask about the new global economy, it seems to me what is new is IT.
IT is what has facilitated the rest of globalization. If we think about the role of IT in global exchange, it is easy to see that IT takes existing forces in the global economy and magnifies them. [The World Is Flat author] Thomas Friedman's electronic-herd metaphor is a perfect illustration of this.
Battelle: [IT is] as important as ever. It's how we understand our business, and in the end, most businesses find advantage in the analysis and extraction of knowledge in this economy. It's where we never run out of opportunity -- the creation of human knowledge. IT is the infrastructure that can make or break that in the enterprise.
Is the corporate CIO's role more important and powerful than ever, or does the pervasiveness of IT make the CIO less important and powerful?
Battelle: It really depends on what role the CIO is allowed to have. Too often it's "the tech guy," when it should be "the business process/innovation guy." I'd hate to have my knowledge hampered by someone who was more passionate about tech than my business, but that often seems to be the case.
Rivoli: Nicholas Carr takes this idea too far, I think, when he argues that pervasiveness means that the role of the CIO in creating value is limited. The IT function has evolved considerably over the years, from techie to strategist, and no doubt will continue to evolve in ways that we can't anticipate today. But a corporation is kind of like a living system. Finance, marketing, IT are all part of the organism, and it is hard to clearly separate the value contributions of each. How can we talk about which is more important, or which is becoming more important? All are critical pieces.
If you were CEO of a large U.S. company, what would you expect from your CIO?
Rivoli: We need our CIOs to be on top of the technology but integrated with value creation and strategy. Does the CIO understand and support the company's underlying business model? Does he or she understand the company's sustainable advantages and how to enhance them? Does he or she have a value-creation mind-set? Above all, this role requires creativity.
Battelle: [I'd expect] a complete understanding of the company mission and a total commitment to employ technology toward that end; absolute fluency with how the Web is reshaping the world of your customers and a willingness to try new things even if they feel scary or threatening to established models; willingness to tell me I am wrong; mutual respect.
Are U.S. companies poised to lead in this emerging global economy, or is lead the wrong word for the role they ought to play?
Battelle: Sure they are. Look at the tech sector.
Rivoli: No one country is going to lead. And who really knows what a U.S. company is anyway? In what sense -- other than as a formality -- is IBM really an American company? The idea of company nationality has less and less meaning.
I can say that the infrastructure provided by a country -- especially its education and research capabilities -- will be more and more important. But the value of this infrastructure is not captured only by companies with a certain nationality. Think of the tremendous advantages captured by Toyota from its U.S. manufacturing. Are they less than the advantages captured by GM? I don't think so.
If you were a CIO, what would you be doing to ensure that your IT shop could play the role required of it over the next five years?
Battelle: I'd be trying like hell to use Web 2 tools to do what I do now with multimillion-dollar commitments to old-school vendors like Oracle, IBM, Siebel and SAP.
Rivoli: Education will remain critical. We have to enable the employees to stay on top of both the technologies and their applications. I know at many universities, IT is so focused on keeping the machine running and putting out fires that it is difficult for employees to stay on top of what's happening.
Looking out five years, what's the biggest change you expect to see in how business is done?
Rivoli: I see a couple of big changes. As far as IT goes, the world will continue to flatten, and this function will be increasingly global in scope. On this I completely agree with Mr. Friedman. A second change: There is still a lot of room to integrate IT into the delivery of products and services, especially for small and medium-size business. The most glaring example in the U.S. is in health care delivery. Think how much more could be accomplished with the intelligent application of IT. As the baby boomers age, this is a very high-growth area. It is pretty amazing that we still have doctors scribbling on prescription pads and patients and pharmacists trying to read them. Finally, I think IT will increasingly become a focus for those concerned with corporate social responsibility. The digital divide may be narrowing, but it has not gone away. The forward-looking companies will be addressing this even more.
Battelle: [The biggest challenge will be] connecting my data infrastructure with that of the end-user customer. We have the middle done; now, outward to the end.