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In an age of digital disruption companies must follow the data or perish – researcher

July 26, 2017 Business News No Comments Email Email

Companies that fail to act on the business insights revealed in the wealth of data gathered over decades by their own IT systems run the risk offalling victim to the age of digital disruption, according to a leading researcher at the University of Sydney Business School.

Dr Sebastian Boell, a specialist in business information systems, says that mobile phone manufacturer, Nokia, and film maker, Kodak, are examples of companies that possessed the data but failed to recognise the threat posed by technological change.

“Organisations generally introduce IT systems in order to make their operations like processing customers’ orders or salary payments more efficient,” said Dr Boell. “But these systems also provide insights that help companies to innovate and reinvent themselves over time.”

“Through these IT systems, companies create information about themselves and their markets. For example, they produce customer data. Who are your customers, where do they come from and what their needs are?” he said.

Dr Boell goes on to link IT systems to the human nervous system.

“Like the nervous system, the IT system collects information about the company’s environment, about its internal operation, it stores, its history, its memory about what it has done, about its customers and its products,” he says. “Sometimes this information goes astray and companies don’t see things that could be useful to them or could help them.”

Dr Boell believes that Nokia’s inability to see the warning signs revealed in its own data contributed to its inability to complete with Apple’s smartphone technology.

“Another example would be Kodak, which invented the core patents for the digital camera, but decided to not pursue digital photography and instead to focus on selling chemical materials used for developing films and photos.”

“So we could say in those two examples the companies didn’t realise IT was important to them,” Dr Boell said.

While having the right data is important, Dr Boell’s research has found that organisations also need to foster a culture that is open to the information and willing to adapt and innovate as required.

Successful organisations are those that have managed to balance what they’re doing more efficiently with IT, but at the same time use IT to be innovative and be a market leader and to come up with new ways of doing what they’re doing through innovative use of IT.”

Dr Boell concludes that it is now more important than ever for companies to innovate in order to survive in this age of digital disruption that has rendered much of the traditional marketplace obsolete.

“The pace of technological-led change in organisations is accelerating. So, organisations need to use IT to be more efficient and to innovate. This is a challenge because over time a dance unfolds between innovation and efficiency,” he said. “It’s important that companies understand that they must be good at both parts of this, not just one or the other.”

Further information on Dr Boell’s research is available at http://sydney.edu.au/business/research/highlights/2017/balancing_tech_efficiency_with_innovation

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