Environment of Business

Technologies that shape the environment

Manoj Chiba
ChibaM@gibs.co.za
“Digital is the main reason just over half
the companies on the Fortune 500 have
disappeared since year 2000”
Pierre Nanterme

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

 “We have moved into a discontinuous,
innovative, digital world, underpinned by rapid
disintermediation and sector shifts. This
compels us to explore new ways to drive growth
and competitiveness of firms and countries.”

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

How did we get here?

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

Van Duuren (2017)
What is technology?

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

 What is technology?

The interrelationship of tool to context or

practice
© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE
 What is technology?
• The definition of technology: Science or knowledge put into practical use to solve
problems!

• Technology is inextricably linked to practice. Therefore, technology fundamentally has

meaning, and meaning is derived from use!

• Simply put: If aliens had to transport to us (and all animals capable of using tools), to
another planet, leaving all our tools, devices, artifacts, and infrastructure behind, none
of that stuff would count any longer as technology, as it no longer can be integrated into
meaningful activities!

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

What is technology?

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

 Entertainment
tech

Communication
tech

Construction
tech

Assistive tech
Medical tech

Business tech
© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE
 Information technology
• Information technology: Hardware and software tools used to store, transfer and
process information.

• You use information technology to complete various tasks, and these include
transferring of information which facilitates decision-making

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

 Entertainment
tech

Communication
tech

Construction
tech

Assistive tech
Medical tech

Business tech
© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE
 Technology…
Scratch plow 1837 – allowed for
the irrigation and farming-
increasing productivity – moving
from subsistence to excess for
trade and sale

Transistor 1947:
Current through a
circuit board used in
Printing press: The TV’s, cellphone &
Diamond Sutra – Computer
868 AD 1st printed
book (China), and
±1450 – Printing
machine for mass
production. The
age of
enlightenment
“Waves” of Information Technology
Wave 1 (1960s and 1970s)

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

 High-level trends in information
systems
Management reporting:
Management information
systems

Strategic end-user
computing

1960-1970 1980-1990
1950-1960 1970-1980 1980-1990

Data processing: E-commerce

Electronic Data
Processing
Decision-support:
Decision-supports
systems
© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE
 What was “Wave 1” about?
How did this affect business? Why is it
important?

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

1960s and 1970s

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

1960s and 1970s

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

 What is a value chain?

It’s a concept: Divides a company’s activities into the technologically and economically
distinct activities it performs to do business.

THESE ACTIVITIES ARE INTERDEPENDENT

What is value?

• Amount that buyers are willing to pay for a product/service BUT business is only
profitable if the value it creates exceeds the cost of performing the value activities

• Either you perform these activities at a lower cost or perform them in a way that leads
to differentiation and a premium price

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

 Technology and the value chain

Group Work:

What are the business implications of products and services

that have a successful interdependencies across the value
chain?

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

 moving

Early 1900’s

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

1960s and 1970s

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

1960s and 1970s

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

 Technologies (?) pre and post 1960’s

Digital computer: Consolidation of

the workplace: Information
creation and dissemination

Telegraph and telephone: Impact on business

communication?

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

 So what?

What did the television do for business?

“Waves” of Information Technology
Wave 2 (1980s and 1990s)

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

The Internet: Internet technologies
Internet penetration
Internet users: Who do you believe?

Why you must

triangulate your
data/information
How much time do we spend on the
internet?
Adoption in SSA- above global average
What we use it for?
What we use it for?
Storage of information: Cost
 So what for business?

So why is the internet good for business?

 If this provides
how – then I want
to know why?
 Recap
Wave 1:
• Technology enabling communication (telephone), insights (computer) – together these drive
efficiency & productivity.
• Automation of repetitive tasks drove increased productivity (human error 1/300, automated error –
1/30 000 000)
• The results of these were: standardization of products and services – examples of Big Business that
remains standardized – McDonalds. Standardisation is NOT bad – some industries – parts
manufacturing requires standardization!
• Technologies that shaped the environment for big business: Telephone, Television, and computer
largely. The print press was a key driver of the “age of enlightenment”
• Cost-cutting and INTERNALLY FOCUSSED

Wave 2:
• The internet: Connectivity! And E-Commerce largely – beginning to allow for growth not simply cost-
cutting.
• Globalisation – the internet as a technology is the carrier of globalisation
• We begin to see the blurring of industry lines (internet technology enables this)
• The internet is ubiquitous – but serves as a carrier that continues to drive the divide at the country
levels, and threatens business in terms of cost of doing business.
• The internet business is NOT an option, but how its leveraged
• IT’S THE BRIDGE BETWEEN WAVE 2 AND WAVE 3. Still predominantly internally focused, but external
focus on consumer begins
 So…

Is technology a driver or enabler for

business?

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

 Predominantly an enabler…
±2000 BC ±2000 AD
±150m ± 828 m
±10,000 builders ±10,000 builders
20-27 years to 6 years to
complete complete

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

“Waves” of Information Technology
Wave 3…

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

Wave 1: Value chain

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

 Wave 3: Value chain
disintermediation by sector
Transportation 10 Manufacturing
Hospitality
and Logistics 11 9 and Tourism
Tech Products
2 and Services Professional
Retail 3 8
Real Estate 12 Services
Media and
1
Financial Entertainment
Education
Services 4 7
Healthcare and
Pharmaceuticals 13 6
Consumer
5 Telecoms Packaged Goods

Energy and
14
Utilities

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

Voice Calling Messaging/SMS Video Delivery Home Broadband

Data/Mobile Internet Mobile Money Content Creation Communications PaaS

& Delivery
 Launched in 1994

10 Manufacturing
Transportation Hospitality
11
and Logistics 9 and Tourism
Tech Products
2
and Services Professional
Retail 3 8
Real Estate 12 Services
Media and
1
Entertainment
Financial
4 7 Education
Services
Healthcare and
13
Pharmaceuticals 6
Consumer
5 Telecoms Packaged Goods

Energy and 14 16 Emmy nominated

Utilities shows in 2018
 Amazon

What business is Amazon in?

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

 Amazon
We will
come back
to this?

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

 Amazon: Can we agree?

Online retailer that sells books, electronics

and merchandise

Why was Amazon successful upfront,

when there were many successful and
established businesses?

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

 Amazon: Competancies?

What competencies are required by

Amazon to be successful?

Logistics for warehousing, sorting, and shipping products at scale

and technologies that help customers search, find and buy
products online.

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

 Amazon: The marketplace

What is a marketplace?

Any location, whether in person or online,

that facilitates the exchange of goods
between buyers and suppliers

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

 Amazon: Why a marketplace

Why did Amazon launch a marketplace?

Network effects and the move from an

online retailer to a platform business!

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

 But wait the hardware game as well?

Why did Amazon enter the hardware “game” with Kindle?

What is the difference between Amazon’s Kindle Strategy and Apple’s Strategy?

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

 Razor blade strategy!

What are the implications of a Razor-Blade strategy on the organisational

structure?

Your product (Kindle) and the content (e-books) have to be in the same BU – and
therefore you have to structure it in that way. This makes more sense as the
money (from a P&L) is made from eBooks NOT The device (Kindle) at all!

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

 Environment of Business
Technologies that shape the environment

Manoj Chiba
ChibaM@gibs.co.za