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Champy: Know thy competitors

Like Ford, more companies are laying off workers and sending work offshore. Columnist James Champy offers advice on how to help your company remain competitive.

Ford Motor Co.'s recent announcement to lay off an additional 30,000 workers sent waves of concern across many U.S.-based businesses. If jobs at Ford are at risk, workers wondered, is my job also on the line? For IT organizations, the question is often expressed in terms of whether jobs will be outsourced or offshored.

The low cost of offshore operations is often seen as the culprit in the loss of U.S. jobs. But the issue of job loss in U.S. companies is not one of just lower costs in another country, but rather one of a company's competitiveness. Ford's problems were not caused by cheap labor offshore. Ford, as well as other U.S.-based manufacturers, has just failed to remain competitive -- in quality, price and offerings. Ford has had a stubborn behavior of basing its strategy on a single product since introducing the Model T. Today, it's stuck on the SUV. With the cost of gasoline climbing, that product is struggling.

GM has always erred in the other direction: It offers too many products. GM has been stuck on the business model introduced by Alfred Sloan in the first half of the last century: Just make a model for every taste and every income, and customers will come. Unfortunately, the world has become too competitive for that costly strategy to work. Customers go to any producer, anywhere in the world, for the best product and service.

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As IT professionals, it's possible to feel victimized by a more open, competitive world. New sources of highly skilled labor, particularly in IT, are available to any company, anywhere. But it would be a mistake to try to build defenses against major structural and economic shifts. The only real defense is competitiveness and how your company rethinks its position in this "flat world." That means IT must also rethink its position. And more than ever, you must ask questions about how you can help your company compete -- even if you now feel remote from your company's real customers.

Another part of today's hard reality is that you may be personally doing a great job in your work, but if your company is not performing well your job is at risk. Here are some ways you can positively affect your company's competitiveness:

Recognize that competitiveness has two parts: price and value. IT organizations often make the mistake of focusing technology on only efficiency and lowering costs. They seldom focus on value creation -- that's value in the eyes of the customer.

IT organizations also make the mistake of considering people and departments within their companies as their "customers." A company has only one set of real customers, and those are external. You should be asking how your IT resources are increasing the quality and value of the product or service that your company is selling. You can affect the competitiveness of your company by increasing the value and quality that your real customers experience.

IT professionals can do more today than ever before in affecting customer experience and the value of their company's products and services. Most customers now have some form of electronic transaction somewhere in the buying process. I did that as a consumer when I refinanced my apartment with Washington Mutual, when I flew on JetBlue, when I searched for a book on Amazon, when I wanted to inquire about a painting at a remote auction house in Maine. The systems and processes with which I engaged were all elegant and provided a good customer experience. There was value delivered in every one of these transactions -- and I saw each one of these companies as real competitors, set to survive and grow in this global economy.

If there is a single thing IT professionals can do to improve the competitiveness of their company, it is to improve the quality of their company's electronic interface with customers. This is now the window through which you are viewed and experienced. So take some of the resources you are spending on maintaining legacy systems that do not differentiate your company in its markets, and put those resources into the electronic front end that engages your customers. How you are electronically experienced by your customers might be one of your few remaining competitive options.

Ford will teach us the sad lesson that sticking to a failed strategy is not the route to saving jobs. Jobs are protected and created by change and competitiveness.

James Champy is chairman of Perot Systems Corp.'s consulting practice and head of strategy for the company. He is also the author of the best-selling books Reengineering the Corporation, Reengineering Management, The Arc of Ambition and X-Engineering the Corporation.

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