In Part I, we provided an historical perspective of IT value creation along with a set of 21-century adages to IT value creation. As a refresher, recall the adages, as they help frame our case studies:

• "Time is money." IT enables real-time, globe-spanning communications.
• "The information about the money is more valuable than the money." IT's potential value is in enabling real-time search and communications of information to global entrepreneurs; in this case, the context is financial.
• "Investment in IT-enabled information resources is better than investing in physical brick-and-mortar resources." This adage relates to brick-and-mortar resources against a dynamic IT customer demand system by geographical location.
• "Digitization of 'stuff,' enabling precise measurements of the stuff and delivery across geographical space." Digitization innovation leads to communicating to customers and staff in real time.
• "If a picture is worth a 1,000 words, a digital prototype is worth a 1,000 pictures." Technologies that allow digitized artifacts to be quickly and easily manipulated and communicated can lay the groundwork for the consistent emergence of unanticipated value.

In Part I, we examined our first two case studies: the Boeing 787 and JPMorgan Chase. The Boeing 787 case demonstrated a product-driven innovation project, while JPMorgan Chase illustrated the enhancement of capabilities involving mergers. Along with a detailed review of these cases, we also pointed out specific management difficulties, which we will again do here in Part II with the remaining three cases. Management difficulties confronted in execution often accumulate until they reach a level in which the value realized is substantially reduced, or, in some cases, in which the difficulties become so overwhelming, the projects are terminated (or worse). Consequently, our research methodology in this report series strives to separate analysis of the potential IT-based capabilities and value (i.e., whether the capability and value creation idea is conceptually sound) from issues of management difficulty on the way to potential benefits (i.e., execution issues).

Before we delve into our last three cases, let's review their synopses:

• Case 3: Delta XYZ's troubled social media implementation. Delta XYZ (a fictitious name) had a grand plan to increase its rate of innovation by deploying social media technology throughout the company. Delta XYZ executed the deployment but achieved much less value than it had hoped. This case shows how organizational norms and culture interact and how they can curtail the possibilities for realizing IT capabilities and value creation.
• Case 4: Crowdsourcing as a new initiative. This case explores an examination of several companies, all of whom have built business models around the emerging value-creation paradigm of crowdsourcing. We have included this collection of mini-cases because we wanted to examine IT value creation in leading-edge areas. This part of our study demonstrates that even within a seemingly narrow category of value creation, there is much variety in how value creation happens.
• Case 5: Ascent Media's transition to digital services. The Ascent Media Group traditionally warehoused physical media (film, videotape, etc.) for its movie and TV studio clients, conducting business in ways that deployed IT to realize physical efficiencies. Under the threat of increasing media digitization, the company opted to move toward a vision that would create advantages in a more digital future. This meant a serious break from the past, using IT in new ways to realize new categories of value. The case demonstrates a wide variety of execution difficulties. In many ways, the Ascent case illustrates, better than any of our other cases (with the possible exception of Boeing), the full cycle of how IT can create new capabilities and value through a total transformation of a firm's business model.

Case 3: Delta XYZ

Like the cases discussed in Part I, the Delta XYZ case provides us with additional perspectives on observations about the importance of culture and complementary skills in realizing value from investments in IT. We begin by noting that the transformation attempted at Delta XYZ was not as nearly as dramatic as Boeing or JPMorgan Chase. For example, although Delta XYZ's managers were concerned about competition from developing countries (e.g., China) at the time of the project, they were neither experiencing any immediate threat from an industry revolution of the sort experienced by JPMorgan Chase (and, as we will discuss later, Ascent Media) nor attempting, in the same way as Boeing, to generate a revolution.

This case centers around Delta XYZ's mission to introduce social networking technologies in order to fuel innovation throughout the organization as well as to create positive network effects and unanticipated, emergent innovation. This idea moves well beyond the notions of applying IT to automate manual processes and make them more efficient to ideas of creating a process and culture for sustainable innovation. The case also occurs against the backdrop of a revolution in the underlying technologies: the Web 2.0 movement. Though this is different from an industry revolution in which the company competes, it nevertheless presents difficulties in separating fads from potential sources of real value.

Social Networks and the Importance of "Weak Ties"

In the past few years, we have seen how Web 2.0 has changed the way organizations use computer networking -- moving from static, one-way communication to horizontal, multidirectional communication in efforts to accumulate and share knowledge, connect people who otherwise are unconnected, obtain access to nonredundant knowledge within or outside an organization, and leverage the "wisdom of crowds" (which we'll discuss further in our next case study on crowdsourcing). Using Web 2.0 technologies, whether internally or externally, appears to create powerful organizational capabilities. The mechanisms by which these new capabilities are realized constitute a confluence of possibilities for IT-enabled collaboration.

Overall, the emergence of new technologies and platforms in the past decade have contributed to a more decentralized, user-driven dynamic Web. Traditionally, companies would broadcast and push their content to customers and users, but changes in the past few years have led to content being produced, personalized, and widely exchanged through distributed social networks. Today, users are establishing more and more platforms, causing a completely new focus on network effects and economies of scale and scope. ² In particular, the availability and sources of knowledge seem to have been forever changed: what was once bound to a few is now available to all.

A "network effect" arises when the addition of each user to a network increases the value of the network to all users. Additionally, value to each member of the network increases with the number of people in the network. But network effects do not alone account for the new possibilities that have arisen from Web 2.0 and social media. The nature of the connections in the network matters.

In 1973, Mark Granovetter published a pioneering article about social networks in which he presented the "weak tie hypothesis." ³ The weak tie hypothesis suggested that infrequent "acquaintance" linkages between people were particularly important to the network's innovative potential. Weak ties carry less information than "strong ties" -- established conduits of regular information transfer. However, the information that arrives at a network node through a weak tie is more likely to be novel and surprising than the larger volume of information supplied through strong ties. This novelty of information is more likely to lead to new ideas, innovations, and problem solutions than information that arrives through strong ties. In an article a decade later, Granovetter argued that:

Individuals with few weak ties will be deprived of information from distant parts of the social system and will be confined to the provincial news and views of their close friends.... Social systems lacking in weak ties will be fragmented and incoherent. New ideas will spread slowly, scientific endeavors will be handicapped. ⁴

For IT to create an innovative capability, it must enable not only strong organizational ties (important for coordinative and accountability purposes to support intended organizational actions, as we saw in the Boeing and JPMorgan Chase cases), but also weak ties, which are important for innovation and emergent value creation. As suggested by Granovetter, if companies can facilitate the creation of weak ties among employees who may otherwise be unconnected, then they will be able to create coherence and integration between clusters of employees as well as a greater capacity for organizational integration.

For example, in using an internal social media application, employees who would otherwise have no official reason to interact might connect to each other when they notice they are enthusiasts for a particular breed of dog, or a style of antiques -- the process of creating a weak tie. Consequently, employees with weak ties might ultimately exchange novel work-related information that creates new value for the company.

But, in order for IT to stimulate a value-creation capability, it is important to transform the weak ties of a group into strong ties when transferring complicated and tacit knowledge. ⁵ Barriers to the transfer of such knowledge exist between weakly tied people because they hardly know each other. A weak tie will not support the transfer of complicated knowledge, without first becoming a strong tie. This adds a dynamic to the challenge of creating innovation capabilities when using IT to establish weak ties.

As frequency of interaction increases among weak ties, ties will strengthen, and the novelty of the knowledge available through the ties will decrease. A weak tie becomes a strong tie when people in a network act to realize value from a combination of novel, nonredundant information. Over time, information at connected nodes will become redundant. This suggests a need to constantly create new weak ties as weak ties become strong ties over time. To replenish the supply of weak ties, a supporting technology must not only support weak ties, but the system should ideally produce more of them.

To summarize, organizational benefits arise from using IT to form both strong and weak ties. Benefits from strong ties include:

• Low risk of opportunistic behavior
• Higher trust of transferred knowledge
• Improved transfer of tacit knowledge
• Mutual motivation and support

Benefits from weak ties include:

• Access to nonredundant knowledge, which can breed radical innovation

This leads us to our first major observation with the Delta XYZ case: IT can support both strong and weak ties, and both ties are important to organizational capabilities. Thus, a sophisticated capability that might result from IT, the capability that Delta XYZ attempted to realize, would be one that promotes both strong and weak ties. The emphasis in the history of IT, and in the case studies in this series, is on strong ties. Jamie Dimon's accountability system in the JPMorgan case, for example, created strong ties across which important information traveled across the organization to lower the risk of opportunistic behavior. This is, of course, a very important way of using IT to create value. However (and this is a major observation from the Delta XYZ case), using IT to create and replenish the supply of organizational weak ties constitutes an attempt at IT-based value creation that goes well beyond the traditional applications of IT, which suggests a greater possibility to deploy IT to support an organization's ability to innovate.

Delta XYZ: The Company

Company Delta XYZ is a European manufacturer of construction materials with more than 10,000 employees based primarily in Europe. The company is traditionally conservative, far from an IT "first-mover." Delta XYZ centralizes and monitors most of IT to limit the risk of inappropriate use, or leaks of sensitive information. At the time of the case study, employees had only recently been granted access to the Internet, but the company had blocked many online communities, such as Facebook, Twitter, YouTube, and so forth. In general, management did not embrace new technologies, platforms, and services without well-founded analysis and thorough experimentation. The company's size, risk-averse behavior, and top-down management structure all cause rigidity, which naturally limits the possibility of specific departments trying new platforms.

This history of technological conservatism makes Delta XYZ an unlikely company to engage in such a sophisticated attempt to realize capabilities and value from IT. The impetus toward its social media initiative appears to have arisen from the perceptions of changes in the company's market conditions. Delta XYZ has moved from a relatively simple, homogeneous market to a more complex, heterogeneous market dispersed across the globe, resulting in both challenges and opportunities. The more Delta XYZ spans across diverse markets and cultures, the more complex its business model gets. During this case period, more competitors were entering the market, and in spite of its dominant market position, Delta XYZ experienced a feeling of increased pressure. Therefore, a greater demand for being open to new possibilities arose internally, in part because of concerns that a closed, rigid organization might be less attractive to the next generation of skilled employees.

Management Difficulties

Although Delta XYZ experienced some benefits from increased efficiency and effectiveness in internal communication and workflows as well as from lowering costs of communication and collaboration, the company fell short in achieving many of its intended objectives in deploying its social media technology, despite substantial investment and effort. Certainly, information had become more accessible due to new, intuitive interfaces and search capabilities, while functional consolidation of IM, email, and IP telephony into a single dashboard promised lower costs and other benefits. However, the more ambitious objectives of creating a broad-based, IT-supported innovation capability had not been realized at the time of this case study. This does not mean the initiative was a failure in producing benefits. It is only deemed a "failure" if it does not achieve the original benefits targeted by the company's senior management team.

Our primary interest in including Delta XYZ as a case in this series relates to its efforts to achieve very mature capabilities from IT in order to support organizational benefits such as innovation and unanticipated, emergent value creation. The reasons why this firm appears to have fallen short in this area relate, interestingly, to Boeing and JPMorgan Chase:

1. The rationale behind the project, the expected benefits, and how the project would affect everyone was neither widely understood nor agreed upon within the organization. Lack of understanding and agreement derives partly from the fact that virtual collaboration is a relatively new concept for companies and their employees. The desired benefits from weak ties weren't obvious, and therefore not realized.
2. The organization's culture, especially its risk aversion, conservatism, and closed approach to information, did not change with social media deployment. There was no equivalent within Delta XYZ of Jamie Dimon, JP Morgan Chase's strong leader who actively sought to change company culture in ways that would enable IT value creation. On the contrary, Delta XYZ's CEO resisted the idea that company culture should become more open regarding information in order to activate innovative effects from IT. Instead of focusing on innovative capabilities, managers focused on the IT's potential to improve efficiencies. Though there were efficiency gains, those were not the main point of the social media project implementation. Rather than arising from a dire business need or a crisis and being aggressively led from high up in the organization, as with Boeing and JPMorgan Chase, IT lead the project at Delta XYZ. And, unfortunately, IT had very limited ability to influence the attitudes and culture relative to the company's senior management team.
3. There remained a prevalent belief within Delta XYZ that information contained within the social media systems had to be strictly controlled and that the company needed to closely monitor interactions in the systems. Delta XYZ created formal policies prior to the project's implementation to regulate the technology platform, which created administrative bottlenecks (e.g., admins approving/disapproving information and maintaining user permissions). This was not an environment in which emergent value, or, indeed, anything not anticipated or intended, could readily happen. Thus, a paradox formed: on one hand, Delta XYZ acted openly by pursuing Web 2.0, but on the other hand, the company maintained its secretive and controlling cultural inclinations.
4. Delta XYZ could not realize network benefits because the organization adopted a reflexive pilot approach. Deployed on a limited scale, the technology did not achieve network effects and benefits.

Summary and Findings

The following are three key findings from the Delta XYZ case:

1. Without a commonly accepted and well-understood vision and goal for achievement of advanced benefits from IT-enabled collaboration, value from IT will not be successful.
2. Cultures that focus on justification and rationales based on less mature capabilities (e.g., efficiency) cannot realize advanced capabilities from IT, such as the enhanced organizational innovative capability attempted at Delta XYZ. Innovation-enhancing capabilities are not the same as efficiency-enhancing capabilities, and efforts to implement the former that do not recognize the differences between the two are doomed to fail.
3. A culture based on control and information protection limits the value IT can achieve. Such a culture blocks certain collaboration benefits. Far from seeing benefits in weak tie collaboration, employees instead see a risk of violating policy.

Key Comparisons

At Boeing, cultural difficulties resulted in the loss of vital integration skills. At JPMorgan Chase, Dimon acted proactively to create a leadership team that could project changes into its culture to help realize value from IT. At Delta XYZ, there was neither a senior management cultural change in leadership nor any adjustments to the organizational context that would activate the potential of advanced IT (i.e., social media) to create capabilities or value. The IT department drove the project, limiting its ability to effect profound organizational changes. In the end, Delta XYZ implemented a very sophisticated IT-based capability while retaining an incompatible organizational culture, ultimately limiting value creation.

Case 4: Crowdsourcing

Unlike our other single-entity cases, Case 4 represents several mini-cases to demonstrate the emerging uses of IT in creating capabilities and value through crowdsourcing. We chose this mini-case style due to the lack of a well-established, single-company case in this relatively new value creation area. This particular case study focuses on IT companies that offer services through IT-based value creation and non-IT companies that apply this new approach. Because of the way we have approached this mini-case series, it has yielded more information on the possibilities of value creation and less on the management difficulties of execution. This is an inevitable limitation due to the relative newness of crowdsourcing.

Simply defined, crowdsourcing represents the act of a company, or institution, taking a function once performed by employees and outsourcing it to an undefined (and generally large) network of people in the form of an open call. This can take the form of peer production (when the job is performed collaboratively), but is also often undertaken by sole individuals. Its crucial prerequisite is the use of the open-call format and the large network of potential laborers.

Crowdsourcing forms online groups into communities of mass collaboration. These communities consist of very diverse mindsets, cultures, and approaches to problem solving. The variety in social capital and knowledge within the community makes this a potentially exciting approach to problem solving and innovation. There are two distinct types of crowdsourcing:

1. Companies that outsource internal tasks or challenges or the solving of a difficult scientific problem. Some companies that leverage the benefits of crowds in this category include TopCoder, InnoCentive, and Amazon.
2. Companies that use crowdsourcing for idea generation, often referred to as "open innovation." ⁶ Companies in this category deploy collaborative social media platforms externally in order to create communities and reach large crowds of customers (see Figure 1). By encouraging customers to share their ideas in online forums, companies gain access to new thinking. Company examples of such user-driven innovation include Dell's IdeaStorm and Starbucks's My Starbucks Idea.

Both types of crowdsourcing include the formation of a large network of people from distant social worlds with diverse knowledge and approaches to problem solving. With such size and diversity in the network, the chance of obtaining the newest or most relevant knowledge for a company improves. Furthermore, spanning across multiple time zones with a great amount of people competing for work and acknowledgement can improve effectiveness and efficiency. It appears that solutions from such an approach can be of higher quality, obtained at lower cost, and/or result in faster delivery time than many conventionally derived solutions. Thus, IT platforms make possible a capability that would be, at best, cumbersome and, at worst, impossible, to create without IT.

Seven Mini-Cases

Mini-Case 1: Amazon Mechanical Turk

Mechanical Turk is an online service provided by Amazon that enables companies to crowdsource small tasks that require human intelligence without automation. Client companies define the tasks, and individuals are paid (in small amounts) for each task they complete. Examples include categorizing products, selecting photos based on certain impressionistic criteria, or matching labels to pictures. Mechanical Turk makes accessible an enormous number of workers available at a very low price per hour, which allows companies to accomplish simple but important tasks that would otherwise have been too costly or impossible. As Amazon CEO Jeff Bezos once put it: "MTurk is a marketplace where folks who have work meet up with folks who want to do work." ⁷

Mini-Case 2: Threadless

Threadless is an online shop that sells a vast assortment of t-shirts, hoodies, and other kinds of clothing. Anyone can submit designs for the Threadless collection, and the community rates each design. Threadless staff then selects the most popular designs for production in a limited batch, with the designer being paid upon initial production and then being paid again for additional batches. Through this startlingly simple model, the company effectively minimizes its cost of product development, while still producing interesting and distinctive designs.

Mini-Case 3: InnoCentive

InnoCentive matches people with expertise to companies with unsolved problems. It manages a community of more than 200,000 highly qualified "solvers" from nearly 200 countries. When a registered solver finds a solution to a problem for a "seeker" (a client company), the associated IP with the solution transfers to the seeker, and the solver receives payment. Payments vary in amount, but are often tens of thousand US dollars. InnoCentive helps seekers structure their problems for sharing within the community and also makes all contractual arrangements between parties. This appears to work well for all involved.

Mini-Case 4: TopCoder

Founded as an online community of software engineers, TopCoder implements a crowdsourcing model that nourishes competition to solve IT challenges. It supports an elite community of more than 400,000 developers who are on the cutting edge of software development and among the best-of-breed. The company works with clients to create specifications that are the basis for its community "competitions." By contracting independently with software developers worldwide, TopCoder has constant access to new talent, knowledge, and technologies. It seems unlikely that any commercial software firm can boast so many top developers among its employees.

Although the concept of TopCoder is simple, our contacts with some of its executives suggest that the execution of the model is complex. Roughly considered, TopCoder focuses on five core tasks: breaking down large projects into components, processing specifications from clients, setting appropriate prices for competition, picking "winners" objectively and consistently, and fixing bugs before deployment. The actual development process is broken down into seven phases: conceptualization, specification, architecture, component production, application assembly, certification, and deployment. The company has experimented with crowdsourcing models for all seven of these phases.

A central challenge for TopCoder seems to be in cultivating and motivating its community of skilled programmers to contribute knowledge and engage in competition. It must keep its community happy. Another challenge, however, is on the client side. Client needs vary, as do their concerns about security, quality assurance, and the like.

Mini-Case 5: Danske Bank

During the financial crisis, Danske Bank, one of the two largest banks in Northern Europe, initiated a campaign to crowdsource ideas for future development of the bank, partly as a public relations effort to improve its standing in community opinion. By trying to harvest ideas and points of concern from the company's customers, it sought to brand itself as a more aware and modern bank. However, in addition to being part of a marketing campaign aimed at renewing its brand, the campaign sought to exploit the wisdom of the crowd in order to generate new ideas for future products, services, and business processes.

This example points out an additional advantage available to firms exhibiting the second user-driven innovation tendency in crowdsourcing: the potential to enhance company brand through customer interaction and establishing a new kind of relationship to customers and community. Even if Danske Bank's crowdsourcing initiative had produced no useful ideas, it would have still created value if it had improved the standing of the company's brand.

Mini-Case 6: Starbucks

In early 2008, Starbucks launched a crowdsourcing community, My Starbucks Idea, for its customers to post ideas for improvements. The online community provides a way for customers to discuss, make comments, and vote on ideas. Starbucks interacts with its customers via this platform, providing updates on progress of ideas in the works and sorting ideas by time, popularity, and level of commentary. To date, the site and the community have been a great success. Starbucks has implemented many ideas and has strengthened relationships with customers.

Mini-Case 7: Dell

IdeaStorm is an idea-gathering platform established by Dell. It allows community members to submit ideas for Dell products and services and then facilitates community votes on the ideas. Launched in 2007, the site has had more than 17,000 ideas submitted, more than 700,000 votes, and nearly 500 ideas implemented. The company has invested significant effort in the maintenance of this idea-generation community.

Management Difficulties

Using IT to create capabilities and business value via crowdsourcing appears to entail various specialized challenges. Our closest examination of this phenomenon was through our interactions with TopCoder executives who emphasized its long road in achieving an understanding of how to best structure work, create specifications, tend to a community, and satisfy client needs TopCoder Chairman Jack Hughes told us that he does not worry about being overtaken by competitors, even those with lots of resources available to invest, because, he says, the learning curve is rather steep on the way to mastering how to execute all the components of the crowdsourcing model well. This is probably most true of the crowdsourcing models that outsource tasks and challenges, less so for models of idea generation.

As with all customer interactions, it is possible to make mistakes with this approach, which could certainly worsen a company's standing in its customer community. Thus, it is important that any efforts to interact with customers using this approach are not disingenuous, cynical, or inauthentic.

Summary and Findings

Our study of this collection of mini-cases on crowdsourcing leads us to three important findings:

1. Crowdsourcing appears to be a legitimate source of IT-enabled capabilities and value creation.
2. Crowdsourcing creates value in at least two ways: (1) by allowing companies to access solutions and ideas they would not have had access to if they had relied only on internal sources; and (2) by creating or strengthening customer relationships and thereby enhancing company brand.
3. Crowdsourcing value creation can produce solutions more cheaply than other forms of sourcing, but this kind of value creation seems different from traditional IT-enabled values based on efficiency, standardization, or cost reduction. Rather, crowdsourcing appears to create new products or services to sell or improve the value (brand) of existing products and services. This primarily affects the revenue, rather than the cost, side of the income statement.

Key Comparisons

Crowdsourcing has at least two value-creating advantages. The first -- the ability to outsource the solution of tasks or problems that cannot be solved internally -- is a variation on the kind of value creation outlined in the Boeing case in Part I of this series. Like Boeing's IT systems, crowdsourcing platforms allow company access to specialized skills and talents beyond the boundary of the firm. In the Boeing case, this happened in a more conventional outsourcing form (using companies with expertise in the manufacturing of parts based on composite materials). But the principle is the same, and the role that IT plays in enabling the capability is equivalent.

The crowdsourcing case demonstrates that IT has the potential to impact the capabilities of innovation as well as revenue-side value creation. Comparing the crowdsourcing mini-cases to the Boeing case illustrates IT-enabled revenue side effects through the access of specialized skills. In the case of Boeing, its IT systems made these possible by enabling the creation of a more technologically advanced and customer-oriented product: the 787 Dreamliner. Next, our final case -- Ascent Media Group -- helps us gain a better understanding of the full range of IT value-creation possibilities, from cost savings to revenue enhancement, from one side of the income statement to the other.

Case 5: Ascent Media Group

In this final case, we will look back at a company, the Ascent Media Group, that once comprised about 40 postproduction, media management, and distribution companies and examine how it achieved IT value creation during the peak of digitalization innovation. ⁸ In any given year, the company worked on 40% of major prime-time TV dramas, 40% of prime-time commercials, and any number of feature films. Its main clients included all the major movie studios (Sony Pictures, Fox, Universal, Paramount, Disney, and Warner Brothers), MTV, Viacom, Discovery, A&E, BBC, HBO, and others. Historically, the company operated under two main categories of very different businesses:

1. For many years, Ascent's Media Management business was its dominant operation. In essence, Media Management was a warehousing, or "library," business, the core activity of which was to store securely and produce as requested media assets (usually film in canisters or videotape masters in boxes) for its client studios. Content already aired on TV or in movie theaters had to be duplicated and repurposed for ancillary markets, such as VHS and DVD rental and sales, video on demand, and syndicated TV. Some employees worked as librarians, while others were traditional pick-and-pack workers similar to those you might find in an industrial warehouse. A large number of highly skilled technicians performed video or sound editing, tape dubbing, and other transfers. Much of the work was routine and repetitive but required a high standard of quality.
2. More recently, Ascent Media moved toward the digitalization business. In 2005, Ascent spent $17 million to build its 100,000 square-foot Digital Media Center (DMC). This center stored about 300,000 elements in its physical library -- everything from the original nitrate print of Disney's 1941 classic Dumbo to working masters of the latest TV shows. Throughout the facility, jobs previously done by analog equipment shifted to digital technologies. Efficiency through automation of library and warehousing systems became the focus of IT value creation. The objective was to move physical media sources (films and tapes) through processes faster and more cost-effectively. Overall, the DMC deployed IT impressively to realize value.

At the time of our case study, Ascent's up-and-coming business, Creative Services, provided postproduction services to major film studios, independent TV production companies, broadcast networks, and advertising agencies at the height of a digital media revolution, and industry insiders ranked Ascent as a top-tier player in the business. Postproduction created final versions of entertainment and advertising products by manipulating, enhancing, or creating visual or sound elements of a client's raw film or video footage. The group's outputs included feature films, trailers, TV shows, music videos, and advertisements. Postproduction employed digital technologies to create new visual effects that movie and TV companies wanted to buy.

But Creative Services was a very different business than the Media Management warehousing unit. Creative Services comprised loosely connected, smaller organizations, most with individual brands that had once been independent small businesses built around talented individuals. These talented "creatives" were highly regarded by major players in the film and TV industries. Famous film directors often insisted on working with particular individuals within Ascent and were willing to pay handsomely for it. To keep key creatives happy, Ascent paid them well, kept them supplied with the latest technology, and ensured that they had interesting work. One executive told us: "This business doesn't work without very high-end talent. We're not a fast-food joint." Whereas the revenues for Media Management were on a slight declining trend, and its profit margins were modest, Creative Services was enjoying strong, if sporadic, growth with high-profit margins.

The Digital Media Revolution

The greatest threat to Ascent's business was not the current activities of existing competitors, but rather the unknown developments emerging as film and TV technology evolved. Despite the tremendous uncertainty in creating hit movies or TV shows, many aspects of the businesses had remained stable for decades. New technologies had appeared, such as videotapes and cable TV, but the movie industry had always managed to keep control of the channels of distribution, enabling existing players to keep new technologies from cannibalizing existing revenues. Although the rate of change in the industry was not leisurely, technology was not, historically, a disruptive force.

Digital technologies changed all that. When DVDs arrived in 1997, most people saw them as a new distribution channel they could manage. Nobody expected DVDs to take over as rapidly as they did; by 2002, DVD sales had eclipsed box-office revenues. ⁹ More important, digital technology dramatically escalated concerns about piracy. The quality of digital images, the ease of copying bits and bytes, and the continued growth of a worldwide network for distributing digital content (the Internet) all generated vast new possibilities for enjoying proprietary content without paying for it. As such, black market DVDs of not-yet-released movies leaked from the postproduction process. And just-released films moved quickly to bootleg DVDs as "cammers" smuggled digital video cameras into theaters on opening day, then quickly "burned" copies and transported them for sale to countries where the movie had not yet been released. Others uploaded digital content to the Internet, where growing bandwidth made downloading large video files increasingly easy and profitable. In 2005, movie studios lost an estimated $6.1 billion to piracy. ¹⁰ Hollywood moguls reacted with increasing horror as they watched the music industry contract by 17% between 1996 and 2005). ¹¹ By 2006, the music industry had been radically altered.

Across the industry, digital technology affected so many core elements of the business that nobody knew what the future held. During a meeting of studio chiefs, Robert Chapek, then-president of Buena Vista Home Entertainment, remarked: "The technology seems to change every Monday. On the one hand we're playing with the old-fashioned packaged goods business, at the same time, we have to deal with new technologies." ¹² Against this backdrop of industry revolution, Ascent needed to rethink hard about its business model. It came up with a bold, new concept called "digital services."

Digital Services at Ascent

The digital services concept was the brainchild of the late visionary José Royo, who joined Ascent as a low-level executive overseeing IT functions and moved up to CEO of Ascent Media Group. His ambitious digital services vision involved creating a completely digital infrastructure to support all of Ascent's businesses. When fully developed, a digital services platform would allow Ascent to accomplish most, if not all, of its services through the manipulation of data files instead of via physical media.

No longer would workers physically pull a film canister or videotape box from a shelf and insert it into a workflow that required technicians to perform the following steps: (1) edit the content on an analog machine; (2) make copies of the edited version; (3) ship the copies, usually on videotape, to one or more locations where they were needed (e.g., for syndicated TV broadcast); and (4) return the original content package to its shelf. No longer would Ascent employees handle and process physical paperwork associated with the order, including sending an invoice to the client. Instead, a computer would automatically retrieve the content from a database on a spinning online disk or digital tape library. With the new system, Ascent would perform all necessary alterations (edits) digitally without moving the content to tape, sometimes without even the intervention of a human operator. Consequently, Ascent could then deliver reformatted content to a client as a file or set of files over the Internet, and perform billing operations in the same way. Everything would go digital.

Although this digitization would make the "warehousing" function much more efficient, efficiency was not the justification for the digital services vision. Rather, Royo imagined a future where digital content could be deployed in many new ways (in targeted marketing, or to create new media experiences) in which customers (movie and TV studios especially, but end users as well) would be willing to pay more. The metaphor that inspired Royo and his colleagues was not merely a more efficient warehouse, but rather a new value creation on the revenue side that arose from entirely new business opportunities. Some of these opportunities were, they assumed, as yet unknown.

Digital Technologies in Action

After a director's final edit, film or video footage would come to Ascent, where it would be scanned or loaded into a very high-resolution file-based format. The colorist, while working in a special theater, using sophisticated hardware and software, would then "color correct" the digitized movie. Once upon a time, this artistry would have been impossible. The technology did not yet exist. Thus, this new capability represented an entirely new and substantial and expanding source of revenue for Ascent, one it had not anticipated. This was exactly the kind of value creation that Royo expected to experience from digital services. Though they could not envision every possible source of revenue expansion from digital services, Royo and his group had many ideas. One Ascent executive explained the vision to us in this way:

There won't be one business model. There'll be many business models. Some content will be sold with a hamburger. Other content aimed at a specific demographic will drive people to search for something where we'll earn money off an ad. All these things, and many, many more are going to happen. Content owners will need to exploit their libraries in ways we can't figure out today. This media factory, this flexible platform in the middle, this investment, will help our customers do things to monetize their media assets. Valuable things. You need to start to be really clever, with bundles, services, formats, advertising. If we get to that point, we're going to triple the revenues, for everybody.

Customers liked the digital services vision. In April 2005, Ascent agreed with Sony Pictures Entertainment and HP to digitize Sony's entire 3,500 title film library. Sony had also recently acquired another 4,000 titles from MGM. As the years passed, the charge to digitalize content continued, and Ascent extended its investments in its ability to manage end-to-end digitized media artifacts. This leads to a major observation in this case: the primary advantages of combining IT and digitized artifacts were on the revenue side of the income statement. The IT-enabled, revenue-generation value is multiples of IT-enabled, cost-saving value and is generally strategic in nature versus tactical. Further, IT-enabled, revenue-generation value continues to be at an embryonic state of evolution..

Ascent Media Group: The Company

Ascent Media Group resulted from a series of mergers. Each new acquisition had its own culture, but one thing was common among them -- a fierce independence. What drew the many small boutique firms into Ascent's organization was the promise of a steady income stream; however, in periods of large revenue jumps from the boutique business, this promise often became forgotten. Instead, the boutique satellites would bristle at sharing revenue with the media storage units. What was interesting is that many of the satellite boutique shops within Ascent were onboard with Royo's new IT vision. Networking all the content and services in real time was a clear benefit to the many small film service shops within Ascent. It was those in media storage, particularly the managers at DMC, who were not seeing the bigger picture. The fact that Ascent built the DMC without thought to a broader network vision highlights the divergent views concerning IT within the company. People in creative services saw the benefits in the development of Royo's digital services, while those at the DMC were lagging, or in some cases stalling, full adoption of real-time networks for content. The different cultures of the two groups supported the opposing viewpoint problem about IT. DMC saw IT as a cost reducer, while creative services saw IT as a revenue generator. DMC required relatively low-skilled workers to manage media transfer and storage, while creative services required highly skilled employees with knowledge of advanced computer systems and software to manage emerging film services, such as colorization. These two groups naturally had very different views on the role of IT. The challenge was in merging the views into a single vision of the future for Ascent Media Group.

In late 2006, Royo's vision took a big step forward. The board instituted a major reorganization that effectively demoted the Media Management group and dismissed many of the senior executives who still favored a focus on that part of the business. In January 2007, Royo was elevated to Chief Technology Officer and, eventually, Chief Strategy Officer. By early 2008, he was chosen to be CEO, and the commitment to his digital services vision was complete -- but not the execution.

Transition difficulties continued. Realizing the digital services vision required a substantial investment, it took a long time to get all the technology pieces in place, and even then people kept doing some things the old way, out of habit. The new systems had occasional problems, which sometimes undermined confidence in the new ways. In addition, variety in the services that customers asked for continued to rise, leading to increased complexity with which the new systems had to deal. Tensions sometimes flared between long-time employees and the many new faces; between experts in the refined old ways and advocates of the still-improving new methods. In the words of one technologist, "Again and again, the craftsmanship of the past collides with the as-yet-imperfect processes of the future."

Investor appetite for improving financial performance remained, as always, voracious; stakeholders wanted to see more benefits from investments in digital technology. Because media technologies advanced rapidly, Ascent needed to invest aggressively in capital equipment to keep up with the state of the art; customer demands for the latest and greatest thing often drove Ascent to upgrade even before old equipment fully depreciated. Employees debated the extent of synergy between the old and new Ascent. Some even argued for splitting the company into old and new companies for operational reasons and to "unlock shareholder value." Others insisted that the synergies remained important and that the new could (and should) learn from the old. As we have observed in other companies, Ascent had to face the challenge of simultaneously managing its mature cash-generating business unit with its new strategic growth business.

In the background, the financial crisis unfolded. Ascent's competitors struggled. Deluxe and Technicolor, for example, both made news with their own business difficulties; media startups "flamed out" almost daily. Multiples on media company valuations were down to 5x revenues from 14x revenues five years before. Cutting costs, Ascent weathered the storm. Creative Services revenues dropped, but it continued to be profitable. Digital services continued to gain traction, realizing exciting growth rates but on a small base. Traditional media content management continued to pull in revenue but at a fast-contracting rate.

Management Difficulties

The digital transformation at Ascent also had to transcend an ongoing debate about the future direction of the business. In 2005, the power base within the company's management team still resided with its historical business. The remarkable evidence of this fact was that even while digital technology revolutionized the industry in the background, someone in the company decided to construct an expensive new physical warehouse. At the time of this decision, Royo was a low-level IT executive.

The transition of electronic storage and manipulation of film led to a misconception by both internal and external stakeholders that IT would lead to lower costs. The main misconception was that the film delivery and storage processes would be unchanged, but instead would be fulfilled using IT, which would be cheaper due to the replacement of workers. Thus, a primary challenge that Royo faced in implementing IT during this period was to overcome the view that the new technology was a cheaper way of storing and retrieving content. Because digital processes were new, requiring new equipment purchases, implementing IT was anything but cheap. The skills involved were more complex and therefore required more expensive labor. Royo and his team had to sell managers and the board of directors on IT as a dramatic driver of change in how Ascent would do business and convince them that there were new profit streams that would justify the expense. However, the development of the DMC designed to house the digitized media content further exacerbated the problem. Ascent built the DMC to accommodate the old process for media storage and delivery and, therefore, not positioned to take advantage of the new IT processes developed by Royo. The investment in the DMC created inertia in the company that resisted the new IT initiatives.

Summary and Findings

The Ascent Media Group case tells a story that parallels our other cases, yet it is perhaps unique because it shows so clearly a full range of ways that IT creates capabilities and new business value. In the DMC, IT helped the company achieve efficiency gains that reduced physical media cycle times from weeks to days. At the other end of the value-creation spectrum, digitized media, and the technology to manipulate it, achieved the high margins associated with providing distinctive digital color correction services. Both of these kinds of value creation are based on the dramatic rise in computing power expressed by Moore's Law, but they operate in quite different ways to create business value. The media warehousing improvements reduced costs. The digital color correction and digital services infrastructure tapped new revenues by providing a basis for raising prices and offering new services.

The Ascent Media Group case produces two main findings:

1. Changes in technology lead to shifts in the way technology produces value for a firm; at Ascent, aggressive digitization (at least partly forced by an industry digital revolution) moved the company from its sole focus on efficiency in the warehouse of its mature business to a joint focus on new revenue sources from an emerging strategic growth business that could arise from new IT capabilities.
2. As in the Boeing, JPMorgan Chase, and Delta XYZ cases, we reinforce the importance of effects of culture, leadership, blocking managers, and complementary skills in realizing new IT-enabled capabilities and value. Declining business segments within a firm will lead to shifts in power to the business segments that experience a rise in revenue streams. In the case of Ascent, Creative Services grew in power and influence as the importance of Media Management services declined.

FINDINGS FROM CROSS-CASE ANALYSIS

In analyzing how IT created value across all the cases, 12 general conclusions emerge:

1. IT plus "digitization" continues to be a source of competitive advantage for firms in various ways, some of them quite new. Contrary to Nicholas Carr's infamous claim that "IT doesn't matter," ¹³ IT continues to provide firms with competitive differentiation through (1) efficiencies unique to the firm; (2) organizational structures often "virtually integrated" (thus physically disintegrated), but sometimes more effectively vertically integrated, which leads either to a distinctive ability to focus on core competencies or better decision making; (3) superior access to human talent regardless of where in the world it resides; and (4) advanced abilities to nurture collaborative interactions that lead to innovation and routine realization of emergent, unanticipated sources of business value. From our study, we recognize that there are many categories of capabilities and value that IT can produce, including:

   • Efficiency and quality gains from standardizing, automating, and accelerating existing processes (as in most applications of IT, this is the oldest source of IT value, and the only one Carr was really thinking about when he wrote his infamous article)
   • Improving systems of accountability to reduce risk (as in Boeing and JPMorgan Chase)
   • Providing access to otherwise inaccessible skills (as in Boeing and crowdsourcing)
   • Engagement with customers in ways that improve the brand (as in crowdsourcing)
   • Support for innovation and emergent value by creating weak ties within an organization (as in Delta XYZ).
   • Support for innovative, revenue-generating value creation by using technology to supply entirely new services or customer experiences that people are willing to pay for (as in Ascent).

   Any and all of these sources of value can sustain competitive differentiation. Boeing's supply chain cannot be easily copied, nor can JPMorgan Chase's accountability and report system, nor can really effective social media systems that build links with customers or establish weak ties within organizations.

2. Companies evolve through three phases as they expand and mature their uses of IT to achieve new organizational capabilities and business value (see Figure 2):

   • Phase 1: Standardization and Automation. Companies begin with an emphasis on process standardization and automation with the intention to create value through efficiency and cost reduction. Changes in patterns of information flow in this phase often result in changes to the organization (e.g., hierarchies flatten, some vertical disintegration occurs).
   • Phase 2: Directed Partnering, Improved Reporting and Accountability, and Organizational Disintegration. In Phase 2, as IT networks expand and mature, the concept of IT shifts from "machines to automate" to "machines to collaborate." IT-based networks become the conduits of organizational strong ties, a reliable means of bringing about intended results and new organizational structures. Reporting and accountability structures based on "one set of numbers" improve decision making and coordination. Taken to its most mature extreme, Phase 2 ends with a capability to access nonredundant, high-value knowledge across the globe, often beyond the boundaries of the organization, along with an ability to effectively integrate disparate knowledge into superior performance. Consequently, there's a dramatic tendency toward organizational disintegration (i.e., IT-enabled outsourcing).
   • Phase 3: IT as an Engine for Innovation and Revenue Expansion. In Phase 3, as networks become more qualitatively sophisticated, and more supportive of advanced collaboration and social media platforms, emphasis shifts toward using IT to create conditions conducive to the generation of emergent, unanticipated value by moving IT use toward the creation of weak ties, which fuel innovation (e.g., new products, services, business models, customer relationships).
   

   Figure 2 -- Three phases of IT value transformation.

   Movement though these phases corresponds roughly with the evolution in a company's awareness of the capacity of IT to create business value on the revenue side, as opposed to the cost side. Most companies engaged in the advanced phases continue to do work that fits with the earlier phases. Although it is not perfectly true that companies always move from left to right through the phases, we can say with confidence that the cost- and efficiency-based sources of value on the left are the oldest, most common, and best understood, and are perhaps least likely to provide sustainable competitive advantage since they are well understood and accessible to more companies. We can also say that the value-creating activities at the right, the revenue-enhancing capabilities, are the newest, the least common and understood, and the most likely to provide sustainable competitive advantage if management difficulties can be surmounted on the way to realizing them.

3. Companies experience different degrees of success in accessing more advanced ways of using IT to create new capabilities and business value. From the earliest uses of IT to the modern state of the art, technology itself has evolved in ways that make more advanced modes of value creation accessible, but not all companies are successful in accessing these advanced modes. Delta XYZ, for example, operated under Phase 1 processes, attitudes, and culture, but in attempting to realize Phase 3 value, its effort was largely unsuccessful. Just having a sound idea to create value with IT is not the same as actually creating value. At Delta XYZ, we saw what we interpreted as a sound idea for value creation poorly realized. Similarly, at JPMorgan Chase, we saw integration skills retained that Boeing lost in its transformation. Different companies in our sample succeeded in conceiving value-creation ideas and in executing them to differing degrees. The more toward the right of Figure 2 we go, the more difficulty firms have in achieving the value they hope to obtain.

4. A company's ability to acquire, retain, and engage employees with high levels of integration skills appears critical to its ability to transition to more advanced modes of IT value creation. Consistent with research by Erik Brynjolfsson,¹⁴ We find that complementary considerations, especially the degree to which a company can bring complementary human adaptability and integration skills to bear on the use of IT, greatly affect the company's ability to extract value from IT investments. We also find that, ironically, the employees who harbor these critical skills may be difficult to convince of the desirability of focusing on advanced modes of value creation. In at least one of our cases (Boeing), the transition to more advanced modes of IT value creation led to the departure of many employees with the needed organizational skills. In several of our cases (Boeing, JPMorgan Chase, Ascent), we clearly saw the importance of integration skills to realizing the benefits from IT investments. Investments in technology are not enough on their own. The following summarizes a more accurate value equation:

   Digitized artifact + complementary high-level integration and coordination skills = value realization

   This conclusion is quite consistent with Brynjolfsson's research, who noted that "companies don't simply plug in computers or telecommunications equipment and achieve productivity gains. Instead, they go through a process of organizational redesign." Similarly, our statistical analysis found that a "cluster" of related innovations, notably organizational changes outside the IT department, embed IT. This cluster, which we call the "digital organization," includes:

   • Automation of numerous routine tasks (Phase 1 activities)
   • Highly skilled labor (with integration skills)
   • More decentralized decision making (as in JPMorgan Chase's accountability system)
   • Improved information flow vertically and laterally (as in several cases, notably Boeing and JPMorgan Chase)
   • Strong performance-based incentives (as in JPMorgan Chase)
   • Increased emphasis on training and recruitment (not explicit in our study but consistent with our findings).

   This concordance with the results of Brynjolfsson adds to our confidence in our results.

5. Identifying managers who might obstruct movement toward more advanced IT-based value creation and fashioning practical strategies for dealing with those "blockers" is critical to the realization of advanced capabilities. In our study, we encountered examples of companies that succeeded in addressing the problem of blocking managers (JPMorgan Chase, Ascent) as well as an example of a company (Delta XYZ) that could not and therefore failed to realize the full value of investments in the creation of new organizational capabilities. Dimon's example (JPMorgan Chase) was most striking here, as he assembled a senior team by hiring trusted former colleagues and dislodged blockers. Ascent's several transitions, in which Royo was eventually elevated to CEO, provide another example.

6. The effective management and coordination of an IT-enabled, virtually integrated organization is a newly emerging challenge fraught with risks. That is, while many misconceived efforts at IT-enabled value creation can fail to achieve sought-after benefits, efforts to gain value that involve the dramatic restructuring of an organization and its processes entail considerably higher risks, including the possibility of impairing performance to a level lower than before the change. Risk and difficulty along this path, conversely, adds to the sustainability of competitive advantage for firms that can achieve value despite these risks and difficulties. Certainly, we saw no trouble-free transformations in our set of case studies. We saw one clear success (JPMorgan Chase), two companies on the way to success (Boeing, Ascent), and one that had clearly failed to achieve its objectives (Delta XYZ). Additionally, some apparent wrong turns on the road to transformation were very expensive (at Boeing, for example).

7. Success in advanced capabilities and differentiating value creation though the use of IT may require an investment, both in technologies and organizational process and culture change, to reach a minimum threshold before achieving real value. Movement toward advance uses of IT to create new capabilities is not for the faint of heart. In at least two of our cases (Boeing, Ascent) and arguably in a third (JPMorgan Chase), the companies were required to make substantial investments before achieving sought-after value. For firms that have already made an investment, there's often potential to add to competitive differentiation since the level of required investment may dissuade others from following. Waiting for major value to appear before reaching the threshold only adds to the difficulty of transformation. When achieving benefits require long-term patience, people begin to wonder if they will ever arrive. They lose faith. Effective leadership is the only counter to this problem.

8. Industry expertise matters for effective IT leadership and the associated organizational restructuring necessary for capturing potential strategic IT value. Hands-on shrewdness allows managers to lead by example and to ask particularly insightful and detailed questions during efforts to leverage IT to create new capabilities and business value. JPMorgan Chase's Dimon is the compelling example here. His effectiveness as a leader of IT value creation relied heavily on his ability to address challenges in full-blown detail. Not all leaders will have the capacity to be so hands-on during a transformation, but those that do will be more likely to succeed.

9. Faulty division of work between human and IT resources -- automating things that should not be, for example, or automating them too completely without appropriate scope for human judgment to enter into outcomes -- is a source of threat to the viability of companies and even industries. Against the backdrop of the financial crisis, the actions and preparations made by one organizational leader (Dimon) demonstrates the importance of maintaining a balance between human and IT capabilities as we seek value from IT. His accountability systems were important in creating incentives that kept the firm from following other companies down an immensely risky path. Human judgment interacted with IT-based automation at an appropriate level and to an appropriate degree.

10. Organizational norms concerning "openness" and "closedness" in communication strongly determine the realization of advanced capabilities and value creation. When organizations attempt Phase 3 value creation, which involves creating conditions for emergent value, informational openness that fuels innovation becomes more important than control of most proprietary information. One company in our study (Delta XYZ) did not make the shift to a more open culture and thus failed to realize value. You cannot succeed in creating Phase 3 value with Phase 1 attitudes and culture.

11. Creation of advanced IT-enabled capabilities to support innovation and emergent value requires constantly adding weak ties to the organization. A primary potential value of most deployments of social media appears to be in its ability to proliferate weak ties throughout the organization. Research suggests that such ties lead to innovation. Companies must constantly replenish these ties because realization of value from innovation requires converting existing weak ties to strong ties. IT seems well suited to this cause, but the technology is still evolving. We suspect, however, that if successfully implemented, technology to create weak ties in an organization could lead to a more innovative organization across a broad range of activities.

12. IT and digitization will continue to have a major impact on the changing nature of work, including where and how companies perform work. We saw no suggestion in our study that the modes of capability and value creation from the use of IT have approached any point of exhaustion. In fact, we suspect that value-creation possibilities for IT on the revenue side -- those at the far right of Phase 3 (refer back to Figure 2) -- remain poorly understood and minimally exploited. We expect many more opportunities in this realm for companies to achieve competitive advantage from IT.

CONCLUSION

Continued IT maturation, corporate IT investment, architecture improvements, and organizational learning can together lead to the dawn of a fundamental transition in the role of IT. IT investments and benefits can shift from primarily achieving efficiency-based cost savings to primarily achieving strategic, revenue-generating value. The revenue-generating value is significantly greater than the efficiency-based cost savings.

But what our case studies and analyses make abundantly clear is that this shift is far from automatic. Reaching maturity, transitioning the firm and its attitude toward IT value creation, and addressing management difficulties -- engaging in bold decision making, achieving strong leadership, bringing about changes in cultural and organizational restructure, and effectively coordinating global partnerships -- can be overwhelming to senior management. In the current environment, these challenges can overcome efforts to achieve a balanced view of the cost/benefits of making IT investments. For this reason, we discovered in our case analysis a need to separate our discussions of the potential revenue benefits of the emerging IT-enabled benefits from the discussions of the management difficulties of realizing the potential benefits.

Our case studies and analyses confirm that we can reach a tipping point in the potential of IT to contribute to strategic benefits. Our message for senior managers, therefore, is that they must take this possibility to achieve new strategic opportunity from IT seriously. Even in companies not yet ready to reach for these benefits, managers must keep an eye on the possibility that competitors might reach for and achieve mature capabilities and value. And, unless the company is prepared to be a "fast follower," it could risk serious and lasting "too late to catch-up" competitive disadvantages, even to the point of eventual bankruptcy.

At this point in our evolving state of understanding, however, the complex management challenges of execution pose significant risks, which make new strategic benefits difficult to achieve. For example, our study of the Boeing 787 project makes this point abundantly clear: Boeing estimated development cost of this project to be $10 billion, yet the various management challenges have surpassed that cost. Nevertheless, it seems likely that the Boeing 787 is as revolutionary for the company as the Boeing 707 was; the 707 was the innovation that launched the world into global jet-air travel, placing Boeing as an industry leader for more than 50 years.

By examining the realities of the new potential of IT as well as the management difficulties in realizing that potential by bold early adopters (Boeing, JPMorgan, and Ascent), we can get a sense of the high stakes and challenges in the "game." The Delta XYZ case, and others like it, asks if we are really ready, if we are really committed, and tells us that we cannot ensure success, while Dimon of JPMorgan Chase reminds us of the importance of having the right management team in place to provide bold leadership. Finally, our mini-case series on crowdsourcing seems to say if you don't have much to lose, "go for it."

Indeed, this is our final recommendation. Eventually, you will need to "go for it" to reach for more mature IT-based capabilities and value. Only you can decide the right timing. But realize that your competitors face the same challenge, and that their timing in confronting the challenges could force your hand. Boeing has experienced profound difficulties in executing its aggressive new strategy, but being a Boeing competitor is no cake walk. The challenges inherent in trying to achieve IT value in new ways will not go away until you embrace them. It's up to you.

ENDNOTES

¹ Austin, Robert D, Richard L. Nolan, et al. "The Evolution of IT: Improving Organizational Capabilities and Promoting Business Value: Part I." Cutter Consortium Business Technology Strategies Executive Report, Vol. 15, No. 2, 2012.

² O'Reilly, Tim. "What Is Web 2.0." O'Reilly Media, 30 September 2005 (http://oreilly.com/web2/archive/what-is-web-20.html).

³ Granovetter, Mark. "The Strength of Weak Ties." American Journal of Sociology, Vol. 78, No. 6, 1973.

⁴ Granovetter, Mark. "The Strength of Weak Ties: A Network Theory Revisited." Sociological Theory, Vol. 1, 1983.

⁵ Hansen, Morton T. Collaboration: How Leaders Avoid the Traps, Create Unity, and Reap Big Results. Harvard Business School Press, 2009.

⁶ Leimeister, Jan Marco, Michael Huber, Ulrich Bretschneider, and Helmut Krcmar. "Leveraging Crowdsourcing: Activation-Supporting Components for IT-Based Ideas Competition." Journal of Management Information Systems, Vol. 26, No. 1, 2009.

⁷ Pontin, Jason. "Artificial Intelligence, With Help from the Humans." The New York Times, 25 March 2007.

⁸ Since the time of our study, Ascent Media Corporation sold some of its divisions, including the Creative Services, Media Services, and Content Distribution businesses of Ascent Media Group.

⁹ Belson, Ken. "As DVD Sales Slow, The Hunt Is on for a New Cash Cow." The New York Times, 13 June 2006.

¹⁰ McBride, Sarah, and Geoffrey A. Fowler. "Studios See Big Rise in Estimates of Losses to Movie Piracy." The Wall Street Journal, 3 May 2006.

¹¹ Graves, Tom. "Movies & Home Entertainment." Standard & Poor's Industry Surveys, 24 March 2005.

¹² Belson, See. 9.

¹³ Carr, Nicholas. "IT Doesn't Matter." Harvard Business Review, 1 May 2003.

¹⁴ Brynjolfsson, Erik. "The IT Productivity Gap." Optimize, No. 21, July 2003

ABOUT THE AUTHORS

Robert D. Austin

Richard L. Nolan