Technology Innovation

Exerpt From
"Leading People and Organizations in the 21st. Century"
By: Gary Dessler
Florida International University

"Technological innovations are changing the way companies are managed, and that's not just true for industry giants like Merrill Lynch. For instance, Inter-Design of Ohio sells plastic clocks, refrigerator magnets, soap dishes, and similar products. Its president explains the impact of information technology, which merges communications systems with computers, this way: "In the seventies we went to the post office to pick up our orders. In the early 80's, we put in an 800 number. In the late 80's, we got a fax machine. In 1991, pressured by Target (stores and customers), we added electronic datat interchange." Now, more than half of the Inter-Design's orders arrive via modem straight into company computers. Errors in order entry and shipping have all but disappeared, and both Target and Inter-Design have been able to slash finished inventories and therefore costs.

Information like this has been a boon to many companies, but a near disaster for others. Wal-Mart became the industry leader in the 1990's in part because its managers used information technology to link stores with suppliers: Levi Strauss, for instances, always knew exactly how many size 10, 501-style jeans were being sold and could replenish stores' supplies almost at once. But Wal-Mart's technology advantage almost ruined K-Mart, which struggled for years without the speed and cost-effectiveness of such a system.

The Internet is having similar effects. Without physical stores and staffs, many Internet sellers like Amazon.com can offer much lower prices than local stores. And the availability of easily accessible price information means that retailers of thousandss of products from books to boats must now drive down their costs in order to math Internet sellers' prices. The result is continuing pressure to drive down costs and to manage firms in the most efficient and flexible manner. That's one of the reasons more conventional computer makers like Apple and Compaq have their own work cut out for them in competing with the likes of Dell, which is super efficient at marketing its computers via the Internet."