CHAP TER

1

Setting the Stage: Technology
and the Modern Enterprise
1. TECH’S TECTONIC SHIFT: RADICALLY CHANGING
BUSINESS LANDSCAPES
L E A R N I N G

O B J E C T I V E

1. Appreciate how in recent years, technology has helped bring about radical changes across industries and throughout societies.

This book is written for a world that has changed radically in the most recent years of your lifetime. At the start of the prior decade, Google barely existed and well-known strategists dismissed Internet advertising models.[1] By decade’s end, Google brought in more advertising revenue than any firm, online or off, and had risen to become the most profitable media company on the planet. Today billions in advertising dollars flee old media and are pouring into digital efforts, and this shift is reshaping industries and redefining skills needed to reach today’s consumers. Prior to the introduction of the iPod, Apple was widely considered a tech industry has-been. Within ten years Apple had grown to be the most valuable firm in the United States, selling more music and generating more profits from mobile device sales than any firm in the world. Social media barely warranted a mention a decade ago, but today, Facebook’s user base is roughly the size of the world’s most populous countries, China and India. Firms are harnessing social media for new product ideas and for millions in sales. But with promise comes peril. When mobile phones are cameras just a short hop from YouTube, Facebook, Instagram, and Twitter, every ethical lapse can be captured, every customer service flaw graffiti-tagged on the permanent record that is the Internet. The service and ethics bar for today’s manager has never been higher. Social media has also emerged as a catalyst for global change, with Facebook and Twitter playing key organizing roles in uprisings worldwide. While a status update alone won’t depose a dictator, technology can capture injustice, broadcast it to the world, disseminate ideas, and rally the far-reaching. Moore’s Law and other factors that make technology faster and cheaper have thrust computing and telecommunications into the hands of billions in ways that are both empowering the poor and poisoning the planet.

China started the prior decade largely as a nation unplugged and offline. But today China has more Internet users than any other country and has spectacularly launched several publicly traded Internet firms including Baidu, Tencent, and Alibaba. China Mobile has become one of the most valuable companies on earth. The world’s second most populous nation, India, has ridden technology to become a global IT powerhouse. In two decades, India’s tech sector has grown from “almost nothing” to a $73 billion industry, expanding even during the recent global recession. Technology has enabled the once almostexclusively-agrarian nation to become a go-to destination for R&D and engineering across sectors as far-flung as aircraft engine design, medical devices, telecom equipment, and microprocessors.[2] Think the United States holds the number one ranking in home broadband access? Not even close—the United States is ranked sixteenth.[3]

Even in the far reaches of nations in sub-Saharan Africa, fast/cheap tech is becoming an economic lubricant. Mobile phones using Ghana’s Esoko empower the agrarian poor with farming info and commodity pricing, raising incomes and lowering the chance of exploitation by unscrupulous middlemen. Kenya’s M-PESA and Somaliland’s Zaad use text messages to replace cash, bringing the safety and speed of electronic payment and funds transfer to the unbanked and leveraging mobile money at rates © 2013 Flat World Knowledge, Inc. All rights reserved.


Created exclusively for [email protected]

8

INFORMATION SYSTEMS VERSION 3.0

that far outstrip any nation in the West.[4] And Sproxil uses text message verification to save lives by fighting drug counterfeiting throughout the continent. Tech giants including Google, IBM, and Microsoft now run R&D centers and significant operations in several African nations,[5] many of which now rank among the world’s fastest growing economies.[6]

FIGURE 1.1
Many nations in sub-Saharan Africa are seeing significant tech-fueled growth. Throughout the continent, technologies substitute for cash, deliver insights to farmers, and help uncover counterfeit pharmaceuticals. This plant in Accra owned by Ghanaian firm Rlg is the first sub-Saharan PC, tablet, and cell phone assembly facility.

Source: Photograph taken with permission of the Rlg plant.

The way we conceive of software and the software industry is also changing radically. IBM, HP, and Oracle are among the firms that collectively pay thousands of programmers to write code that is then given away for free. Today, open source software powers most of the Web sites you visit. And the rise of open source has rewritten the revenue models for the computing industry and lowered computing costs for start-ups to blue chips worldwide.

Cloud computing and software as a service are turning sophisticated, high-powered computing into a utility available to even the smallest businesses and nonprofits. Many organizations today collect and seek insights from massive datasets, which are often referred to as “Big Data.” Data analytics and business intelligence are driving discovery and innovation, redefining modern marketing, and creating a shifting knife-edge of privacy concerns that can shred corporate reputations if mishandled.

And the pervasiveness of computing has created a set of security and espionage threats unimaginable to the prior generation. As recent years have shown, tech creates both treasure and tumult. These disruptions aren’t going away and will almost certainly accelerate, impacting organizations, careers, and job functions throughout your lifetime. It’s time to place tech at the center of the managerial playbook.

© 2013 Flat World Knowledge, Inc. All rights reserved.


Created exclusively for [email protected]

CHAPTER 1

SETTING THE STAGE: TECHNOLOGY AND THE MODERN ENTERPRISE

K E Y
<
<

9

T A K E A W A Y S

In the prior decade, tech firms have created profound shifts in the way firms advertise and individuals and organizations communicate.
New technologies have fueled globalization, redefined our concepts of software and computing, crushed costs, fueled data-driven decision making, and raised privacy and security concerns.

Q U E S T I O N S

A N D

E X E R C I S E S

1. Search online and compare profits from Google, Apple, and other leading tech firms with those of major media firms and other nontech industry leaders. How have profits at firms such as Google and Apple changed over the past few years? What do you think is behind such trends? How do these compare with changes in the nontech firms that you chose?

2. How do recent changes in computing impact consumers? Are these changes good or bad? Explain. How do they impact businesses?
3. Serial entrepreneur and venture capitalist Marc Andreessen has written that “software is eating the world,” suggesting that software and computing are transforming entire industries and creating disruptive new upstarts. Come to class with examples of firms and industries that have been completely transformed through the use of software.

4. How is social media impacting firms, individuals, and society? 5. What kinds of skills do today’s managers need that weren’t required a decade ago? 6. Investigate the role of technology in emerging markets. Come to class with examples to share on how technology is helping fuel economic growth and provide economic opportunity and public good to consumers outside of North America, Europe, and Asia’s wealthier nations. 7. Work with your instructor to identify and implement ways in which your class can leverage social media. For example, you might create a Facebook group where you can share ideas with your classmates, join Twitter and create a hash tag for your class, leverage Google Hangouts and other tools on Google+, or create a course wiki. (See Chapter 8 “Social Media, Peer Production, and Web 2.0” for more on these and other services.)

2. IT’S YOUR REVOLUTION
L E A R N I N G

O B J E C T I V E

1. Name firms across hardware, software, and Internet businesses that were founded by people in their twenties (or younger).

The intersection where technology and business meet is both terrifying and exhilarating. But if you’re under the age of thirty, realize that this is your space. While the fortunes of any individual or firm rise and fall over time, it’s abundantly clear that many of the world’s most successful technology firms—organizations that have had tremendous impact on consumers and businesses across industries—were created by young people. Consider just a few: Bill Gates was an undergraduate when he left college to found Microsoft—a firm that would eventually become the world’s largest software firm and catapult Gates to the top of the Forbes list of world’s wealthiest people (enabling him to also become the most generous philanthropist of our time). Michael Dell was just a sophomore when he began building computers in his dorm room at the University of Texas. His firm would one day claim the top spot among PC manufacturers worldwide. Mark Zuckerberg founded Facebook as a nineteen-year-old college sophomore. Steve Jobs was just twenty-one when he founded Apple.

Tony Hsieh proved his entrepreneurial chops when, at twenty-four, he sold LinkExchange to Microsoft for over a quarter of a billion dollars.[7] He’d later serve as CEO of Zappos, eventually selling that firm to Amazon for $900 million.[8]

Sergey Brin and Larry Page were both twenty-something doctoral students at Stanford University when they founded Google. So were Jerry Yang and David Filo of Yahoo! All would become billionaires.
Kevin Systrom was twenty-six when he founded the photo-sharing service Instagram. In just eighteen months, his thirteen-person start-up garnered thirty-five million users worldwide, including five © 2013 Flat World Knowledge, Inc. All rights reserved.


Created exclusively for [email protected]

10

INFORMATION SYSTEMS VERSION 3.0

million Android users in just a single week, and sold to Facebook for a cool $1 billion. Systrom’s take was $400 million.[9] Another young one nabbed twice as much. Twenty-one-year-old Palmer Luckey sold virtual reality firm Oculus VR to Facebook for $2 billion before his company had even shipped its first consumer product. Steve Chen and Chad Hurley of YouTube were in their late twenties when they launched their firms. Jeff Bezos hadn’t yet reached thirty when he began working on what would eventually become Amazon. The founders of Dropbox, Box, and Spotify were all under thirty when they founded businesses that would go on to be worth billions.[10] Of course, those folks would seem downright ancient to Catherine Cook, who founded MyYearbook.com, a firm that at one point grew to become the third most popular social network in the United States and eventually sold for $100 million.[11] Cook started the firm when she was a sophomore—in high school. David Karp was another early bloomer. Karp wasn’t just another college dropout; he actually quit high school for self-paced, tech-focused home schooling. Good move—he was taking meetings with venture capitalists at twenty, went on to found what would become one of the world’s most visited Web sites, and sold that Web site, Tumblr, to Yahoo! for $1.1 billion at an age younger than most MBA students.[12]

FIGURE 1.2
Wealth accumulation wasn’t the only fast-paced activity for young Bill Gates. The Microsoft founder appears in a mug shot for a New Mexico traffic violation. Microsoft, now headquartered in Washington State, had its roots in New Mexico when Gates and partner Paul Allen moved there to be near early PC maker Altair.

Source: Wikimedia Commons.

This trend will almost certainly accelerate. We’re in a golden age of tech entrepreneurship where “the cloud” means a start-up can rent the computing resources one previously had to buy at great expense; where app stores give code jockeys immediate, nearly zero-cost distribution to a potential market of hundreds of millions of people worldwide; and where social media done right can virally spread awareness of a firm with nary a dime of conventional ad spending. Crafting a breakout hit is tough, but the jackpot can be immense.

But you don’t have to build a successful firm to have an impact as a tech revolutionary. Shawn Fanning’s Napster, widely criticized as a piracy playground, was written when he was just nineteen. Fanning’s code was the first significant salvo in the tech-...

/careers/university/fbu. 1 1.1 1.2 10 100 103 11 12 13 14 140 15 16 17 1712669 18 19 2 2.0 2.8 20 200 2000s 2001 2007 2008 2009 2010 2011 2012 2013 2014 21 21st 22 23 24 25 26 27 28 29 3 3.0 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 30 31 32 33 34 35 36 37 38 39 4 40 400 41 42 43 44 45 47 5 50 500 582 6 60 62 657 7 71 73 730 78 79 8 847m 871 9 900 928m 997 abil abl abound abroad abund acceler accentur access account accra accumul accur accuraci acquir acquisit across act action activ actual ad adapt addit address administr admir adopt advanc advantag advertis africa african age ago agrarian ahead airbnb aircraft airport aka alibaba allen allow almost almostexclus almostexclusively-agrarian alon along alongsid alphabet also altair although alumni amazon amd america amid among amp analyst analyt analyz ancient andersen andr andreessen android angel anoth answer anyon aol aol-tim apart app appeal appear appetit appl appleinsid appli applic appreci approv april area aren around arrang array arrington arsenal arthur articl asia ask.com aspir assembl assess asset associ athlet atom attack attract audit auditor august auto autom avail averag avoid awar away afford b back background backlog backpack bad baidu bake balanc bank banker banner bar bare barri base beacon beat becam becom beer began behind benefit best better beyond bezo big big-pictur bigger bill billion billionair bind bit bitcoin bits-bas blast blindsid blog bloomberg bloomer blown blown-apart blue bluenil blueprint board bold bolton book boom bort boss boston boston-bas botnet bought bounc box brainstorm brake brand breadth break breakout brick brick-and-mortar bridg brief bright brightest brin bring broad broadband broadcast broader broken brought brynjolfsson build built busi businessweek buy c c-level caesar call camera campaign campus candid candidaci capabl capit capitalist captur care career career-crush carri carv case cash cashless cast catalyst catapult catherin caught celebr cell center central centric centuri ceo certain ch01 chad chafkin chain challeng chanc chang channel chap chapter charact chat cheap cheaper chen chief china chip choic choos chop chose chrome cio circuit circumst cisco ciso citizen claim class classmat clear clearinghous click client client-fac client-serv clock clog close cloth cloud cloud-bas cmos cnnmoney co co-found code codeacademi coder coldewey collabor collaps collect colleg combin come commerc commod common communic communiti compani compar compel compens compet competit competitor compil complet compon comput computer-autom con conceiv concept concern conclud conduct conquer consid constant consult consum consumpt contain content contin continu contract contrast contribut control controversi convent convers configur conflict cook cooki cool coolest core corollari corp corpor [email protected] cost cost-of-good could count counterfeit counterintuit countri cours coursera cover cpc cpm cpo crack craft creat creation credit crimin criteria critic crm crow crowdsourc crush cultur current custom cut cutting-edg cycl d data data-driven databas dataset date davenport david day deal decad decemb decis decision-mak declar deepli defi degre delic deliv deliveri dell deloitt demand demon demonstr depart deploy depos depth describ descript design desktop destin destroy detail devast develop devic defie defin definit dial dictat digit dilger diller dime dip director directori disast disastr disc disciplin disclosur discoveri discret discuss dismiss dispar displac dispos disrupt disruptor dissemin distinct distribut divers divid divis differ differenti difficult dns doctor doesn dog dollar domin done doom dorm dotcom doubtless download downright downturn dr dramat dre dream dreamit drive driven driver drop dropbox dropout drug durabl dust dynam e e-book e-commerc e-wast e.g earli earlier early-mov earn earth easi easier easili eat ebb econom economi economist edg edx eight eighteen either electron elev emarket embarrass embed emerg emphas empir employ employe empow enabl enact encourag end end-us endeavor endnot endur enforc engag engin enjoy enough ensur enter enterpris entertain enthusiast entir entrant entrepreneur entrepreneuri entrepreneurship envelop environ epsilon equip equiti equival era erp escal esoko espionag establish estim ethic etsi europ evalu even eventu ever ever-chang ever-increas ever-shift everi everyon everyth everywher evolut evolv examin exampl examplerich exceed except exchang excit exclus exec execut exhilar exist expand expect expedia expens expert expertis explain exploit explor expos extend effect effort efficienc efficient f fabrik face facebook facil facilit fact factor factori fail failur fair fall fan far far-reach far-flung farewel farm farmer fashion fast fast-pac fast/cheap faster fastest fear februari fed feed feel femal fertil fidel field figur filo final financ financi finland firm five flat focus folk follow foot forb forc forecast form former forti fortt fortun forty-eight found foundat founder four fourfold fourth fox framework fraud free frenzi frequenc freshdirect friend front frontier frontlin fuel full function fund fundament fundrais futur g gain gap garner gartner gate gather geek geekup general generat generous geographi geotarget gerd get ghana ghanaian giant gigaom girl github give given global globe go go-to goal goe golden good googl grad graduat grate gravi graffiti graffiti-tag great greatest grenad grew grid groceri ground groundbreak group grow grown growth guarante guard guess guidanc guy guynn habit hack hadn half halt hand hangout happen happi har hard hard-cor hardwar harm harrah harvard has-been hash hashtag hasn head headhunt headquart health heart heartland heat heavi heavili helft help herd hide high high-end high-frequ high-pow higher highest highest-growth highest-pay highlight hire histori hit hold home hop hope hottest hous hp hr hsieh human hunch hundr hunt hurley i-bank i.e iac ibank ibm idea identifi identific ignor illustr immedi immens immers impact imper implement implic import improv in-hous inappropri inc includ incom incorpor increas incumb india indian individu industri inevit inexor info inform infoworld infrastructur inher initi inject injustic innov insid insight insta insta-rich instagram instal institut instructor insurmount integr intel intellectu intellig interact interfac internet interpret intersect intimid introduc introduct intuit invent inventori invers invest investig invit involv influenc influenti io ip ipad ipo ipod irrelev isn issu itun j jackpot jackson jail januari java jerri jeff job jockey join journal juli june junior k kafka kamanetz kaneshig karp keep kenya kevin key keyword kind kindl knife knife-edg know knowledg known kuchment l laboratori laci lack landscap languag laps larg larger largest larri last last-mil late later launch law lead leader learn led left legal legisl lend less level leverag levin licens lie lifeblood lifetim like limit link linkedin linkexchang linus linux list littl live ll locat location-bas long long-term look los lose lost lot lower loyalti lubric luce luckey lucrat luggag lunch luxuri m m-pesa made magazin magnet mail mainstream major make maker malais malik malwar man manag manageri mani manufactur marc march march/april margin mark market mass massiv match may mba mcafe mcdonald meal mean mechan media medic meet megabreach mention merger messag method mexico michael microprocessor microsoft middlemen might migrat mile miller million milwauke mind mini mini-cas minimum minor mint misde mishandl mismanag mistak misunderstood mitig mobil model modern modifi mom money monitor month moor morph mortar motiv mouth move mover much mug multicor murdoch music must mutual myspac mysteri myyearbook.com n nab name napster nari nation near need neglig net network netflix never new newcom newli news newspap next nineteen nineteen-year-old nonetheless nonprogram nonprofit nontech nontechnologist north note noth notion novel novemb number nyse o obsolet occur octob oculus often old old-tim one one-third onetim onlin onto open open-sourc opent oper opportun optim option oracl order organ other outlook outsid outsourc outspent outstrip overcom overse overview own ownership oxley off offer officer offlin p pace packag packet page palmer parent part particip particular partner partnership pass past patent path patil pattern paul pay payment pc peak peer penalti peopl percent perform perhap peril period perman permeat permiss person perspect pervad pervas pesa pharmaceut philanthropist philip phish phone photo photo-shar photograph physic pictur pilot piraci pitch place plain plan planet plant platform play playbook playground plus pocket point pois poison polici pontin poor popul popular porter portfolio posit possibl post post-internet poston potenti pour power powerhous practic prada predict prep prepar presenc present presid pressur prevent previous price primari primarili primer principl print prior privaci pro probabl problem procedur process produc product profession professor profound program programm project promin promis properti propos proprietari pros protect prototyp proud prove provid prowess profil profit profitabl public publish pull purchas pure pure-play purs pursu push put q qualiti quarter question question-and-answ quick quinn quit quora r r.i.p radar radic radio raid rais ralli rang rank rao rapid rapper rare ratchet rate rather ravisankar re re/code reach read reader real real-world realiti realiz recent recess recip recogn recommend record recoveri recruit redesign redefin refer region regul regular reinforc relat relationship relev reli reliabl relianc remain rememb rent repel replac replic report repres represent reput requir research reserv reshap resign resourc respect respons rest restrict result retail retent return revenu revenue-shar review revolut revolutionari reward rewritten reflect rfid rich ridden right rise risen risk rival rifle rifle-scop rlg robot role roll rollout room root rough rsa ruin run rupert résumé saa safe safest safeti saharan salari sale salvo sarban sarbanes-oxley sarbox satisfact save savvi saw scale scandal scarc scenario schmid school scienc scientist scientific scm scope scour screen script search second secteor section sector secur see seek seeker seem seen select self self-pac self-taught sell sem semel semiconductor senior sensit sentinel seo septemb sergey seri serial serv server servic set seven sever sexi sexiest shanghai shape share shawn shift ship shontel shop short short-term shot show shown shred shrink signific silicon silverman similar simpli singl site six six-figur sixteenth sixti sixty-four sixty-thre size skill sleuth slew sloan slow smallest smart smartphon smorgasbord so-cal social societi softwar sold soldier sole solid solut somaliland someon someth soni sophist sophomor sorel sorri sort soup sourc sox space spanish spawn speak speaker special specialist specialti specific spectacular speed spend spin spin-off split spot spotifi sprang spread sprout sproxil spun sql squar ssrn stackoverflow stage stake standard stanford start start-up startup state status stay staff steam steve still stock storag store stori straight strateg strategi strategist stream street strength strong structur struggl student studi stun stuff style sub sub-saharan subscript substitut subtitl success suggest suit suitcas supercomput superstar suppli supplier support sure surfac surpris survey sustain switch system systrom tabl tablet tactic tag tail take taken talent target taught tax team tech tech-centr tech-driven tech-en tech-f tech-focus tech-fuel techcrunch technic techniqu technolog technologist technology-bas technology-centr technology-en techstar tecton telecom telecommun telegraph televis ten tencent ter term terri terrifi texa text thank thaw thing think third thirteen thirteen-person thirti thirty-seven thirty-fiv thought thousand threat threaten three threefold thrive throughout thrown thrust ticket tie tighter tim time timer tip titan tivo tjx today toe togeth toni tool toolkit top topic torvald total touch tough tough-to-track track trade trade-off tradit train trampl transfer transform transistor transit traffic treasur treat tremend trend tri tripl troubl true tumblr tumult turn tv tweet twenti twenty-four twenty-on twenty-one-year-old twenty-seven twenty-six twenty-someth twenty-first twenty-fiv twice twitter twitter-styl two two-hundred-year-old u u.s uber ubiquit udemi uk unbank uncertain uncertainti uncov under undergradu underpin underrepres underscor understand unimagin uniqu unit univers unmask unplug unscrupul unseat untap up updat upend upon upper upper-level upris upstart us use user user-interfac usual util v vacuum valley valu valuabl vari various ve ventur verific vers version versus via victori video violat viral virtual visit voic volum voraci vr vulner w wadhwa wait wake wall walmart want warehous warn warner warrant washington wasn wast watch water wave way weak wealth wealthier wealthiest wearabl weav web weber webpdf wechat week well well-known wellfund went weren west whatsapp whenev whether whop wide wider wiki wikimedia win winner wisdom wise wish within without woman women won wonder word word-of-mouth work worker world worldwid worst worth wortham would wouldn write written wrong wrote www.facebook.com www.facebook.com/careers/university/fbu. www.indeed.com x y y-combin yahoo yang year year-old yet york young younger youtub zaad zappo zara zero zero-cost zhu zuckerberg field fierc fifti fifty-seven fighting figure filled filtere final financ financial finding firm firm-destroy firms first five flaw flee floor flow flung flush flux