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by Lori Cameron

The emergence of what experts call “digital intelligence”—the capacity of a company to understand and leverage the power of information technology to their advantage—can make or break a company.

The IT world has changed remarkably since the 1960s. Back then, IT focused primarily on automation and reducing costs. IT was its own department squirreled away in another part of the building. It was not well integrated with business functions, and did not matter as much strategically to overall business operations.

Over the past fifty years, that has changed dramatically.

Now, IT permeates every level of business operations, requiring well-structured integration and synchronization, says Sunil Mithas of the Robert H. Smith School of Business and F. Warren McFarlan of Harvard Business School.

“Digital  intelligence is more than being able to work with computers or IT; it involves an understanding of how to synchronize business and IT strategies, govern IT, and execute IT projects and enterprise systems,” Mithas writes.

Read more about digital intelligence here.

Mithas and McFarlan describe three key elements of digital intelligence to help companies gain a competitive advantage and sustain it in the rapidly changing digital age:

Envision IT

IT can have a significant impact on an organization. Companies can thrive or implode based on how they manage their IT.

“CEMEX, Zara, Capital One, and Amazon all demonstrate how IT and information-based capabilities helped firms create sustainable value in widely differing industries and ways. Conversely, companies such as FoxMeyer Drug, Blockbuster, and Borders had significant difficulties managing IT and dealing with IT-enabled transformations. Xerox’s failure to capitalize on the innovations of its PARC lab demonstrates the importance of this point,” write the authors.

Integrate IT

Information technology not only expedites, streamlines, and enhances business operations, it turns business on its head. The introduction of the personal computer, the smart phone, and various forms of multimedia have changed drastically the way business is conducted.

“The dualities of IT refer to the idea that technology can be both sustaining and disruptive; enable adaptation to and shape competition; provide new competitive advantages, even if such advantages are highly visible and replicable,” say the authors.

Explore New IT

The digital age stops for no one, and only the most successful companies will keep up.

“Managers and entrepreneurs need to repeatedly scan new technologies to assess their significance and use them to stay relevant and transform their organizations. This should not be a one-time exercise; these actions should become part of a manager’s routine because exploration of newer technologies can often facilitate new and more effective ways of doing business,” the authors added.

Related research from the Computer Society Digital Library: