"IT Doesn't Matter" by Nicholas Carr: A clear paradox?

If you have read Nicholas Carr's 2003 article "IT Doesn't Matter," I am sure you know why this article is still a topic of interest even today. Though Carr wrote this article almost two decades ago, the fact that it is still being discussed and debated globally shows the astute quality of his ideas, the compelling nature of his narrative, and his gift of captivating readers despite the barrier of time. His words have painted a clear picture of how the railroads, while initially conferring advantages to various industries, failed to sustain those same benefits when the industries scaled up.

And while the author's argument over railroad technology is sound, the same cannot be said for his arguments about information technology, especially in today's world. Carr's entire article revolves around how IT doesn't matter in the long run. But you will find that there is a constant disconnect between which technology he is actually referring to—for instance, he often uses the term “technology” synonymously with regards to railroads, power grids, as well as IT, when a distinction should have been made in some of his arguments.

Carr starts the article talking about how IT has become the backbone of commerce, and that its presence has expanded so much that chief executives routinely talk about its strategic importance. However, later, he contradicts himself and goes on to say that IT is a commodity input that only acts as a transport mechanism for carrying digital information, the same way railroads carry goods, and power grids carry electricity. And just when you think you've seen it all, he gives his flawed reason for IT being a commodity: its global pervasiveness and decreasing cost. I can't help but feel that here the author has failed to consider the wide scope of applications that arise from the use of technology, especially IT, in different industries with differing needs.

The author then gives his opinion on proprietary and infrastructural technologies, saying that the former is more advantageous for long-term profits. He says that IT has all the hallmarks of an infrastructural technology because it can be rapidly commoditized and all businesses can get their hands on it in a relatively short time. The author also agrees that infrastructural technology leads to major market changes, but he labels the advantages it confers as “unsustainable.” He says that infrastructural technologies’ power to transform businesses doesn't last long.

The author gives the example of American Hospital Supply Corp. (AHS), which reaped profits within the first few years of launching its proprietary software. However, he admits that with the advent of personal computers and packaged software, things went belly up for AHS and it had to merge with Baxter Travenol to survive. If we go by the author's argument, then doesn't this mean that even proprietary technology cannot give a lasting advantage? Any technology, whether it is proprietary or infrastructural, can give businesses a sustained advantage if they adapt that technology to changing market trends and user requirements. Don't you think so?

The author concludes his article by appealing to business executives to delay their technological investments because the rapid pace of technological advancements could quickly render their systems obsolete. According to the author, IT expenses hardly ever translate into profits, and IT challenges such as technical glitches, security breaches, and unreliable vendors make the matter worse. He says that the real key to success is to spend frugally and avoid risks. The author gives the examples of Dell and Walmart, which allowed their competitors to bear the high costs of experimenting with a new technology and reaped the benefits of the advancement after best practices had been standardized and the costs had gone down significantly.

Now, I know what you are thinking. Isn't this similar to what Carr said about infrastructural technology being a mere commodity and hence strategically insignificant, except for an initial cost advantage? Beats me! And like me, I am sure this is not the only discrepancy you found in his article or the only disagreement you had with his viewpoints. So, allow me to address the grievances on your behalf.

• If, as the author says, IT is really just a transport mechanism, it shouldn't be able to decide the rise and fall of businesses. Today, IT has diverse applications, playing a major role in various sectors, from banking to healthcare, to data security, to even the food industry. Even law enforcement agencies depend on technology to analyze evidence, identify victims, and spot perpetrators. IT is highly robust and can be applied in various ways in response to changing times; but railroad technology, which the author compares to IT, does not possess such capabilities.

  Also, as the Principle of Comparison states, "Only the likes can be compared"; comparing something as unique as IT with railroad technology defies logic.

• We can concede that IT can be regarded as a commodity insomuch that it has indispensable value not just for a few but for the masses as a whole. But this doesn't mean that it has no distinction when used by different businesses in different ways. For instance, hypothetically speaking, when a business does not even use a vital commoditized technology, then all chance of strategic advantages is lost.

  Moreover, easy access to a certain technology does not mean that it is accessed by all, or for the same purposes, or even to the same extent. While technology is available to all, how it is used is always in the hands of the user. Gone are the days when people believed that “knowledge is power.” We now live in the information era, and knowledge is at the fingertips of everyone. So, the real power lies in how organizations put the knowledge to use, and who puts it to use first.

• Using a blanket term like "technology" while discussing strategic advantages for businesses, or lack thereof, is arbitrary. Every business will have specific needs, which can be catered to by specific technologies. And even if an infrastructural technology caters to a need, it has the potential to become a competitive advantage. This can happen if the company personalizes the technology to meet the needs of its customers. For example, technology, being fluid, can be customized to meet the present and future needs of customers. So, if using a particular technology is not working out for a business, the organization is either unaware of its customers' expectations or it doesn't have a USP for its products or services. In this instance, despite the technological advantage, the lack of business intelligence results in the nonperformance of that business.
• The author's opinion that technology's influence can be felt only at the macroeconomic level cannot be farther from the truth. In today's world, when the pandemic brought life to a standstill, technology helped bring normalcy back to daily life. It wasn't just businesses whose survival depended on technology—humanity's did too. During lockdown, we were able to ward off loneliness and maintain our peace of mind thanks to technology, which enabled us to keep in touch with our friends and family via video calls.

The success of a business lies in how effectively its decision makers grab hold of opportunities. For instance, restaurants that aren’t on delivery services often have lower sales, and this proved even more true during lockdowns. Pre-pandemic, delivery apps like Uber Eats, Seamless, Swiggy, and Zomato were already delivering food, but their services became absolutely essential during lockdown.

Also, if you would rather trust numbers than words, let's take a look at the stats. While both Swiggy and Zomato experienced a multi-fold increase in their revenue, Swiggy allowed for delivery between individuals and not just restaurants, and this further increased the company’s revenue by 56% between April and September 2021.

This is a clear example of how technology not only provides a strategic advantage to businesses but can also influence the success or downfall of a business as a whole. So, if IT services really don’t matter, as the author says, how could they have the ability to paralyze a business? How can something be so paradoxical as to be unimportant and yet be so utterly valuable as to decide the fate of a business?

And, folks, if you think I am exaggerating, let's look into some of the factors that affect businesses. Experts agree that these are the major reasons businesses fail:

• Lack of a proper business plan or model
• Not having measurable goals
• Poor marketing and customer service
• Poor pricing
• Poor maintenance of records and inventory

Looking at these factors, don't you think that technology can help overcome these issues? We have all experienced the wonders of technology in real life during this pandemic, haven't we? We are all aware of how LinkedIn helps both employers and employees find each other, which was even more important when the pandemic caused many people to lose their jobs. And, thanks to software like Zoho Remotely, Microsoft Teams, and Zoom, we were able to work from the comfort of our homes. Going digital in so many aspects of our life wasn't easy; but, thanks to AI chatbots, many of the queries we had, even after business hours, were resolved quickly, weren't they? And in different languages too. Isn't this an example of how technology can help improve marketing and customer service efficiency?

Also, as Carr mentions in his article, there is rapid advancement in technology, which means businesses need to keep updating their strategies. But the advancements thankfully don't have to be as fast as the author would have you believe, because software these days is progressive enough to allow for updates on an existing device or technology without major changes. However, it is also wise to remember that the early bird gets the worm, which means delaying technological investments might not be in a business’s favor!

Having said all that, please understand that the author wrote his article in 2003, and it would not have been possible for him to anticipate the level of technological advancements and their impact on the world to this extent; but it does feel like he underestimated the impact of technology quite a bit even in his times, doesn't it? Let's take this as a learning opportunity and remind ourselves that technology is a powerful weapon indeed; but, a weapon is only as good or as powerful as the person who wields it. So, to be successful, you need to strike the right balance between improving your business acumen and your technology. Thanks for reading, folks!