Strategic Information Management phần 8 potx

In the horizontal organization, work is primarily structured around a smallnumber of business processes or work flows which link the activities ofemployees to the needs and capabilities

Practitioner Fund holders and the competitive role of NHS Trusts Thedistinction between purchaser and provider organization represents theemergence of the networked organization District Health Authorities nowpurchase health services based on the health needs assessment of thecommunity from a variety of sources Provider organizations need to be morecost and quality conscious.

In order for networks to exist, close relationships must be built with bothsuppliers and buyers along what Porter (1985) refers to as the value system.Johnson and Lawrence (1988) have coined the term value-adding partnerships(VAPs) to describe such relationships, which are more than just conventionalelectronic data interchange (EDI) links They depend largely on the attitudesand practices of the participating managers Asda Superstores and Procter andGamble (P&G) now cooperate with each other beyond sending just orders andinvoices via EDI For instance Asda now provide forecasting information toP&G in an open way that was not previously management practice In return,P&G are more responsive in meeting replenishment requirements GeneralMotors has renamed its purchasing department the ‘supplier development’department

For a network organization to exist it requires the capability of IT tofacilitate communication and co-ordination among the various units This isespecially so when firms are operating in global markets Further, ITfacilitates VAPs; it does not create them

Strategic alliances

Strategic alliances with both competitors and others in the industry valuesystem are key strategies adopted by many organizations in the late 1980s

(Hamel et al., 1989; Nakomoto, 1992; Ohmae, 1989) McKinsey’s estimate

that the rate of joint venture formation between US companies andinternational partners has been growing by 27 per cent since 1985 (Ernst andBleeke, 1993)

Collaboration may be considered a low cost route for new companies to

gain technology and market access (Hamel et al., 1989) Many European

companies have developed pan-European alliances to help rationalizeoperations and share costs Banks and other financial institutions use eachothers’ communication networks for ATM transactions Corning, the $3billion-a-year glass and ceramics maker, is renowned for making partnerships.Among Corning’s bedfellows are Dow Chemicals, Siemens (Germany’selectronics conglomerate) and Vitro (Mexico’s biggest glass maker) Alliancesare so central to Corning’s strategy that the corporation now defines itself as

a ‘network of organizations’ The multi-layered structure of today’s computerindustry and the large number of firms it now contains, means that any singlefirm, no matter how powerful, must work closely with many others Often,

OutsourcingCompanies using more:Vertical integration

this is in order to obtain access to technology or management expertise A web

of many joint ventures, cross-equity holdings and marketing pacts nowentangles every firm in the industry

Japanese financial-industrial groups are an advanced manifestation of a

dynamic network Called keiretsu, they are able to make long-term

investments in technology and manufacturing, command the supply chainfrom components and capital equipment to end products and coordinate theirstrategic approaches to block foreign competition and penetrate worldmarkets There are also close relations between the banks and groupcompanies, often cemented by banks holding company shares It is interesting

to note that many German companies have similar relations with their banks

Figure 15.2 Outsourcing versus integration in electronics companies (Source: Fortune, 8 February 1993)

and very often bankers sit on the board of directors Business Week (1992)

recently reported that Ford has been making plans for what it would do with

a bank if and when US legislation permits it to own one

Business network redesign

The concept of business network redesign (BNR) has become increasinglypopular where organizations seek to address major changes in the way theyinterface and do business with external entities BNR represents using IT for

‘designing the nature of exchange among multiple participants in a businessnetwork’ (Venkatraman, 1991, p.140) The underlying assumption is that thesources of competitive advantage lie partly within a given organization andpartly in the larger business network Using IT, suppliers, buyers andcompetitors, are linked together via a strategy of electronic integration(Venkatraman, 1991)

BNR needs to be distinguished from EDI, which refers to the technicalfeatures, and inter-organizational systems (IOS), which refers to thecharacteristics of a specific system

Redesigning an industry network is something akin to the dynamic

structure of Snow et al (1992) where an active relationship is cultivated

between members of the network Terms such as strategic alliance and adding partnerships are equally relevant here as they are with dynamicnetworks Extending the industry network by introducing outsourcing is alsofeasible

value-Task focused teams

Reich (1987) argues that a ‘collective entrepreneurship’ with few middle-levelmanagers and only modest differences between senior management and juniorstaff is developing in some organizations Drucker (1988) concurs andcontends the organization of the future will be more information-based, flatter,more task oriented, driven more by professional specialists, and moredependent upon clearly focused issues He proposes that such an organizationwill resemble a hospital or symphony orchestra rather than a typicalmanufacturing firm For example, in a hospital much of the work is done inteams as required by an individual patient’s diagnosis and condition Drucker

argues that these ad hoc decision-making structures will provide the basis for

a permanent organizational form

The emphasis on the team is a common theme which is emerging from theother perspectives on organizations The team is seen as being the buildingblock of the new organization and not the individual as has traditionally beenthe case Katzenbach and Smith (1992) define a team as a ‘small number ofpeople with complementary skills who are committed to a common purpose,

performance goals and approach for which they hold themselves mutuallyaccountable’ They suggest that there is a common link between teams,individual behaviour change and high performance.

High performance teams play a crucial role within Asea Brown Boveri(ABB), the Swedish–Swiss conglomerate Here, their T50 programme isseeking to reduce cycle time by 50 per cent These teams were as a result of

a major change of attitude in the organization Management by directives wasreplaced by management by goals and trust; individual piece-rate paymentchanged to group bonuses; controlling staffs moved to support teams; andthere was one union agreement for all employees

Drucker’s notion of teams echoes Burns and Stalker’s (1961) organicorganization as opposed to the more mechanistic type of organization Table15.1 contrasts these views and presents their distinguishing organizationalcharacteristics

Increasingly, firms are using teams to coordinate development across

functional areas and thus reduce product development times (Krachenberg et al., 1988; Lyons et al., 1990) For example, if we look at pharmaceuticals and

telecommunications, the traditional sequential flow of research, development,manufacturing and marketing is being replaced by synchrony: specialists fromall these functions working together as a team Terms such as ‘concurrentengineering’, ‘design for manufacturability’, ‘simultaneous engineering’,

‘design-integrated manufacturing’ and ‘design-to-process’ are being usedincreasingly in organizations to incorporate cross-functional teams andmethodologies to integrate engineering and design with manufacturing

process (Dean and Susman, 1989; Griffin et al., 1991).

Since 1990 British Aerospace (BAe) has been actively promotingsimultaneous engineering in its engineering division, having examined anumber of initiatives They saw the total quality management (TQM) messagebeing difficult to get across and not very relevant to engineering While processreview was appealing it was limited in scope if only done inside engineering.For BAe, multifunctional teams are key to the success of their programmes.There is a clear focus on goals, the top level plan is robust to change,dependencies are less critical as they are dealt with by the team, membersdevelop mutual role acknowledgement generating an achievement culture.However, the notion of teams is nothing new Value analysis and valueengineering have been popular in many manufacturing firms since the 1950s.Although employees from various disciplines were brought together, the focuswas on products; the new conceptualization is much broader What is newabout Drucker’s vision is the role that IT will play IT greatly facilitates task-based teams especially in enabling geographically dispersed groups toimprove the coordination of their activities through enhanced electroniccommunication Rockart and Short (1989) see self-governing units as beingone of the impacts of IT

The networked group

According to Charan (1991) a network is a recognized group of managersassembled by the CEO and the senior executive team The membership isdrawn from across company functional areas, business units, from differentlevels in the hierachy and from different locations Such a network bringstogether a mix of managers whose business skills, personal motivations, andfunctional expertise allow them to drive a large company like a smallcompany The foundation of a network is its social architecture, which differs

in important ways from structure As such, it differs from Miles and Snow’s(1987) concept of network in that it is internally focused

Table 15.1 Mechanistic versus organic organizations

Element Mechanistic organization Organic organization

Channel of

communication

Highly structuredControlled information flow

Open; free flow ofinformation

holding fast to tried and testedprinciples in spite of changes

conform to job description

Flexible and shaped theindividual to meet the needs

of the situation andpersonality

minimum consultation andminimum involvement ofsubordinates

Participation and groupconsensus frequently used

Source: D P Slevin and J G Colvin (1990).

• networks differ from teams, cross-functional task forces or otherassemblages designed to break hierarchy

• networks are not temporary; teams generally disband when the reason theywere assembled is accomplished

• networks are dynamic; they do not merely solve problems that have beendefined for them

• networks make demands on senior management

In most organizations, information flows upwards and is thus prone todistortion and manipulation In a network, especially a global network thatextends across borders, information must be visible and simultaneous.Members of the network receive the same information at the same time Notonly must hard information be presented, but also more qualitativeinformation, not just external information but members’ experiences,successes, views and problems

The single most important level for reinforcing behaviour in networks isevaluation Every manager, regardless of position or seniority, responds to thecriteria by which he or she is evaluated, who conducts the review, and how it

is conducted For a network to survive top management must focus onbehaviour and horizontal leadership: Does a manager share informationwillingly and openly? Does he or she ask for and offer help? Is he or sheemotionally committed to the business? Does the manager exercise informalleadership to energize the work of sub-networks?

Horizontal organizations

Questioning the validity of the vertical orientation of organizations a number

of writers have proposed what they call the horizontal organization Suchorganizations have clearly defined customer facing divisions and processes toimprove performance

Ostrof and Smith (1992) contend that performance improvements will bedifficult to achieve for companies organized in a traditional vertical fashion.While the advantage of vertical organizations may be functional excellence itsuffers from the problem of coordination With many of today’s competitivedemands requiring coordination rather than functional specialization, tradi-tional vertical organizations have a hard time responding to the challenges ofthe 1990s

In the horizontal organization, work is primarily structured around a smallnumber of business processes or work flows which link the activities ofemployees to the needs and capabilities of suppliers and customers in a waythat improves the performance of all three

Ostrof and Smith (1992) list ten principles at the heart of horizontalorganizations which are listed in Table 15.2 Although not arguing for the

replacement of vertical organizations they recommend that each companymust seek its own unique balance between the horizontal and vertical featuresneeded to deliver performance.

BT was one of the early companies to recognize the ineffectiveness of thetraditional vertical organization Through project Sovereign and its processmanagement initiatives, BT has reorganized itself into customer facingdivisions and has embarked on significant performance improvement activity.Senior managers are now process owners with responsibility for servicedelivery as opposed to being functional heads In a recent interview, BT’schairman revealed that AT&T, MCI and Deutsche Telecom have allrestructured themselves following the BT model, setting up distinct businessand personal communication divisions and separating network managementfrom customer facing elements (Lorenz, 1993)

The horizontal design is seen as a key enabler to organizational flexibilityand responsiveness Time is critical in today’s fast changing businessenvironment (Stalk, 1988) Organizations need to be able to respond tocustomer demands with little delay and just-in-time (JIT) is just onemanifestation of this Kotler and Stonich (1991) have coined the term ‘turbomarketing’ to describe this requirement to make and deliver goods andservices faster than competitors

Multinational corporations face additional challenges making horizontalorganizations work As a result of their research Poynter and White (1990)have identified five activities needed to create and maintain a horizontalorganization spanning a number of countries:

Table 15.2 Blueprint for a horizontal organization

• Organize around process not task

• Flatten hierarchy by minimizing the subdivision of work flows and

non-value-added activities

• Assign ownership of processes and process performance

• Link performance objectives and evaluation to customer satisfaction

• Make teams, not individuals, the principal building blocks of organizationperformance and design

• Combine managerial and non-managerial activities as often as possible

• Treat multiple competencies as the rule, not the exception

• Inform and train people on a ‘just-in-time to perform’ basis not on a ‘need toknow’ basis

• Maximize supplier and customer contact

• Reward individual skill development and team performance, not individualperformance

Source: Ostrof and Smith (1992).

1 Create shared values Collaborative decision making is not possible unless

an organization has shared decision premises, a common culture or set ofbusiness values

2 Enabling the horizontal network To counteract the tendency for an

organization to (re)assert vertical relationships, initiatives, such as givingheadquarters’ executives dual responsibilities, should be put in place

3 Redefine managers’ roles The skills, abilities and approaches required for

the horizontal organization are different than those from conventional cal organizations Fundamentally, senior managers must create, maintainand define an organization context that promotes lateral decision makingoriented towards the achievement of competitive advantage world-wide

verti-4 Assessing results Assignment of performance responsibility and

avail-ability for results within horizontal organizations is problematic Thepeople involved in horizontal collaborative efforts change over time andtheir individual contributions are difficult to measure

5 Evaluating people Evaluating executives in terms of their acceptance and

application of a common set of beliefs is particularly appropriate forinternational management because of the shortcomings of orthodoxvertical measures of evaluating people

Business process redesign

This focus on process has become an important management focus over thepast few years, with business process redesign (BPR) figuring highly on manycorporate agendas (Dumaine, 1989; Butler Cox Foundation, 1991; Heygateand Breback, 1991; Kaplan and Murdock, 1991) BPR first entered themanagement nomenclature as a result of research conducted at MIT(Davenport and Short, 1990; Scott Morton, 1991) In their ‘Management inthe 1990s’ research project they identified BPR as an evolutionary way ofexploiting the capabilities of IT for more than just efficiency gains (ScottMorton, 1991)

Consider how IT is currently implemented in organizations: localizedexploitation – typically to improve the efficiency of a particular task; andinternal integration – integration of key internal applications to establish acommon IT platform for the business

With an internal focus, both of the above overlay on the existing tasks andactivities thus retaining existing organization structures This is what Hammer(1990) has referred to as ‘paving the cow path’ Most IT systems designmethodologies reinforce this view BPR, however, questions the validity ofexisting ways of organizing work and is concerned with redesigning theorganization around fundamental business processes

BPR is the analysis and design of work flows and processes withinorganizations It has also been called business re-engineering, process

re-engineering, process innovation and core process redesign The crucialelement is the concentration on process rather than events or activities Abusiness process can be defined as a set of related activities that cuts acrossfunctional boundaries or specializations in order to realize a businessobjective A set of processes is a business system.* Processes are seen to havetwo important characteristics: (i) they have customers, that is, processes havedefined business outcomes and there are recipients of outcomes (customerscan be either internal or external); (ii) they cross functional boundaries, i.e.they normally occur across or between organizational functional units.Examples include research and development, mortgage application appraisal,developing a budget, ordering from suppliers, creating a marketing plan, newproduct development, customer order fulfilment, flow of materials (purchas-ing, receiving, manufacturing).

Most companies still operate with thousands of specialists who are judgedand rewarded by how well they perform their separate functions – with littleknowledge or concern about how these fit into the complex process of turningraw material, capital and labour into a product or service Activities and eventsare thus snap shots of a larger process The Japanese realized that focusing onindividual activities in the value chain was not sufficient Superiorperformance was gained by focusing on the total process So while Westernmanagers focused on managing inventories, the Japanese saw that eliminatingdelays in the production process was the key to reducing instability, decreasedcost, increased productivity and service

However, BPR is not a new concept: its origins can be found in work studyorganization and methods (O&M) of the 1960s It also has its roots in thequality revolution where the stress is on improving quality by identifying,studying, and improving the processes that make and deliver a product orservice The scope of quality management is often narrow, however, withresponsibility lying in functional areas and thus not as rigorous as processredesign The emphasis of BPR is on how different processes are carried out.The objective is to re-evaluate these processes and to redesign them so thatthey are aligned more closely to business objectives

The philosophy of BPR is fundamentally different from the systemsapproach with which it might be confused The systems approach is atheoretical framework which recognizes the interdependence of functionalunits and seeks to integrate them by integrating information flows With BPRthe emphasis is on processes which transcend functional units It seeks tochallenge existing assumptions relating to how the organization operates It

* For a discussion on the ‘process’ notion see Chris Edwards and Joe Peppard, Business Process Redesign: Hype, Hope or Hypocrisy? Cranfield School of Management, Cranfield, Bedford,

1993.

emphasizes a top down customer focused approach often using IT as themechanism for coordination and control.

The benefits of taking a process approach is to reduce costs, increasequality, while increasing responsiveness and flexibility IT is often theessential ingredient by which the process concept can be turned into apractical proposition Processes can also be redesigned to take account of thelatest developments in technology

Learning organizations

There has been renewed interest over the past few years in the learning

organization (Garvin, 1993; Hayes et al., 1988; Kochan and Useem, 1992;

Stata, 1989; Senge, 1990a, 1990b, 1991; Quinn Mills and Friesen, 1992) Theargument is that current patterns of behaviour in large organizations aretypically ‘hard wired’ in structure, in information systems, incentive schemes,hiring and promotion practice, working practices, and so on To break downsuch behaviour, organizations need the capability to harness the learningcapabilities of their members The learning organization is able to sustainconsistent internal innovation or ‘learning’ with the immediate goals ofimproving quality, enhancing customer or supplier relationships, or moreeffectively executing business strategy (Quinn Mills and Friesen, 1992) Thisnotion has similarities to the work of Argyris (1976, 1982)

Argyris identified two types of learning that can occur in organizations:adaptive learning and generative learning Typically, organizations engage inadaptive or ‘single-loop’ learning and thus cope with situations within whichthey find themselves For example, comparing budgeted against actual figuresand taking appropriate action Generative or double-loop learning, however,requires new ways of looking at the world, challenging assumptions, goals,and norms

Implementing executive information systems (EIS) typically requires users

to first adapt to using technology to obtain their required information, i.e.adaptive learning However, to exploit the potential of EIS fully, systems usersmust proactively develop and test models of the use of EIS in the managementprocess, i.e double-loop learning Zuboff’s (1988) work refers to thecriticality of line managers developing spatial models to exploit fully thepotential of information systems available to them

Mintzberg (1973) claims that the way executives use information that theycollect is to develop mental images – models of how the organization and itsenvironment function Hedberg and Jonsson (1978) assert that to be able tooperate at all, managers look at the world and intuitively create a myth ortheory of what is happening in the world With this in mind, they create astrategy to react to this myth so that they can form defence networks againstinformation overflows from other myths and map information into definitions

of their situations They then test the strategy out on the world and evaluateits success.

Mason and Mitroff (1981) suggest that assumptions are the basic elements

of a strategist’s frame of reference or world view Since assumptions form thebasis of strategies, it is important that they be consistent with the informationavailable to strategists (Schwenk, 1988) However, most decision-makers areunaware of the particular set of assumptions they hold and of methods that canhelp them in examining and assessing the strength of their assumptions(Mason and Mitroff, 1981; Mitroff and Linstone, 1993) The accuracy of theseassumptions may be affected by their cognitive heuristics and biases DeGeus(1988) suggests that planning is learning However, planning is based onassumptions that should be constantly challenged

Organization learning theory suggests that learning often cannot begin untilunlearning has taken place (Burgelman, 1983) This requires a realization ofthe current position Senge (1990a) talks about creative tension where a vision(picture of what might be) of the future pulls the organization from its currentreality position This is more than adaptation and is very much proactive.Quinn Mills and Friesen (1992) list three key characteristics of a learning

organization: (i) It must make a commitment to knowledge This includes

promoting mechanisms to encourage the collection and dissemination ofknowledge and ideas throughout the organization This may include research,

discussion groups, seminars, hiring practices (ii) It must have a mechanism for renewal A learning organization must promote an environment where knowledge is incorporated into practices, processes and procedures (iii) It must possess an openness to the outside world The organization must be

responsive to what is occurring outside of it

Many organizations have implemented information systems in an attempt toimprove organizational learning For example, groupware products such asLotus Notes or IBM’s TeamFocus facilitate the sharing of ideas and expertisewithin an organization

At Price Waterhouse they have 9000 employees linked together using LotusNotes Auditors in offices all over the world can keep up to date on relevanttopics; anyone with an interest in a subject can read information and add theirown contribution By using groupware, Boeing has cut the time needed tocomplete a wide range of products by an average of 90 per cent or to one-tenth

of what similar work took in the past

Over the long run, superior performance depends on superior learning Thekey message is that the learning organization requires new leadership skillsand capabilities The essence of the learning organization is that it is not just

the top that does the thinking; rather it must occur at every level Hayes et al.

(1988) argue that in effect the organization of the 1990s will be a learningorganization, one in which workers teach themselves how to analyse and solveproblems

Matrix management

Bartlett and Ghoshal (1990) argue that strategic thinking has far outdistancedorganizational capabilities which are incapable of carrying out sophisticatedstrategies In their search for a more effective form they argue that companiesthat have been most successful at developing multi-dimensional organizationsfirst attend to the culture of the organization; then change the systems andrelationships which facilitate the flow of information Finally, they realign theorganizational structure towards the new focus

They call this matrix management although it is different from the 1970sconcept of matrix management They argue that while the notion of matrixmanagement had appeal, it proved unmanageable – especially in aninternational context Matrix management tended to pull people in severaldirections at once Management needs to manage complexity rather thanminimize it

They contend that the most successful companies are those where topexecutives recognize the need to manage the new environmental andcompetitive demands by focusing less on the quest for an ideal structure andmore on developing the abilities, behaviour and performance of individualmanagers This has echoes of Peters and Waterman’s (1982) bias for action.People are the key to managing complex strategies and organizations The

‘organizational psychology’ needs to be changed in order to reshape theunderstanding, identification, and commitment of its employees Threeprincipal characteristics common to those that managed the task mosteffectively are identified:

• Build a shared vision Break down traditional mindsets by developing and

communicating a clear sense of corporate purpose that extends into everycorner of the company and gives context and meaning to each manager’sparticular roles and responsibilities

• Develop human resources Turn individual manager’s perceptions,

capabil-ities, and relationships into the building blocks of the organization

• Co-opting management efforts Get individuals and organizational groups

into the broader vision by inviting them to contribute to the corporateagenda and then giving them direct responsibility for implementation.While matrix management as a structural objective (the 1970s con-ceptualization) may not be possible, the essence can still be achieved.Management needs to develop a matrix of flexible perspectives andrelationships in their mind

A framework

Each of the perspectives presented above challenges traditional views oforganizations The arguments are based around a total re-evaluation of the

assumptions which underlie organizational form, i.e the best mix of structure,systems, management style, culture, roles, responsibilities and skills From thedifferent viewpoints presented we can get a glimpse of the characteristics ofthe 21st century organization Key characteristics of these organizationsare:

• constantly challenging traditional organizational assumptions

• evolution through learning at all levels

• multi-disciplinary self-managing teams with mutual role acknowledgement

• a reward structure based on team performance

• increased flexibility and responsiveness

• an achievement rather than blame culture

• an organizational wide and industry wide vision

• a vision of what kind of organizational form is required

• process driven with a customer focus

• fast response with time compression

• information based

• IT enabled

This list of characteristics is perhaps not surprising They have beenadvocated in both the academic and general management literature over recentyears Of course we cannot categorically say that organizations structured in

a traditional way will not survive, although it is hard to see them thriving We

do suggest, however, that an organization critically reviews its form todetermine whether it should incorporate some of these characteristics and theextent to which these should be adopted

While we do have a destination in general terms there are three key issueswhich we feel need to be addressed in practice:

• The vision The precise destination for a particular organization, i.e where

do we need to be? This is very much the visioning process whereorganizational requirements are determined The precise final form will beunique to each organization depending on the organization itself and thecontext within which it exists While form will depend on the strategy ofthe business many organizations fail to consider the organization’s ability

to deliver this strategy This must go beyond defining structure andincorporate culture, reward systems, human resource requirements, etc.These in some sense could be seen as representing the organization form’scritical success factors (CSFs)

• Gap analysis A critical understanding of where the organization is now in

relation to this organization vision should be established The role which ITwill play in the new organization should also be assessed In short, we areattempting to describe the nature of the journey that needs to be undertaken.The concern here is with planning the business transformation

• Managing the migration How do we manage the migration from the

existing organization form to a new form? The concern here is with thechange management process which seeks to ensure the successfultransition from the old form to the new form A particularly difficult area

to tackle here is an organization’s ability to incorporate informationsystems/information technology (IS/IT) developments successfully wherethese involve significant business change

A recurring problem faced by any organization engaging in redesign isdetermining an appropriate approach Perhaps it is too ambitious to expect anexisting method to be comprehensive enough to deal with all the issuesinvolved All organizations are different and changing an organization’s form

is more complex than simply identifying core processes and leveraging IT asmany of the articles imply The critical issue is to address broader themes such

as culture, management development, IS/IT development, skills, rewardsystems, etc These notions are complex, however, and do not subscribe toneat techniques but need to be managed carefully

Traditionally, we have aligned IT with the business strategy, without muchconsideration to people issues or the organizational capability to deliver(Galliers, 1991) Macdonald (1991, 1993) provides a useful model high-lighting interrelationships between the business strategy, IS/IT and organiza-tional processes While checking for alignment of these variables andidentifying issues, he outlines the topography but fails to provide any help inreaching the required destination

It is much easier to embellish the characteristics of the organization of the1990s than to define clear frameworks to achieve these characteristics What we

do not have is a road map to translate these aspirations into a workable design.Additionally, the road map needs to identify potential hazards and obstacles thatare likely to be encountered en route and how these are to be dealt with.Figure 15.3 illustrates some of the problems faced by an organizationattempting to move from a current form to a new one There are many forceswhich will drive it off course and it is essential that these are managed in ordersuccessfully to achieve the desired goal

A key point is that, even when we identify the destination, the challenge is

to negotiate the journey Any route planning needs to explicitly address theseissues Questioning an organization’s fundamental approach to the way that itdoes business can be risky and may confront too many entrenched interestsamong managers and employees to be worth doing unless an organization is

in dire trouble By then a complete overhaul is often too late to be of muchuse It is often difficult to put across the idea that a successful organizationshould radically reconsider how it does business, however

The issues can be fundamental and might include inappropriate IS/IT,management myopia, resistance, poor vision, etc The stakes are high as is the

organisation

form

Required organisation form Lost!!!

Traditional assumptions

Inappropriate IT Culture

Lack of clarity Poor vision

We have continually failed to provide an integrating framework to help incoordinating change and uncertainty This uncertainty requires continuallearning on the part of the organization both in terms of its destination andhow to get there A new multifaceted approach which integrates businessstrategy, IS/IT, organization design and human resources is needed

In Figure 15.4 we present a framework for business transformation which

we have found useful when approaching issues associated with the migrationtowards a new organizational form This framework expands on the model ofIS/IT strategy formulation popularized by Earl (1989), Galliers (1991) and

Ward et al (1990) and incorporates organizational and implementation issues.

Figure 15.3 Roadblocks and obstacles to a new organization

organisation

form

Existing IS/IT strategy

Organisation strategy

Organisation

redesign HR initiatives developmentIS/IT

Organisation vision

Strategic business vision

IS strategy

DELIVERY PLANNING

VISION

BUSINESS TRANSFORMATION PLANNING

CHANGE MANAGEMENT PROCESS

It is structured around the triumvirate of vision, planning and delivery withconsiderable iteration between planning and delivery to ensure that therequired form is being met

The underlying premise of this framework questions the traditionalsequential IS/IT planning model where business strategy drives IS strategywhich determines the organization’s IT strategy It incorporates an organiza-tion’s ability to deliver fundamental business change, recognizing thatincreasingly this change is being enabled by IT

Vision

The requirement for a clear business vision is well known and espoused bymany scholars on strategy However, equally important is a vision of theorganization form that is necessary to deliver and support the achievement ofthat strategy This organizational vision needs to be more than the traditionalstructural perspective of centralization, differentiation and formalization.Rather, it should define the organizational form CSFs in relation to culture,teamwork, empowerment, skills, reward systems and management style

We define two types of visioning: business vision and organization vision.While business vision remains as currently practised by many organizations,the organization vision identifies the attributes and characteristics of theorganization to achieve this business vision Grand Metropolitan, for example,

Figure 15.4 Business transformation framework

has an organization vision based on organizational competencies which arecrucial to deliver its strategies They believe that managerial and organiza-tional competencies are more enduring and difficult to emulate than, whatthey call, ‘the traditional structural strategies’ of a conglomerate such asproduct portfolio, production sites and acquisition strategies Having looked atthe organizational CSFs for home banking, Midland Bank decided that theirexisting organization was not an appropriate vehicle for a home banking/telebanking organization, hence First Direct was set up Acting ‘independ-ently’ of the parent it articulated an organization vision of what was requiredorganizationally to deliver this new service.

Business transformation planning

Business transformation planning demands two key activities: planning theorganization strategy and developing an information systems strategy whichfacilitates this strategy but which is also closely aligned to businessrequirements The conventional IS/IT planning framework does not explicitlyconsider the organization’s ability and capability to deliver the businessstrategy

A key concern of business transformation planning is a critical evaluationand understanding of the existing organization’s characteristics and capabil-ities of how the current IS/IT strategy is being used to support them The gapbetween existing and required can then be determined It is important toemphasize that the relationship between both the organizing strategy and the

IS strategy is bi-directional

Organization strategy

An organization strategy involves more than simply considering thearrangement of people and tasks: what we typically call structure Itincorporates all the characteristics of organizational form which areencapsulated in the CSFs articulated in the organization vision This willinclude what is needed in terms of skills, styles, procedures, values and rewardsystems The organization strategy operationalizes these notions and willbecome the blueprint for the change management process

A number of approaches to understand and evaluate aspects of tional form have been proposed by many authors For example, Johnson(1992) presents the cultural web as a means of assessing existing organizationculture The strategic alignment process of Macdonald is also useful inreviewing the alignment of strategy, organizational processes and IT

organiza-It is important also at this stage to consider the opportunities which IToffers in relation to organizing work Groupware, for example, greatlyenhances team work and can lead to greater productivity IT facilitates more

customer-oriented service as the systems provide more comprehensiveinformation BT now has one point of contact with both business and personalcustomers Queries can be dealt with more efficiently and work routed to theappropriate area where necessary First Direct is only possible due to IT,which allows the telephone clerks to give almost immediate response torequests.

Distance effects are also minimized due to IT People from diversegeographical locations can now work together in the same team creating theboundary-less corporation Multinational corporations can adopt a moreefficient horizontal structure Technology is also blurring the distinctionbetween organizations With technology, business processes can nowtranscend traditional organizational boundaries Strategic alliances and valueadded partnerships are becoming key strategies for many organizations and IThas a major role to play in facilitating the communication and coordinationnecessary to make these pay off

Changing the way things are done will usually require investment in humanresource initiatives in order to enhance team skills, customer service skills,information sharing and organization wide values These can become criticalbarriers and deflect an organization in migrating to the new form

IS strategy

Although the organization of the 1990s will be information-based, we believethat designing systems solely around information flows is flawed Theemphasis will not be on how tasks are performed (faster, cheaper, better) butrather in how firms organize the flow of goods and services through value-added chains and systems Organizing around business processes permitsgreater focus on what the organization is trying to achieve and not onoperationalizing objectives around existing activities

IT has, for too long, been seen as a tool for improving efficiency andeffectiveness The new organizational shapes are dependent on the capability

of information and communication technologies EIS, for example, permitsenior managers to delegate and decentralize while still maintaining overallcontrol

As mentioned above, aligning IS strategy with business strategy is only halfthe story The IS strategy must also be compatible with how the business isorganized to meet the business strategy As a result of their research, Hayes andJaikumar (1988) contend that acquiring any advanced manufacturing system ismore like replacing an old car with a helicopter By failing to understand andprepare for the revolutionary capabilities of these systems, they will become asmuch an inconvenience as a benefit – and a lot more expensive

During the business transformation planning phase, the existing tion form and the existing IS/IT strategy will be reviewed and the

organiza-transformation plans developed The change strategy will be mapped out interms of approaches to be used, the rate of change, how it is to be achieved,milestones and how the road-blocks and obstacles are to be negotiated Ofcritical concern, is a clear statement of the final destination.

Change management process

Migration to the new form is a change process which implements the plans inthe most appropriate way

Organizational redesign

Organization redesign involves managing the migration to the new tional infrastructure In particular:

organiza-• the change from function to process orientation

• developing and implementing new ways of working

• redefining roles and responsibilities in line with the migration

These must be closely aligned with human resource (HR) initiatives and IS/ITdevelopment

Human resource initiatives

Central to the successful management change are the HR initiatives which areput in place Many organizations try to accomplish strategic change by merelychanging the system and structure of their organization This is a recipe forfailure HR initiatives will be incorporated within the organization’s overall

HR strategy and will include education, management development grammes, training and reward structures Probably one of the greatest barriers

pro-to the management of change is the assumption that it simply happens or thatpeople must simply change because it is necessary to do so (Peppard andSteward, 1993)

HR development has a crucial challenging role to play in successfully

‘orchestrating’ strategic culture change (Burack, 1991) US Labor SecretaryRobert Reich recently urged American companies to treat their workers asassets to be developed rather than as costs to be cut

Many barriers to change are not tangible, and although are propagated byorganizations, they exist in the mind of the manager Indeed, such an initiativewould also contribute towards the learning capability of organizations,although there is a distinction between learning as an individual phenomenonand an organization’s capability to learn by the systematization of knowledge.Management needs to be taught new skills, particularly interpersonal skillsand how to work in teams New organizational forms also require managers

to carry out new tasks and roles The informate phenomenon identified byZuboff (1988) increasingly requires empowerment and wider responsibilityfor decision-making to be given to organization members.

Changing technology places additional strains on management Educationfor new technology is important for two reasons: (i) strategically, to give astrategic view of IT; and (ii) organizationally – it is arguable that the chiefcontribution of managers to the competitive nature of organizations will bethinking creatively about organizational change

Motorola spends $120 million every year on education, equivalent to 3.6per cent of payroll It calculates that every $1 it spends on training delivers

$30 in productivity gains within three years Since 1987, the company has cutcosts by $3.3 billion – not by the normal expedient of firing workers, but bytraining them to simplify processes and reduce waste For example, thepurchasing department at the automotive and industrial electronics group set

up a team called ET/VT = 1 because it wanted to ensure that all ‘elapsed time’(the hours it took to handle a requisition) was ‘value time’ (the hours when anemployee is doing something necessary and worthwhile) The team managed

to cut from seventeen to six the number of steps in handling a requisition.Team members squeezed average elapsed time from thirty hours to three,enabling the purchasing department to handle 45 per cent more requestswithout adding workers (Henkoff, 1993)

Scott Morton (1991) contends that one of the challenges for an organization

in the 1990s is understanding one’s culture and knowing that an innovativeculture is a key first step in a move towards an adaptive organization.Managers have a core set of beliefs and assumptions which are specific andrelevant to the organization in which they work and are learned over time Theculture of the organization propagates many of the traditional assumptionswhich underlie organizations and also makes it extremely difficult to change.This is not something that is unique to organizations but is firmly based in asociety which fosters individuality Everyone tends to be pigeonholed from anearly age and it is only to be expected that it be carried to working life.Management education itself promotes specialization by teaching functionalcourses

Hirschhorn and Gilmore (1992) have identified four psychologicalboundaries which managers must pay attention to in flexible organizations:

authority boundary, task boundary, political boundary, and identity boundary.

Let us briefly explore each of these

• Authority In more flexible organizations, issuing and following orders is

no longer good enough The individual with formal authority is notnecessarily the one with the most up-to-date information about a businessproblem or a customer need Subordinates must challenge in order tofollow while superiors must listen in order to lead

• Task In a team environment, people must focus not only on their own

work, but also on what others do

• Political In an organization, interest groups sometimes conflict and

managers must know how to negotiate productively

• Identity In a workplace where performance depends on commitment,

organizations must connect with the values of their employees

An innovative HR policy that supports organizational members as theylearn to cope with a more complex and changing world is required Newcriteria to measure performance are also needed It is no use fostering cross-functional teams if evaluation and reward are based on individual criteria.Every manager, regardless of position or seniority, responds to the criteria bywhich he or she is evaluated, who conducts the review, and how it isconducted

IS/IT development

The approach to IS/IT development needs to take cognizance of the businessobjective as described in the IS and organization strategies Most of theperspectives discussed above depend on harnessing the power of IT to make

it all possible However, it is important that the overall business applications

of which IT developments are part are owned by business management This

is because their key involvement in requirements definition, data conversion,new working practices, implementation and realizing the benefits

IS/IT developments are not all the same and the approach adopted needs to

be related to business objectives Ward et al (1990) propose the use of the

applications portfolio which indicates appropriate management strategies,particularly in relation to financial justification, IS/IT management style, theuse of packages, outsourcing, contractors and consultants This portfolioapproach makes more effective the use of the IT resource in relation tobusiness requirements

Delivering the IS strategy is traditionally seen as a purely technologicalissue However, of key concern are the changes which accompany any ITimplementation (Galliers, 1991) People issues are key reasons why many ITinvestments fail to realize benefits (Scott Morton, 1991) Involvement andownership in the design and implementation are seen as critical for the success

of any IT development The training needs required for the new technologymust be integrated when appropriate with the HR initiatives

Conclusions

The traditional organization has been criticized by many writers onorganization Alternatives have been proposed but these merely represent a

destination without a clear road map setting the direction rather thanpresenting a map and route to negotiate the obstacles to be encountered alongthe way.

In this chapter we have presented a framework to help organizations inplanning and implementing their journey This framework is constructedaround the triumvirate of vision, planning and delivery with considerableiteration between all stages This helps with the management of uncertaintyand reconfirms the destination

Crucial in the visioning stage are the critical success factors of the neworganizational form which define the requirements of critical issues such asculture, teamwork, people, skills, structure, reward systems and informationneeds This provided the basis for the gap analysis highlighting the nature ofthe journey to be undertaken and the subsequent delivery initiatives of HR,organization design and IS/IT Central to our framework are the interactionsbetween HR, organization design and IS/IT in a way that enables the delivery

of the new organization form with its CSFs

Fundamentally, we believe that managing the migration to the neworganization form will require a significant amount of senior managementtime, energy and initiative If this is not forthcoming because management

is ‘too busy’, the likelihood of success is minimal This must be the firstparadigm to be broken

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Questions for discussion

1 How does the concept of organizational form differ from that oforganizational strategy and structure as presented in Chapter 4?

2 There is much talk today of achieving ‘dynamic’ and ‘flexible’organizations What does it mean to be ‘dynamic’ and ‘flexible’?

3 Consider the six organizational forms discussed by the authors:

– has any emerged as the dominant paradigm in the late 1990s/early2000s?

– are the forms mutually exclusive? What are some variants?

– highlight the role of IT in each of the forms: what specifictechnologies are necessary to make the forms effective?

– what are the impediments to the effective functioning of the forms?– what might be the appropriate IS strategy for the different forms?

4 What might be the role of IT in the human resource initiatives, mentioned

by the authors as critical to the change management process?

16 Information Technology and

making The motivations for such a chapter are four

One motivation concerns the need to reinvestigate and possibly revisecertain components of organization theory A large part of what is knownabout the factors affecting organizational processes, structures, and perform-ance was developed when the nature and mix of communication technologieswere relatively constant, both across time and across organizations of thesame general type In contrast, the capabilities and forms of communication

technologies have begun to vary, and they are likely to vary a great deal in thefuture For example, communication technology (or communication medium)

is now a variable whose traditionally relatively constant range (from face at one extreme to unaddressed broadcast documents at the other, cf Daftand Lengel, 1984, 1986) is being expanded by organizations to include

face-to-computer-assisted communication technologies (e.g electronic mail, image

transmission devices, computer conferencing, and videoconferencing) thatfacilitate access to people inside and outside the organization with an ease thatpreviously was not possible Also, more sophisticated and more user-friendly

forms of computer-assisted decision-aiding technologies (e.g expert systems,

decision-support systems, on-line management information systems, andexternal information retrieval systems) are in the late stages of development

or early stages of implementation Consequently, as the uses, capabilities, andforms of communication and decision-aiding technologies increase in theirrange, researchers must reassess what is known about the effects of thesetechnologies because what is known may change ‘That is, new media impactsmay condition or falsify hypothesized relationships developed by pastresearch’ (Williams and Rice, 1983, p.208) Thus, one motivation for settingforth propositions concerning the impact of advanced information technolo-gies is to encourage investigation and debate on what the nature oforganizational design, intelligence, and decision making might be when thesetechnologies become more sophisticated and more widely used

The second motivation is to take a step toward creating a theory of theeffects that advanced information technologies have on organizations

Advanced information technologies are devices (a) that transmit, manipulate,

analyze, or exploit information; (b) in which a digital computer processesinformation integral to the user’s communication or decision task; and (c) thathave either made their appearance since 1970 or exist in a form that aids incommunication or decision tasks to a significantly greater degree than did pre-

1971 forms (For expanded discussion of the term advanced information technologies, see Culnan and Markus, 1987; Gibson and Jackson, 1987;

Johansen, 1988; Rice and Associates, 1984; and Strassman, 1985a.) The needfor such a theory has been exemplified in a review by Culnan and Markus

(1987) and in a special issue of Communication Research (Steinfield and

Fulk, 1987) In that special issue, the guest editors noted that, although thereare many empirical findings concerning the effects of advanced informationtechnologies on organizations, ‘there has been little synthesis, integration, anddevelopment of theoretical explanations [and] that it is time for theorydevelopment and theory-guided research’ (Steinfield and Fulk, 1987,p.479)

Together, the propositions in this chapter comprise a theory such as thatcalled for by Steinfield and Fulk, but like any theory, it is limited It includes

as dependent variables only (a) characteristics of organizational intelligence

and decision making, such as timeliness, and (b) aspects of organizationdesign associated with intelligence and decision making, such as the size ofdecision units Further, within this still rather large set of dependent variables,the theory includes only those (a) that seem to be significantly affected byadvanced information technology, (b) that are of interest to organizationscientists or administrators, or (c) whose variance seems to have increasedwith the advent of advanced information technologies The dependentvariables included in the theory are shown in Table 16.1 Variables that are notincluded in the theory, but whose omission is briefly discussed, includehorizontal integration, specialization, standardization, formalization, and thedistribution of influence on organizational decisions.

As independent variables the theory includes only (a) the use of assisted communication technologies and (b) the use of computer-assisteddecision-aiding technologies The theory does not encompass the use ofcomputer-assisted production technologies or the use of transaction-enactingtechnologies such as computerized billing systems (For ideas concerning theeffects of advanced information technologies, broadly defined to include

computer-Table 16.1 Dependent variables included in the theory (and the numbers of the propositions related to them)

Design variables

(subunit level)

Design variables (organizational level)

Design variables (organizational memory)

Performance variables

Participation in

decision making

(1)

Centralization ofdecision making(4, 5)

Development anduse of computer-resident databases (8)

Effectiveness ofenvironmentalscanning (10)

Size and

heterogeneity of

decision units (2)

Number oforganizationallevels involved inauthorization (6)

Development anduse of computer-resident in-houseexpert systems(9)

Quality andtimeliness oforganizationalintelligence (11)

Quality ofdecision (12)

Speed of decisionmaking (13, 14)

computer-assisted automation, on a broader set of organizational attributes,see Child, 1984, 1988; Gibson and Jackson, 1987; Strassman 1985a; Zuboff,1984.) Finally, the theory does not explicitly address use of advancedinformation technologies for impression-management purposes such as thosedescribed by Sabatier (1978) and Feldman and March (1981).

The third motivation for integrating the work of organizational researchers,communication researchers, and information systems researchers is to helpresearchers in each of these fields become more aware of the existence,content, and relevance of the work done by researchers in other fields.Without such awareness, the efficiency of the research establishment is less,opportunities for synergy are lost, and progress in theory development isinhibited

The fourth and last motivation is of practical, administrative importance.Advanced information technologies are becoming a pervasive aspect oforganizations, but their relatively recent appearance and rapidly changingnature virtually guarantee that administrators and their advisors will nothave experience as a guide in anticipating and planning for the impacts theymay have In the absence of experience, the value of theory isconsiderable

It is important to note that the theory described here is not based on agreat deal of directly applicable empirical research There are two reasonsfor this The first is that the components of organization theory that weredrawn upon in developing the propositions were not validated underconditions in which decision and communication systems were computerassisted; consequently, they may not be valid for organizations thatpresently use a good deal of advanced information technology The secondreason is that many of the empirical studies that were drawn uponinductively in developing the propositions pertain to forms of technologythat are not necessarily representative of the more sophisticated forms now

in use or expected to be in use in the more distant future (See Hofer, 1970;Pfeffer, 1978; Rice, 1980; Robey, 1977; Whisler, 1970, for brief reviews ofsome of these early studies, and Olson and Lucas, 1982, for somethoughtful speculations concerning the effects of advanced informationtechnologies on a variety of organizational attributes and behaviors.) Thus,most propositions about the organization-level effects of advanced informa-tion technology must be viewed with some caution, whether derived frommature, but possibly outdated, organization theory or from recent, butperhaps soon-to-be outdated, empirical findings

The above cautions notwithstanding, the propositions set forth aresupportable to the degree necessary to be responsive to the motivations justnoted, especially if the qualifications attendant to each proposition areseriously considered by users In any case, these propositions can serve as

a basis for the development of specific hypotheses