Chapter 3: Organizational Strategy and Information Systems

Chapter Overview This chapter, retitled in this edition for greater accuracy, is about the organizational impacts of using information systems. It will set up, and in many ways complement, the following chapter, Chapter 4: Digital Systems and the Design of Work. Whereas this chapter is about the organizational level impacts, the next chapter is about the individual worker level impacts. Many of you find these discussions complementary, and in some ways they overlap. But we felt it was important to present them as two different chapters to make sure the key points from both perspectives were not lost. Discussion: What do you think about Cognizant and TCS? Other Questions: What information resources (assets and capabilities) are employed by your university? How can IS lead to competitive advantage?

Key Points in Chapter The opening scenario, about Cognizant Technology Solutions, highlights how an outsourcing company had to change its model of managing its employees across the globe, particularly in India. Managers were moved to customer locations while the software engineers stayed in their original location. This led to new headaches, but Cognizant learned that some of the teams were working well. They changed to a new layout that enabled the company to adopt a matrix structure (Figure 3.1) that utilized the best of both styles of management. Tata Consultancy Services (TCS), the largest outsourcing company and software exporter in India, created a different organizational structure (Figure 3.2). This organization focused more on New Growth Markets and Strategic Initiatives. This chapter builds on the concepts in Chapter 1, particularly those around organizational design and organizational strategy. The Business Diamond reminds of you that there are several components to be considered when designing the organization, and the Cash, Eccles, Nohria and Nolan table (Figure 3.3) suggests how IT affects the design specifically. This table builds upon the discussion of managerial levers in Chapter 1. Decision rights indicate the persons designated with specific responsibilities and control. Holding these individuals accountable for results leads to greater effectiveness. Organizational design includes appropriately allocating decision rights. The middle part of this chapter reviews some specific instances of how IT allows organizations to be structured differently. We present a brief overview of 4 classic organization structures: hierarchical, flat, matrix, and networked. These can be embellished in many ways with the use of IT. The resulting organization is often one that feels flat (because everyone can talk with anyone in the organization, and information is easily passed between organizational entities and workers) but has some semblance of structure. Further, IT facilitates easier reconfiguration of organization structures, because the history of the company is embedded in the IT, rather than in file cabinets or other paper artifacts. Reorganization is a completely different activity for an IT savvy company versus a "traditional company." Today, most organizations are a hybrid of the traditional structures. You will relate to the networked organization, which is well described in the HBR article by Applegate, Cash, and Mills (HBR Nov-Dec 1988). Also, an extension of networked organization, the T-form organization, described by Lucas (in the book, T-Form Organization, 1996). That organizational design is technology-based, and suggests designs similar to many we see today: easy access to information, electronically-coordinated work, larger span of control, electronically-based business processes, etc. The chapter also discusses "the zero time organization" and "heterarchies." Informal networks are then discussed and their importance on management. Managers must be aware and actively seek to manage these informal networks. Some organizations are clearly able to utilize informal networks - like communities of practice - to get feedback, employee support, and learning groups. Social Networks are described, both in the common form, and also in the context of enterprise social networks, with each bringing together people of similar interests. Within corporations, this directory can be integrated with expertise and work processes to create a more dynamic knowledge repository and information resource. IT's effect on management control is then discussed. Managers are able to use IT for new opportunities to collect data, evaluate, and communicate. An interesting discussion here might stem around the bounds of "what is possible" versus "what should be done." How can IT be used to monitor? When is it appropriate to deliver feedback via e-mail? What types of deliverables are appropriate/inappropriate for evaluation over the computer? When is it appropriate to monitor employees using technology-mediated control? Then the text discusses how planning and IT interact. There are three ways in which IT can play a role in planning. Data can be provided to help in developing a strategic plan, to automate the process, and to be the focus of the strategic initiative. Monitoring work can take on a completely new meaning with the use of information technologies. There are lots of software programs on the market that make it possible for companies to monitor exactly what their employees are doing. What web sites they visit, what keys they press on their keyboards, etc. Companies need to understand what is appropriate to monitor and what monitoring techniques may be perceived as overly intrusive and decrease employee morale. Performance measurement and incentives and rewards are another part of management control systems. Managers can use this data to determine rewards, but they have to be careful to not over analyze data to the point that decisions become bogged down in a glut of data. Some organizations use the 360 degree method of evaluation which can be useful when getting a better and clearer picture from all those that interact with the employee. You need to clearly understand the importance of keeping evaluation data secret. Incentives and rewards need to be fairly and carefully created. Employees need to be recognized for their hard work and rewarded for a job well done. Technology can support this and managers need to understand how this can be done. The next section presents the relationship between information technology and culture. With the globalization of many businesses this is an important and timely topic. You need to understand that they cannot apply the same strategies across the board in an organization that may be comprised of many different cultures and cultural norms. What is acceptable in one culture may be extremely offensive in another. This chapter defines Values, Beliefs, and Assumptions. Figure 3.5, "Levels of Culture," shows the impact of IT issues on organizational values and national values. Make sure to spend adequate time discussing this topic and look for ways for you to share what they have seen in their particular environments (taking care not to demean other cultures). The final topic describes National Culture Dimensions and their Applications. A set of national culture dimensions (Figure 3.6) that combines those of Hofstede and the GLOBE project suggests examples of their impacts on IT. Take time to go through and to discuss these dimensions and impacts with your class. Some interesting examples of cultural impacts appear in the discussion on pp. 73-75. You might be encouraged to provide any stories that support or refute these examples, putting these concepts in their own words. Make sure to close the loop and point out where the examples relate to their applicable dimensions in Figure 3.6.