Learning Objectives DBQ: Why IS Strategy Triangle Model...

1

Chapter Intro. & 1:

The Information Systems Strategy Triangle

Jason C. H. Chen, Ph.D.

Professor of MIS

School of Business Administration

Gonzaga University

Spokane, WA 99258

[email protected] John Wiley & Sons, Inc. & Dr. Chen, Information Systems – Theory and Practices 2

IT Planning: The Relationship Between Business, IS, and

IT Strategies

John Wiley & Sons, Inc. & Dr. Chen, Information Systems – Theory and Practices 3

Learning Objectives

• Determine the role general managers must take in

decisions about IS

• Define and explain the Information Systems Strategy

Triangle

• Understand the alignment between decisions of

business strategy, information systems, and

organizational design

• Identify and define the various business strategy

frameworks

• Explain the information system strategy matrix

• Understand and apply these models to different

organizations


DBQ: Why IS Strategy

Triangle Model Matters?

• Suppose managers in an organization

decided to hand out tablets (iPad) to all

salespeople without making any other

formal changes in organizational strategy or

business strategy. What might be the

outcome? What unintended consequences

might occur? (Why IS Strategy Triangle

Model Matters?)


• DBQ (answer)

• Salespeople might not use them, without training and

modifications to their jobs. They may be accustomed to a

manual, paper system and resist moving to the tablet devices.

They might not appreciate the added benefits of the mobility,

choosing familiar business processes instead. If they do use the

devices, there will eventually be strain on the rest of the

organization if it doesn't adapt to this new technology. For

example, messaging might become ineffective if salespeople use

e-mail on their tablets and voice mail. Where is the primary place

or method to contact them?

• When someone is urgently needed, it is a hindrance to have

multiple places to check. Likewise, if the tablets are used for

order entry, but the order process is not changed to accommodate

the tablets, there will be problems. Lack of integration could lead

to unnecessary delays and frustrated customers.


• DBQ (answer) – cont.

• Support systems must also be redesigned. It does a salesperson

little good to have to bring a tablet device into the office for

repairs, especially if this involves a substantial geographical

distance.

• Many troubleshooting activities can be performed by the

salespeople, but only if they have been trained and feel

confident. Support processes will have to adapt to the mobility

of the technology, or the company can expect to have agents

further resist. Employees are adept at creating their own

“workarounds,” particularly when they do not support a

mandatory change.

2


Real World Example

• The 2010 Deepwater Horizon oil spill became the largest marine oil spill in human history

• An estimated four million barrels per day flowed freely into the gulf waters

• Straining the marine ecosystem and threatening the shoreline from Texas to Florida

• A sequence of failures involving multiple companies and work teams

• Repeated failures to follow safety procedures


Real World Example (Cont.)

• A series of Information Technology (IT) failures

coupled with organizational misalignments that

ultimately catalyzed the accident

• The crisis illustrates the need for proper alignment of

• _________ strategy

• __________ __________

• ______________ mechanisms

• Practices for designing safety mechanisms

• Issues in organizational culture, process, and

leadership at British Petroleum (BP)

Business

Organizational

Information Systems (IS)


INTRODUCTION

• Shouldn’t managers rely on experts when it comes

to making the decisions on IS for their

organizations?

– Managers today need to know about their

organization’s capabilities and uses of information as

much as they need to understand how to obtain and

budget financial resources.

– A manager who does not understand the basics of

managing and using information cannot expect to be

successful in today’s business environment.


Figure I.1 - Reasons why business managers should

participate in information systems decisions

•IS must be managed as a critical resource

•IS enables ________ in the way people work together.

•IS are part of (and integrate) almost every aspect of

business.

•IS enable or inhibit business ___________ and

new __________.

•IS can be used to combat ____________

Reasons:

change

business

challenges from competitors

opportunities

strategies


The Role of the General Manager

• A key decisions maker.

• Not necessary to have a ____ technical knowledge

of there is.

• Aggressively seek to understand the consequences

of using technologies relevant to the business’s

environment.

• Ask questions when it’s not clear.

• Should not leave IS decisions solely to the IS

professionals

deep


Technology vs. Technique

• Technology

– is the making, usage, and knowledge of tools,

machines, techniques, crafts, systems or methods of

organization in order to solve a problem or perform a

specific function.

– It can also refer to the collection of such tools,

machinery, and procedures.

• Technique

– Personal habits

– Work style

3


Planning is everything ... What are Two Major Outputs for an organization?

Products, Services

Customers, market,

competition

Vision

guide

Strategy

create

develop

Tactic

N

Mission


14

Essential Value Propositions

for a Successful Company

• __________ Model

• __________ Competency

– outsourcing

– offshoring

• __________

– Set corporate goals and get executive

sponsorship for the initiative

Business

Core

Execution


Information System Strategy Triangle

Business (Firm)

Strategy

Organizational Strategy IS/IT Strategy

Where is the business

going and why?

What is required? How it can be delivered?

N

Needs and priorities

Infrastructure and

services

Strategy Triangle

1. Architecture/Infrastructure

2. MIS organization (Sourcing,

Governance etc.)

3. Funding

4. Project Management John Wiley & Sons, Inc. & Dr. Chen, Information Systems – Theory and Practices 16


• A business strategy is a well-articulated vision of where the business seeks to go and how it expects to get there.

• An organizational strategy is the organization’s design, as well as the choices it makes to define, set up, coordinate, and control its work processes.

• IS strategy is the plan the organization uses in providing information systems and services.


Example

• Give an example in which a company fails to perform well because it does not align its three strategies.

• Any?

– too much focus on IT

– used to be considered as a “hardware” company (Mainframe, Mini-computers, PC, DOS etc.)

– new division established in early 1990: GLOBAL BUSINESS SERVICIE DIVISION

– it now becomes a “Service” corp. – “TOTAL solution”


IBM IS Strategy Triangle:

Old Strategy

Business (Firm)

Strategy


Revenue Creation

(from Hardware)

COMPLICATED

and inflexible

structure

N

Too much focus on

hardware

The triangle becomes

unbalanced!

http://en.wikipedia.org/wiki/File:IBM_logo.svg

4


IBM IS Strategy Triangle:

New Strategy

Business (Firm)

Strategy


Re-structured/

Re-engineered Organization (e.g.,

Global Business Service Division)

N

IT is a supportive tool

for entire organization

worldwide

Revenue Creation

(_____________)

The triangle is

balanced!

IBM Global Business Services is

organized into six service lines:

1) Strategy & Transformation

2) SAP Applications

3) Oracle Applications

4) Business Analytics and

Optimization

5) Application Innovation

Services

6) Application Management

Services

Service Corp


Louis V. Gerstner, Jr. IBM former CEO and president (1992-2002)

Prior to joining IBM, Mr. Gerstner served for four years as chairman and

chief executive officer of RJR Nabisco, Inc. This was preceded by an 11-

year career at American Express Company, where he was president of the

parent company and chairman and CEO of its largest subsidiary, American

Express Travel Related Services Company. Prior to that, Mr. Gerstner was

a director of the management consulting firm of McKinsey & Co., Inc.,

which he joined in 1965.

In January 2003 he assumed the position of chairman of The Carlyle

Group, a global private equity firm located in Washington, DC.


HW

• Each Group finds out another example (not

limited to the high-tech industry) and

analyze it using the IS/IT Triangle Strategy

model.


Another Example?

• Give another example (not in the high tech industry) in which a company fails to perform well because it does not align its three strategies.

• Any?

– too much focus other than IT

– inefficient organization structure

– Inefficient IT usage


FORD IS Strategy Triangle:

Old Strategy

Business (Firm)

Strategy


TOO MANY

BRANDS/

FOCUSES

COMPLICATED

and Inefficient

structure

N

Inefficient and

ineffective IT usage


FORD IS Strategy Triangle:

New Strategy (ONE FORD)

Business (Firm)

Strategy


ONE FORD

STRATEGY:

One Team,

One Plan,

One Goal

SIMPLE and

Efficient Structure

N

Efficient and Effective

IT Usage and Support

A simple-sounding

plan with big

consequences

http://en.wikipedia.org/wiki/File:IBM_logo.svg

http://0.tqn.com/d/retailindustry/1/0/4/1/-/-/Ford-vintage-autos.jpg

5



Alan Mulally: President and CEO,

Ford Motor Company

In September 2006

Prior to joining Ford in September 2006, Mulally served as

executive vice president of The Boeing Company, and president

and chief executive officer of Boeing Commercial Airplanes. In

that role, he was responsible for all of the company’s commercial

airplane programs and related services. Mulally also was a

member of the Boeing Executive Council and served as Boeing’s

senior executive in the Pacific Northwest.

Management style

Mulally negotiated four new agreements with United

Auto Workers, which has brought down labor costs

from $76/hour to $55/hour.


The Information Systems Strategy

Triangle

• Successful firms’ business strategy ______ both their organizational and IS strategies:

• They must, therefore, seek to balance business, organizational, and IS strategies

• Changes in any strategy requires changes in the others to maintain balance.

• IS Strategy is affected by the other strategies a firm uses.

• IS strategy can have (sometimes unintentional) consequences on business and organizational strategies

drives


BRIEF OVERVIEW OF

BUSINESS STRATEGY

FRAMEWORKS


Striving for Competitive Advantage

• Firm level: Industry & Competitive Analysis

• Business level

Competitive Forces Model (more details will be

discussed in chap.2)

Competitive Strategy

D’Aveni’s Hypercompetition Model/

Framewrok (7s)

Value-Chain Analysis

(more details will be discussed in chap.2)

Business

Strategy

Framework


PORTER’S FIVE COMPETITIVE

FORCES MODEL

THE FIRM INDUSTRY

COMPETITORS

NEW

MARKET

ENTRANTS

SUPPLIERS

SUBSTITUTE

PRODUCTS

& SERVICES

CUSTOMERS

Threats

Bargaining power

N Dr. Chen, The Trends of the Information Systems Technology TM -30

•Switching cost •Access to distribution channels •Economies of scale

•Redefine products and services •Improve price/performance

•Selection of suppler •Threat of backward integration

•Buyer selection •Switching costs •Differentiation

•Cost-effectiveness

•Market access •Differentiation of product or service

6


Business Strategy Frameworks

• Porter’s Generic Strategies Framework

(and its variants)

• Hypercompetition and the New 7-Ss

framework (D’Aveni)

N John Wiley & Sons, Inc. & Dr. Chen, Information Systems – Theory and Practices

32

Generic Strategies Framework

• Michael Porter describes how businesses can build a

sustainable competitive advantage

• “fundamental basis of above-average performance in

the long run is sustainable competitive advantage.”

• He identified three primary strategies for achieving

competitive advantage:

• ______ leadership - lowest-cost producer

• _____________ - product/service is with unique feature

• _______ - limited scope; occupy narrow market niche

where the products/services can stand out by virtue of

their cost leadership or differentiation.

Cost

Differentiation

Focus


Figure 1.2: Porter’s Generic Strategy Framework –

3 Strategies for achieving Competitive Advantage

Dr. Chen, The Trends of the Information Systems Technology TM -33

Competitive Mechanism

Overall Cost

Leadership

Focus

Differentiation Industrywide

(Broad

Target)

Particular

Segment only

(Narrow

Target)

Lower Cost

Position

Uniqueness

Perceived by

Customer

Competitive Advantage

N


Cost

Leadership

Business Strategies

and its Competitive Advantage

Dr. Chen, The Trends of the Information Systems Technology TM -34

Cost Focus

Differentiation

Differentiation

Focus

Industry

wide

(Broad

Target)

Particular

Segment

only

(Narrow

Target)

Competitive Mechanism

Lower Cost

Position

Uniqueness

Perceived by

Customer

N

Industrial economy Knowledge-based

economy


Dynamic Environment Strategies

• Porter’s model is useful for diagnostics, or

understanding how a business seeks to profit in

its chosen marketplace, and for prescriptions, or

building new opportunities for advantage

• Porter model was developed at a time where the

rate of change in any given industry was

relatively _____ and _________. (i.e., stable)

• Newer models were developed to take into

account the increasing turbulence and velocity

of the marketplace

slow manageable


Hypercompetition and

the New 7-S’s framework (D’Aveni)

• _______________________

• Sustaining an advantage uses too much time and resources that can be a deadly distraction.

• The goal should be___________, not _______________ of advantage.

• Initiatives are achieved with a series of small steps.

• Hypercompetiton occurs when technologies or offerings are so new that standards and rules are influx, resulting in competitive advantages that cannot be sustained. It is characterized by intense and rapid competitive moves, in which competitors must move quickly to build new advantages and erode the advantages of their rivals.

Every advantage is eroded.

disruption sustainability

7


D’Aveni’s Disruption and 7-S’s Vision for Disruption

Identifying and creating opportunities for

temporary advantage through understanding

• Stakeholder satisfaction

• Strategic Soothsaying

directed at identifying new ways to serve existing

customers better or new customers that are not

currently served by others

Market Disruption

Capability for Disruption Sustaining momentum by developing

flexible capacities for

• Speed

• Surprise

That can be applied across actions to

Build temporary advantage

Tactics for Disruption Seizing the initiative to gain advantage by

• Shifting the rules

• Signaling

• Simultaneous and sequential strategic

thrusts

With actions that shape, mold, or influence

the direction or nature of the competitor’s

response N

Old 7Ss:

structure, strategy,

system, style, skills,

staff, and super-

ordinate goals.

By Richard D’Aveni, professor of business strategy at Dartmouth College John Wiley & Sons, Inc. & Dr. Chen, Information Systems – Theory and Practices

38

D’Aveni’s Hypercompetition Model (cont.)

• Hypercompetiton Strategies for Disruption – 1. Stakeholder satisfaction is key

to winning each dynamic interaction with competitors

– 2. Strategic soothsaying is the process for seeking out new knowledge for predicting what customers will want in the future

– 3. Speed is crucial to take advantage of opportunities and respond to counterattacks by competitors

– 4. Surprise enhances a company’s ability to stun a competitor, to build up superior position before a competitor can counterattack.

• Hypercompetition Tactics for Disruption – 1. Shifting rules of the market

to create tremendous disruption for competitors.

– 2. Signals out to (a) make announcements of strategic intent to dominate a marketplace, or (b) manipulate the future moves of rivals.

– 3. Simultaneous or sequential strategic thrusts using several moves to mislead or confuse a competitor.

Speed of the disruptive turbulence created by hypercometition is driven by

more appealing , more fragmented , and the

invention of new – all contributing to structural disequilibrium,

falling barriers to market entry, and the dethronement of industry leaders

globalization, substitute products customer tastes, deregulation

business models


Examples of Competitive Dynamics

Models

• A similar strategy of cannibalizing their own

products was used by Apple® and GilletteTM.

• Apple introduced the iPhone® while iPod® sales

were _____ , and the iPad® while its Macintosh

sales were ______.

• Apple continues to exhibit this strategy with

subsequent releases of new models of all of its

products

brisk

strong

What S’s fit into this scenario?


An Example in Beijing

(Residential Housing Industry)

锋尚国际公寓案例

• Say “Good Bye” to the air conditioning era

– (告别空调暖气时代)

• Selling house based on the actual living size

– 按照使用面积售房

• Recruiting __________

– 招收 __________ 中共党员

members of communist party



Rapidly Changing Environment and

Marketplace

• Firms focus on their capability to dynamically adjust

their organizational resources, valuing agility itself as

the competitive advantage

• Still focus on customer satisfaction, profit

maximization, and other goals consistent with the

business’s values and beliefs

• Utilize components of business intelligence (BI):

– The ability to predict new opportunities, organizational

designs that can sense, restructure, and respond quickly

– Strategic signaling and actions that both surprise and

confuse competitors


Accelerated Competition

• Since the 1990s, competition led to wider gaps

between industry leaders and laggards

– “winner-take-all” environments

– Greater churn among sector rivals

• Joseph Schumpeter predicted the “creative destruction”

over 60 years ago

• Sharp increases in the quality and quantity of IT

investment

• The changes in competitive dynamics are particularly

striking in sectors that spend the most on IT

8


Competitive Dynamics Models: An Example

• Destroy Your Business (DYB)- strategic planning

implemented by leadership guru Jack Welch at General

Electric (GE)

– GE employees develop strategies to destroy GE’s competitive

advantage

– Similarly GE’s Medical Systems Division used DYB to respond to

the challenges posed by the Internet.

• Grow Your Business (GYB) - strategy to find fresh ways to

reach new customers and better serve existing ones

– Complete disruption of current practices

– Take actions to protect GE business before competitors hone in on its

weaknesses

• Implicit assumption underlying DYB is that GE would not be

able to sustain its position in the marketplace over the long

term John Wiley & Sons, Inc. & Dr. Chen, Information Systems – Theory and Practices 44

D’Aveni’s 7-S & GE

Superior stakeholder

satisfaction

Strategic soothsaying

Positioning for speed

Positioning for surprise

Shifting the rules of

competition

Signaling strategic

intent

Simultaneous and

sequential strategic

thrusts

Approach Definition

Understanding how to maximize customer satisfaction by adding

value strategically

Seeking out new knowledge that can predict or create new windows

of opportunity

Preparing the organization to react as quickly as possible

Preparing the organization to respond to the marketplace in a

manner that will surprise competitors

Finding new ways to serve customers which transform the

industry

Communicating the intended actions of a company, in order to

stall responses by competitors

Taking a series of steps designed to stun and confuse

competitors in order to disrupt or block their efforts

N


D’Aveni’s Hypercompetition Model (cont.)

• Hypercompetiton Strategies for Disruption – 1. Stakeholder satisfaction is key

to winning each dynamic interaction with competitors

– 2. Strategic soothsaying is the process for seeking out new knowledge for predicting what customers will want in the future

– 3. Speed is crucial to take advantage of opportunities and respond to counterattacks by competitors

– 4. Surprise enhances a company’s ability to stun a competitor, to build up superior position before a competitor can counterattack.

• Hypercompetition Tactics for Disruption – 1. Shifting rules of the market

to create tremendous disruption for competitors.

– 2. Signals out to (a) make announcements of strategic intent to dominate a marketplace, or (b) manipulate the future moves of rivals.

– 3. Simultaneous or sequential strategic thrusts using several moves to mislead or confuse a competitor.

Speed of the disruptive turbulence created by hypercometition is driven by

more appealing , more fragmented , and the

invention of new – all contributing to structural disequilibrium,

falling barriers to market entry, and the dethronement of industry leaders

globalization, substitute products customer tastes, deregulation

business models


Hypercompetition Model

• Porter’s model focus on ________ competitive

advantage, whereas hypercompetition models

suggest that the speed and aggressiveness of the

moves and countermoves in any given market create

an environment in which advantages are rapidly

created and _______.

• Hypercompetition models

– Fits _________ environments

– Enables managers respond instantly and change rapidly

– Requires _________ structures and processes

creating

eroded

turbulent

dynamic


Rapidly Changing Environment and

Marketplace

• Firms focus on their capability to dynamically adjust

their organizational resources, valuing agility itself as

the competitive advantage

• Still focus on customer satisfaction, profit

maximization, and other goals consistent with the

business’s values and beliefs

• Utilize components of __________________ (BI):

– The ability to _______ new opportunities, organizational

designs that can sense, restructure, and respond quickly

– Strategic signaling and actions that both surprise and

confuse competitors

business intelligence

predict


Accelerated Competition

• Since the 1990s, competition led to wider gaps

between industry leaders and laggards

– “winner-take-all” environments

– Greater churn among sector rivals

• Joseph Schumpeter predicted the “creative destruction”

over 60 years ago

• Sharp increases in the quality and quantity of IT

investment

• The changes in competitive dynamics are particularly

striking in sectors that spend the most on IT

9


Competitive Dynamics Models: An Example

• Destroy Your Business (DYB)- strategic planning

implemented by leadership guru Jack Welch at General

Electric (GE)

– GE employees develop strategies to destroy GE’s competitive

advantage

– Similarly GE’s Medical Systems Division used DYB to respond to

the challenges posed by the Internet.

• Grow Your Business (GYB) - strategy to find fresh ways to

reach new customers and better serve existing ones

– Complete disruption of current practices

– Take actions to protect GE business before competitors hone in on its

weaknesses

• Implicit assumption underlying DYB is that GE would not be

able to sustain its position in the marketplace over the long

term John Wiley & Sons, Inc. & Dr. Chen, Information Systems – Theory and Practices 50

Examples of Competitive Dynamics

Models

• A similar strategy of cannibalizing their own

products was used by Apple® and GilletteTM.

• Apple introduced the iPhone® while iPod® sales

were _____ , and the iPad® while its Macintosh

sales were ______.

• Apple continues to exhibit this strategy with

subsequent releases of new models of all of its

products

brisk

strong



Industries Competitive

Advantage

(Characteristics)

Competitive

Advantage

(How to)

Porter’s

Model

Relatively ______

Establish a strong,

long-term position

and defend it.

Attain a fit with the

environment as in

traditional markets

Hyper-

competition

Model

__________

1) Ever-increasing

competition

2) Changing

power between

players

Short-lived, take

advantage of any

small window of

opportunity that

arises (thru speed

and aggression)

1) change rules of

competition

2) create disruptions

(during which

temporary advantages

can be exploited)

Porter’s Model vs. Hypercompetition Model

stable

Dynamic


52

Summary of Key Strategy

Frameworks (Fig. 1.4)

Strategic Approach Key Idea Applications to Information

Systems

Porter’s generic

strategies

framework

Firms achieve

competitive advantage

through cost leadership,

differentiation, or

focus.

Understanding which strategy is chosen

by a firm is critical to choosing IS to

complement that strategy.

D’Aveni’s

hypercompetition

model

Speed, agility and

aggressive moves and

countermoves by a firm

Create competitive

advantage.

IS are critical to achieving the

speed needed for moves and

countermoves.

IS are in a constant state of flux or

development

Brandenberg and

Nalebuff’s

co-opetition model

Companies cooperate

and compete at the

same time.

Being cooperative and competitive at the

same time requires IS that can manage

these two roles.


(Value)

N

Figure I.6 Business Level: The Value Chain


Manufacturing Industry Value Chain

Product and Service Flow

Research and

Development Engineering

Production

and

Manufacturing

Marketing Sales and

Distribution Service

Primary Activities

Dr. Chen, The Trends of the Information Systems Technology

Administrative and Other

Indirect Value Added

Support Activities

N

10


Disruptive versus Sustaining Technology

• __________ technologies – produces an improved product customers are eager to buy, such as a faster car or larger hard drive – Sustaining technologies tend to provide us with better, faster, and

cheaper products in established markets

– Sustaining technologies virtually never lead in markets opened by new and disruptive technologies

• ____________technologies – a new way of doing things that initially does not meet the needs of existing customers – Disruptive technologies redefine the competitive playing fields of their

respective markets

– Disruptive technologies tend to open new markets and destroy old ones

– Disruptive technologies typically cut into the low end of the marketplace and eventually evolve to displace high-end competitors and their reigning technologies

Sustaining

Disruptive


Disruptive versus Sustaining

Technology

• Please name two (or more) of Disruptive

and Sustaining Technologies on the market

now?


“Be fearful when others are greedy, and

be greedy when others are fearful.”

-- Warren E. Buffett, CEO, Berkshire Hathawy, Inc.


Building a Social Business Strategy

A social business strategy is

• A plan of how the firm will use social IT, aligned with

organization strategy and IS strategy

• A vision of how the business would operate if it seamlessly

and thoroughly incorporated social and collaborative

capabilities throughout the business model

– Social IT is the technologies used for collaboration, networking, and

the general interaction between people over the Web.

– Social business is the enterprise use of social IT for business

applications, activities and processes .

• Answers the same type of questions of what, how, and who,

as any other business strategy


Social Business Strategies

Most of the social business opportunities fall into one of

three categories:

• ______________ – Using social IT to extend the reach of stakeholders, both employees

and those outside the enterprise walls.

– Social networks enable individuals to find and connect with each

other to share ideas, information, and expertise.

• ______________ – Using social IT to involve stakeholders in the traditional business of

the enterprise.

– Communities and blogs provide a platform for individuals to join in

conversations, create new conversations, offer support to each other,

and other activities that create a deeper feeling of connection to the

company, brand, or enterprise

Collaboration

Engagement


Social Business Strategies (Cont.)

• _____________

– Using social IT to identify, describe, prioritize, and

create new ideas for the enterprise

– Social IT offer the community members a “super idea

box” where individuals suggest new ideas, comment on

other ideas, and vote for their favorite idea, giving

managers a new way to generate and decide on

products and services

Innovation

11


Applications of Social IT

• National Instruments (ni.com) has embraced social IT and created a social business strategy

• Managers developed a branded community consisting of a number of social IT tools like Facebook®, Twitter®, blogs, forums, and more

• Thinking holistically about all of the ways customers and employees might interact with each other, the branded community has become the hub of collaboration, engagement and idea generation


BRIEF OVERVIEW OF

ORGANIZATIONAL

STRATEGIES


Brief Overview of Organizational Strategies

• Organizational strategy includes the organization’s

design as well as the choices it makes to define, set up,

coordinate, and control its work processes

• A plan that answers the question:

– “How will the company organize to achieve its

goals and implement its business strategy?”

• There are numerous models of organizational strategy

• The business diamond introduced by Harold Leavitt,

identifies the crucial components of an organization’s

plan as its information/control, people, structure, and

tasks.

John Wiley & Sons, Inc. & Dr. Chen, Information Systems – Theory and Practices

64

64

Figure 1.5 The Leavitt Business Diamond

Structure

Tasks Information

and Control

People

(Source: Hammer et al, 1994)

N


The Managerial Levers

• This framework (Figure 1.6) suggests that the successful

execution of a business’s organizational strategy comprises

the best combination of organizational, control, and cultural

variables

• Organizational variables include:

– Decision rights, business processes, formal reporting

relationships, and informal networks

• Control variables include:

– availability of data, nature and quality of planning,

effectiveness of performance measurement and evaluation

systems, and incentives to do good work

• Cultural variables comprise the values of the organization John Wiley & Sons, Inc. & Dr. Chen, Information Systems – Theory and Practices

66

66

Figure 1.6 Managerial Levers

Source: Cash, et al., 1994

People,

Information, and

Technology

Values

Performance

measurement and

evaluation Incentives

and rewards

Data

Planning

Culture

Control Organization

Execution

Informal

networks

Formal

reporting relationships

Business

processes

Decision

rights

Organizational

effectiveness Strategy

N

12


67

Figure 1.7 Summary of Org. Strategy Frameworks

Framework Key Idea Usefulness in IS

Discussions

Business Diamond

Management

levers

There are 4 key

components to an

organization’s design:

people, structure, tasks,

and information and

control.

Organizational

variables, control

variables, and cultural

variables are the levers

manager can use to

affect change in their

organizations

Using IS in an organization

will affect each of these

components. Use this

framework to identify

where these impacts are

likely to occur

This is a more detailed model

than the Business diamond

and gives specific areas

where IS can be used to

manage the organization

and to change it


68

BRIEF OVERVIEW OF

INFORMATION SYSTEMS

STRATEGY


Brief Overview of IS Strategy

• IS strategy is the plan an organization uses to provide

information services.

• IS allows a company to __________ its business

strategy

• Business strategy is a function of

– ___________ (What does the customer want and what does

the competition do?)

– __________ (In what way does the firm want to compete?)

– __________ (What can the firm do?). IS help determine the

company’s capabilities.

implement

Competition

Positioning

Capabilities


What Who Where Hardware List of physical components

of the system

Individuals who use it

Individuals who

manage it

Physical location

Software List of programs,

applications, and utilities

Individuals who use it

Individuals who

manage it

What hardware it

resides upon and

where that

hardware is located

Networking Diagram of how hardware

and software components

are connected

Individuals who use it/

Individuals who

manage it/Company

service obtained from

Where the nodes

are located, where

the wires and other

transport media are

located

Data Bits of information stored in

the system Individuals who use it

Individuals who

manage it

Where the

information resides

Figure 1.8: IS Strategy Matrix


Major Issues for the Next

Society

1. Internationalization

2. Technology

3. Population

4I + 1K

Internationalization

Integration

Innovation

Information

and

Knowledge


What is Web 2.0?

• "Web 2.0" refers to the second generation of web development and web design.

– It is characterized as facilitating communication, information sharing, interoperability, user-centered design and collaboration on the World Wide Web. It has led to the development and evolution of web-based communities, hosted services, and web applications.

– Examples include social-networking sites, video-sharing sites, wikis, blogs, mashups and folksonomies.

– Web 2.0 is the business revolution in the computer industry caused by the move to the Internet as a platform, and an attempt to understand the rules for success on that new platform.

Source: http://en.wikipedia.org/wiki/Web_2.0

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File name on your group work

• Please name your group files as follows:

• NTUT-G1-Swimming in the VCPool with

PlentyofFish (.pptx or .docx)

• Other group, please change G1 to your

designated group#.


End of Chapter 1


Mini Case Study

• Case Study 1-2 (p. 41)

• Google

• Questions #1 thru #5



Business (Firm)

Strategy


N


Information System Strategy Triangle for

GOOGLE

Business (Firm)

Strategy


N

1. Innovation and Openness

2. Differentiation

New concept of

Organization (organize the

world’s information and

make it universally

accessible and useful)

1. Internet (Web-based

Applications)

2. Cloud computing

Flexible working hours


Q#1. How is Google’s mission statement related

to its business strategy?

• Ans: Google’s primary goal is to “organize the world’s information and make it universally accessible and useful” (mission statement).

• Google continues to take risks and expand into new markets to further its reach into the information world. It takes advantage of new avenues to expand its market share by making information freely available on its Intranet, and by willing to take risks by investing in speculative and strange projects if they see a large potential payoff.

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2. How does Google’s information systems

strategy support its business strategy?

• Ans: Through openness and innovation. It permits

users to download their own software, maintain

official and unofficial blogs, and buys and makes

software to suit the needs of the business.

• IT encourages innovation by allowing employees

to spend 20% of their time on a project of their

own choosing. This “flexible” IT structure

supports the innovation and creativity that its

business strategy espouses.


3. How does Google’s organizational

strategy supports its business strategy?

• Ans: Google has a culture of innovation and creativity. However, it still provides a level of structure when making decisions. Specifically, Google’s mission statement relates to its business strategy by making data on all ongoing projects and systems available to all of its employees through its corporate Intranet.

• Any employee can see what is transpiring in other areas and can lend a hand through Google’s “free day” policy and other open work-environment strategies.


4. Which of Porter’s three generic strategies does

Google appear to be using based upon this case?

Provide a rationale for your response.

• Ans: Differentiation, though one may argue that cost leadership is also utilized with its very reasonable ad costs. However, though the use of its innovative processes, and unique business model, Google has differentiated itself from its competitors by keeping a clean and simple interface (which most of the other search engines have emulated), and by continuing to invest in its employees, to provide innovation on a large scale.


D’Aveni’s Disruption and 7-S’s (for #5)

Vision for Disruption Identifying and creating opportunities for

temporary advantage through understanding

• Stakeholder satisfaction

• Strategic Soothsaying

directed at identifying new ways to serve existing

customers better or new customers that are not

currently served by others

Market Disruption

Capability for Disruption Sustaining momentum by developing

flexible capacities for

• Speed

• Surprise

That can be applied across actions to

Build temporary advantage

Tactics for Disruption Seizing the initiative to gain advantage by

• Shifting the rules

• Signaling

• Simultaneous and sequential strategic

thrusts

With actions that shape, mold, or influence

the direction or nature of the competitor’s

response N By Richard D’Aveni, professor of business strategy at Dartmouth College


5. Using D’Avenis Hpercompetitive Framework

analyze Google’s strategy and the type of market

disruption it has created.

• Ans: In some form or another Google has utilized almost all of D.Aveni’s framework. Specifically, it has gained superior stakeholder satisfaction through offering a superior product to its customers and adding new products that provide value to its customers (Adsense, etc.).

• They are continually seeking out new knowledge through its innovative management styles and by its willingness to invest in risky projects that have a high-return potential. Google positions for speed and surprise by constantly innovating by setting limitations on how long it will take to make changes to its products and services.

• Through this innovative approach it is able to stay on the cutting edge of technology and lead this market of IT world. Through its new products and services (Adsense, GoogleApps, etc.) and its low cost marketing its shifts the rules of competition by finding new and better ways to serve its customers.

Learning Objectives DBQ: Why IS Strategy Triangle Model...

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