Operational Excellence Assignment

Information Technology and Organizational

Learning Managing Behavioral Change

through Technology and Education

Second Edition

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Information Technology and Organizational

Learning Managing Behavioral Change

through Technology and Education

Second Edition

Arthur M. Langer

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CRC Press Taylor & Francis Group 6000 Broken Sound Parkway NW, Suite 300 Boca Raton, FL 33487-2742

© 2011 by Taylor and Francis Group, LLC CRC Press is an imprint of Taylor & Francis Group, an Informa business

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Library of Congress Cataloging-in-Publication Data

Langer, Arthur M. Information technology and organizational learning : managing behavioral change

through technology and education / Arthur M Langer. p. cm.

Rev. ed. of: IT and organizational learning : managing change through technology and education. 2005.

Includes bibliographical references and index. ISBN 978-0-415-87583-7 1. Organizational learning. 2. Information technology--Management. I. Langer,

Arthur M. IT and organizational learning. II. Title.

HD58.82.L33 2011 658.4’038--dc22 2010024825

Visit the Taylor & Francis Web site at http://www.taylorandfrancis.com

and the CRC Press Web site at http://www.crcpress.com

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v

Contents

Foreword ix Acknowledgments xiii IntroductIon xv About the Author xxxi

1chApter the “rAvell” corporAtIon 1 Introduction 1 A New Approach 3

The Blueprint for Integration 5 Enlisting Support 6

Assessing Progress 7 Resistance in the Ranks 8 Line Management to the Rescue 8 IT Begins to Reflect 9 Defining an Identity for Information Technology 10 Implementing the Integration: A Move Toward Trust and Reflection 12 Key Lessons 14

Defining Reflection and Learning for an Organization 14 Working Toward a Clear Goal 15 Commitment to Quality 15 Teaching Staff “Not to Know” 16 Transformation of Culture 16

Alignment With Administrative Departments 17 Conclusion 20

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vi Contents

2chApter the It dIlemmA 23 Introduction 23 Recent Background 25 IT in the Organizational Context 26 IT and Organizational Structure 26 The Role of IT in Business Strategy 28 Ways of Evaluating IT 29 Executive Knowledge and Management of IT 30 IT: A View From the Top 31

Section 1: Chief Executive Perception of the Role of IT 34 Section 2: Management and Strategic Issues 36 Section 3: Measuring IT Performance and Activities 37 General Results 38

Defining the IT Dilemma 39 Recent Developments in Operational Excellence 41

3chApter technology As A vArIAble And responsIve orgAnIzAtIonAl dynAmIsm 43 Introduction 43 Technological Dynamism 43 Responsive Organizational Dynamism 44

Strategic Integration 45 Summary 50

Cultural Assimilation 50 IT Organization Communications With “Others” 51 Movement of Traditional IT Staff 51 Summary 53

Technology Business Cycle 54 Feasibility 55 Measurement 55 Planning 56 Implementation 57 Evolution 59

Drivers and Supporters 60 Information Technology Roles and Responsibilities 62 Replacement or Outsource 63

4chApter orgAnIzAtIonAl leArnIng theorIes And technology 65 Introduction 65 Learning Organizations 74 Communities of Practice 76 Learning Preferences and Experiential Learning 85 Social Discourse and the Use of Language 90

Identity 93 Skills 93 Emotion 94

Linear Development in Learning Approaches 98

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Contents vii

5chApter mAnAgIng orgAnIzAtIonAl leArnIng And technology 109 The Role of Line Management 109

Line Managers 111 First-Line Managers 111 Supervisor 112

Management Vectors 112 Knowledge Management 116 Change Management 120 Change Management for IT Organizations 123 Social Networks and Information Technology 134

6chApter orgAnIzAtIonAl trAnsFormAtIon And the bAlAnced scorecArd 141 Introduction 141 Methods of Ongoing Evaluation 147 Balanced Scorecards and Discourse 158 Knowledge Creation, Culture, and Strategy 161

7chApter vIrtuAl teAms And outsourcIng 165 Introduction 165 Status of Virtual Teams 167 Management Considerations 168 Dealing With Multiple Locations 168

Externalization 171 Internalization 173 Combination 173 Socialization 174 Externalization Dynamism 174 Internalization Dynamism 174 Combination Dynamism 175 Socialization Dynamism 175

Dealing With Multiple Locations and Outsourcing 179 Revisiting Social Discourse 181

Identity 181 Skills 182 Emotion 182

8chApter synergIstIc unIon oF It And orgAnIzAtIonAl leArnIng 189 Introduction 189 Siemens AG 189

Aftermath 204 ICAP 205

Five Years Later 226 HTC 227

IT History at HTC 228 Interactions of the CEO 229

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viii Contents

The Process 230 Transformation From the Transition 231 Five Years Later 234

Summary 235

9chApter towArd best prActIces 243 Introduction 243 Chief IT Executive 244 Definitions of Maturity Stages and Dimension Variables in the Chief IT Executive Best Practices Arc 253

Maturity Stages 253 Performance Dimensions 254

Chief Executive Officer 255 CIO Direct Reporting to the CEO 262 Outsourcing 263 Centralization Versus Decentralization of IT 263 CIO Needs Advanced Degrees 264 Need for Standards 264 Risk Management 264

The CEO Best Practices Technology Arc 270 Definitions of Maturity Stages and Dimension Variables in the CEO Technology Best Practices Arc 271

Maturity Stages 271 Performance Dimensions 272

Middle Management 278 The Middle Management Best Practices Technology Arc 281

Definitions of Maturity Stages and Dimension Variables in the Middle Manager Best Practices Arc 282

Maturity Stages 282 Performance Dimensions 283

Summary 284 Ethics and Maturity 284

1chApter 0 conclusIons 295 Introduction 295

glossAry oF terms 313 reFerences 319 Index 327

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ix

Foreword

In the time since the first edition of Information Technology and Organizational Learning was published, Arthur Langer’s message for leaders has become even more relevant and important. The increas- ing pace of change and disruption in organizations has amplified the value of information technology in driving adaptive responses. In this period, we have also seen that many organizations lack the capability to extract that value.

In this book, Arthur Langer shows us in practical ways what consti- tutes those adaptive capabilities. Information technology is a variable and not a constant in Langer’s equation. The old thinking views it as a support for the “real work” of the organization. Langer has reframed information technology as a disruptive accelerator of change. In orga- nizations in which that is the case, information technology is a stra- tegic driver and lens through which the core work of the organization is viewed and reinvented.

The importance of this perspective is no more evident than in two sectors of the U.S. economy in need of significant change: educa- tion and health care. Two colleagues and I recently chronicled the

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x Foreword

most successful stories on education reform and closing the racial achievement gap in America (Childress, Doyle, & Thomas, 2009). Montgomery County Public Schools sits just outside Washington, D.C., in Maryland. It serves students from some of the poorest and wealthiest socioeconomic groups and had experienced a widening achievement gap between its Black and Latino and White students. Over the last decade, that gap has been rapidly closing, while overall achievement has been going up. In other words, those kids already doing well are doing better, and the Black and Latino kids are doing better at an accelerating pace. Core to that process was the use of information technology as a strategic driver to transform the relation- ship between teachers and learners. In keeping with Langer’s message in this book, technology did not close the gap but instead enabled the organizational learning and capacity building that reinvented the approach of Montgomery County to educating its diverse socioeco- nomic and ethnic student body.

In health care, the U.S. Veterans Health Administration (the VA) underwent a huge transformation that took it from inefficiency and poor quality to today delivering among the highest quality health care at the lowest cost per patient in the nation (Lee & Mongan, 2009). Central to this turnaround story was the use of technology to accelerate change and drive the system-level integration neces- sary to most efficiently utilize scarce resources and enable frontline caregivers to provide the best care possible. The result has not only been a broken system fixed but also a reinvention of the way care is provided.

The most important message of this book is not just the need to see information technology as a strategic driver. It is that the effec- tive executive in this new world must see technology as a catalyst for organizational learning. Langer shows us through compelling case studies and the use of research findings what organizational learning looks like when it is happening and the processes and culture neces- sary to support it.

Information Technology and Organizational Learning is at its core a book for and about leadership. It draws on core knowledge about lead- ing change, business strategy, and organizational design. It provides a view of the executive role in managing organizational transformation

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Foreword xi

that is relevant not only to the chief information officer but also to every occupant of the C-Suite [the offices designated for those execu- tives whose title starts with “Chief,” such as chief executive officer (CEO), chief operating officer (COO), etc.].

David A. Thomas H. Naylor Fitzhugh Professor of Business Administration

Harvard Business School

References Childress, S. M., Doyle, D. P., & Thomas, D. A. (2009). Leading for equity: The

pursuit of excellence in Montgomery County Public Schools. Cambridge, MA: Harvard Education Press.

Lee, T. H., & Mongan, J. J. (2009). Chaos and organization in healthcare. Cambridge, MA: MIT Press.

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xiii

Acknowledgments

Many colleagues and clients have provided significant support during the development of the second edition of Information Technology and Organizational Learning.

I owe much to my colleagues at Teachers College, namely, Professor Victoria Marsick and Lyle Yorks, who guided me on much of the theories on organizational learning, and Professor Lee Knefelkamp for her ongoing mentorship on adult learning and developmental theories. Professor David Thomas from the Harvard Business School also provided valuable direction on the complex issues surrounding diversity and its importance in work- force development.

I appreciate the corporate executives who agreed to partici- pate in the studies that allowed me to apply learning theories to actual organizational practices. Stephen McDermott from ICAP provided invaluable input on how chief executive officers (CEOs) can successfully learn to manage emerging technologies. Dana Deasy, now corporate chief information officer (CIO) of Beyond Petroleum (BP), contributed enormous information on how cor- porate CIOs can integrate technology into business strategy. Lynn O’Connor Vos, CEO of Grey Healthcare, also showed me how

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xiv ACknowledgments

technology can produce direct monetary returns, especially when the CEO is actively involved.

And, of course, thank you to my wonderful students at Columbia University. They continue to be at the core of my inspiration and love for writing, teaching, and scholarly research.

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xv

Introduction

Background

Information technology (IT) has become a more significant part of workplace operations, and as a result information systems personnel are key to the success of corporate enterprises (Bradley & Nolan, 1998; Langer, 1997, 2005; Lipman-Blumen, 1996). This book focuses on the vital role that information technology needs to play in the course of organizational development and learning and on the growing need to integrate technology fully into the processes of workplace organiza- tional learning. Technology personnel have long been criticized for their inability to function as part of the business, and they are often seen as a group outside the corporate norm (Schein, 1992). This is a problem of cultural assimilation, and it represents one of the two major fronts that organizations now face in their efforts to gain a grip on the new growing power of technology. The other major front con- cerns the strategic integration of new technologies into business-line management.

Because technology is changing at such a rapid pace, the ability for organizations to operate within a new paradigm of dynamic change emphasizes the need to employ action learning as a way to build competitive learning organizations in the 21st century. Information Technology and Organizational Learning integrates some of the

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xvi IntroduCtIon

fundamental issues bearing on IT today with concepts from organi- zational learning theory, providing comprehensive guidance based on real-life business experiences and concrete research.

But, the book also focuses on another sector of what IT can mean to an organization. IT represents a broadening dimension of business life that affects everything we do inside an organization. This new reality is shaped by the increasing and irreversible dissemination of technology. To maximize the usefulness of its encroaching presence in everyday business affairs, organizations will require an optimal understanding of how to integrate technology in everything they do. To this end, this book seeks to break new ground in the approach and conceptualization of this salient issue—that is, that the optimiza- tion of technology is best pursued with, indeed technology cannot be adequately integrated except with, a synchronous implementation of organizational learning concepts. Furthermore, these concepts can- not be implemented without utilizing theories of strategic learning. Therefore, this book takes the position that technology literacy requires individual and group strategic learning if it is to transform a business into a technology-based learning organization. Technology-based orga- nizations are defined as those that have implemented a means of suc- cessfully integrating technology into their process of organizational learning. Such organizations recognize and experience the reality of technology as part of their everyday business function.

This book will also examine some of the many existing organiza- tional learning theories and the historical problems that have occurred with companies that have used them or that have failed to use them. Thus, the introduction of technology into organizations actually pro- vides an opportunity to reassess and reapply many of the past con- cepts, theories, and practices that have been used to support why organizational learning is important. It is important, however, not to confuse this message with a reason for promoting organizational learning but rather to understand the seamless nature of the relation- ship between IT and organizational learning. Each needs the other to succeed. Indeed, technology has only served to expose problems that have existed in organizations for decades: the inability to drive down responsibilities to the operational levels of the organization.

This book is designed to help businesses and individual manag- ers understand and cope with the many issues involved in developing

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IntroduCtIon xvii

organizational learning programs and in integrating an important component: their IT organizations. The book aims at providing a combination of research case studies together with existing theories on organizational learning in the workplace. The goal is also to pro- vide researchers and corporate practitioners with a book that allows them to incorporate a growing IT infrastructure with their existing workforce culture. Professional organizations need to integrate IT into their organizational processes to compete effectively in the tech- nology-driven business climate of today. This book responds to the complex and various dilemmas faced by many human resource man- agers and corporate executives regarding how to actually deal with many marginalized IT infrastructures that somehow always operate outside the normal flow of the core business.

While the history of IT as a marginalized organization is relatively short in comparison to that of other professions, the problems of IT have been consistent since its insertion into business organizations in the early 1960s. Indeed, while technology has changed, the posi- tion and valuation of IT have continued to challenge how executives manage it, account for it, and, most important, ultimately value its contributions to the organization. Technology personnel continue to be criticized for their inability to function as part of the business, and they are often seen as outside the business norm. IT employees are frequently stereotyped as “techies” and segregated in such a way that they become isolated from the organization. This book provides a method for integrating IT and redefining its role in organizations, especially as a partner in formulating and implementing key busi- ness strategies that are crucial for the survival of many companies in the new millennium. Rather than provide a long and extensive list of common issues, I have decided it best to uncover the challenges of IT integration and performance through the case study approach.

Information technology continues to be one of the most impor- tant yet least-understood departments in an organization. It has also become one of the most significant components for competing in the global markets of today. IT is now an integral part of the way compa- nies become successful. This is true across all industries. The role of IT has grown enormously in companies throughout the world, and it has a mission to provide strategic solutions that can make companies more competitive. Indeed, the success of IT, and its ability to operate

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xviii IntroduCtIon

as part of the learning organization, can mean the difference between the success and failure of entire companies.

This book provides answers to other important questions that have challenged many organizations for decades. First, how can managers master emerging technologies, sustain a relationship between organizational learning, and link it to strategy and per- formance? Second, what is the process by which to determine the value of using technology, and how does it relate to traditional ways of calculating return on investment? Third, what are the roles and responsibilities of the IT executive and the department in general? To answer these questions, managers need to focus on the follow- ing factors:

Address the operational weaknesses in organizations in terms of how to deal with new technologies and how to better realize business benefits

Provide a mechanism that both enables organizations to deal with accelerated change caused by technological innovations and integrates them into a new cycle of processing and han- dling of change

Provide a strategic learning framework by which every new tech- nology variable adds to organizational knowledge

Establish an integrated approach that ties technology account- ability to other measurable outcomes using organizational learning techniques and theories

To realize these objectives, organizations must be able to

Create dynamic internal processes that can deal on a daily basis with understanding the potential fit of new technologies and its overall value into the structure of the business

Provide the discourse to bridge the gaps between IT- and non- IT-related investments and uses into one integrated system

Monitor investments and determine modifications to the life cycle Implement various organizational learning practices includ-

ing learning organization, knowledge management, change management, and communities of practice, all of which help foster strategic thinking and learning that can be linked to performance (Gephardt & Marsick, 2003)

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IntroduCtIon xix

Strengths of this book are that it integrates theory and practice and provides answers to the three common questions mentioned. Many of the answers provided in these pages are founded on theory and research and are supported through practical experience. Thus, evi- dence of the performance of the theories is presented via case stud- ies, which are designed to assist the reader in determining how such theories and proven practices can be applied to their specific and indi- vidual organizations.

A common theme in this book involves three important terms: “dynamic,” “unpredictable,” and “acceleration.” Dynamic is a term that represents spontaneous and vibrant things—a motive force. Technology behaves with such a force and requires organizations to deal with its capabilities. Glasmeier (1997) postulated that technol- ogy evolution, innovation, and change are dynamic processes. The force then is technology, and it carries many motives, as we shall see throughout this book. Unpredictable suggests that we cannot plan what will happen or will be needed. Many organizational individuals, including executives, have attempted to predict when, how, or why technology will affect their organization. Throughout our recent his- tory, especially during the dot.com era, we have found that it is dif- ficult, if not impossible, to predict how technology will ultimately benefit or hurt organizational growth and competitive advantage. I believe that technology is volatile and erratic at times. Indeed, har- nessing technology is not at all an exact science, certainly not in the ways in which it can and should be used in today’s modern organiza- tion. Finally, I use the term acceleration to convey the way technology is speeding up our lives. Not only have emerging technologies created this unpredictable environment of change, but they also continue to change it rapidly—even with the demise of the dot.com era. Thus, what becomes important is the need to respond quickly to technology. The inability to be responsive to change brought about by technologi- cal innovations can result in significant competitive disadvantages for organizations. This book shows why this is a fact. So, we look at these three words—dynamic, unpredictable, and acceleration—as a way to define how technology affects organizations; that is, technology is an accelerating motive force that occurs irregularly. These words name the challenges that organizations need to address if they are to manage technological innovations and integrate them with business strategy

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xx IntroduCtIon

and competitive advantage. It only makes sense that the challenge of integrating technology in business requires us first to understand its potential impact, determine how it occurs, and see what is likely to follow. There are no quick remedies to dealing with emerging tech- nologies, just common practices and sustained processes that must be adopted for organizations to survive in the future.

I had four goals in mind in writing this book. First, I am interested in writing about the challenges of using technology strategically. What particularly concerns me is the lack of literature that truly addresses this issue. What is also troublesome is the lack of reliable techniques for the evaluation of IT, especially since IT is used in almost every aspect of business life. So, as we increase our use and dependency on technology, we seem to understand less about how to measure and validate its outcomes. I also want to convey my thoughts about the importance of embracing nonmonetary methods for evaluating tech- nology, particularly as they relate to determining return on invest- ment. Indeed, indirect and nonmonetary benefits need to be part of the process of assessing and approving IT projects.

Second, I want to apply organizational learning theory to the field of IT and use proven learning models to help transform IT staff into becoming better members of their organizations. Everyone seems to know about the inability of IT people to integrate with other depart- ments, yet no one has really created a solution to the problem. I find that organizational learning techniques are an effective way of coach- ing IT staff to operate more consistently with the goals of the busi- nesses that they support.

Third, I want to present cogent theories about IT and organiza- tional learning, theories that establish new ways for organizations to adapt new technologies. I want to share my experiences and those of other professionals who have found approaches that can provide posi- tive outcomes from technology investments.

Fourth, I have decided to express my concerns about the valid- ity and reliability of organizational learning theories and practices as they apply to the field of IT. I found that most of these models needed to be enhanced to better fit the unique aspects of technology. These modified models enable the original learning techniques to address IT-specific issues. In this way, the organization can develop a more holistic approach toward a common goal for using technology.

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IntroduCtIon xxi

Certainly, the balance of how technology ties in with strategy is essential. However, there has been much debate over whether tech- nology should drive business strategy or vice versa. We will find that the answer to this is “yes.” Yes in the sense that technology can affect the way organizations determine their missions and business strategy; “no” in that technology should not be the only component for deter- mining mission and strategy. Many managers have realized that busi- ness is still business, meaning that technology is not a “silver bullet.” The challenge then is to determine how best to fit technology into the process of creating and supporting business strategy. This philosophy does not negate the fact that technology can, indeed, affect existing business strategy. The more viable approach is to incorporate technol- ogy into the process of determining business strategy. I have found that many businesses formulate their strategies first and then look at technology as a means to efficiently implement objectives and goals. Executives need to understand the unique and important role that technology provides us: It can drive business strategy and support it at the same time.

Managers should not solely focus their attention on generating breakthrough innovations that will create spectacular results. Most good uses of technology are much more subtle and long lasting. For this reason, this book discusses and defines new technology life cycles that blend business strategy and strategic learning. Building on this theme, I introduce the idea of responsive organizational dynamism as the core theory of this book. Responsive organizational dynamism defines an environment that can respond to the three important terms (dynamic, unpredictable, and acceleration). Indeed, technology requires organizations that can sustain a system in which individu- als can deal with dynamic, unpredictable, and accelerated change as part of their regular process of production. The basis of this concept is that organizations must create and sustain such an environment to be competitive in a global technologically driven economy. I further analyze responsive organizational dynamism in its two subcompo- nents: strategic integration and cultural assimilation, which address how technology needs to be measured as it relates to business strategy and what related social–structural changes are needed, respectively.

Change is an important principle to this book. I talk about the importance of how to change, how to manage such change, and why

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xxii IntroduCtIon

emerging technologies are a significant agent of change. I support the need for change as an opportunity to use many of the learning theories that have been historically difficult to implement. That is, implementing change brought on by technological innovation is an opportunity to make the organization more “change ready.” However, we also know that little is known about how organizations should actually go about modifying existing processes to adapt to new tech- nologies—and to be accustomed to doing this regularly. Managing through such periods of change requires that we develop a model that can deal with dynamic, unpredictable, and accelerated change. This is what responsive organizational dynamism is designed to do.

We know that over 20% of IT projects still fail to be completed. Another 54% fail to meet their projected completion date. We now sit at the forefront of another technological spurt of innovations that will necessitate major renovations to existing legacy systems, requir- ing that they be linked to sophisticated e-business systems. These e-business systems will continue to utilize the Internet and emerg- ing wireless technologies. While we tend to focus primarily on what technology generically does, organizations need urgently to prepare themselves for the next generation of advances by forming structures that can deal with continued, accelerated change as the norm of daily operations. For this edition, I have added new sections and a chap- ter that address the increased impact of social networks and virtual teams, which are now posing yet another wave of historic changes in the ways organizations function and communicate with each other and with their clientele.

This book provides answers to a number of dilemmas but ultimately offers an imbricate cure for the problem of latency in performance and quality afflicting many technologically based projects. Traditionally, management has attempted to improve IT performance by increasing technical skills and project manager expertise. While there has been an effort to educate IT managers to become more interested and par- ticipatory in business issues, their involvement continues to be based more on service than on strategy. Yet, at the heart of the issue is the entirety of the organization. It is my belief that many of the program- matic efforts conducted in traditional ways and attempting to mature and integrate IT with the rest of the organization will deliver disap- pointing results.

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IntroduCtIon xxiii

My personal experience goes well beyond research; it draws from living and breathing the IT experience for the past 35 years and from an understanding of the dynamics of what occurs inside and outside the IT department in most organizations. With such experience, I can offer a path that engages the participation of the entire manage- ment team and operations staff of the organization. While my vision for this kind of transformation is different from other approaches, it is consistent with organizational learning theories that promote the integration of individuals, communities, and senior management to participate in more democratic and visionary forms of thinking, reflec- tion, and learning. It is my belief that many of the dilemmas presented by IT have existed in other parts of organizations for years and that the Internet revolution only served to expose them. If we believe this to be true, then we must begin the process of integrating technology into strategic thinking and stop depending on IT to provide magical answers and inappropriate expectations of performance. Technology is not the responsibility of any one person or department; rather, it is part of the responsibility of every employee. Thus, the challenge is to allow organizations to understand how to modify their processes and the roles and responsibilities of their employees to incorporate technology as part of normal workplace activities. Technology then becomes more a subject and a component of discourse. IT staff mem- bers need to emerge as specialists who participate in decision making, development, and sustained support of business evolution. There are also technology-based topics that do not require the typical expertise that IT personnel provide. This is a literacy issue that requires different ways of thinking and learning during the everyday part of operations. For example, using desktop tools, communicating via e-mail, and sav- ing files and data are integral to everyday operations. These activities affect projects, yet they are not really part of the responsibilities of IT departments. Given the knowledge that technology is everywhere, we must change the approach that we take to be successful. Another way of looking at this phenomenon is to define technology more as a commodity, readily available to all individuals. This means that the notion of technology as organizationally segregated into separate cubes of expertise is problematic, particularly on a global front. Thus, the overall aim of this book is to promote organizational learning that disseminates the uses of technology throughout the business so that

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xxiv IntroduCtIon

IT departments are a partner in its use, as opposed to being its sole owner. The cure to IT project failure, then, is to engage the business in technology decisions in such a way that individuals and business units are fundamentally involved in the process. Such processes need to be designed to dynamically respond to technology opportunities and thus should not be overly bureaucratic. There is a balance between establishing organizations that can readily deal with technology ver- sus those that become too complex and inefficient.

This balance can only be attained using organizational learning techniques as the method to grow and reach technology maturation.

Overview of the Chapters

Chapter 1 provides an important case study of the Ravell Corporation (a pseudonym), where I was retained for over 5 years. During this period, I applied numerous organizational learning methods toward the integration of the IT department with the rest of the organiza- tion. The chapter allows readers to understand how the theories of organizational learning can be applied in actual practice and how those theories are particularly beneficial to the IT community. The chapter also shows the practical side of how learning techniques can be linked to measurable outcomes and ultimately related to business strategy. This concept will become the basis of integrating learn- ing with strategy (i.e., “strategic learning”). The Ravell case study also sets the tone of what I call the IT dilemma, which represents the core problem faced by organizations today. Furthermore, the Ravell case study becomes the cornerstone example throughout the book and is used to relate many of the theories of learning and their practical applicability in organizations. The Ravell case has also been updated in this second edition to include recent results that support the importance of alignment with the human resources department.

Chapter 2 presents the details of the IT dilemma. This chapter addresses issues such as isolation of IT staff, which results in their marginalization from the rest of the organization. I explain that while executives want technology to be an important part of busi- ness strategy, few understand how to accomplish it. In general, I show that individuals have a lack of knowledge about how technology and

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IntroduCtIon xxv

business strategy can, and should, be linked to form common business objectives. The chapter provides the results of a 3-year study of how chief executives link the role of technology with business strategy. The study captures information relating to how chief executives perceive the role of IT, how they manage it and use it strategically, and the way they measure IT performance and activities.

Chapter 3 focuses on defining how organizations need to respond to the challenges posed by technology. I analyze technological dyna- mism in its core components so that readers understand the different facets that comprise its many applications. I begin by presenting tech- nology as a “dynamic variable” that is capable of affecting organiza- tions in a unique way. I specifically emphasize the unpredictability of technology and its capacity to accelerate change—ultimately con- cluding that technology, as an independent variable, has a dynamic effect on organizational development. This chapter also introduces my theory of responsive organizational dynamism, defined as a disposi- tion in organizational behavior that can respond to the demands of technology as a dynamic variable. I establish two core components of responsive organizational dynamism: strategic integration and cultural assimilation. Each of these components is designed to tackle a specific problem introduced by technology. Strategic integration addresses the way in which organizations determine how to use technology as part of business strategy. Cultural assimilation, on the other hand, seeks to answer how the organization, both structurally and culturally, will accommodate the actual human resources of an IT staff and depart- ment within the process of implementing new technologies. Thus, strategic integration will require organizational changes in terms of cultural assimilation. The chapter also provides a perspective of the technology life cycle so that readers can see how responsive organi- zational dynamism is applied on an IT project basis. Finally, I define the driver and supporter functions of IT and how these contribute to managing technology life cycles.

Chapter 4 introduces theories on organizational learning and applies them specifically to responsive organizational dynamism. I emphasize that organizational learning must result in individual and organiza- tional transformation that leads to measurable performance outcomes. The chapter defines a number of organizational learning theories, such as reflective practices, learning organization, communities of practice,

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learning preferences and experiential learning, social discourse, and the use of language. These techniques and approaches to promoting organizational learning are then configured into various models that can be used to assess individual and organizational development. Two important models are designed to be used in responsive organizational dynamism: the applied individual learning wheel and the technology maturity arc. These models lay the foundation for my position that learning maturation involves a steady linear progression from an indi- vidual focus toward a system or organizational perspective. The chap- ter also addresses implementation issues—political challenges that can get in the way of successful application of the learning theories.

Chapter 5 explores the role of management in creating and sustain- ing responsive organizational dynamism. I define the tiers of middle management in relation to various theories of management participa- tion in organizational learning. The complex issues of whether orga- nizational learning needs to be managed from the top down, bottom up, or middle top-down are discussed and applied to a model that operates in responsive organizational dynamism. This chapter takes into account the common three-tier structure in which most orga- nizations operate: executive, middle, and operations. The executive level includes the chief executive officer (CEO), president, and senior vice presidents. The middle is the most complex, ranging from vice president/director to supervisory roles. Operations covers what is commonly known as “staff,” including clerical functions. The knowl- edge that I convey suggests that all of these tiers need to participate in management, including operations personnel, via a self-development model. The chapter also presents the notion that knowledge manage- ment is necessary to optimize competitive advantage, particularly as it involves transforming tacit knowledge into explicit knowledge. I view the existing theories on knowledge management, create a hybrid model that embraces technology issues, and map them to responsive organizational dynamism. Discussions on change management are included as a method of addressing the unique ways that technol- ogy affects product development. Essentially, I tie together responsive organizational dynamism with organizational change theory by offer- ing modifications to generally accepted theories. There is also a specific model created for IT organizations that maps onto organizational- level concepts. Although I have used technology as the basis for the

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need for responsive organizational dynamism, I show that the needs for its existence can be attributed to any variable that requires dynamic change. As such, I suggest that readers begin to think about the next “technology” or variable that can cause the same needs to occur inside organizations. The chapter has been extended to address the impact of social networking and the leadership opportunities it provides to technology executives.

Chapter 6 examines how organizational transformation occurs. The primary focus of the chapter is to integrate transformation the- ory with responsive organizational dynamism. The position taken is that organizational learning techniques must inevitably result in organizational transformation. Discussions on transformation are often addressed at the organizational level, as opposed to individual development. As in other sections of the book, I extend a number of theories so that they can operate under the auspices of responsive organizational dynamism, specifically the works of Yorks and Marsick (2000) and Aldrich (2001). I expand organizational transformation to include ongoing assessment within technology deliverables. This is accomplished through the use of a modified Balanced Scorecard originally developed by Kaplan and Norton (2001). The Balanced Scorecard becomes the vehicle for establishing a strategy-focused and technology-based organization.

Chapter 7 deals with the many business transformation projects that require outsource arrangements and virtual team management. This chapter provides an understanding of when and how to consider outsourcing and the intricacies of considerations once operating with virtual teams. I cover such issues as management considerations and the challenges of dealing in multiple locations. The chapter extends the models discussed in previous chapters so that they can be aligned with operating in a virtual team environment. Specifically, this includes communities of practice, social discourse, self-development, knowl- edge management, and, of course, responsive organizational dyna- mism and its corresponding maturity arcs. Furthermore, I expand the conversation to include IT and non-IT personnel and the arguments for the further support for the need to integrate all functions across the organization.

Chapter 8 presents updated case studies that demonstrate how my organizational learning techniques are actually applied in practice.

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Three case studies are presented: Siemens AG, ICAP, and HTC. Siemens AG is a diverse international company with 20 discrete sepa- rate businesses in over 190 countries. The case study offers a perspec- tive of how a corporate chief information officer introduced e-business strategy. ICAP is a leading international money and security bro- ker. This case study follows the activities of the electronic trading community entity and how the CEO transformed the organization and used organizational learning methods to improve competitive advantage. HTC (a pseudonym) provides an example of why the chief IT executive should report to the CEO and how a CEO can champion specific projects to help transform organizational norms and behav- iors. This case study also maps the transformation of the company to actual examples of strategic advantage.

Chapter 9 seeks to define best practices to implement and sustain responsive organizational dynamism. The chapter sets forth a model that creates separate, yet linked, best practices and maturity arcs that can be used to assess stages of the learning development of the chief IT executive, the CEO, and the middle management. I discuss the concept of “common threads,” by which each best practices arc links through common objectives and outcomes to the responsive organi- zational dynamism maturity arc presented in Chapter 4. Thus, these arcs represent an integrated and hierarchical view of how each com- ponent of the organization contributes to overall best practices. A new section has been added that links ethics to technology leadership and maturity.

The conclusions provided in Chapter 10 summarize the many aspects of how IT and organizational learning operate together to support the responsive organizational dynamism environment. The chapter emphasizes the specific key themes developed in the book, such as evolution versus revolution; control and empowerment; driver and supporter operations; and responsive organizational dynamism and self-generating organizations. Finally, I provide an overarching framework for “organizing” reflection and integrate it with the best practices arcs.

As a final note, I need to clarify my use of the words information technology and technology. In many parts of the book, they are used

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IntroduCtIon xxix

interchangeably, although there is a defined difference. Of course, not all technology is related to information; some is based on machinery or the like. For the purposes of this book, the reader should assume that IT is the primary variable that I am addressing. However, the theories and processes that I offer can be scaled to all types of techno- logical innovation.

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xxxi

About the Author

Arthur M. Langer has more than 25 years of experience in manag- ing the strategic development, support, and marketing of software and computer systems. His professional expertise encompasses IT strategy, outsourcing, operations management, feasibility analysis and techniques for developing and marketing systems, management of IT staff, IT cost/benefit analysis, systems selection/migration, Year 2000 implementation, computer downsizing, and software re-engineering of enterprise systems to Client/Server using Object Oriented Methods. Select clients include Prudential Insurance, Corcoran Group, Citibank, Purina Mills, WNET/Thirteen, System Software Associates, Global Turnkey Systems, TIAA/Cref, France Telecom, and Buelli and Rasero (Italy’s largest insurance agents). In addition to corporate consulting, Dr. Langer presents seminars throughout the world on analysis, design, and software management.

Dr. Langer is Chair of Faculty and Curricular Development in the Information Technology Programs of Columbia University’s School of Continuing Education and teaches courses in the MBA program of the Graduate School of Business at Columbia. A specialist in issues of distance education, mentoring, and workplace learning, he has more than 15 years of experience in adult higher education. At Columbia, he is responsible for developing overall curricular direction, as well as individual courses, for graduate-level adult education program. He is

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xxxii About the Author

also responsible for program administration, including faculty hiring and student recruitment.

As a researcher, Dr. Langer has authored various papers on infor- mation systems design and management. His current research focuses on the mentoring of adult learners and the design of technology-based curricula for corporations and universities. Dr. Langer is also the author of The Art of Analysis (Springer-Verlag, 1997; second edition 1999), used in the United States and abroad by universities and pro- fessionals in the industry.

Dr. Langer holds a BS in computer science, an MBA in accounting/ finance, and a Doctorate of Education from Columbia University.

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1

1 The “Ravell” CoRpoRaTion

Introduction

Launching into an explanation of information technology (IT), organizational learning, and the practical relationship into which I propose to bring them is a challenging topic to undertake. I choose, therefore, to begin this discussion by presenting an actual case study that exemplifies many key issues pertaining to organizational learn- ing and how it can be used to improve the performance of an IT department. Specifically, this chapter summarizes a case study of the IT department at the Ravell Corporation (a pseudonym) in New York City. I was retained as a consultant at the company to improve the performance of the department and to solve a mounting political problem involving IT and its relation to other departments. The case offers an example of how the growth of a company as a “learning organization”—one in which employees are constantly learning dur- ing the normal workday (Argyris, 1993; Watkins & Marsick, 1993)— utilized reflective practices to help it achieve the practical strategic goals it sought. Individuals in learning organizations integrate pro- cesses of learning into their work. Therefore, a learning organization must advocate a system that allows its employees to interact, ask ques- tions, and provide insight to the business. The learning organization will ultimately promote systematic thinking and the building of orga- nizational memory (Watkins & Marsick, 1993). A learning organiza- tion (discussed more fully in Chapter 4) is a component of the larger topic of organizational learning.

The Ravell Corporation is a firm with over 500 employees who, over the years, had become dependent on the use of technology to run its business. Its IT department, like that of many other compa- nies, was isolated from the rest of the business and was regarded as a peripheral entity whose purpose was simply to provide technical

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2 InFormAtIon teChnology

support. This was accompanied by actual physical isolation—IT was placed in a contained and secure location away from mainstream operations. As a result, IT staff rarely engaged in active discourse with other staff members unless specific meetings were called relat- ing to a particular project. The Ravell IT department therefore was not part of the community of organizational learning—it did not have the opportunity to learn along with the rest of the organization, and it was never asked to provide guidance in matters of general rele- vance to the business as a whole. This marginalized status resulted in an us-versus-them attitude on the part of IT and non-IT personnel alike. Much has been written about the negative impact of margin- alization on individuals who are part of communities. Schlossberg (1989) researched adults in various settings and how marginalization affected their work and self-efficacy. Her theory on marginalization and mattering is applied to this case study because of its relevance and similarity to her prior research. For example, IT represents simi- lar characteristics to a separate group on a college campus or in a workplace environment. Its physical isolation also can be related to how marginalized groups move away from the majority population and function without contact. The IT director, in particular, had cul- tivated an adversarial relationship with his peers. The director had shaped a department that fueled his view of separation. This had the effect of further marginalizing the position of IT within the orga- nization. Hand in hand with this form of separatism came a sense of actual dislike on the part of IT personnel for other employees. IT staff members were quick to point fingers at others and were often noncommunicative with members of other departments within the organization. As a result of this kind of behavior, many departments lost confidence in the ability of IT to provide support; indeed, the quality of support that IT furnished had begun to deteriorate. Many departments at Ravell began to hire their own IT support person- nel and were determined to create their own information systems subdepartments. This situation eventually became unacceptable to management, and the IT director was terminated. An initiative was begun to refocus the department and its position within the orga- nization. I was retained to bring about this change and to act as the IT director until a structural transformation of the department was complete.

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the “rAvell” CorporAtIon 3

A New Approach

My mandate at Ravell was initially unclear—I was to “fix” the prob- lem; the specific solution was left up to me to design and implement. My goal became one of finding a way to integrate IT fully into the organizational culture at Ravell. Without such integration, IT would remain isolated, and no amount of “fixing” around this issue would address the persistence of what was, as well, a cultural problem. Unless IT became a true part of the organization as a whole, the entire IT staff could be replaced without any real change having occurred from the organization’s perspective. That is, just replacing the entire IT staff was an acceptable solution to senior management. The fact that this was acceptable suggested to me that the knowledge and value contained in the IT department did not exist or was misunderstood by the senior management of the firm. In my opinion, just eliminat- ing a marginalized group was not a solution because I expected that such knowledge and value did exist and that it needed to be investi- gated properly. Thus, I rejected management’s option and began to formulate a plan to better understand the contributions that could be made by the IT department. The challenge was threefold: to improve the work quality of the IT department (a matter of performance), to help the department begin to feel itself a part of the organization as a whole and vice versa (a matter of cultural assimilation), and to per- suade the rest of the organization to accept the IT staff as equals who could contribute to the overall direction and growth of the organiza- tion (a fundamental matter of strategic integration).

My first step was to gather information. On my assignment to the position of IT director, I quickly arranged a meeting with the IT orga- nization to determine the status and attitudes of its personnel. The IT staff meeting included the chief financial officer (CFO), to whom IT reported. At this meeting, I explained the reasons behind the changes occurring in IT management. Few questions were asked; as a result, I immediately began scheduling individual meetings with each of the IT employees. These employees varied in terms of their position within the corporate hierarchy, in terms of salary, and in terms of technical expertise. The purpose of the private meetings was to allow IT staff members to speak openly and to enable me to hear their concerns. I drew on the principles of action science, pioneered by Argyris and

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4 InFormAtIon teChnology

Schön (1996), designed to promote individual self-reflection regard- ing behavior patterns and to encourage a productive exchange among individuals. Action science encompasses a range of methods to help individuals learn how to be reflective about their actions. By reflect- ing, individuals can better understand the outcomes of their actions and, especially, how they are seen by others. This was an important approach because I felt learning had to start at the individual level as opposed to attempting group learning activities. It was my hope that the discussions I orchestrated would lead the IT staff to a better understanding not only of the learning process itself than what they had shown but also of the significance of that process. I pursued these objectives by guiding them to detect problem areas in their work and to undertake a joint effort to correct them (Argyris, 1993; Arnett, 1992). Important components of reflective learning are single-loop and dou- ble-loop learning. Single-loop learning requires individuals to reflect on a prior action or habit that needs to be changed in the future but does not require individuals to change their operational procedures with regard to values and norms. Double-loop learning, on the other hand, does require both change in behavior and change in operational procedures. For example, people who engage in double-loop learning may need to adjust how they perform their job, as opposed to just the way they communicate with others, or, as Argyris and Schön (1996) stated, “the correction of error requires inquiry through which organi- zational values and norms themselves are modified” (p. 22).

Despite my efforts and intentions, not all of the exchanges were destined to be successful. Many of the IT staff members felt that the IT director had been forced out and that there was consequently no support for the IT function in the organization. There was also clear evidence of internal political division within the IT depart- ment; members openly criticized each other. Still other interviews resulted in little communication. This initial response from IT staff was disappointing, and I must admit I began to doubt whether these learning methods would be an antidote for the department. Replacing people began to seem more attractive, and I now under- stood why many managers prefer to replace staff as opposed to investing in their transformation. However, I also knew that learn- ing is a gradual process and that it would take time and trust to see results.

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the “rAvell” CorporAtIon 5

I realized that the task ahead called for nothing short of a total cul- tural transformation of the IT organization at Ravell. Members of the IT staff had to become flexible and open if they were to become more trusting of one another and more reflective as a group (Garvin, 2000; Schein, 1992). Furthermore, they had to have an awareness of their history, and they had to be willing to institute a vision of partnering with the user community. An important part of the process for me was to accept the fact that the IT staff was not habitually inclined to be reflective. My goal then was to create an environment that would foster reflective learning, which would in turn enable a change in individual and organizational values and norms (Senge, 1990).

The Blueprint for Integration

Based on information drawn from the interviews, I developed a pre- liminary plan to begin to integrate IT into the day-to-day operations at Ravell and to bring IT personnel into regular contact with other staff people. According to Senge (1990), the most productive learn- ing occurs when skills are combined in the activities of advocacy and inquiry. My hope was to encourage both among the staff at Ravell. The plan for integration and assimilation involved assigning IT resources to each department; that is, following the logic of the self-dissemina- tion of technology, each department would have its own dedicated IT person to support it. However, just assigning a person was not enough, so I added the commitment to actually relocate an IT person into each physical area. This way, rather than clustering together in an area of their own, IT people would be embedded throughout the organiza- tion, getting first-hand exposure to what other departments did and learning how to make an immediate contribution to the productiv- ity of these departments. The on-site IT person in each department would have the opportunity to observe problems when they arose— and hence to seek ways to prevent them—and, significantly, to share in the sense of accomplishment when things went well. To reinforce their commitment to their respective areas, I specified that IT person- nel were to report not only to me but also to the line manager in their respective departments. In addition, these line managers were to have input on the evaluation of IT staff. I saw that making IT staff offi- cially accountable to the departments they worked with was a tangible

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6 InFormAtIon teChnology

way to raise their level of commitment to the organization. I hoped that putting line managers in a supervisory position would help build a sense of teamwork between IT and non-IT personnel. Ultimately, the focus of this approach was to foster the creation of a tolerant and supportive cultural climate for IT within the various departments; an important corollary goal here was to allow reflective reviews of per- formance also to flourish (Garvin, 1993).

Enlisting Support

Support for this plan had to be mustered quickly if I was to create an environment of trust. I had to reestablish the need for the IT func- tion within the company, show that it was critical for the company’s business operations, and show that its integration posed a unique challenge to the company. However, it was not enough just for me to claim this. I also had to enlist key managers to claim it. Indeed, employees will cooperate only if they believe that self-assessment and critical thinking are valued by management (Garvin, 2000). I decided to embark on a process of arranging meetings with specific line man- agers in the organization. I selected individuals who would represent the day-to-day management of the key departments. If I could get their commitment to work with IT, I felt it could provide the stimulus we needed. Some line managers were initially suspicious of the effort because of their prior experiences with IT. However, they generally liked the idea of integration and assimilation that was presented to them and agreed to support it, at least on a trial basis.

Predictably, the IT staff was less enthusiastic about the idea. Many of them felt threatened, fearing that they were about to lose their independence or lose the mutual support that comes from being in a cohesive group. I had hoped that holding a series of meetings would help me gain support for the restructuring concept. I had to be care- ful to ensure that the staff members would feel that they also had an opportunity to develop a plan that they were confident would work. During a number of group sessions, we discussed various scenarios of how such a plan might work. I emphasized the concepts of integration and assimilation and that a program of their implementation would be experimental. Without realizing it, I had engaged IT staff mem- bers in a process of self-governance. Thus, I empowered them to feel

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the “rAvell” CorporAtIon 7

comfortable with voicing new ideas without being concerned that they might be openly criticized by me if I did not agree. This process also encouraged individuals to begin thinking more as a group. Indeed, by directing the practice of constructive criticism among the IT staff, I had hoped to elicit a higher degree of reflective action among the group and to show them that they had the ability to learn from one another as well as the ability to design their own roles in the organi- zation (Argyris 1993). Their acceptance of physical integration and, hence, cultural assimilation became a necessary condition for the abil- ity of the IT group to engage in greater reflective behavior (Argyris & Schön, 1996).

Assessing Progress

The next issue concerned individual feedback. How was I to let each per- son know how he or she was doing? I decided first to get feedback from the larger organizational community. This was accomplished by meeting with the line managers and obtaining whatever feedback was available from them. I was surprised at the large quantities of information they were willing to offer. The line managers were not shy about participat- ing, and their input allowed me to complete two objectives: (1) to under- stand how the IT staff was being perceived in its new assignment and (2) to create a social and reflective relationship between IT individuals and the line managers. The latter objective was significant, for if we were to be successful, the line managers would have to assist us in the effort to integrate and assimilate IT functions within their community.

After the discussions with managers were completed, individual meetings were held with each IT staff member to discuss the feed- back. I chose not to attribute the feedback to specific line managers but rather to address particular issues by conveying the general con- sensus about them. Mixed feelings were also disclosed by the IT staff. After conveying the information, I listened attentively to the responses of IT staff members. Not surprisingly, many of them responded to the feedback negatively and defensively. Some, for example, felt that many technology users were unreasonable in their expectations of IT. It was important for me as facilitator not to find blame among them, particularly if I was to be a participant in the learning organization (Argyris & Schön, 1996).

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Resistance in the Ranks

Any major organizational transformation is bound to elicit resistance from some employees. The initiative at Ravell proved to be no excep- tion. Employees are not always sincere, and some individuals will engage in political behavior that can be detrimental to any organiza- tional learning effort. Simply put, they are not interested in partici- pating, or, as Marsick (1998) stated, “It would be naïve to expect that everyone is willing to play on an even field (i.e., fairly).” Early in the process, the IT department became concerned that its members spent much of their time trying to figure out how best to position themselves for the future instead of attending to matters at hand. I heard from other employees that the IT staff felt that it would live through my tenure; that is, just survive until a permanent IT director was hired. It became difficult at times to elicit the truth from some members of the IT staff. These individuals would skirt around issues and deny making statements that were reported by other employees rather than con- front problems head on. Some IT staff members would criticize me in front of other groups and use the criticism as proof that the plan for a general integration was bound to fail. I realized in a most tangible sense that pursuing change through reflective practice does not come without resistance and that this resistance needs to be factored into the planning of any such organizationally transformative initiative.

Line Management to the Rescue

At the time that we were still working through the resistance within IT, the plan to establish a relationship with line management began to work. A number of events occurred that allowed me to be directly involved in helping certain groups solve their IT problems. Word spread quickly that there was a new direction in IT that could be trusted. Line management support is critical for success in such trans- formational situations. First, line management is typically comprised of people from the ranks of supervisors and middle managers who are responsible for the daily operations of their department. Assuming they do their jobs, senior management will cater to their needs and listen to their feedback. The line management of any organiza- tion, necessarily engaged to some degree in the process of learning

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the “rAvell” CorporAtIon 9

(a “learning organization”), is key to its staff. Specifically, line manag- ers are responsible for operations personnel; at the same time, they must answer to senior management. Thus, they understand both exec- utive and operations perspectives of the business (Garvin, 2000). They are often former staff members themselves and usually have a high level of technical knowledge. Upper management, while important for financial support, has little effect at the day-to-day level, yet this is the level at which the critical work of integration and the building of a single learning community must be done.

Interestingly, the line management organization had previously had no shortage of IT-related problems. Many of these line managers had been committed to developing their own IT staffs; however, they quickly realized that the exercise was beyond their expertise and that they needed guidance and leadership. Their participation in IT staff meetings had begun to foster a new trust in the IT department, and they began to see the possibilities of working closely with IT to solve their problems. Their support began to turn toward what Watkins and Marsick (1993, p. 117) called “creating alignment by placing the vision in the hands of autonomous, cross-functional synergetic teams.” The combination of IT and non-IT teams began to foster a synergy among the communities, which established new ideas about how best to use technology.

IT Begins to Reflect

Although it was initially difficult for some staff members to accept, they soon realized that providing feedback opened the door to the process of self-reflection within IT. We undertook a number of exer- cises to help IT personnel understand how non-IT personnel per- ceived them and how their own behavior may have contributed to these perceptions. To foster self-reflection, I adopted a technique developed by Argyris called “the left-hand column.” In this technique, individuals use the right-hand column of a piece of paper to transcribe dialogues that they felt had not resulted in effective communication. In the left-hand column of the same page, participants are to write what they were really thinking at the time of the dialogue but did not say. This exercise is designed to reveal underlying assumptions that speakers may not be aware of during their exchanges and that may be

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10 InFormAtIon teChnology

impeding their communication with others by giving others a wrong impression. The exercise was extremely useful in helping IT personnel understand how others in the organization perceived them.

Most important, the development of reflective skills, according to Schön (1983), starts with an individual’s ability to recognize “leaps of abstraction”—the unconscious and often inaccurate generaliza- tions people make about others based on incomplete information. In the case of Ravell, such generalizations were deeply entrenched among its various personnel sectors. Managers tended to assume that IT staffers were “ just techies” and that they therefore held funda- mentally different values and had little interest in the organization as a whole. For their part, the IT personnel were quick to assume that non-IT people did not understand or appreciate the work they did. Exposing these “leaps of abstraction” was key to removing the roadblocks that prevented Ravell from functioning as an integrated learning organization.

Defining an Identity for Information Technology

It was now time to start the process of publicly defining the identity of IT. Who were we, and what was our purpose? Prior to this time, IT had no explicit mission. Instead, its members had worked on an ad hoc basis, putting out fires and never fully feeling that their work had contributed to the growth or development of the organization as a whole. This sense of isolation made it difficult for IT members to begin to reflect on what their mission should or could be. I organized a series of meetings to begin exploring the question of a mission, and I offered support by sharing exemplary IT mission statements that were being implemented in other organizations. The focus of the meetings was not on convincing them to accept any particular idea but rather to facilitate a reflective exercise with a group that was undertaking such a task for the first time (Senge, 1990).

The identity that emerged for the IT department at Ravell was dif- ferent from the one implicit in their past role. Our new mission would be to provide technical support and technical direction to the organi- zation. Of necessity, IT personnel would remain specialists, but they were to be specialists who could provide guidance to other depart- ments in addition to helping them solve and prevent problems. As they

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the “rAvell” CorporAtIon 11

became more intimately familiar with what different departments did—and how these departments contributed to the organization as a whole—IT professionals would be able to make better informed rec- ommendations. The vision was that IT people would grow from being staff who fixed things into team members who offered their expertise to help shape the strategic direction of the organization and, in the process, participate fully in organizational growth and learning.

To begin to bring this vision to life, I invited line managers to attend our meetings. I had several goals in mind with this invita- tion. Of course, I wanted to increase contact between IT and non-IT people; beyond this, I wanted to give IT an incentive to change by making them feel a part of the organization as a whole. I also got a commitment from IT staff that we would not cover up our prob- lems during the sessions but would deal with all issues with trust and honesty. I also believed that the line managers would reciprocate and allow us to attend their staff meetings. A number of IT individuals were concerned that my approach would only further expose our prob- lems with regard to quality performance, but the group as a whole felt compelled to stick with the beliefs that honesty would always prevail over politics. Having gained insight into how the rest of the organiza- tion perceived them, IT staff members had to learn how to deal with disagreement and how to build consensus to move an agenda forward. Only then could reflection and action be intimately intertwined so that after-the-fact reviews could be replaced with periods of learning and doing (Garvin, 2000).

The meetings were constructive not only in terms of content issues handled in the discussions but also in terms of the number of line managers who attended them. Their attendance sent a strong message that the IT function was important to them and that they understood that they also had to participate in the new direction that IT was tak- ing. The sessions also served as a vehicle to demonstrate how IT could become socially assimilated within all the functions of the commu- nity while maintaining its own identity.

The meetings were also designed as a venue for group members to be critical of themselves. The initial meetings were not successful in this regard; at first, IT staff members spent more time blaming oth- ers than reflecting on their own behaviors and attitudes. These ses- sions were difficult in that I would have to raise unpopular questions

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12 InFormAtIon teChnology

and ask whether the staff had truly “looked in the mirror” concerning some of the problems at hand. For example, one IT employee found it difficult to understand why a manager from another department was angry about the time it took to get a problem resolved with his computer. The problem had been identified and fixed within an hour, a time frame that most IT professionals would consider very respon- sive. As we looked into the reasons why the manager could have been justified in his anger, it emerged that the manager had a tight deadline to meet. In this situation, being without his computer for an hour was a serious problem.

Although under normal circumstances a response time of 1 hour is good, the IT employee had failed to ask about the manager’s particu- lar circumstance. On reflection, the IT employee realized that putting himself in the position of the people he was trying to support would enable him to do his job better. In this particular instance, had the IT employee only understood the position of the manager, there were alternative ways of resolving the problem that could have been imple- mented much more quickly.

Implementing the Integration: A Move Toward Trust and Reflection

As communication became more open, a certain synergy began to develop in the IT organization. Specifically, there was a palpable rise in the level of cooperation and agreement with regard to the over- all goals set during these meetings. This is not to suggest that there were no disagreements but rather that discussions tended to be more constructive in helping the group realize its objective of providing outstanding technology support to the organization. The IT staff also felt freer to be self-reflective by openly discussing its ideas and its mistakes. The involvement of the departmental line managers also gave them the support they needed to carry out the change. Slowly, there developed a shift in behavior in which the objectives of the group sharpened its focus on the transformation of the department, on its acknowledgment of successes and failures, and on acquiring new knowledge to advance the integration of IT into the core busi- ness units.

Around this time, an event presented itself that I felt would allow the IT staff to establish its new credibility and authority to the other

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departments: the physical move of the organization to a new location. The move was to be a major event, not only because it represented the relocation of over 500 people and the technological infrastructure they used on a day-to-day basis but also because the move was to include the transition of the media communications systems of the company to digital technology. The move required tremendous tech- nological work, and the organization decided to perform a “technol- ogy acceleration,” meaning that new technology would be introduced more quickly because of the opportunity presented by the move. The entire moving process was to take a year, and I was immediately sum- moned to work with the other departments in determining the best plan to accomplish the transition.

For me, the move became an emblematic event for the IT group at Ravell. It would provide the means by which to test the creation of, and the transitioning into, a learning organization. It was also to pro- vide a catalyst for the complete integration and assimilation of IT into the organization as a whole. The move represented the introduction of unfamiliar processes in which “conscious reflection is … necessary if lessons are to be learned” (Garvin, 2000, p. 100). I temporarily reorganized IT employees into “SWAT” teams (subgroups formed to deal with defined problems in high-pressure environments) so that they could be eminently consumed in the needs of their community partners. Dealing with many crisis situations helped the IT depart- ment change the existing culture by showing users how to better deal with technology issues in their everyday work environment. Indeed, because of the importance of technology in the new location, the core business had an opportunity to embrace our knowledge and to learn from us.

The move presented new challenges every day and demanded open- ness and flexibility from everyone. Some problems required that IT listen intently to understand and meet the needs of their commu- nity partners. Other situations put IT in the role of teaching: assess- ing needs and explaining to other departments what was technically possible and then helping them to work out compromises based on technical limitations. Suggestions for IT improvement began to come from all parts of the organization. Ideas from others were embraced by IT, demonstrating that employees throughout the organization were learning together. IT staff behaved assertively and without fear

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of failure, suggesting that, perhaps for the first time, their role had extended beyond that of fixing what was broken to one of helping to guide the organization forward into the future. Indeed, the move established the kind of “special problem” that provided an opportunity for growth in personal awareness through reflection (Moon, 1999).

The move had proved an ideal laboratory for implementing the IT integration and assimilation plan. It provided real and important opportunities for IT to work hand in hand with other departments— all focusing on shared goals. The move fostered tremendous cama- raderie within the organization and became an excellent catalyst for teaching reflective behavior. It was, if you will, an ideal project in which to show how reflection in action can allow an entire organiza- tion to share in the successful attainment of a common goal. Because it was a unique event, everyone—IT and non-IT personnel alike— made mistakes, but this time there was virtually no finger-pointing. People accepted responsibility collectively and cooperated in finding solutions. When the company recommenced operations from its new location—on time and according to schedule—no single group could claim credit for the success; it was universally recognized that success had been the result of an integrated effort.

Key Lessons

The experience of the reorganization of the IT department at Ravell can teach us some key lessons with respect to the cultural transforma- tion and change of marginalized technical departments, generally.

Defining Reflection and Learning for an Organization

IT personnel tend to view learning as a vocational event. They gener- ally look to increase their own “technical” knowledge by attending special training sessions and programs. However, as Kegan (1998) reminded us, there must be more: “Training is really insufficient as a sole diet of education—it is, in reality a subset of education.” True education involves transformation, and transformation, according to Kegan, is the willingness to take risks, to “get out of the bedroom of our comfortable world.” In my work at Ravell, I tried to augment this “diet” by embarking on a project that delivered both vocational

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training and education through reflection. Each IT staff person was given 1 week of technical training per year to provide vocational development. But beyond this, I instituted weekly learning sessions in which IT personnel would meet without me and produce a weekly memo of “reflection.” The goal of this practice was to promote dia- logue in the hope that IT would develop a way to deal with its fears and mistakes on its own. Without knowing it, I had begun the pro- cess of creating a discursive community in which social interactions could act as instigators of reflective behavior leading to change.

Working Toward a Clear Goal

The presence of clearly defined, measurable, short-term objectives can greatly accelerate the process of developing a “learning organiza- tion” through reflective practice. At Ravell, the move into new physi- cal quarters provided a common organizational goal toward which all participants could work. This goal fostered cooperation among IT and non-IT employees and provided an incentive for everyone to work and, consequently, learn together. Like an athletic team before an important game or even an army before battle, the IT staff at Ravell rallied around a cause and was able to use reflective practices to help it meet its goals. The move also represented what has been termed an “eye-opening event,” one that can trigger a better understanding of a culture whose differences challenge one’s presuppositions (Mezirow, 1990). It is important to note, though, that while the move acceler- ated the development of the learning organization as such, the move itself would not have been enough to guarantee the successes that followed it. Simply setting a deadline is no substitute for undergoing the kind of transformation necessary for a consummately reflective process. Only as the culmination of a process of analysis, socializa- tion, and trust building can an event like this speed the growth of a learning organization.

Commitment to Quality

Apart from the social challenges it faced in merging into the core business, the IT group also had problems with the quality of its out- put. Often, work was not performed in a professional manner. IT

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organizations often suffer from an inability to deliver on schedule, and Ravell was no exception. The first step in addressing the quality prob- lem was to develop awareness by IT of the importance of the problem, not only in my estimation but in that of the entire company. The IT staff needed to understand how technology affected the day-to-day operations of the entire company. One way to start the dialogue on quality is to first initiate one about failures. If something was late, for instance, I asked why. Rather than addressing the problems from a destructive perspective (Argyris & Schön, 1996; Schein 1992; Senge, 1990), the focus was on encouraging IT personnel to understand the impact of their actions—or lack of action—on the company. Through self-reflection and recognition of their important role in the organi- zation, the IT staff became more motivated than before to perform higher quality work.

Teaching Staff “Not to Know”

One of the most important factors that developed out of the process of integrating IT was the willingness of the IT staff “not to know.” The phenomenology of “not knowing” or “knowing less” became the facilitator of listening; that is, by listening, we as individuals are better able to reflect. This sense of not knowing also “allows the individual to learn an important lesson: the acceptance of what is, without our attempts to control, manipulate, or judge” (Halifax, 1999, p. 177). The IT staff improved its learning abilities by suggesting and adopting new solutions to problems. An example of this was the creation of a two-shift help desk that provided user support during both day and evening. The learning process allowed IT to contribute new ideas to the community. More important, their contributions did not dramat- ically change the community; instead, they created gradual adjust- ments that led to the growth of a new hybrid culture. The key to this new culture was its ability to share ideas, accept error as a reality (Marsick, 1998), and admit to knowing less (Halifax, 1999).

Transformation of Culture

Cultural changes are often slow to develop, and they occur in small intervals. Furthermore, small cultural changes may even go unnoticed

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or may be attributed to factors other than their actual causes. This raises the issue of the importance of cultural awareness and our ability to measure individual and group performance. The history of the IT problems at Ravell made it easy for me to make management aware of what we were newly attempting to accomplish and of our reasons for creating dialogues about our successes and failures. Measurement and evaluation of IT performance are challenging because of the intricacies involved in determining what represents success. I feel that one form of measurement can be found in the behavioral patterns of an orga- nization. When it came time for employee evaluations, reviews were held with each IT staff member. Discussions at evaluation reviews focused on the individuals’ perceptions of their role and how they felt about their job as a whole. The feedback from these review meetings suggested that the IT staff became more devoted, more willing to reflect on their role in the organization, and, generally, seemed hap- pier at their jobs then ever before. Interestingly, and significantly, they also appeared to be having fun at their jobs. This happiness propa- gated into the community and influenced other supporting depart- ments to create similar infrastructures that could reproduce our type of successes. This interest was made evident by frequent inquiries I received from other departments about how the transformation of IT was accomplished and how it might be translated to create similar changes in staff behavior elsewhere in the company. I also noticed that there were fewer complaints and a renewed ability for the staff to work with our consultants.

Alignment With Administrative Departments

Ravell provided an excellent lesson about the penalties of not align- ing properly with other strategic and operational partners in a firm. Sometimes, we become insistent on forcing change, especially when placed in positions that afford a manager power—power to get results quickly and through force. The example of Ravell teaches us that an approach of power will not ultimately accomplish transformation of the organization. While senior management can authorize and man- date change, change usually occurs much more slowly than they wish, if it occurs at all. The management ranks can still push back and cause problems, if not sooner, then later. While I aligned with the line

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units, I failed to align with important operational partners, particu- larly human resources (HR). HR in my mind at that time was imped- ing my ability to accomplish change. I was frustrated and determined to get things done by pushing my agenda. This approach worked early on, but I later discovered that the HR management was bitter and devoted to stopping my efforts. The problems I encountered at Ravell are not unusual for IT organizations. The historical issues that affect the relationship between HR and IT are as follows:

IT has unusual staff roles and job descriptions that can be • inconsistent with the rest of the organization. IT tends to have complex working hours and needs.• IT has unique career paths that do not “fit” with HR standards.• IT salary structures shift more dynamically and are very sen-• sitive to market conditions. IT tends to operate in silos.•

The challenge, then, to overcome these impediments requires IT to

Reduce silos and IT staff marginalization• Achieve better organization-wide alignment• Develop shared leadership• Define and create an HR/IT governance model•

The success of IT/HR alignment should follow practices similar to those I instituted with the line managers at Ravell, specifically the following:

Successful HR/IT integration requires organizational learn-• ing techniques. Alignment requires an understanding of the relationship • between IT investments and business strategy. An integration of IT can create new organizational cultures • and structures. HR/IT alignment will likely continue to be dynamic in nature • and evolve at an accelerated pace.

The oversight of not integrating better with HR cost IT dearly at Ravell. HR became an undisclosed enemy—that is, a negative

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the “rAvell” CorporAtIon 19

force against the entire integration. I discovered this problem only later and was never able to bring the HR department into the fold. Without HR being part of the learning organization, IT contin- ued to struggle with aligning their professional positions with those of the other departments. Fortunately, within 2 years the HR vice president retired, which inevitably opened the doors for a new start.

In large IT organizations, it is not unusual to have an HR mem- ber assigned to focus specifically on IT needs. Typically, it is a joint position in which the HR individual in essence works for the IT executive. This is an effective alternative in that the HR per- son becomes versed in IT needs and can properly represent IT in the area of head count needs and specific titles. Furthermore, the unique aspect of IT organizations is in the hybrid nature of its staff. Typically, a number of IT staff members are consultants, a situation that presents problems similar to the one I encountered at Ravell— that is, the resentment of not really being part of the organization. Another issue is that many IT staff members are outsourced across the globe, a situation that brings its own set of challenges. In addi- tion, the role of HR usually involves ensuring compliance with vari- ous regulations. For example, in many organizations, a consultant is permitted to work on site for only 1 year before U.S. government regulations force the company to hire them as employees. The HR function must work closely with IT to enforce these regulations. Yet another important component of IT and HR collaboration is talent management. That is, HR must work closely with IT to understand new roles and responsibilities as they develop in the organization. Another challenge is the integration of technology into a the day- to-day business of a company and the question of where IT talent should be dispersed throughout the organization. Given this com- plex set of challenges, IT alone cannot facilitate or properly repre- sent itself unless it aligns with the HR departments. This becomes further complex with the proliferation of IT virtual teams across the globe that create complex structures that often have different HR ramifications, both legally and culturally. Virtual team management is discussed further in the book.

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Conclusion

This case study shows that strategic integration of technical resources into core business units can be accomplished by using those aspects of organizational learning that promote reflection in action. This kind of integration also requires something of a concomitant form of assimilation on the cultural level (see Chapter 3). Reflective think- ing fosters the development of a learning organization, which in turn allows for the integration of the “other” in its various organizational manifestations. The experience of this case study also shows that the success of organizational learning will depend on the degree of cross fertilization achievable in terms of individual values and in the abil- ity of the community to combine new concepts and beliefs to form a hybrid culture.

Such a new culture prospers with the use of organizational learn- ing strategies to enable it to share ideas, accept mistakes, and learn to know less as a regular part their discourse and practice in their day- to-day operations.

Another important conclusion from the Ravell experience is that time is an important factor to the success of organizational learn- ing approaches. One way of dealing with the problem of time is with patience—something that many organizations do not have. Another element of success came in the acceleration of events (such as the relocation at Ravell), which can foster a quicker learning cycle and helps us see results faster. Unfortunately, impatience with using organizational learning methods is not an acceptable approach because it will not render results that change individual and orga- nizational behavior. Indeed, I almost changed my approach when I did not get the results I had hoped for early in the Ravell engage- ment. Nevertheless, my persistence paid off. Finally, the belief that replacing the staff, as opposed to investing in its knowledge, results from a faulty generalization. I found that most of the IT staff had much to contribute to the organization and, ultimately, to help transform the culture. Subsequent chapters of this book build on the Ravell experience and discuss specific methods for integrating organizational learning and IT in ways that can improve competi- tive advantage.

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the “rAvell” CorporAtIon 21

Another recent perception, which I discuss further in Chapter 4, is the commitment to “complete” integration. Simply put, IT cannot select which departments to work or choose to participate only with line managers; as they say, it is “all or nothing at all.” Furthermore, as Friedman (2007) stated, “The world is flat” (p. 8). Certainly, part of the “flattening” of the world has been initiated by technology, but it has also created overwhelming challenges for seamless integration of technology within all operations. The flattening of the world has cre- ated yet another opportunity for IT to better integrate itself into what is now an everyday challenge for all organizations.

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23

2 The iT Dilemma

Introduction

We have seen much discussion in recent writing about how informa- tion technology has become an increasingly significant component of corporate business strategy and organizational structure (Bradley & Nolan, 1998; Levine, Locke, Searls, & Weinberger, 2000; Siebel, 1999). But, do we know about the ways in which this significance takes shape? Specifically, what are the perceptions and realities regarding the importance of technology from organization leaders, business manag- ers, and core operations personnel? Furthermore, what forms of the participation should IT assume within the rest of the organization?

The isolation of IT professionals within their companies often pre- vents them from becoming active participants in the organization. Technology personnel have long been criticized for their inability to function as part of the business and are often seen as a group falling outside business cultural norms (Schein, 1992). They are frequently stereotyped as “techies” and segregated into areas of the business where they become marginalized and isolated from the rest of the organization. It is my experience, based on case studies such as the one reviewed in Chapter 1 (the Ravell Corporation), that if an orga- nization wishes to absorb its IT department into its core culture, and if it wishes to do so successfully, the company as a whole must be pre- pared to consider structural changes and to seriously consider using organizational learning approaches.

The assimilation of technical people into an organization presents a special challenge in the development of true organizational learning practices (developed more fully in Chapter 3). This challenge stems from the historical separation of a special group that is seen as stand- ing outside the everyday concerns of the business. IT is generally acknowledged as having a key support function in the organization as a whole. However, empirical studies have shown that it is a challenging

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24 InFormAtIon teChnology

endeavor to successfully integrate IT personnel into the learning fold and to do so in such a way that they not only are accepted but also are understood to be an important part of the social and cultural struc- ture of the business (Allen & Morton, 1994; Cassidy, 1998; Langer, 2007; Schein, 1992; Yourdon, 1998).

In his book In Over Our Heads, Kegan (1994) discussed the chal- lenges of dealing with individual difference. IT personnel have been consistently regarded as “different” fixtures, as outsiders who do not quite fit easily into the mainstream organization. Perhaps because of their technical practices, which may at times seem “foreign,” or because of perceived differences in their values, IT personnel can become marginalized, imagined as outside the core social structures of business. As in any social structure, marginalization can result in the withdrawal of the individual from the community (Schlossberg, 1989). As a result, many organizations are choosing to outsource their IT services rather than confront and address the issues of cultural absorption and organizational learning. The outsourcing alternative tends to further distance the IT function from the core organiza- tion, thus increasing the effects of marginalization. Not only does the outsourcing of IT personnel separate them further from their peers, but it also invariably robs the organization of a potentially important contributor to the social growth and organizational learning of the business. For example, technology personnel should be able to offer insight into how technology can support further growth and learning within the organization. In addition, IT personnel are usually trained to take a logical approach to problem solving; as a result, they should be able to offer a complementary focus on learning. Hence, the inte- gration of IT staff members into the larger business culture can offer significant benefits to an organization in terms of learning and orga- nizational growth.

Some organizations have attempted to improve communications between IT and non-IT personnel through the use of an intermedi- ary who can communicate easily with both groups. This intermediary is known in many organizations as the business analyst. Typically, the business analyst will take responsibility for the interface between IT and the larger business community. Although a business analyst may help facilitate communication between IT and non-IT personnel,

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the It dIlemmA 25

this arrangement cannot help but carry the implication that differ- ent “languages” are spoken by these two groups and, by extension, that direct communication is not possible. Therefore, the use of such an intermediary suffers the danger of failing to promote integration between IT and the rest of the organization; in fact, it may serve to keep the two camps separate. True integration, in the form of direct contact between IT and non-IT personnel, represents a greater chal- lenge for an organization than this remedy would suggest.

Recent Background

Since the 1990s, IT has been seen as a kind of variable that pos- sesses the great potential to reinvent business. Aspects of this promise affected many of the core business rules used by successful chief exec- utives and business managers. While organizations have used IT for the processing of information, decision-support processing, and order processing, the impact of the Internet and e-commerce systems has initiated revolutionary responses in every business sector. This eco- nomic phenomenon became especially self-evident with the formation of dot.coms in the mid- and late 1990s. The advent of this phenom- enon stressed the need to challenge fundamental business concepts. Many financial wizards surmised that new technologies were indeed changing the very infrastructure of business, affecting how businesses would operate and compete in the new millennium. Much of this hoopla seemed justified by the extraordinary potential that technol- ogy offered, particularly with respect to the revolutionizing of old- line marketing principles, for it was technology that came to violate what was previously thought to be protected market conditions and sectors—technology came to reinvent these business markets and to allow new competitors to cross market in sectors they otherwise could not have entered.

With this new excitement also came fear—fear that fostered unnat- ural and accelerated entry into technology because any delay might sacrifice important new market opportunities. Violating some of their traditional principles, many firms invested in creating new organi- zations that would “incubate” and, eventually, capture large market segments using the Internet as the delivery vehicle. By 2000, many of

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26 InFormAtIon teChnology

these dot.coms were in trouble, and it became clear that their notion of new business models based on the Internet contained significant flaws and shortfalls. As a result of this crisis, the role and valuation of IT is again going through a transformation—and once more we are skeptical about the value IT can provide a business and about the way to measure the contributions of IT.

IT in the Organizational Context

Technology not only plays a significant role in workplace operations but also continues to increase its relevance among other traditional components of any business, such as operations, accounting, and marketing (Earl, 1996b; Langer, 2001a; Schein, 1992). Given this increasing relevance, IT gains significance in relation to

1. The impact it bears on organizational structure 2. The role it can assume in business strategy 3. The ways in which it can be evaluated 4. The extent to which chief executives feel the need to manage

operational knowledge and thus to manage IT effectively

IT and Organizational Structure

Sampler’s (1996) research explored the relationship between IT and organizational structure. His study indicated that there is no clear-cut relationship that has been established between the two. However, he concluded that there are five principal positions that IT can take in this relationship:

1. IT can lead to centralization of organizational control. 2. Conversely, IT can lead to decentralization of organizational

control. 3. IT can bear no impact on organizational control, its signifi-

cance being based on other factors. 4. Organizations and IT can interact in an unpredictable

manner. 5. IT can enable new organizational arrangements, such as net-

worked or virtual organizations.

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the It dIlemmA 27

According to Sampler (1996), the pursuit of explanatory models for the relationship between IT and organizational structure continues to be a challenge, especially since IT plays dual roles. On the one hand, it enhances and constrains the capabilities of workers within the orga- nization, and because of this, it possesses the ability to create a unique cultural component. While both roles are active, their impact on the organization cannot be predicted; instead, they evolve as unique social norms within the organization. Because IT has changed so dramati- cally over the past decades, it continues to be difficult to compare prior research on the relationship between IT and organizational structure.

Earl (1996a) studied the effects of applying business process reen- gineering (BPR) to organizations. BPR is a process that organizations undertake to determine how best to use technology to improve busi- ness performance. Earl concluded that BPR is

an unfortunate title: it does not reflect the complex nature of either the distinctive underpinning concept of BPR [i.e., to reevaluate methods and rules of business operations] or the essential practical challenges to make it happen [i.e., the reality of how one goes about doing that]. (p. 54)

In my 2001 study of the Ravell Corporation (“Fixing Bad Habits,” Langer, 2001b), I found that BPR efforts require buy-in from business line managers, and that such efforts inevitably require the adaptation by individuals of different cultural norms and practices.

Schein (1992) recognized that IT culture represents a subculture in collision with many others within an organization. He concluded that if organizations are to be successful in using new technologies in a global context, they must cope with ceaseless flows of information to ensure organizational health and effectiveness. His research indicated that chief executive officers (CEOs) have been reluctant to implement a new system of technology unless their organizations felt comfort- able with it and were ready to use it. While many CEOs were aware of cost and efficiency implications in using IT, few were aware of the potential impact on organizational structure that could result from “adopting an IT view of their organizations” (p. 293). Such results suggest that CEOs need to be more active and more cognizant than they have been of potential shifts in organizational structure when adopting IT opportunities.

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The Role of IT in Business Strategy

While many chief executives recognize the importance of IT in the day-to-day operations of the business, their experience with attempt- ing to utilize IT as a strategic business tool has been frustrating. Typical executive complaints about IT, according to Bensaou and Earl (1998), fall into five problem areas:

1. A lack of correspondence between IT investments and busi- ness strategy

2. Inadequate payoff from IT investments 3. The perception of too much “technology for technology’s

sake” 4. Poor relations between IT specialists and users 5. The creation of system designs that fail to incorporate users’

preferences and work habits

McFarlan created a strategic grid (as presented in Applegate, Austin, & McFarlan, 2003) designed to assess the impact of IT on operations and strategy. The grid shows that IT has maximum value when it affects both operations and core business objectives. Based on McFarlan’s hypothesis, Applegate et al. established five key questions about IT that may be used by executives to guide strategic decision making:

1. Can IT be used to reengineer core value activities and change the basis of competition?

2. Can IT change the nature of the relationship and the balance of power between buyers and sellers?

3. Can IT build or reduce barriers to entry? 4. Can IT increase or decrease switching costs? 5. Can IT add value to existing products and services or create

new ones?

The research and analysis conducted by McFarlan and Applegate, respectively, suggest that when operational strategy and its results are maximized, IT is given its highest valuation as a tool that can trans- form the organization; it then receives the maximum focus from senior management and board members. However, Applegate (Applegate et al., 2003) also focused on the risks of using technology. These risks increase when executives have a poor understanding of competitive

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the It dIlemmA 29

dynamics, when they fail to understand the long-term implications of a strategic system that they have launched, or when they fail to account for the time, effort, and cost required to ensure user adoption, assimilation, and effective utilization. Applegate’s conclusion under- scores the need for IT management to educate senior management so that the latter will understand the appropriate indicators for what can maximize or minimize their investments in technology.

Szulanski and Amin (2000) claimed that while emerging tech- nologies shrink the window in which any given strategy can be implemented, if the strategy is well thought out, it can remain via- ble. Mintzberg’s (1987) research suggested that it would be useful to think of strategy as an art, not a science. This perspective is especially true in situations of uncertainty. The rapidly changing pace of emerg- ing technologies, we know, puts a strain on established approaches to strategy—that is to say, it becomes increasingly difficult to find comfortable implementation of technological strategies in such times of fast-moving environments, requiring sophisticated organizational infrastructure and capabilities.

Ways of Evaluating IT

Firms have been challenged to find a way to best evaluate IT, par- ticularly using traditional return-on-investment (ROI) approaches. Unfortunately, in this regard, many components of IT do not gener- ate direct returns. Cost allocations based on overhead formulas (e.g., costs of IT as a percentage of revenues) are not applicable to most IT spending needs. Lucas (1999) established nonmonetary methods for evaluating IT. His concept of conversion effectiveness places value on the ability of IT to complete its projects on time and within its budgets—this alone is a sufficient factor for providing ROI, assuming that the project was approved for valid business reasons. He called this overall process for evaluation the “garbage can” model. It allows orga- nizations to present IT needs through a funneling pipeline of con- version effectiveness that filters out poor technology plans and that can determine which projects will render direct and indirect benefits to the organization. Indirect returns, according to Lucas, are those that do not provide directly measurable monetary returns but do pro- vide significant value that can be measured using his IT investment

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opportunities matrix. Utilizing statistical probabilities of returns, the opportunities matrix provides an effective tool for evaluating the impact of indirect returns.

Executive Knowledge and Management of IT

While much literature and research have been produced on how IT needs to participate in and bring value to an organization, there has been relatively little analysis conducted on what non-IT chief execu- tives need to know about technology. Applegate et al. (2003) sug- gested that non-IT executives need to understand how to differentiate new technologies from older ones and how to gauge the expected impact of these technologies on the businesses in which the firm com- petes for market share. This is to say that technology can change the relationship between customer and vendor and thus should be exam- ined as a potential for providing competitive advantage. The authors stated that non-IT business executives must become more comfort- able with technology by actively participating in technology decisions rather than delegating them to others. They need to question experts as they would in the financial areas of their businesses. Lou Gerstner, former CEO of IBM, is a good example of a non-IT chief executive who acquired sufficient knowledge and understanding of a technol- ogy firm; he was then able to form a team of executives who better understood how to develop the products, services, and overall busi- ness strategy of the firm.

Allen and Percival (2000) also investigated the importance of non- IT executive knowledge and participation with IT: “If the firm lacks the necessary vision, insights, skills, or core competencies, it may be unwise to invest in the hottest [IT] growth market” (p. 295). The authors pointed out that success in using emerging technologies is different from success in other traditional areas of business. They concluded that non-IT managers need to carefully consider expected synergies to determine whether an IT investment can be realized and, especially, whether it is efficient to earn cost of capital.

Recent studies have focused on four important components in the linking of technology and business: its relationship to organiza- tional structure, its role in business strategy, the means of its evalu- ation, and the extent of non-IT executive knowledge in technology.

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The challenge in determining the best organizational structure for IT is posed by the accelerating technological advances since the 1970s and by the difficulty in comparing organizational models to consistent business cases. Consequently, there is no single organizational struc- ture that has been adopted by businesses.

While most chief executives understand the importance of using technology as part of their business strategy, they express frustration in determining how to effectively implement a technology-based stra- tegic approach. This frustration results from difficulties in understand- ing how IT investments relate to other strategic business issues, from difficulty in assessing payoff and performance of IT generally and from perceived poor relations between IT and other departments.

Because most IT projects do not render direct monetary returns, executives find themselves challenged to understand technology investments. They have difficulty measuring value since traditional ROI formulas are not applicable. Thus, executives would do better to focus on valuing technology investments by using methods that can determine payback based on a matrix of indirect returns, which do not always include monetary sources. There is a lack of research on the question of what general knowledge non-IT executives need to have to manage effectively the strategic use of technology within their firms. Non-IT chief executives are often not engaged in day-to-day IT activities, and they often delegate dealing with strategic technol- ogy issues to other managers. The remainder of this chapter examines the issues raised by the IT dilemma in its various guises especially as they become relevant to, and are confronted from, the top manage- ment or chief executive point of view.

IT: A View From the Top

To investigate further the critical issues facing IT, I conducted a study in which I personally interviewed over 40 chief executives in vari- ous industries, including finance/investment, publishing, insurance, wholesale/retail, and hotel management. Executives interviewed were either the CEO or president of their respective corporations. I canvassed a population of New York-based midsize corporations for this interview study. Midsize firms, in our case, comprise businesses of between 200 and 500 employees. Face-to-face interviews were

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32 InFormAtIon teChnology

conducted to allow participants the opportunity to articulate their responses, in contrast to answering printed survey questions; execu- tives were therefore allowed to expand and clarify their responses to questions. An interview guide (see questions in Tables 2.1–2.3) was designed to raise issues relevant to the challenges of using technology

Table 2.1 Perception and Role of IT

QuesTIon AnAlysIs

1. How do you define the role and the mission of IT in your firm?

Fifty-seven percent responded that their IT organizations were reactive and did not really have a mission. Twenty-eight percent had an IT mission that was market driven; that is, their IT departments were responsible for actively participating in marketing and strategic processes.

2. What impact has the Internet had on your business strategy?

Twenty-eight percent felt the impact was insignificant, while 24% felt it was critical. The remaining 48% felt that the impact of the Internet was significant to daily transactions.

3. Does the firm have its own internal software development activity? Do you develop your own in-house software or use software packages?

seventy-six percent had an internal development organization. eighty-one percent had internally developed software.

4. What is your opinion of outsourcing? Do you have the need to outsource technology? If so, how is this accomplished?

sixty-two percent hade outsourced certain aspects of their technology needs

5. Do you use consultants to help formulate the role of IT? If yes, what specific roles do they play? If not, why?

sixty-two percent of the participants used consultants to assist them in formulating the role of IT.

6. Do you feel that IT will become more important to the strategy of the business? If yes, why?

eighty-five percent felt that IT had recently become more important to the strategic planning of the business.

7. How is the IT department viewed by other departments? Is the IT department liked, or is it marginalized?

Twenty-nine percent felt that IT was still marginalized. Another 29% felt it was not very integrated. Thirty-eight percent felt IT was sufficiently integrated within the organization, but only one chief executive felt that IT was very integrated with the culture of his firm.

8. Do you feel there is too much “hype” about the importance and role of technology?

Fifty-three percent felt that there was no hype. However, 32% felt that there were levels of hype attributed to the role of technology; 10% felt it was “all hype.”

9. Have the role and the uses of technology in the firm significantly changed over the last five years? If so, what are the salient changes?

Fourteen percent felt little had changed, whereas 43% stated that there were moderate changes. Thirty-eight percent stated there was significant change.

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Table 2.2 Management and strategic Issues

QuesTIon AnAlysIs

1. What is the most senior title held by someone in IT? Where does this person rank on the organization hierarchy?

sixty-six percent called the highest position CIo (chief information officer). Ten percent used managing director, while 24% used director as the highest title.

2. Does IT management ultimately report to you? Fifty percent of IT leaders reported directly to the chief executive; the other half reported to either the chief financial officer or the chief operating officer.

3. How active are you in working with IT issues? Fifty-seven percent stated that they are very active—on a weekly basis. Thirty-eight percent were less active or inconsistently involved, usually stepping in when an issue becomes problematic.

4. Do you discuss IT strategy with your peers from other firms?

eighty-one percent did not communicate with peers at all. only 10% actively engaged in peer-to-peer communication about IT strategy.

5. Do IT issues get raised at board, marketing, and/or strategy meetings?

eighty-six percent confirmed that IT issues were regularly discussed at board meetings. However, only 57% acknowledged IT discussion during marketing meetings, and only 38% confirmed like discussions at strategic sessions.

6. How critical is IT to the day-to-day business? eighty-two percent of the chief executives felt it is very significant or critical to the business.

Table 2.3 Measuring IT Performance and Activities

QuesTIon AnAlysIs

1. Do you have any view of how IT should be measured and accounted for?

sixty-two percent stated that they had a view on measurement; however, there was significant variation in how executives defined measurement.

2. Are you satisfied with IT performance in the firm?

There was significant variation in IT satisfaction. only 19% were very satisfied. Thirty-three percent were satisfied, another 33% were less satisfied, and 14% were dissatisfied.

3. How do you budget IT costs? Is it based on a percentage of gross revenues?

Fifty-seven percent stated that they did not use gross revenues in their budgeting methodologies.

4. To what extent do you perceive technology as a means of increasing marketing or productivity or both?

seventy-one percent felt that technology was a significant means of increasing both marketing and productivity in their firms.

5. Are Internet/Web marketing activities part of the IT function?

only 24% stated that Internet/Web marketing efforts reported directly to the IT organization.

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34 InFormAtIon teChnology

as reported in the recent research literature and to consider significant phenomena that could affect changes in the uses of technology, such as the Internet. The interview discussions focused on three sections: (1) chief executive perception of the role of IT, (2) management and strategic issues, and (3) measuring IT performance and activities. The results of the interviews are summarized next.

Section 1: Chief Executive Perception of the Role of IT

This section of the interview focuses on chief executive perceptions of the role of IT within the firm. For the first question, about the role and mission of IT, over half of the interviewees responded in ways that suggested their IT organizations were reactive, without a strate- gic mission. One executive admitted, “IT is not really defined. I guess its mission is to meet our strategic goals and increase profitability.” Another response betrays a narrowly construed understanding of its potential: “The mission is that things must work—zero tolerance for failure.” These two responses typify the vague and generalized percep- tion that IT “has no explicit mission” except to advance the important overall mission of the business itself. Little over a quarter of respon- dents could confirm a market-driven role for IT; that is, actively par- ticipating in marketing and strategic processes. Question 2, regarding the impact of the Internet on business strategy, drew mixed responses. Some of these revealed the deeply reflective challenges posed by the Internet: “I feel the Internet forces us to take a longer-term view and a sharper focus to our business.” Others emphasized its transformative potential: “The Internet is key to decentralization of our offices and business strategy.”

Questions 3 and 4 focused on the extent to which firms have their own software development staffs, whether they use internally developed or packaged software, and whether they outsource IT ser- vices. Control over internal development of systems and applications remained important to the majority of chief executives: “I do not like outsourcing—surrender control, and it’s hard to bring back.” Almost two thirds of the participants employed consultants to assist them in formulating the role of IT within their firms but not always without reservation: “Whenever we have a significant design issue we bring in consultants to help us—but not to do actual development work.”

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Only a few were downright skeptical: “I try to avoid consultants— what is their motivation?” The perception of outsourcing is still low in midsize firms as compared to the recent increase in IT outsourcing abroad. The lower use could be related to the initial costs and man- agement overhead that is required to properly implement outsource operations in foreign countries.

A great majority of chief executives recognized some form of the strategic importance of IT to business planning: “More of our business is related to technology and therefore I believe IT is more important to strategic planning.” Still, this sense of importance remained some- what intuitive: “I cannot quantify how IT will become more strategic to the business planning—but I sense that job functions will be dra- matically altered.” In terms of how IT is viewed by other departments within the firm, responses were varied. A little over a third of respon- dents felt IT was reasonably integrated within the organization: “The IT department is vitally important—but rarely noticed.” The majority of respondents, however, recognized a need for greater integration: “IT was marginalized—but it is changing. While IT drives the sys- tem—it needs to drive more of the business.” Some articulated clearly the perceived problems: “IT needs to be more proactive—they do not seem to have good interpersonal skills and do not understand cor- porate politics.” A few expressed a sense of misgiving (“IT people are strange—personality is an issue”) and even a sense of hopeless- ness: “People hate IT—particularly over the sensitivity of the data. IT sometimes is viewed as misfits and incompetent.”

Question 8 asked participants whether they felt there was too much “hype” attributed to the importance of technology in business. Over half responded in the negative, although not without reservation: “I do not think there is too much hype—but I am disappointed. I had hoped that technology at this point would have reduced paper, decreased cost—it just has not happened.” Others felt that there is indeed some degree of sensationalism: “I definitely think there is too much hype—everyone wants the latest and greatest.” Hype in many cases can be related to a function of evaluation, as in this exclamation: “The hype with IT relates more to when will we actually see the value!” The last question in this section asks whether the uses of technology within the firm had significantly changed over the last 5 years. A majority agreed that it had: “The role of IT has changed significantly

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36 InFormAtIon teChnology

in the last 5 years—we need to stay up-to-date because we want to carry the image that we are ‘on the ball.’” Many of these stressed the importance of informational flows: “I find the ‘I’ [information] part to be more and more important and the ‘T’ [technology] to be dimin- ishing in importance.” Some actively downplayed the significance: “I believe in minimizing the amount of technology we use—people get carried away.”

Section 2: Management and Strategic Issues

This section focuses on questions pertaining to executive and manage- ment organizational concerns. The first and second questions asked executives about the most senior title held by an IT officer and about the reporting structure for IT. Two thirds of the participants ranked their top IT officer as a CIO (chief information officer). In terms of organizational hierarchy, half of the IT leaders were at the second tier, reporting directly to the CEO or president, while the other half were at the third tier, reporting either to the CFO (chief financial officer) or to the COO (chief operating officer). As one CEO stated, “Most of my activity with IT is through the COO. We have a monthly meet- ing, and IT is always on the agenda.”

The third question asked executives to consider their level of involvement with IT matters. Over half claimed a highly active rela- tionship, engaging on a weekly basis: “I like to have IT people close and in one-on-one interactions. It is not good to have artificial barri- ers.” For some, levels of involvement may be limited: “I am active with IT issues in the sense of setting goals.” A third of participants claimed less activity, usually becoming active when difficulties arose. Question 4 asked whether executives spoke to their peers at other firms about technology issues. A high majority managed to skip this potential for communication with their peers. Only 1 in 10 actively pursued this matter of engagement.

Question 5 asked about the extent to which IT issues were dis- cussed at board meetings, marketing meetings, and business strategy sessions. Here, a great majority confirmed that regular discussion regarding IT concerns were raised, especially at board meetings; a smaller majority attested to IT discussions during marketing meet- ings. Over a third reported that IT issues maintained a presence at

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strategic sessions. The higher incidence at board meetings may still be attributable to the effects of Y2K (Year 2000) preparations. The final question in this section concerned the level of criticality for IT in the day-to-day operations of the business. A high majority of executives responded affirmatively in this regard: “IT is critical to our survival, and its impact on economies of scale is significant.”

Section 3: Measuring IT Performance and Activities

This section is concerned with how chief executives measured IT per- formance and activities within their firms. The first question of this section asked whether executives had a view about how IT perfor- mance should be measured. Almost two thirds affirmed having some formal or informal way of measuring performance: “We have no formal process of measuring IT other than predefined goals, cost constraints, and deadlines.” Their responses demonstrated great variation, some- times leaning on cynicism: “I measure IT by the number of complaints I get.” Many were still grappling with this challenge: “Measuring IT is unqualified at this time. I have learned that hours worked is not the way to measure IT—it needs to be more goal-oriented.” Most chief executives expressed some degree of quandary: “We do not feel we know enough about how IT should be measured.” Question 2 asked executives to rate their satisfaction with IT performance. Here, also, there was significant variation. A little more than half expressed some degree of satisfaction: “Since 9/11 IT has gained a lot of credibility because of the support that was needed during a difficult time.” Slightly fewer than half revealed a degree of dissatisfaction: “We had to over- haul our IT department to make it more customer-service oriented.”

Question 3 concerned budgeting; that is, whether or not chief executives budgeted IT costs as a percentage of gross revenues. Over half denied using gross revenues in their budgeting method: “When handling IT projects we look at it on a request-by-request basis.”

The last two questions asked chief executives to assess the impact of technology on marketing and productivity. Almost three quarters of the participants felt that technology represented a significant means of enhancing both marketing and productivity. Some maintained a cer- tainty of objective: “We try to get IT closer to the customer—having them understand the business better.” Still, many had a less-defined

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38 InFormAtIon teChnology

sense of direction: “I have a fear of being left behind, so I do think IT will become more important to the business.” And others remained caught in uncertainty: “I do not fully understand how to use technol- ogy in marketing—but I believe it’s there.” Chief executive certainty, in this matter, also found expression in the opposite direction: “IT will become less important—it will be assumed as a capability and a service that companies provide to their customers.” Of the Internet/ Web marketing initiatives, only one quarter of these reported directly to the IT organization: “IT does not drive the Web activities because they do not understand the business.” Often, these two were seen as separate or competing entities of technology: “Having Web develop- ment report to IT would hinder the Internet business’s growth poten- tial.” Yet, some might be willing to explore a synergistic potential: “We are still in the early stages of understanding how the Internet relates to our business strategy and how it will affect our product line.”

General Results

Section 1 revealed that the matter of defining a mission for the IT organization remains as unresolved as finding a way to reckon with the potential impact of IT on business strategy. Executives still seemed to be at a loss on the question of how to integrate IT into the workplace—a human resource as well as a strategic issue. There was uncertainty regarding the dependability of the technology informa- tion received. Most agreed, however, in their need for software devel- opment departments to support their internally developed software, in their need to outsource certain parts of technology, and in their use of outside consultants to help them formulate the future activities of their IT departments.

Section 2 showed that while the amount of time that executives spent on IT issues varied, there was a positive correlation between a structure in which IT managers reported directly to the chief execu- tive and the degree of activity that executives stated that they had with IT matters. Section 3 showed that chief executives understood the potential value that technology can bring to the marketing and productivity of their firms. They did not believe, however, that tech- nology can go unmeasured; there needs to be some rationale for allot- ting a spending figure in the budget. For most of the firms in this

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study, the use of the Internet as a technological vehicle for future busi- ness was not determined by IT. This suggests that IT does not man- age the marketing aspects of technology and that it has not achieved significant integration in strategic planning.

Defining the IT Dilemma

The variations found in this study in terms of where IT reports, how it is measured, and how its mission is defined were consistent with exist- ing research. But, the wide-ranging inconsistencies and uncertain- ties among executives described here left many of them wondering whether they should be using IT as part of their business strategy and operations. While this quandary does not in itself suggest an inad- equacy, it does point to an absence of a “best practices” guideline for using technology strategically. Hence, most businesses lacked a clear plan on how to evolve IT contributions toward business development. Although a majority of respondents felt that IT was critical to the survival of their businesses, the degree of IT assimilation within the core culture of organizations still varied. This suggests that the effects of cultural assimilation lag behind the actual involvement of IT in the strategic direction of the company.

While Sampler (1996) attributed many operational inconsistencies to the changing landscape of technology, the findings of this study suggest that there is also a lack in professional procedures, rules, and established governance that could support the creation of best prac- tices for the profession. Bensaou and Earl (1998), on the one hand, have addressed this concern by taking a pro-Japanese perspective in extrapolating from five “Western” problems five “general” principles, presumably not culture bound, and thence a set of “best principles” for managing IT. But, Earl, Sampler and Short (1995), on the other hand, sidestepped any attempt to incorporate Earl’s own inductive approach discussed here; instead, they favored a market management approach based on a supply-and-demand model to “balance” IT management. Of course, best practices already embody the implicit notion of best principles; however, the problems confronting executives—the need for practical guidelines—remain. For instance, this study showed that IT performance is measured in many different ways. It is this type of practical inconsistency that leaves chief executives with the

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40 InFormAtIon teChnology

difficult challenge of understanding how technology decisions can be managed.

On a follow-up call related to this study, for example, a CEO informed me of a practical yet significant difference she had instituted since our interview. She stated:

The change in reporting has allowed IT to become part of the main- stream vision of the business. It now is a fundamental component of all discussions with human resources, sales and marketing, and accounting. The change in reporting has allowed for the creation of a critical system, which has generated significant direct revenues for the business. I attri- bute this to my decision to move the reporting of technology directly to me and to my active participation in the uses of technology in our business.

This is an example of an executive whom Schein (1994) would have called a “change agent”—someone who employs “cognitive redefinition through scanning,” in this case to elicit the strategic potential of IT. We might also call this activity reflective thinking (Langer, 2001b). Schein’s change agents, however, go on to “acknowledge that future generations of CEOs will have been educated much more thoroughly in the possibilities of the computer and IT, thus enabling them to take a hands-on adopter stance” (p. 343). This insight implies a distanc- ing (“future”) of present learning responsibilities among current chief executives. The nearer future of this insight may instead be seen in the development of organizational learning.1 These are two areas of con- temporary research that begin to offer useful models in the pursuit of a best practices approach to the understanding and managing of IT.

If the focus of this latter study was geared toward the evaluation of IT based on the view of the chief executive, it was, indeed, because their views necessarily shape the very direction for the organizations that they manage. Subsequent chapters of this book examine how the various dilemmas surrounding IT that I have discussed here are

1 My case study “Fixing Bad Habits” (Langer, 2001b) has shown that integrating the practices of reflective thinking to support the development of organizational learn- ing has greatly enhanced the adaptation of new technologies, their strategic valua- tion to the firm, and their assimilation into the social norms of the business.

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affecting organizations and how organizational learning practices can help answer many of the issues of today as raised by executives, man- agers, and operations personnel.

Recent Developments in Operational Excellence

The decline in financial markets in 2009 and the continued increase in mergers and acquisitions due to global competition have created an interesting opportunity for IT that reinforces the need for integration via organizational learning. During difficult economic periods, IT has traditionally been viewed as a cost center and had its operations reduced (I discuss this further in Chapter 3, in which I introduce the concept of drivers and supporters). However, with the growth in the role of technology, IT management has now been asked to help improve efficiency through the use of technology across departments. That is, IT is emerging as an agent for business transformation in a much stronger capacity than ever before. This phenomenon has placed tremendous pressure on the technology executive to align with his or her fellow executives in other departments and to get them to partici- pate in cost reductions by implementing more technology. Naturally, using technology to facilitate cuts to the workforce is often unpopular, and there has been much bitter fallout from such cross-department reductions. Technology executives thus face the challenge of position- ing themselves as the agents of a necessary change. However, opera- tional excellence is broader than just cutting costs and changing the way things operate; it is about doing things efficiently and with qual- ity measures across corporate operations. Now that technology affects every aspect of operations, it makes sense to charge technology execu- tives with a major responsibility to get it accomplished.

The assimilation of technology as a core part of the entire orga- nization is now paramount for survival, and the technology execu- tive of today and certainly tomorrow will be one who understands that operational excellence through efficiency must be accomplished by educating business units in self-managing the process. The IT executive, then, supports the activity as a leader, not as a cost cut- ter who invades the business—the two approaches are very different, and adopting the former can result in significant long-term results in strategic alignment.

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My interviews with CEOs supported this notion: The CEO does not want to be the negotiator; change must be evolutionary within the business units themselves. While taking this kind of role in organizational change presents a new dilemma for IT, it can also be an opportunity for IT to position itself successfully within the organization.

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43

3 TeChnology as a

vaRiable anD Responsive oRganizaTional Dynamism

Introduction

This chapter focuses on defining the components of technology and how they affect corporate organizations. In other words, if we step back momentarily from the specific challenges that information tech- nology (IT) poses, we might ask the following: What are the generic aspects of technology that have made it an integral part of strategic and competitive advantage for many organizations? How do organizations respond to these generic aspects as catalysts of change? Furthermore, how do we objectively view the role of technology in this context, and how should organizations adjust to its short- and long-term impacts?

Technological Dynamism

To begin, technology can be regarded as a variable, independent of others, that contributes to the life of a business operation. It is capable of producing an overall, totalizing yet distinctive effect on organizations—it has the unique capacity to create accelerations of corporate events in an unpredictable way. Technology, in its aspect of unpredictability, is necessarily a variable, and in its capacity as accel- erator—its tendency to produce change or advance—it is dynamic. My contention is that, as a dynamic kind of variable, technology, via responsive handling or management, can be tapped to play a special role in organizational development. It can be pressed into service as the dynamic catalyst that helps bring organizations to maturity in dealing not only with new technological quandaries but also with other agents of change. Change generates new knowledge, which in turn requires a structure of learning that should, if managed properly,

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44 InFormAtIon teChnology

result in transformative behavior, supporting the continued evolu- tion of organizational culture. Specifically, technology speeds up events, such as the expectation of getting a response to an e-mail, and requires organizations to respond to them in ever-quickening time frames. Such events are not as predictable as what individuals in orga- nizations have experienced prior to the advent of new technologies— particularly with the meteoric advance of the Internet. In viewing technology then as a dynamic variable, as one that requires of organi- zations systemic and cultural change, we may regard it as an inherent, internal driving force—a form of technological dynamism.

Dynamism is defined as a process or mechanism responsible for the development or motion of a system. Technological dynamism character- izes the unpredictable and accelerated ways in which technology, spe- cifically, can change strategic planning and organizational behavior/ culture. This change is based on the acceleration of events and inter- actions within organizations, which in turn create the need to better empower individuals and departments. Another way of understanding technological dynamism is to think of it as an internal drive recognized by the symptoms it produces. The new events and interactions brought about by technology are symptoms of the dynamism that technology manifests. The next section discusses how organizations can begin to make this inherent dynamism work in its favor on different levels.

Responsive Organizational Dynamism

The technological dynamism at work in organizations has the power to disrupt any antecedent sense of comfortable equilibrium or an unwelcome sense of stasis. It also upsets the balance among the vari- ous factors and relationships that pertain to the question of how we might integrate new technologies into the business—a question of what we will call strategic integration—and how we assimilate the cul- tural changes they bring about organizationally—a question of what we call cultural assimilation. Managing the dynamism, therefore, is a way of managing the effects of technology. I propose that these orga- nizational ripples, these precipitous events and interactions, can be addressed in specific ways at the organizational management level. The set of integrative responses to the challenges raised by technology is what I am calling responsive organizational dynamism, which will

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teChnology As A vArIAble 45

also receive further explication in the next few chapters. For now, we need to elaborate the two distinct categories that present themselves in response to technological dynamism: strategic integration and cul- tural assimilation. Figure 3.1 diagrams the relationships.

Strategic Integration

Strategic integration is a process that addresses the business-strategic impact of technology on organizational processes. That is, the business- strategic impact of technology requires immediate organizational responses and in some instances zero latency. Strategic integration recog- nizes the need to scale resources across traditional business–geographic boundaries, to redefine the value chain in the life cycle of a product or ser- vice line, and generally to foster more agile business processes (Murphy, 2002). Strategic integration, then, is a way to address the changing requirements of business processes caused by the sharp increases in uses

Technology as an Independent

Variable

Organizational Dynamism

Creates

Acceleration of events that require different

infrastructures and organizational processes

Symptoms and Implications

Strategic Integration

Cultural Assimilation

Requires

Figure 3.1 Responsive organizational dynamism.

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46 InFormAtIon teChnology

of technology. Evolving technologies have become catalysts for competi- tive initiatives that create new and different ways to determine successful business investment. Thus, there is a dynamic business variable that drives the need for technology infrastructures capable of greater flexibility and of exhibiting greater integration with all business operations.

Historically, organizational experiences with IT investment have resulted in two phases of measured returns. The first phase often shows negative or declining productivity as a result of the investment; in the second phase, we often see a lagging of, although eventual return to, productivity. The lack of returns in the first phase has been attributed to the nature of the early stages of technology exploration and experimentation, which tend to slow the process of organizational adaptation to technology. The production phase then lags behind the ability of the organization to integrate new technologies with its existing processes. Another complication posed by technological dynamism via the process of strategic integration is a phenomenon we can call factors of multiplicity—essentially what happens when several new technology opportunities overlap and create myriad projects that are in various phases of their developmental life cycle. Furthermore, the problem is compounded by lagging returns in productivity, which are complicated to track and to represent to management. Thus, it is important that organizations find ways to shorten the period between investment and technology’s effective deployment. Murphy (2002) identified several factors that are critical to bridging this delta:

1. Identifying the processes that can provide acceptable business returns from new technological investments

2. Establishing methodologies that can determine these processes

3. Finding ways to actually perform and realize expected benefits

4. Integrating IT projects with other projects 5. Adjusting project objectives when changes in the business

require them

Technology complicates these actions, making them more difficult to resolve; hence the need to manage the complications. To tackle these compounded concerns, strategic integration can shorten life- cycle maturation by focusing on the following integrating factors:

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teChnology As A vArIAble 47

Addressing the weaknesses in management organizations in • terms of how to deal with new technologies and how to better realize business benefits Providing a mechanism that both enables organizations to • deal with accelerated change caused by technological innova- tions and integrates them into a new cycle of processing and handling change Providing a strategic learning framework by which every new • technology variable adds to organizational knowledge, par- ticularly using reflective practices (see Chapter 4) Establishing an integrated approach that ties technology • accountability to other measurable outcomes using organiza- tional learning techniques and theories

To realize these objectives, organizations must be able to

Create dynamic internal processes that can function on a • daily basis to deal with understanding the potential fit of new technologies and their overall value to the business Provide the discourse to bridge the gaps between IT- and non-• IT-related investments and uses into an integrated system Monitor investments and determine modifications to the • life cycle Implement various organizational learning practices, includ-• ing learning organization, knowledge management, change management, and communities of practice, all of which help foster strategic thinking and learning that can be linked to performance (Gephardt & Marsick, 2003)

Another important aspect of strategic integration is what Murphy (2002) called “consequential interoperability,” in which “the conse- quences of a business process” are understood to “dynamically trigger integration” (p. 31). This integration occurs in what he called the five pillars of benefits realization:

1. Strategic alignment: The alignment of IT strategically with business goals and objectives

2. Business process impact: The impact on the need for the organi- zation to redesign business processes and integrate them with new technologies

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48 InFormAtIon teChnology

3. Architecture: The actual technological integration of appli- cations, databases, and networks to facilitate and support implementation

4. Payback: The basis for computing return on investment (ROI) from both direct and indirect perspectives

5. Risk: Identifying the exposure for underachievement or fail- ure in the technology investment

Murphy’s (2002) pillars are useful in helping us understanding how technology can engender the need for responsive organizational dynamism (ROD), especially as it bears on issues of strategic integra- tion. They also help us understand what becomes the strategic inte- gration component of ROD. His theory on strategic alignment and business process impact supports the notion that IT will increasingly serve as an undergirding force, one that will drive enterprise growth by identifying the initiators (such as e-business on the Internet) that best fit business goals. Many of these initiators will be accelerated by the growing use of e-business, which becomes the very driver of many new market realignments. This e-business realignment will require the ongoing involvement of executives, business managers, and IT managers. In fact, the Gartner Group forecasted that 70% of new software application investments and 5% of new infrastructure expenditures by 2005 would be driven by e-business. Indeed, this has occurred and continues to expand.

The combination of evolving business drivers with accelerated and changing customer demands has created a business revolution that best defines the imperative of the strategic integration component of ROD. The changing and accelerated way businesses deal with their customers and vendors requires a new strategic integration to become a reality rather than remain a concept discussed but affecting little action. Without action directed toward new strategic integration, organizations would lose competitive advantage, which would affect profits. Most experts see e-business as the mechanism that will ulti- mately require the integrated business processes to be realigned, thus providing value to customers and modifying the customer–vendor relationship. The driving force behind this realignment emanates from the Internet, which serves as the principle accelerator of the change in transactions across all businesses. The general need to optimize

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resources forces organizations to rethink and to realign business pro- cesses to gain access to new business markets.

Murphy’s (2002) pillar of architecture brings out yet another aspect of ROD. By architecture we mean the focus on the effects that technol- ogy has on existing computer applications or legacy systems (old exist- ing systems). Technology requires existing IT systems to be modified or replacement systems to be created that will mirror the new busi- ness realignments. These changes respond to the forces of strategic integration and require business process reengineering (BPR) activi- ties, which represent the reevaluation of existing systems based on changing business requirements. It is important to keep in mind the acceleration factors of technology and to recognize the amount of organizational effort and time that such projects take to complete. We must ask the following question: How might organizations respond to these continual requirements to modify existing processes? We discuss in other chapters how ROD represents the answer to this question.

Murphy’s (2002) pillar of direct return is somewhat limited and nar- row because not all IT value can be associated with direct returns, but it is important to discuss. Technology acceleration is forcing organiza- tions to deal with broader issues surrounding what represents a return from an investment. The value of strategic integration relies heavily on the ability of technology to encapsulate itself within other departments where it ultimately provides the value. We show in Chapter 4 that this issue also has significance in organizational formation. What this means is simply that value can be best determined within individual business units at the microlevel and that these appropriate-level busi- ness units also need to make the case for why certain investments need to be pursued. There are also paybacks that are indirect; for example, Lucas (1999) demonstrated that many technology investments are non- monetary. The IT department (among others) becomes susceptible to great scrutiny and subject to budgetary cutbacks during economically difficult times. This does not suggest that IT “hide” itself but rather that its investment be integrated within the unit where it provides the most benefit. Notwithstanding the challenge to map IT expenditures to its related unit, there are always expenses that are central to all departments, such as e-mail and network infrastructure. These types of expenses can rarely provide direct returns and are typically allocated across departments as a cost of doing business.

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Because of the increased number of technology opportunities, Murphy’s (2002) risk pillar must be a key part of strategic integration. The concept of risk assessment is not new to an organization; how- ever, it is somewhat misunderstood as it relates to technology assess- ment. Technology assessment, because of the acceleration factor, must be embedded within the strategic decision-making process. This can only be accomplished by having an understanding of how to align technology opportunities for business change and by understanding the cost of forgoing the opportunity as well as the cost of delays in delivery. Many organizations use risk assessment in an unstructured way, which does not provide a consistent framework to dynamically deal with emerging technologies. Furthermore, such assessment needs to be managed at all levels in the organization as opposed to being an event-driven activity controlled only by executives.

Summary

Strategic integration represents the objective of dealing with emerg- ing technologies on a regular basis. It is an outcome of ROD, and it requires organizations to deal with a variable that forces acceleration of decisions in an unpredictable fashion. Strategic integration would require businesses to realign the ways in which they include technol- ogy in strategic decision making.

Cultural Assimilation

Cultural assimilation is a process that focuses on the organizational aspects of how technology is internally organized, including the role of the IT department, and how it is assimilated within the organiza- tion as a whole. The inherent, contemporary reality of technologi- cal dynamism requires not only strategic but also cultural change. This reality demands that IT organizations connect to all aspects of the business. Such affiliation would foster a more interactive culture rather than one that is regimented and linear, as is too often the case. An interactive culture is one that can respond to emerging technol- ogy decisions in an optimally informed way, one that understands the impact on business performance.

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The kind of cultural assimilation elicited by technological dynamism and formalized in ROD is divided into two subcategories: the study of how the IT organization relates and communicates with “others” and the actual displacement or movement of traditional IT staff from an isolated “core” structure to a firmwide, integrated framework.

IT Organization Communications With “Others”

The Ravell case study shows us the limitations and consequences of an isolated IT department operating within an organization. The case study shows that the isolation of a group can lead to marginalization, which results in the kind of organization in which not all individuals can participate in decision making and implementation, even though such individuals have important knowledge and value. Technological dynamism is forcing IT departments to rethink their strategic posi- tion within the organizational structure of their firm. No longer can IT be a stand-alone unit designed just to service outside departments while maintaining its separate identity. The acceleration factors of technology require more dynamic activity within and among depart- ments, which cannot be accomplished through discrete communica- tions between groups. Instead, the need for diverse groups to engage in more integrated discourse and to share varying levels of techno- logical knowledge, as well as business-end perspectives, requires new organizational structures that will of necessity give birth to a new and evolving business–social culture. Indeed, the need to assimilate tech- nology creates a transformative effect on organizational cultures, the way they are formed and re-formed, and what they will need from IT personnel.

Movement of Traditional IT Staff

To facilitate cultural assimilation from an IT perspective, IT must become better integrated with non-IT personnel. This form of integration can require the actual movement of IT staff into other departments, which begins the process of a true assimilation of resources among business units. While this may seem like the elimination of the integrity or identity of IT, such a loss is far from the case. The elimination of the IT department is not at all what

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is called for here; on the contrary, the IT department is critical to the function of cultural assimilation. However, the IT department may need to be structured differently from the way it has been so that it can deal primarily with generic infrastructure and sup- port issues such as e-mail, network architecture, and security. IT personnel who focus on business-specific issues need to become closely aligned with the appropriate units so that ROD can be suc- cessfully implemented.

Furthermore, we must acknowledge that, given the wide range of available knowledge about technology, not all technological knowl- edge emanates from the IT department. The question becomes one of finding the best structure to support a broad assimilation of knowledge about any given technology; then, we should ask how that knowledge can best be utilized by the organization. There is a pitfall in attempt- ing to find a “standard” IT organizational structure that will address the cultural assimilation of technology. Sampler’s (1996) research, and my recent research with chief executives, confirmed that no such standard structure exists. It is my position that organizations must find their own unique blend using organizational learning constructs. This simply means that the cultural assimilation of IT may be unique to the organization. What is then more important for the success of organizational development is the process of assimilation as opposed to the transplanting of the structure itself.

Today, many departments still operate within “silos” where they are unable to meet the requirements of the dynamic and unpredict- able nature of technology in the business environment. Traditional organizations do not often support the necessary communications needed to implement cultural assimilation across business units. However, business managers can no longer make decisions with- out considering technology; they will find themselves needing to include IT staff in their decision-making processes. On the other hand, IT departments can no longer make technology-based deci- sions without concerted efforts toward assimilation (in contrast to occasional partnering or project-driven participation) with other business units. This assimilation becomes mature when new cul- tures evolve synergistically as opposed to just having multiple cultures that attempt to work in conjunction (partner) with each other. The important lesson from Ravell to keep in mind here is

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that the process of assimilating IT can create new cultures that in turn evolve to better support the requirements established by the dynamism of technology.

Eventually, these new cultural formations will not perceive them- selves as functioning within an IT or non-IT decision framework but rather as operating within a more central business operation that understands how to incorporate varying degrees of IT involvement as necessary. Thus, organizational cultures will need to fuse together to respond to new business opportunities and requirements brought about by the ongoing acceleration of technological innovation. This was also best evidenced by subsequent events at Ravell. Three years after the original case study, it became necessary at Ravell to inte- grate one of its business operations with a particular group of IT staff members. The IT personnel actually transferred to the business unit to maximize the benefits of merging both business and technical cul- tures. Interestingly, this business unit is currently undergoing cultural assimilation and is developing its own behavioral norms influenced by the new IT staff. However, technology decisions within such groups are not limited to the IT transferred personnel. IT and non-IT staff need to formulate decisions using various organizational learning techniques. These techniques are discussed in the next chapter.

Summary

Without appropriate cultural assimilation, organizations tend to have staff that “take shortcuts, [then] the loudest voice will win the day, ad hoc decisions will be made, accountabilities lost, and lessons from successes and failures will not become part of … wisdom” (Murphy, 2002, p. 152). As in the case of Ravell Corporation, it is essen- tial, then, to provide for consistent governance that fits the profile of the existing culture or can establish the need for a new culture. While many scholars and managers suggest the need to have a spe- cific entity responsible for IT governance, one that is to be placed within the operating structure of the organization, such an approach creates a fundamental problem. It does not allow staff and manag- ers the opportunity to assimilate technologically driven change and understand how to design a culture that can operate under ROD. In other words, the issue of governance is misinterpreted as a problem

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of structural positioning or hierarchy when it is really one of cultural assimilation. As a result, many business solutions to technology issues often lean toward the prescriptive instead of the analytical in address- ing the real problem.

Murphy’s (2002) risk pillar theory offers us another important com- ponent relevant to cultural assimilation. This approach addresses the concerns that relate to the creation of risk cultures formed to deal with the impact of new systems. New technologies can actually cause changes in cultural assimilation by establishing the need to make certain changes in job descriptions, power structures, career prospects, degree of job security, departmental influence, or ownership of data. Each of these potential risks needs to be factored in as an important part of considering how best to organize and assimilate technology through ROD.

Technology Business Cycle

To better understand technology dynamism or how technology acts as a dynamic variable, it is necessary to define the specific steps that occur during its evolution in an organization. The evolution or busi- ness cycle depicts the sequential steps during the maturation of a new technology from feasibility to implementation and through subse- quent evolution. Table 3.1 shows the five components that comprise

Table 3.1 Technology Business Cycle

CyCle CoMPonenT CoMPonenT DesCRIPTIon

Feasibility understanding how to view and evaluate emerging technologies from a technical and business perspective

Measurement Dealing with both the direct monetary returns and indirect nonmonetary returns; establishing driver and support life cycles

Planning understanding how to set up projects, establishing participation across multiple layers of management, including operations and departments

Implementation Working with the realities of project management; operating with political factions, constraints; meeting milestones; dealing with setbacks; having the ability to go live with new systems

evolution understanding how acceptance of new technologies affects cultural change and how uses of technology will change as individuals and organizations become more knowledgeable about technology and generate new ideas about how it can be used; objective is established through organizational dynamism, creating new knowledge and an evolving organization

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the cycle: feasibility, measurement, planning, implementation, and evolution.

Feasibility

The stage of feasibility focuses on a number of issues surrounding the practicality of implementing a specific technology. Feasibility addresses the ability to deliver a product when it is needed in comparison to the time it takes to develop it. Risk also plays a role in feasibility assess- ment; of specific concern is the question whether it is possible or prob- able that the product will become obsolete before completion. Cost is certainly a huge factor but viewed at a “high level” (i.e., at a general cost range), and it is usually geared toward meeting the expected ROI of a firm. The feasibility process must be one that incorporates indi- viduals in a way that allows them to respond to the accelerated and dynamic process brought forth by technological innovations.

Measurement

Measurement is the process of understanding how an investment in technology is calculated, particularly in relation to the ROI of an organization. The complication with technology and measurement is that it is simply not that easy to determine how to calculate such a return. This problem comes up in many of the issues discussed by Lucas (1999) in his book Information Technology and the Productivity Paradox. His work addresses many comprehensive issues surrounding both monetary and nonmonetary ROI, as well as direct versus indi- rect allocation of IT costs. Aside from these issues, there is the fact that for many investments in technology the attempt to compute ROI may be an inappropriate approach. As stated, Lucas offered a “garbage can” model that advocates trust in the operational management of the business and the formation of IT representatives into productive teams that can assess new technologies as a regular part of business opera- tions. The garbage can is an abstract concept for allowing individu- als a place to suggest innovations brought about by technology. The inventory of technology opportunities needs regular evaluation. Lucas did not really offer an explanation of exactly how this process should work internally. ROD, however, provides the strategic processes and

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organizational–cultural needs that can provide the infrastructure to better understand and evaluate the potential benefits from technolog- ical innovations using the garbage can model. The graphic depiction of the model is shown in Figure 3.2.

Planning

Planning requires a defined team of user and IT representatives. This appears to be a simple task, but it is more challenging to understand how such teams should operate, from whom they need support, and what resources they require. Let me be specific. There are a number of varying types of “users” of technology. They typically exist in three tiers: executives, business line managers, and operations users. Each of these individuals offers valuable yet different views of the benefits of technology (Langer, 2002). I define these user tiers as follows:

1. Executives: These individuals are often referred to as executive sponsors. Their role is twofold. First, they provide input into the system, specifically from the perspective of productivity, ROI, and competitive edge. Second, and perhaps more important, their responsibility is to ensure that users are participating in

User Needs, Etc

Garbage Can Model of IT Value

Co nv

er sio

n Eff

ec tiv

en es

s

Failed Systems

Direct Benefits

Indirect Benefits

�e IT Value Pipeline

Figure 3.2 Garbage can model of IT value. (From lucas, H. C. Information technology and the productivity paradox. oxford university Press, new york, 1999.)

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the requisite manner (i.e., made to be available, in the right place, etc.). This area can be problematic because internal users are typically busy doing their jobs and sometimes neglect to provide input or to attend project meetings. Furthermore, executive sponsors can help control political agendas that can hurt the success of the project.

2. Business line managers: This interface provides the most information from a business unit perspective. These indi- viduals are responsible for two aspects of management. First, they are responsible for the day-to-day productivity of their unit; therefore, they understand the importance of productive teams and how software can assist in this endeavor. Second, they are responsible for their staff. Thus, line managers need to know how software will affect their operational staff.

3. Functional users: These are the individuals in the trenches who understand exactly how processing needs to get done. While their purview of the benefits of the system is relatively nar- rower than that of the executives and managers, they provide the concrete information that is required to create the feature/ functions that make the system usable.

The planning process becomes challenging when attempting to get the three user communities to integrate their needs and “agree to agree” on how a technology project needs to be designed and managed.

Implementation

Implementation is the process of actually using a technology. Implementation of technology systems requires wider integration within the various departments than other systems in an organization because usually multiple business units are affected. Implementation must combine traditional methods of IT processes of development yet integrate them within the constraints, assumptions, and cultural (perhaps political) environments of different departments. Cultural assimilation is therefore required at this stage because it delves into the structure of the internal organization and requires individual participation in every phase of the development and implementation

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cycle. The following are some of the unique challenges facing the implementation of technological projects:

1. Project managers as complex managers: Technology projects require multiple interfaces that often lie outside the traditional user community. They can include interfacing with writers, editors, marketing personnel, customers, and consumers, all of whom are stakeholders in the success of the system.

2. Shorter and dynamic development schedules: Due to the dynamic nature of technology, its process of development is less lin- ear than that of others. Because there is less experience in the general user community and there are more stakeholders, there is a tendency by those in IT and executives to underes- timate the time and cost to complete the project.

3. New untested technologies: There is so much new technol- ogy offered to organizations that there is a tendency by IT organizations to implement technologies that have not yet matured—that are not yet the best products they will even- tually be.

4. Degree of scope changes: Technology, because of its dynamic nature, tends to be prone to scope creep—the scope of the orig- inal project expanding during development.

5. Project management: Project managers need to work closely with internal users, customers, and consumers to advise them on the impact of changes to the project schedule. Unfortunately, scope changes that are influenced by changes in market trends may not be avoidable. Thus, part of a good strategy is to man- age scope changes rather than attempt to stop them, which might not be realistic.

6. Estimating completion time: IT has always had difficulties in knowing how long it will take to implement a technology. Application systems are even more difficult because of the number of variables and unknowns.

7. Lack of standards: The technology industry continues to be a profession that does not have a governing body. Thus, it is impossible to have real enforced standards as other professions enjoy. While there are suggestions for best practices, many of them are unproven and not kept current with changing

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developments. Because of the lack of successful application projects, there are few success stories to create new and better set of best practices.

8. Less-specialized roles and responsibilities: The IT team tends to have staff members who have varying responsibilities. Unlike traditional new technology-driven projects, separation of roles and responsibilities is more difficult when operating in more dynamic environments. The reality is that many roles have not been formalized and integrated using something like ROD.

9. Broad project management responsibilities: Project management responsibilities need to go beyond those of the traditional IT manager. Project managers are required to provide man- agement services outside the traditional software staff. They need to interact more with internal and external individu- als as well as with nontraditional members of the develop- ment team, such as Web text and content staff. Therefore, there are many more obstacles that can cause implementation problems.

Evolution

The many ways to form a technological organization with a natural capacity to evolve have been discussed from an IT perspective in this chapter. However, another important factor is the changing nature of application systems, particularly those that involve e-businesses. E-business systems are those that utilize the Internet and engage in e-commerce activities among vendors, clients, and internal users in the organization. The ways in which e-business systems are built and deployed suggest that they are evolving systems. This means that they have a long life cycle involving ongoing maintenance and enhance- ment. They are, if you will, “living systems” that evolve in a manner similar to organizational cultures. So, the traditional beginning-to- end life cycle does not apply to an e-business project that must be implemented in inherently ongoing and evolving phases. The impor- tant focus is that technology and organizational development have parallel evolutionary processes that need to be in balance with each other. This philosophy is developed further in the next chapter.

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Drivers and Supporters

There are essentially two types of generic functions performed by departments in organizations: driver functions and supporter func- tions. These functions relate to the essential behavior and nature of what a department contributes to the goals of the organization. I first encountered the concept of drivers and supporters at Coopers & Lybrand, which was at that time a Big 81 accounting firm. I stud- ied the formulation of driver versus supporter as it related to the role of our EDP (electronic data processing) department. The firm was attempting to categorize the EDP department as either a driver or a supporter.

Drivers were defined in this instance as those units that engaged in frontline or direct revenue-generating activities. Supporters were units that did not generate obvious direct revenues but rather were designed to support frontline activities. For example, operations such as internal accounting, purchasing, or office management were all classified as supporter departments. Supporter departments, due to their nature, were evaluated on their effectiveness and efficiency or economies of scale. In contrast, driver organizations were expected to generate direct revenues and other ROI value for the firm. What was also interesting to me at the time was that drivers were expected to be more daring—since they must inevitably generate returns for the business. As such, drivers engaged in what Bradley and Nolan (1998) coined “sense and respond” behaviors and activities. Let me explain.

Marketing departments often generate new business by investing or “sensing” an opportunity quickly because of competitive forces in the marketplace. Thus, they must sense an opportunity and be allowed to respond to it in timely fashion. The process of sensing opportunity and responding with competitive products or services is a stage in the cycle that organizations need to support. Failures in the cycles of sense and respond are expected. Take, for example, the launching of

1 The original “Big 8” consisted of the eight large accounting and management con- sulting firms—Coopers & Lybrand, Arthur Anderson, Touche Ross, Delloite Haskins & Sells, Arthur Young, Price Waterhouse, Pete Marwick Mitchell, and Ernst and Whinney—until the late 1980s, when these firms began to merge. Today, there are four: Price Waterhouse Coopers, Delloit & Touche, Ernst & Young, and KPMG (Pete Marwick and others).

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new fall television shows. Each of the major stations goes through a process of sensing which shows might be interesting to the viewing audience. They respond after research and review with a number of new shows. Inevitably, only a few of these selected shows are actually successful; some fail almost immediately. While relatively few shows succeed, the process is acceptable and is seen by management as the consequence of an appropriate set of steps for competing effectively— even though the percentage of successful new shows is low. Therefore, it is safe to say that driver organizations are expected to engage in high-risk operations, of which many will fail for the sake of creating ultimately successful products or services.

The preceding example raises two questions: (1) How does sense and respond relate to the world of IT? and (2) Why is it important? IT is unique in that it is both a driver and a supporter. The latter is the generally accepted norm in most firms. Indeed, most IT functions are established to support myriad internal functions, such as

Accounting and finance Data center infrastructure (e-mail, desktop, etc.) Enterprise-level application (enterprise resource planning, ERP) Customer support (customer relationship management, CRM) Web and e-commerce activities

As one would expect, these IT functions are viewed as overhead related, as somewhat of a commodity, and thus are constantly managed on an economy-of-scale basis—that is, how can we make this opera- tion more efficient, with a particular focus on cost containment?

So, what then are IT driver functions? By definition, they are those that engage in direct revenues and identifiable ROI. How do we define such functions in IT because most activities are sheltered under the umbrella of marketing organization domains? (Excluding, of course, software application development firms that engage in marketing for their actual application products.) I define IT driver functions as those projects that, if delivered, would change the rela- tionship between the organization and its customers; that is, those activities that directly affect the classic definition of a market: forces of supply and demand, which are governed by the customer (demand) and the vendor (supplier) relationship. This concept can be shown in the case example that follows.

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Santander versus Citibank

Santander Bank, the major bank of Spain, had enjoyed a dominant mar- ket share in its home country. Citibank had attempted for years to pen- etrate Santander’s dominance using traditional approaches (opening more branch offices, marketing, etc.) without success, until, that is, they tried online banking. Using technology as a driver, Citibank made significant penetration into the market share of Santander because it changed the customer–vendor relationship. Online banking, in general, has had a sig- nificant impact on how the banking industry has established new markets by changing this relationship. What is also interesting about this case is the way in which Citibank accounted for its investment in online banking: It knows little about its total investment and essentially does not care about its direct payback. Rather, Citibank sees its ROI in a similar way that depicts driver/marketing behavior: The payback is seen in broader terms to affect not only revenue generation but also customer support and quality recognition.

Information Technology Roles and Responsibilities

The preceding section focuses on how IT can be divided into two dis- tinct kinds of business operations. As such, the roles and responsibili- ties within IT need to change accordingly and be designed under the auspices of driver and supporter theory. Most traditional IT depart- ments are designed to be supporters, so that they have a close-knit organization that is secure from outside intervention and geared to respond to user needs based on requests. While in many instances this type of formation is acceptable, it is limited in providing the IT depart- ment with the proper understanding of the kind of business objectives that require driver-type activities. This was certainly the experience in the Ravell case study. In that instance, I found that making the effort to get IT support personnel “out from their comfortable shells” made a huge difference in providing better service to the organiza- tion at large. Because more and more technology is becoming driver essential, this development will require of IT personnel an increasing ability to communicate to managers and executives and to assimilate within other departments.

The Ravell case, however, also brought to light the huge vacuum of IT presence in driver activities. The subsequent chief executive inter- view study also confirmed that most marketing IT-oriented activi- ties, such as e-business, do not fall under the purview of IT in most

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organizations. The reasons for this separation are correlated with the lack of IT executive presence within the management team.

Another aspect of driver and supporter functions is the concept of a life cycle. A life cycle in this respect refers to the stages that occur before a product or service becomes obsolete. Technology products have a life cycle of value just as any other product or service. It is important not to confuse this life cycle with processes during devel- opment as discussed elsewhere in this chapter.

Many technical products are adopted because they are able to deliver value—value that is typically determined based on ROI calculations. However, as products mature within an organization, they tend to become more of a commodity; and as they are normalized, they tend to become support oriented. Once they reach the stage of support, the rules of economies of scale become more important and relevant to evaluation. As a product enters the support stage, replacement based on economies of scale can be maximized by outsourcing to an outside vendor who can provide the service cheaper. New technologies then can be expected to follow this kind of life cycle, by which their initial investment requires some level of risk to provide returns to the busi- ness. This initial investment is accomplished in ROD using strategic integration. Once the evaluations are completed, driver activities will prevail during the maturation process of the technology, which will also require cultural assimilation; inevitably, technology will change organizational behavior and structure. However, once the technol- ogy is assimilated and organizational behavior and structures are normalized, individuals will use it as a permanent part of their day- to-day operations. Thus, driver activities give way to those of support- ers. Senior managers become less involved, and line managers then become the more important group that completes the transition from driver to supporter.

Replacement or Outsource

After the technology is absorbed into operations, executives will seek to maximize the benefit by increased efficiency and effectiveness. Certain product enhancements may be pursued during this phase; they can create “miniloops” of driver-to-supporter activities. Ultimately, a technology, viewed in terms of its economies of scale and longevity,

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is considered for replacement or outsourcing. Figure 3.3 graphically shows the cycle.

The final stage of maturity of an evolving driver therefore includes becoming a supporter, at which time it becomes a commodity and, finally, an entity with potential for replacement or outsourcing. The next chapter explores how organizational learning theories can be used to address many of the issues and challenges brought forth in this chapter.

Evaluation Cycle

Technology Driver

Driver Maturation

Support Status

Economies of

Scale

Replacement or Outsource

Mini Loop Technology Enhancements

Figure 3.3 Driver to supporter of life cycle.

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65

4 oRganizaTional leaRning TheoRies anD TeChnology

Introduction

The purpose of this chapter is to provide readers with an understanding of organizational theory. The chapter covers some aspects of the his- tory and context of organizational learning. It also defines and explains various learning protocols and how they can be used to promote orga- nizational learning. The overall objective of organizational learning is to support a process that guides individuals, groups, and entire com- munities through transformation. Indeed, evidence of organizational transformation provides the very proof that learning has occurred and that changes in behavior are occurring. What is important in this regard is that transformation remains internal to the organization so that it can evolve in a progressive manner while maintaining the valuable knowledge base that is contained within the personnel of an organization. Thus, the purpose of organizational learning is to foster evolutionary transformation that will lead to change in behaviors and that is geared toward improving strategic performance.

Approaches to organizational learning typically address how indi- viduals, groups, and organizations “notice and interpret information and use it to alter their fit with their environments” (Aldrich, 2001, p. 57). As such, however, organizational learning does not direct itself toward, and therefore has not been able to show, an inherent link to success—which is a critical concern for executive management. There are two perspectives on organizational learning theory. On the one hand, the adoptive approach, pioneered by Cyert and March (1963), treats organizations as goal-oriented activity systems. These systems generate learning when repeating experiences that have either suc- ceeded or failed, discarding, of course, processes that have failed. Knowledge development, on the other hand, treats organizations as

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sets of interdependent members with shared patterns of cognition and belief (Argyris & Schön, 1996). Knowledge development empha- sizes that learning is not limited to simple trial and error or direct experience. Instead, learning is understood also to be inferential and vicarious; organizations can generate new knowledge through experi- mentation and creativity. It is the knowledge development perspec- tive that fits conceptually and empirically with work on technological evolution and organizational knowledge creation and deployment (Tushman & Anderson, 1986).

There is a complication in the field of organizational learning over whether it is a technical or social process; scholars disagree on this point. From the technical perspective, organizational learning is about the effective processing of, interpretation of, and response to infor- mation both inside and outside the organization. “An organization is assumed to learn if any of its units acquires knowledge that it recog- nizes as potentially useful to the organization” (Huber, 1991, p. 89). From the social perspective, on the other hand, comes the concept that learning is “something that takes place not with the heads of individ- uals, but in the interaction between people” (Easterby-Smith, Araujo, & Burgoyne, 1999, p. 6). The social approach draws from the notion that patterns of behavior are developed via patterns of socialization developed by evolving tacit knowledge and skills. There is, regrettably, a lack of ongoing empirical investigation in the area of organizational learning pertaining, for example, to in-depth case studies, to micro- practices within organizational settings, and to processes that lead to outcomes. Indeed, measuring learning is a difficult process, which is why there is a lack of research that focuses on outputs. As Prange (1999) noted: “The multitude of ways in which organizational learn- ing has been classified and used purports an ‘organizational learn- ing jungle,’ which is becoming progressively dense and impenetrable” (p. 24). Mackenzie (1994) lamented that what the “scientific commu- nity devoted to organizational learning has not produced discernable intellectual progress” (p. 251).

Ultimately, organizational learning must provide transformation that links to performance. Most organizations seeking improved per- formance expect changes that will support new outcomes. The study of organizational learning needs an overarching framework under which an inquiry into the pivotal issues surrounding organizational

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change can be organized. Frameworks that support organizational learning, whether their orientation is on individuals, groups, or infra- structure, need to allow for natural evolution within acceptable time frames for the organization. This is the problem of organizational learning theory: It lacks a method of producing measurable results that executives can link to performance. While scholars seek out- comes through strategic learning, there must be tangible evidence of individual and organizational performance to ensure future invest- ments in the concepts of learning. Technology, we should remember, represents the opportunity to provide outcomes through strategic learning that addresses transitions and transformations over a spe- cific life cycle.

We saw this opportunity occur in the Ravell case study; the infor- mation technology (IT) department used organizational learning. Specifically, individual reflective practices were used to provide mea- surable outcomes for the organization. In this case, the outcomes related to a specific event, the physical move of the business to a differ- ent location. Another lesson we can derive (with hindsight) from the Ravell experience is that learning was converted to strategic benefit for the organization. The concept of converting learning to strategic benefit was pioneered by Pietersen (2002). He established a strategic learning cycle comprised of four component processes that he identi- fied with the action verbs learn, focus, align, and execute. These are stages in the learning cycle, as follows:

1. Learn: Conduct a situation analysis to generate insights into the competitive environment and into the realities of the company.

2. Focus: Translate insights into a winning proposition that out- lines key priorities for success.

3. Align: Align the organization and energize the people behind the new strategic focus.

4. Execute: Implement strategy and experiment with new con- cepts. Interpret results and continue the cycle.

At Ravell, technology assisted in driving the learning cycle because, by its dynamic nature, it mandated the acceleration of the cycle Pietersen (2002) described in his stage strategy of implementation. Thus, Ravell required the process Pietersen outlined to occur within 6 months and therein established the opportunity to provide outcomes. It also altered

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the culture of the organization (i.e., the evolution in culture was tan- gible because the transformation was concrete).

We see from the Ravell case that technology represents the best opportunity to apply organizational learning techniques because the use of it requires forms of evolutionary-related change. Organizations are continually seeking to improve their operations and competi- tive advantage through efficiency and effective processes. As I have discussed in previous chapters, today’s businesses are experiencing technological dynamism (defined as causing accelerated and dynamic transformations), and this is due to the advent of technologically driven processes. That is, organizations are experiencing more pressure to change and compete as a result of the accelerations that technology has brought about. Things happen quicker and more unpredictably than before. This situation requires organizations to sense the need for change and execute that change. The solution I propose is to tie orga- nizational theory to technological implementation. Another way of defining this issue is to provide an overarching framework that orga- nizes an inquiry into the issues surrounding organizational change.

Another dimension of organizational learning is political. Argyris (1993) and Senge (1990) argued that politics gets “in the way of good learning.” In my view, however, the political dimension is very much part of learning. It seems naïve to assume that politics can be elimi- nated from the daily commerce of organizational communication. Instead, it needs to be incorporated as a factor in organizational learn- ing theory rather than attempting to disavow or eliminate it, which is not realistic. Ravell also revealed that political factors are simply part of the learning process. Recall that during my initial efforts to create a learning organization there were IT staff members who deliberately refused to cooperate, assuming that they could “outlast” me in my interim tenure as IT director. But politics, of course, is not limited to internal department negotiations; it was also a factor at Ravell with and among departments outside IT. These interdepartmental rela- tionships applied especially to line managers, who became essential advocates for establishing and sustaining necessary forms of learning at the organizational level. But, not all line managers responded with the same enthusiasm, and a number of them did not display a sense of authentically caring about facilitating synergies across departments. The irrepressible existence of politics in social organizations, however,

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must not in itself deter us from implementing organizational learn- ing practices; it simply means that that we must factor it in as part of the equation. At Ravell, I had to work within the constraints of both internal and external politics. Nevertheless, in the end I was able to accomplish the creation of a learning organization. Another way one might look at the road bumps of politics is to assume that they will temporarily delay or slow the implementation of organizational learning initiatives. But, let us make no mistake about the potentially disruptive nature of politics because, as we know, in its extreme cases of inflexibility, it can be damaging.

I have always equated politics with the dilemma of blood choles- terol. We know that there are two types of cholesterol: “good” choles- terol and “bad” cholesterol. We all know that bad cholesterol in your blood can cause heart disease, among other life-threatening condi- tions. However, good cholesterol is essential to the body. My point is simple; the general word politics can have damaging perceptions. When most people discuss the topic of cholesterol, they focus on the bad type, not the good. Such is the same with politics—that is, most individuals discuss the bad type, which often corresponds with their personal experiences. My colleague Professor Lyle Yorks at Columbia University often lectures on the importance of politics and its posi- tive aspects of establishing strategic advocacy, defined as the “ability to establish personal and functional influence through cultivating alli- ances through defining opportunities for the adding value to either the top or bottom line” (Yorks, 2009). Thus, politics can add value for individuals by allowing them to initiate and influence relationships and conversations with other leaders. This then is “good” politics!

North American cultural norms account for much of what goes into organizational learning theory, such as individualism, an empha- sis on rationality, and the importance of explicit, empirical informa- tion. IT, on the other hand, has a broadening, globalizing effect on organizational learning because of the sheer increase in the number of multicultural organizations created through the expansion of global firms. Thus, technology also affects the social aspects of organizational learning, particularly as it relates to the cultural evolution of commu- nities. Furthermore, technology has shown us that what works in one culture may not work in another. Dana Deasy, the former chief infor- mation officer (CIO) of the Americas region/sector for Siemens AG,

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experienced the difficulties and challenges of introducing technology standards on a global scale. He quickly learned that what worked in North America did not operate with the same expectations in Asia or South America. I discuss Siemens AG as a case study in Chapter 8.

It is my contention, however, that technology can be used as an intervention that can actually increase organizational learning. In effect, the implementation of organizational learning has lacked and has needed concrete systemic processes that show results. A solution to this need can be found, as I have found it, in the incorporation of IT itself into the process of true organizational learning. The prob- lem with IT is that we keep trying to simplify it—trying to reduce its complexity. However, dealing with the what, when, and how of working with technology is complex. Organizations need a kind of mechanism that can provide a way to absorb and learn all of the com- plex pieces of technology.

It is my position that organizational change often follows learn- ing, which to some extent should be expected. What controls whether change is radical or evolutionary depends on the basis on which new processes are created (Argyris & Schön, 1996; Senge, 1990; Swieringa & Wierdsma, 1992). Indeed, at Ravell the learning followed the Argyris and Schön approach: that radical change occurs when there are major events that support the need for accelerated change. In other words, critical events become catalysts that promote change through reflec- tion. On the other hand, there can be non-event-related learning that is not so much radical in nature as it is evolutionary. Thus, evolutionary learning is characterized as an ongoing process that slowly establishes the need for change over time. This evolutionary learning process com- pares to what Senge (1990) described as “learning in wholes as opposed to pieces” (p. 15). This concept of learning is different from an event- driven perspective, and it supports the natural tendency that groups and organizations have to protect themselves from open confrontation and critique. However, technology provides an interesting variable in this regard. It is generally accepted as an agent of change that must be addressed by the organization. I believe that this agency can be seized as an opportunity to promote such change because it establishes a reason why organizations need to deal with the inevitable transitions brought about by technology. Furthermore, as Huysman (1999) pointed out, the history of organizational learning has not often created measurable

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improvement, particularly because implementing the theories has not always been efficient or effective. Much of the impetus for implement- ing a new technology, however, is based on the premise that its use will result in such benefits. Therefore, technology provides compelling reasons for why organizational learning is important: to understand how to deal with agents of change and to provide ongoing changes in the processes that improve competitive advantage.

There is another intrinsic issue here. The uses of technology have not always resulted in efficient and effective outcomes, particularly as they relate to a firm’s expected return on investment (ROI). In fact, IT projects often cost more than expected and tend to be delivered late. Indeed, research performed by the Gartner Group and CIO Magazine (Koch, 1999) reported that 54% of IT projects are late and that 22% are never completed. In May 2009, McGraw reported similar trends, so industry performance has not materially improved. This is certainly a disturbing statistic for a dynamic variable of change that promises outcomes of improved efficiency and effectiveness. The question then is why is this occurring? Many scholars might consider the answer to this question complex. It is my claim, however, based on my own research, that the lack of organizational learning, both within IT and within other departments, poses, perhaps, the most significant barrier to the success of these projects in terms of timeliness and completion. Langer (2001b) suggested that the inability of IT organizations to understand how to deal with larger communities within the organization and to establish realistic and measurable outcomes are relevant both to many of the core values of organizational learning and to its importance in attaining results. What better opportunity is there to combine the strengths and weaknesses of each of IT and organizational learning?

Perhaps what is most interesting—and, in many ways, lacking in the literature on organizational learning—is the actual ways individu- als learn. To address organizational learning, I believe it is imperative to address the learning styles of individuals within the organization. One fundamental consideration to take into account is that of indi- vidual turnover within departments. Thus, methods to measure or understand organizational learning must incorporate the individual, how the individual learns, and what occurs when individuals change positions or leave, as opposed to solely focusing on the event-driven aspect of evolutionary learning. There are two sociological positions

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about how individual learning occurs. The first suggests that individual action derives from determining influences in the social system, and the other suggests that it emanates from individual action. The former proposition supports the concept that learning occurs at the organiza- tional or group level, and the latter supports it at the individual level of action and experience. The “system” argument focuses on learning within the organization as a whole and claims that individual action functions within its boundaries. The “individual” argument claims that learning emanates from the individual first and affects the system as a result of outcomes from individual actions. Determining a balance between individual and organizational learning is an issue debated by scholars and an important one that this book must address.

Why is this issue relevant to the topic of IT and organizational learning? Simply put, understanding the nature of evolving technolo- gies requires that learning—and such learning outcomes—will be heav- ily affected by the processes in which it is delivered. Therefore, without understanding the dynamics of how individuals and organizations learn, new technologies may be difficult to assimilate because of a lack of process that can determine how it can be best used in the business. What is most important to recognize is the way in which responsive organizational dynamism (ROD) needs both the system and individual approaches. Huysman (1999) suggested (and I agree) that organization versus individual belief systems are not mutually exclusive pairs but dualities. In this way, organizational processes are not seen as just top- down or bottom-up affairs but as accumulations of history, assimilated in organizational memory, which structures and positions the agency or capacity for learning. In a similar way, organizational learning can be seen as occurring through the actions of individuals, even when they are constrained by institutional forces. The strategic integration component of ROD lends itself to the system model of learning to the extent that it almost mandates change—change that, if not addressed, will inevitably affect the competitive advantage of the organization. On the other hand, the cultural assimilation component of ROD is also involved because of its effect on individual behavior. Thus, the ROD model needs to be expanded to show the relationship between individual and organizational learning as shown in Figure 4.1.

An essential challenge to technology comes from the fact that organizations are not sure about how to handle its overall potential.

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Thus, in a paradoxical way, this quandary provides a springboard to learning by utilizing organizational learning theories and concepts to create new knowledge, by learning from experience, and ultimately by linking technology to learning and performance. This perspective can be promoted from within the organization because chief executives are generally open to investing in learning as long as core business principles are not violated. This position is supported by my research with chief executives that I discussed in Chapter 2.

Organizational learning can also assist in the adoption of technolo- gies by providing a mechanism to help individuals manage change. This notion is consistent with Aldrich (2001), who observed that many orga- nizations reject technology-driven changes or “pioneering ventures,”

Organizational Dynamism

Technology

Acceleration of events that require different

infrastructures and organizational processes

Symptoms and Implications

Strategic Integration

Cultural Assimilation

Requires

Organization Structures (System)

Individual Actions

Renegotiation of Relationship

Organizational Learning Techniques

Figure 4.1 RoD and organizational learning.

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which he called competence-destroying ventures because they threaten existing norms and processes. Organizations would do well to under- stand the value of technology, particularly for those who adopt it early (early adopters), and how it can lead to competitive advantages. Thus, organizations that position themselves to evolve, to learn, and to cre- ate new knowledge are better prepared to foster the handling, absorp- tion, and acceptance of technology-driven change than those that are not. Another way to view this ethic is to recognize that organizations need to be “ready” to deal with change—change that is accelerated by technology innovations. Although Aldrich (2001) noted that organiza- tional learning has not been tied to performance and success, I believe it will be the technology revolution that establishes the catalyst that can tie organizational learning to performance.

The following sections of this chapter expand on the core concept that the success of ROD is dependent on the uses of organizational learning techniques. In each section, I correlate this concept to many of the organizational learning theories and show how they can be tai- lored and used to provide important outcomes that assist the promo- tion of both technological innovation and organizational learning.

Learning Organizations

Business strategists have realized that the ability of an organization to learn faster, or “better,” than its competitors may indeed be the key to long-term business success (Collis, 1994; Dodgson, 1993; Grant, 1996; Jones, 1975). A learning organization is defined as a form of organization that enables, in an active sense, the learning of its mem- bers in such a way that it creates positive outcomes, such as innovation, efficiency, improved alignment with the environment, and competi- tive advantage. As such, a learning organization is one that acquires knowledge from within. Its evolution, then, is primarily driven by itself without the need for interference from outside forces. In this sense, it is a self-perpetuating and self-evolving system of individual and organizational transformations integrated into the daily processes of the organization. It should be, in effect, a part of normal organiza- tional behavior. The focus of organizational learning is not so much on the process of learning but more on the conditions that allow success- ful outcomes to flourish. Learning organization literature draws from

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organizational learning theory, particularly as it relates to interventions based on outcomes. This provides an alternative to social approaches.

In reviewing these descriptions of what a learning organization does and why it is important, we can begin to see that technology may be one of the few agents that can actually show what learning organi- zations purport to do. Indeed, Ravell created an evolving population that became capable of dealing with environmental changes brought on by technological innovation. The adaptation of these changes cre- ated those positive outcomes and improved efficiencies. Without orga- nizational learning, specifically the creation of a learning organization, many innovations brought about by technology could produce chaos and instability. Organizations generally tend to suffer from, and spend too much time reflecting on, their past dilemmas. However, given the recent phenomenon of rapid changes in technology, organizations can no longer afford the luxury of claiming that there is simply too much else to do to be constantly worrying about technology. Indeed, Lounamaa and March (1987) stated that organizations can no longer support the claim that too frequent changes will inhibit learning. The fact is that such changes must be taken as evolutionary and as a part of the daily challenges facing any organization. Because a learning orga- nization is one that creates structure and strategies, it is positioned to facilitate the learning of all its members during the ongoing infil- tration of technology-driven agents of change. Boland, Tenkasi, and Te’eni (1994) showed that information systems based on multimedia technologies may enhance the appreciation of diverse interpretations within organizations and, as such, support learning organizations. Since learning organizations are deliberately created to facilitate the learning of their members, understanding the urgency of technologi- cal changes can provide the stimulus to support planned learning.

Many of the techniques used in the Ravell case study were based on the use of learning organizational techniques, many of which were pioneered by Argyris and Schön (1996). Their work focused on using “action science” methods to create and maintain learning organizations. A key component of action science is the use of reflective practices— including what is commonly known among researchers and practitio- ners as reflection in action and reflection on action. “Reflection with action” is the term I use as a rubric for these various methods involv- ing reflection in relation to activity. Reflection has received a number

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of definitions from different sources in the literature. Depending on the emphasis, whether on theory or practice, definitions vary from philosophical articulation (Dewey, 1933; Habermas, 1998) to practice- based formulations, such as Kolb’s (1984b) use of reflection in the experiential learning cycle. Specifically, reflection with action carries the resonance of Schön’s (1983) twin constructs: reflection on action and reflection in action, which emphasize reflection in retrospect and reflection to determine which actions to take in the present or immedi- ate future, respectively. Dewey (1933) and Hullfish and Smith (1978) also suggested that the use of reflection supports an implied purpose: Individuals reflect for a purpose that leads to the processing of a useful outcome. This formulation suggests the possibility of reflection that is future oriented—what we might call “reflection to action.” These are methodological orientations covered by the rubric.

Reflective practices are integral to ROD because so many technology- based projects are event driven and require individuals to reflect before, during, and after actions. Most important to this process is that these reflections are individually driven and that technology projects tend to accelerate the need for rapid decisions. In other words, there are more dynamic decisions to be made in less time. Without operating in the kind of formation that is a learning organization, IT departments can- not maintain the requisite infrastructure to develop products timely and support business units—something that clearly is not happening if we look at the existing lateness of IT projects. With respect to the role of reflection in general, the process can be individual or organiza- tional. While groups can reflect, it is in being reflective that individuals bring about “an orientation to their everyday lives,” according to Moon (1999). “For others reflection comes about when conditions in the learn- ing environment are appropriate” (p. 186). However, IT departments have long suffered from not having the conditions to support such an individual learning environment. This is why implementing a learning organization is so appealing as a remedy for a chronic problem.

Communities of Practice

Communities of practice are based on the assumption that learning starts with engagement in social practice and that this practice is the fundamental construct by which individuals learn (Wenger, 1998).

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Thus, communities of practice are formed to get things done by using a shared way of pursuing interest. For individuals this means that learn- ing is a way of engaging in, and contributing to, the practices of their communities. For specific communities, on the other hand, it means that learning is a way of refining its distinctive practices and ensur- ing new generations of members. For entire organizations, it means that learning is an issue of sustaining interconnected communities of practice, which define what an organization knows and contributes to the business. The notion of communities of practice supports the idea that learning is an “inevitable part of participating in social life and practice” (Elkjaer, 1999, p. 75). Communities of practice also include assisting members of the community, with the particular focus on improving their skills. This is also known as situated learning. Thus, communities of practice are very much a social learning theory as opposed to one that is based solely on the individual. Communities of practice have been called learning in working, in which learning is an inevitable part of working together in a social setting. Much of this concept implies that learning in some form or other will occur and that it is accomplished within a framework of social participation, not solely or simply in the individual mind. In a world that is changing significantly due to technological innovations, we should recognize the need for organizations, communities, and individuals to embrace the complexities of being interconnected at an accelerated pace.

There is much that is useful in the theory of communities of practice and that justifies its use in ROD. While so much of learning technol- ogy is event driven and individually learned, it would be shortsighted to believe that it is the only way learning can occur in an organization. Furthermore, the enormity and complexity of technology requires a community focus. This would be especially useful within the con- fines of specific departments that are in need of understanding how to deal with technological dynamism. That is, preparation for using new technologies cannot be accomplished by waiting for an event to occur. Instead, preparation can be accomplished by creating a community that can assess technologies as a part of the normal activities of an organization. Specifically, this means that, through the infrastructure of a community, individuals can determine how they will organize themselves to operate with emerging technologies, what education they will need, and what potential strategic integration they will need

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to prepare for changes brought on by technology. Action in this con- text can be viewed as a continuous process, much in the same way that I have presented technology as an ongoing accelerating variable. However, Elkjaer (1999) argued that the continuous process cannot exist without individual interaction. As he stated:

Both individual and collective activities are grounded in the past, the present, and the future. Actions and interactions take place between and among group members and should not be viewed merely as the actions and interactions of individuals. (p. 82)

Based on this perspective, technology can be handled by the actions (community) and interactions (individuals) of the organization as shown in Figure 4.2.

It seems logical that communities of practice provide the mecha- nism to assist particularly with the cultural assimilation component of ROD. Indeed, cultural assimilation targets the behavior of the community and its need to consider what new organizational struc- tures can better support emerging technologies. I have in many ways already established and presented the challenge of what should be called the “community of IT practice” and its need to understand how

Communities of Practice: Social actions of how to

deal with technology Event-Driven Individual-

Based Learning

Allows groups to engage in discourse and examine the ongoing effects on the department/unit, including short/long-term education requirements, skills transfer and development, organizational issues, relationships with other departments and customers

�e individual interacts with others and determines new methods of utilizing technology within his/her specific business objectives. Individuals use reflection as the basis of transformative learning.

Figure 4.2 Technology relationship between communities and individuals.

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to restructure to meet the needs of the organization. This is the kind of issue that does not lend itself to event-driven individual learning but rather to a more community-based process that can deal with the realignment of departmental relationships.

Essentially, communities of IT practice must allow for the con- tinuous evolution of learning based on emergent strategies. Emergent strategies acknowledge unplanned action. Such strategies are defined as patterns that develop in the absence of intentions (Mintzberg & Waters, 1985). Emergent strategies can be used to gather groups that can focus on issues not based on previous plans. These strategies can be thought of as creative approaches to proactive actions. Indeed, a frustrating aspect of technology is its uncertainty. Ideas and concepts borrowed from communities of practice can help departments deal with the evolutionary aspects of technological dynamism.

The relationship, then, between communities of practice and tech- nology is significant. Many of the projects involving IT have been tra- ditionally based on informal processes of learning. While there have been a number of attempts to computerize knowledge using various information databases, they have had mixed results. A “structured” approach to creating knowledge reporting is typically difficult to estab- lish and maintain. Many IT departments have utilized International Organization for Standardization (ISO) 9000 concepts. The ISO is a worldwide organization that defines quality processes through formal structures. It attempts to take knowledge-based information and trans- fer it into specific and documented steps that can be evaluated as they occur. Unfortunately, the ISO 9000 approach, even if realized, is chal- lenging when such knowledge and procedures are undergoing constant and unpredictable change. Technological dynamism creates too many uncertainties to be handled by the extant discourses on how organiza- tions have dealt with change variables. Communities of practice pro- vide an umbrella of discourses that are necessary to deal with ongoing and unpredictable interactions established by emerging technologies.

Support for this position is found in the fact that technology requires accumulative collective learning that needs to be tied to social prac- tices; this way, project plans can be based on learning as a participatory act. One of the major advantages of communities of practice is that they can integrate key competencies into the very fabric of the orga- nization (Lesser, Fontaine, & Slusher, 2000). The typical disadvantage

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of IT is that its staff needs to serve multiple organizational structures simultaneously. This requires that priorities be set by the organization. Unfortunately, it is difficult, if not impossible, for IT departments to establish such priorities without engaging in concepts of communities of practice that allow for a more integrated process of negotiation and determination. Much of the process of communities of practice would be initiated by strategic integration and result in many cultural assimilation changes; that is, the process of implementing communities of practice will necessitate changes in cultural behavior and organization processes.

As stated, communities-of-practice activities can be initiated via the strategic integration component of ROD. According to Lesser et al. (2000), a knowledge strategy based on communities of practice consists of seven basic steps (Table 4.1).

Table 4.1 extended seven steps of Community of Practice strategy

sTeP CoMMunITIes-oF-PRACTICe sTeP TeCHnoloGy exTensIon

1 understanding strategic knowledge needs: what knowledge is critical to success

understanding how technology affects strategic knowledge and what specific technological knowledge is critical to success.

2 engaging practice domains: people form communities of practice to engage in and identify with

Technology identifies groups based on business- related benefits; requires domains to work together toward measurable results.

3 Developing communities: how to help key communities reach their full potential

Technologies have life cycles that require communities to continue; treats the life cycle as a supporter for attaining maturation and full potential.

4 Working the boundaries: how to link communities to form broader learning systems

Technology life cycles require new boundaries to be formed. This will link other communities that were previously outside discussions and thus expand input into technology innovations.

5 Fostering a sense of belonging: how to engage people’s identities and sense of belonging

The process of integrating communities: IT and other organizational units will create new evolving cultures that foster belonging as well as new social identities.

6 Running the business: how to integrate communities of practice into running the business of the organization

Cultural assimilation provides new organizational structures that are necessary to operate communities of practice and to support new technological innovations.

7 Applying, assessing, reflecting, renewing: how to deploy knowledge strategy through waves of organizational transformation

The active process of dealing with multiple new technologies that accelerates the deployment of knowledge strategy. emerging technologies increase the need for organizational transformation.

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Lesser (2000) suggested that communities of practice are heavily reliant on innovation. “Some strategies rely more on innovation than others for their success. … Once dependence on innovation needs have been clarified, you can work to create new knowledge where innovation matters” (p. 8). Indeed, electronic communities of practice are different from physical communities. IT provides another dimen- sion to how technology affects organizational learning. It does so by creating new ways in which communities of practice operate. In the complexity of ways that it affects us, technology has a dichotomous relationship with communities of practice. That is, there is a two- sided issue: (a) the need for communities of practice to implement IT projects and integrate them better into learning organizations and (b) the expansion of electronic communities of practice invoked by technology, which can in turn assist in organizational learning, glob- ally and culturally.

The latter issue establishes the fact that a person can now read- ily be a member of many electronic communities and in many dif- ferent capacities. Electronic communities are different in that they can have memberships that are short-lived and transient, forming and re-forming according to interest, particular tasks, or commonality of issue. Communities of practice themselves are utilizing technologies to form multiple and simultaneous relationships. Furthermore, the growth of international communities resulting from ever-expanding global economies has created further complexities and dilemmas.

Thus far, I have presented communities of practice as an infra- structure that can foster the development of organizational learning to support the existence of technological dynamism. Most of what I presented has an impact on the cultural assimilation component of ROD; that is, affecting organizational structure and the way things need to be done. However, technology, particularly the strategic integration component of ROD, fosters a more expanded vision of what can represent a community of practice. What does this mean? Communities of practice through the advent of strategic integration have expanded to include electronic communities. While technology can provide organizations with vast electronic libraries that end up as storehouses of information, they are only valuable if they are allowed to be shared within the community. Although IT has led many com- panies to imagine a new world of leveraged knowledge, communities

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have discovered that just storing information does not provide for effective and efficient use of knowledge. As a result, many companies have created these “electronic” communities so that knowledge can be leveraged, especially across cultures and geographic boundaries. These electronic communities are predictably more dynamic as a result of what technology provides to them. The following are examples of what these communities provide to organizations.

Transcending boundaries and exchanging knowledge with • internal and external communities. In this circumstance, communities are extending not only across business units but also into communities among various clients—as we see developing in advanced e-business strategies. Using the Internet and intranets, communities can foster dynamic inte- gration of the client, an important participant in competitive advantage. However, the expansion of an external commu- nity, due to emergent electronics, creates yet another need for the implementation of ROD. Creating “Internet” or electronic communities as sources • of knowledge (Teigland, 2000), particularly for technical- oriented employees. These employees are said to form “communities of techies”: technical participants, composed largely of the IT staff, who have accelerated means to come into contact with business-related issues. In the case of Ravell, I created small communities by moving IT staff to allow them to experience the user’s need; this move is directly related to the larger and expanded ability of using electronic communi- ties of practice. Connecting social and workplace communities through • sophisticated networks. This issue links well to the entire expansion of issues surrounding organizational learning, in particular learning organization formation. It enfolds both the process and the social dialectic issues so important to cre- ating well-balanced communities of practice that deal with organizational-level and individual development. Integrating teleworkers and nonteleworkers, including the • study of gender and cultural differences. The growth of dis- tance workers will most likely increase with the maturation

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of technological connectivity. Videoconferencing and improved media interaction through expanded broadband will support further developments in virtual workplaces. Gender and culture will continue to become important issues in the expansion of existing models that are cur- rently limited to specific types of workplace issues. Thus, technology allows for the “globalization” of organizational learning needs, especially due to the effects of technologi- cal dynamism. Assisting in computer-mediated communities. Such media-• tion allows for the management of interaction among com- munities, of who mediates their communications criteria, and of who is ultimately responsible for the mediation of issues. Mature communities of practice will pursue self-mediation. Creating “flame” communities. A • flame is defined as a lengthy, often personally insulting, debate in an electronic commu- nity that provides both positive and negative consequences. Difference can be linked to strengthening the identification of common values within a community but requires organiza- tional maturation that relies more on computerized commu- nication to improve interpersonal and social factors to avoid miscommunications (Franco et al., 2000). Storing collective knowledge in large-scale libraries and • databases. As Einstein stated: “Knowledge is experience. Everything else is just information.” Repositories of informa- tion are not knowledge, and they often inhibit organizations from sharing important knowledge building blocks that affect technical, social, managerial, and personal developments that are critical for learning organizations (McDermott, 2000).

Ultimately, these communities of practice are forming new social networks, which have established the cornerstone of “global connectiv- ity, virtual communities, and computer-supported cooperative work” (Wellman et al., 2000, p. 179). These social networks are creating new cultural assimilation issues, changing the very nature of the way organizations deal with and use technology to change how knowledge develops and is used via communities of practice. It is not, therefore, that communities of practice are new infrastructure or social forces;

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rather, the difference is in the way they communicate. Strategic inte- gration forces new networks of communication to occur (the IT effect on communities of practice), and the cultural assimilation component requires communities of practice to focus on how emerging technolo- gies are to be adopted and used within the organization.

In sum, what we are finding is that technology creates the need for new organizations that establish communities of practice. New members enter the community and help shape its cognitive schemata. Aldrich (2001) defined cognitive schemata as the “structure that repre- sents organized knowledge about persons, roles, and events” (p. 148). This is a significant construct in that it promotes the importance of a balanced evolutionary behavior among these three areas. Rapid learn- ing or organizational knowledge brought on by technological innova- tions can actually lessen progress because it can produce premature closure (March, 1991). Thus, members emerge out of communities of practice that develop around organizational tasks. They are driven by technological innovation and need constructs to avoid premature clo- sure as well as ongoing evaluation of perceived versus actual realities. As Brown and Duguid (1991) stated:

The complex of contradictory forces that put an organization’s assump- tions and core beliefs in direct conflict with members’ working, learn- ing, and innovating arises from a thorough misunderstanding of what working, learning, and innovating are. As a result of such misunder- standings, many modern processes and technologies, particularly those designed to downskill, threaten the robust working, learning, and inno- vating communities and practice of the workplace. (p. 40)

This perspective can be historically justified. We have seen time and time again how a technology’s original intention is not realized yet still productive. For instance, many uses of e-mail by individuals were hard to predict. It may be indeed difficult, if not impossible, to predict the eventual impact of a technology on an organization and provide com- petitive advantages. However, based on evolutionary theories, it may be beneficial to allow technologies to progress from driver to supporter activity. Specifically, this means that communities of practice can pro- vide the infrastructure to support growth from individual-centered learning; that is, to a less event-driven process that can foster systems

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thinking, especially at the management levels of the organization. As organizations evolve into what Aldrich (2001) called “bounded enti- ties,” interaction behind boundaries heightens the salience of cultural difference. Aldrich’s analysis of knowledge creation is consistent with what he called an “adaptive organization”—one that is goal oriented and learns from trial and error (individual-based learning)—and a “knowledge development” organization (system-level learning). The latter consists of a set of interdependent members who share patterns of belief. Such an organization uses inferential and vicarious learn- ing and generates new knowledge from both experimentation and creativity. Specifically, learning involves sense making and builds on the knowledge development of its members. This becomes critical to ROD, especially in dealing with change driven by technological inno- vations. The advantages and challenges of virtual teams and commu- nities of practice are expanded in Chapter 7, in which I integrate the discussion with the complexities of outsourcing teams.

Learning Preferences and Experiential Learning

The previous sections of this chapter focused on organizational learn- ing, particularly two component theories and methods: learning orga- nizations and communities of practice. Within these two methods, I also addressed the approaches to learning; that is, learning that occurs on the individual and the organizational levels. I advocated the posi- tion that both system and individual learning need to be part of the equation that allows a firm to attain ROD. Notwithstanding how and when system and individual learning occurs, the investigation of how individuals learn must be a fundamental part of any theory-to-practice effort, such as the present one. Indeed, whether one favors a view of learning as occurring on the organizational or on the individual level (and it occurs on both), we have to recognize that individuals are, ulti- mately, those who must continue to learn. Dewey (1933) first explored the concepts and values of what he called “experiential learning.” This type of learning comes from the experiences that adults have accrued over the course of their individual lives. These experiences provide rich and valuable forms of “literacy,” which must be recognized as impor- tant components to overall learning development. Kolb (1984a) fur- thered Dewey’s research and developed an instrument that measures

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individual preferences or styles in which adults learn and how they respond to day-to-day scenarios and concepts. Kolb’s (1999) Learning Style Inventory (LSI) instrument allows adults to better understand how they learn; it helps them understand how to solve problems, work in teams, manage conflicts, make better career choices, and negoti- ate personal and professional relationships. Kolb’s research provided a basis for comprehending the different ways in which adults prefer to learn, and it elaborated the distinct advantages of becoming a bal- anced learner.

The instrument schematizes learning preferences and styles into four quadrants: concrete experience, reflective observation, abstract con- ceptualization, and active experimentation. Adults who prefer to learn through concrete experience are those who need to learn through actual experience or compare a situation with reality; in reflective observation, adults prefer to learn by observing others, the world around them, and what they read. These individuals excel in group discussions and can effectively reflect on what they see and read. Abstract conceptualization refers to learning based on the assimilation of facts and information presented and read. Those who prefer to learn by active experimenta- tion do so through a process of evaluating consequences; they learn by examining the impact of experimental situations. For any individual, these learning styles often work in combinations. After classifying an individual’s responses to questions, Kolb’s instrument determines the nature of these combinations. For example, an individual can have a learning style in which he or she prefers to learn from concrete experi- ences using reflective observation as opposed to actually “doing” the activity. Figure 4.3 shows Kolb’s model in the form of a “learning wheel.” The wheel graphically shows an individual’s learning style inventory, reflecting a person’s strengths and weaknesses with respect to each learning style.

Kolb’s research suggests that learners who are less constrained by learning preferences within a distinct style are more balanced and are better learners because they have available to them more dimensions in which to learn. This is a significant concept; it suggests that adults who have strong preferences may not be able to learn when faced with learning environments that do not fit their specific preference. For example, an adult who prefers group discussion and enjoys reflective

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conversation with others may feel uncomfortable in a less interpersonal, traditional teaching environment. The importance of Kolb’s LSI is that it helps adults become aware that such preferences exist.

McCarthy’s (1999) research furthered Kolb’s work by investigating the relationship between learning preferences and curriculum devel- opment. Her Learning Type Measure (4Mat) instrument mirrors and extends the Kolb style quadrants by expressing preferences from an individual’s perspective on how to best achieve learning. Another important contribution in McCarthy’s extension of Kolb’s work is the inclusion of brain function considerations, particularly in terms of hemisphericity. McCarthy focused on the cognitive functions associ- ated with the right hemisphere (perception) and left hemisphere (pro- cess) of the brain. Her 4Mat system shows how adults, in each style quadrant, perceive learning with the left hemisphere of the brain and how it is related to processing in the right hemisphere. For example, for Type 1 learners (concrete experience and reflective observation), adults perceive in a concrete way and process in a reflective way. In other words, these adults prefer to learn by actually doing a task and then processing the experience by reflecting on what they experienced during the task. Type 2 learners (reflective observation and abstract conceptualization), however, perceive a task by abstract thinking and

Concrete Experience

Abstract Conceptualization

Reflective Observation

Active Experimentation

Observes concrete

situation and reflects on its

meaning.

Interested in abstract ideas and concepts

Seeks to find practical uses for ideas and

theories

Learns from hands-on

experience

Figure 4.3 Kolb’s learning style Inventory.

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process it by developing concepts and theories from their initial ideas. Figure 4.4 shows McCarthy’s rendition of the Kolb learning wheel.

The practical claim to make here is that practitioners who acquire an understanding of the concepts of the experiential learning models will be better able to assist individuals in understanding how they learn, how to use their learning preferences during times of transi- tion, and the importance of developing other dimensions of learning. The last is particularly useful in developing expertise in learning from individual reflective practices, learning as a group in communities of practice, and participating in both individual transformative learn- ing and organizational transformations. How then does experiential learning operate within the framework of organizational learning and technology? This is shown Figure 4.5 in a combined wheel, called the applied individual learning for technology model, which creates a

Image

Integrate

Extend

Why?If?

Wh at? How?

QI

QIIQIII

QIV

Ad apt

atio ns Meaning

Co nc

ept s

Skills

Examine

DefineTry

Refine

Counsel

Figure 4.4 McCarthy rendition of the Kolb learning Wheel.

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conceptual framework for linking the technology life cycle with orga- nizational learning and experiential learning constructs.

Figure 4.5 expands the wheel into two other dimensions. The first quadrant (QI) represents the feasibility stage of technology. It requires communities to work together to ascertain why a particular technol- ogy might be attractive to the organization. This quadrant is best represented by individuals who engage in group discussions to make better connections from their own experiences. The process of deter- mining whether a technology is feasible requires integrated discourse among affected communities, who then can make better decisions, as opposed to centralized or individual and predetermined decisions on whether to use a specific technology. During this phase, individuals need to operate in communities of practice as the infrastructure with which to support a democratic process of consensus building.

Communities of Practice

Transformative Learning

Action Learning

Knowledge Management

Feasibility—Why? Cre

atio n—

Wh at I

f?

Me asu

rem ent

& An

aly sis—

Wh at?Planning & Design—

How?

QI

QIIQIII

QIV

Im ple

me nti

ng Tec

hn olo

gy

Engaging in the Technology Process

Co nc

ep tua

lize Dr

ive r &

Su pp

ort er

Lif e C

ycl es

Exploring Technology Opportunities

Figure 4.5 Combined applied learning wheel.

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The second quadrant (QII) corresponds to measurement and analy- sis. This operation requires individuals to engage in specific details to determine and conceptualize driver and supporter life cycles analyti- cally. Individuals need to examine the specific details to understand “what” the technology can do and to reflect on what it means to them and their business unit. This analysis is measured with respect to what the ROI will be and which driver and supporter functions will be used. This process requires transformation theory that allows indi- viduals to perceive and conceptualize which components of the tech- nology can transform the organization.

Quadrant 3 (QIII), design and planning, defines the “how” com- ponent of the technology life cycle. This process involves exploring technology opportunities after measurement and analysis have been completed. The process of determining potential uses for technol- ogy requires knowledge of the organization. Specifically, it needs the abstract concepts developed in Quadrant 2 to be integrated with tacit knowledge to then determine possible applications where the tech- nology can succeed. Thus, knowledge management becomes the pre- dominant mechanism for translating what has been conceptualized into something explicit (discussed further in Chapter 5).

Quadrant 4 (QIV) represents the implementation-and-creation step in the technology life cycle. It addresses the hypothetical ques- tion of “What if?” This process represents the actual implementation of the technology. Individuals need to engage in action learning tech- niques, particularly those of reflective practices. The implementation step in the technology life cycle is heavily dependent on the individual. Although there are levels of project management, the essential aspects of what goes on inside the project very much relies on the individual performances of the workers.

Social Discourse and the Use of Language

The successful implementation of communities of practice fosters heavy dependence on social structures. Indeed, without understanding how social discourse and language behave, creating and sustaining the internal interactions within and among communities of practice are not possible. In taking individuals as the central component for continued learning and change in organizations, it becomes important to work

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with development theories that can measure and support individual growth and can promote maturation with the promotion of organi- zational/system thinking (Watkins & Marsick, 1993). Thus, the basis for establishing a technology-driven world requires the inclusion of linear and circular ways of promoting learning. While there is much that we will use from reflective action concepts designed by Argyris and Schön (1996), it is also crucial to incorporate other theories, such as marginality, transitions, and individual development.

Senge (1990) also compared learning organizations with engi- neering innovation; he called these engineering innovations “tech- nologies.” However, he also related innovation to human behavior and distinguished it as “disciplines.” He defined discipline as “a body of theory and technique that must be studied and mastered to be put into practice, as opposed to an enforced order or means of punishment” (p. 10). A discipline, according to Senge, is a developmental path for acquiring certain skills or competencies. He maintained the concept that certain individuals have an innate “gift”; however, anyone can develop proficiency through practice. To practice a discipline is a life- long learning process—in contrast to the work of a learning organiza- tion. Practicing a discipline is different from emulating a model. This book attempts to bring the arenas of discipline and technology into some form of harmony. What technology offers is a way of address- ing the differences that Senge proclaimed in his work. Perhaps this is what is so interesting and challenging about attempting to apply and understand the complexities of how technology, as an engineer- ing innovation, affects the learning organization discipline—and thereby creates a new genre of practices. After all, I am not sure that one can master technology as either an engineering component or a discipline.

Technology dynamism and ROD expand the context of the glo- balizing forces that have added to the complexity of analyzing “the language and symbolic media we employ to describe, represent, inter- pret, and theorize what we take to be the facticity of organizational life” (Grant, Keenoy, & Oswick, 1998, p. 1). ROD needs to create what I call the “language of technology.” How do we then incorporate technology in the process of organizing discourse, or how has tech- nology affected that process? We know that the concept of discourse includes language, talk, stories, and conversations, as well as the very

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heart of social life, in general. Organizational discourse goes beyond what is just spoken; it includes written text and other informal ways of communication. Unfortunately, the study of discourse is seen as being less valuable than action. Indeed, discourse is seen as a passive activity, while “doing” is seen as supporting more tangible outcomes. However, technology has increased the importance of sense-making media as a means of constructing and understanding organizational identities. In particular, technology, specifically the use of e-mail, has added to the instability of language and the ambiguities associated with metaphorical analysis—that is, meaning making from language as it affects organizational behavior. Another way of looking at this issue is to study the metaphor as well as the discourse of technology. Technology is actually less understood today, a situation that creates even greater reason than before for understanding its metaphorical status in organizational discourse—particularly with respect to how technology uses are interpreted by communities of practice. This is best shown using the schema of Grant et al. of the relationship between content and activity and how, through identity, skills, and emotion, it leads to action (Figure 4.6).

To best understand Figure 4.4 and its application to technology, it is necessary to understand the links between talk and action. It is the activity and content of conversations that discursively produce

Conversational Activity

Conversational Content

Action

Skills

Emotions

Identity

Figure 4.6 Grant’s schema—relationship between content and activity.

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identities, skills, and emotions, which in turn lead to action. Talk, in respect to conversation and content, implies both oral and written forms of communications, discourse, and language. The written aspect can obviously include technologically fostered communications over the Internet. It is then important to examine the unique conditions that technology brings to talk and its corresponding actions.

Identity

Individual identities are established in collaborations on a team or in being a member of some business committee. Much of the theory of identity development is related to how individuals see themselves, particularly within the community in which they operate. Thus, how active or inactive we are within our communities shapes how we see ourselves and how we deal with conversational activity and content. Empowerment is also an important part of identity. Indeed, being excluded or unsupported within a community establishes a different identity from other members of the group and often leads to margin- ality (Schlossberg, 1989).

Identities are not only individual but also collective, which to a large extent contributes to cultures of practice within organizational factions. It is through common membership that a collective iden- tity can emerge. Identity with the group is critical during discussions regarding emerging technologies and determining how they affect the organization. The empowerment of individuals and the creation of a collective identity are therefore important in fostering timely actions that have a consensus among the involved community.

Skills

According to Hardy, Lawrence, and Philips (1998), conversations are “arenas in which particular skills are invested with meaning” (p. 71). Watson (1995) suggested that conversations not only help individuals acquire “technical skills” but also help develop other skills, such as being persuasive. Conversations that are about technology can often be skewed toward the recognition of those individuals who are most “technologically talented.” This can be a problem when discourse is limited to who has the best “credentials” and can often lead to the

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undervaluing of social production of valued skills, which can affect decisions that lead to actions.

Emotion

Given that technology is viewed as a logical and rational field, the appli- cation of emotion is not often considered a factor of action. Fineman (1996) defined emotion as “personal displays of affected, or ‘moved’ and ‘agitated’ states—such as joy, love, fear, anger, sadness, shame, embarrassment”—and pointed out that they are socially constructed phenomena. There is a positive contribution from emotional energy as well as a negative one. The consideration of positive emotion in the organizational context is important because it drives action (Hardy et al., 1998). Indeed, action is more emotion than rational calcula- tion. Unfortunately, the study of emotions often focuses on its negative aspects. Emotion, however, is an important part of how action is estab- lished and carried out and therefore warrants attention in ROD.

Identity, skills, and emotion are important factors in how talk actually leads to action. Theories that foster discourse and its use in organizations, on the other hand, are built on linear paths of talk and action. That is, talk can lead to action in a number of predefined paths. Indeed, talk is typically viewed as “cheap” without action or, as is sometimes said, “action is valued,” or “action speaks louder than words.” Talk from this perspective constitutes the dynamism of what must occur with action science, communities of practice, transfor- mative learning, and, eventually, knowledge creation and manage- ment. Action, by contrast, can be viewed as the measurable outcomes that have been eluding organizational learning scholars. However, not all actions lead to measurable outcomes. Marshak (1998) estab- lished three types of talk that lead to action: tool-talk, frame-talk, and mythopoetic-talk:

1. Tool-talk includes “instrumental communities required to: discuss, conclude, act, and evaluate outcomes” (p. 82). What is most important in its application is that tool-talk be used to deal with specific issues for an identified purpose.

2. Frame-talk focuses on interpretation to evaluate the mean- ings of talk. Using frame-talk results in enabling implicit and

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explicit assessments, which include symbolic, conscious, pre- conscious, and contextually subjective dimensions.

3. Mythopoetic-talk communicates ideogenic ideas and images (i.e., myths and cosmologies) that can be used to communicate the nature of how to apply tool-talk and frame-talk within the particular culture or society. This type of talk allows for con- cepts of intuition and ideas for concrete application.

Furthermore, it has been shown that organizational members experience a difficult and ambiguous relationship between dis- course that makes sense and non-sense—what is also known as “the struggle with sense” (Grant et al., 1998). There are two parts that comprise non-sense: The first is in the difficulties that individu- als experience in understanding why things occur in organizations, particularly when their actions “make no sense.” Much of this dif- ficulty can be correlated with political issues that create “nonlearn- ing” organizations. However, the second condition of non-sense is more applicable and more important to the study of ROD than the first—that is, non-sense associated with acceleration in the organizational change process. This area comes from the taken-for- granted assumptions about the realities of how the organization operates, as opposed to how it can operate. Studies performed by Wallemacq and Sims (1998) provided examples of how organiza- tional interventions can decompose stories about non-sense and replace them with new stories that better address a new situation and can make sense of why change is needed. This phenomenon is critical to changes established or responded to by the advent of new technologies. Indeed, technology has many non-sense or false generalizations regarding how long it takes to implement a product, what might be the expected outcomes, and so on. Given the need for ROD—due to the advent of technology—there is a concomitant need to reexamine “old stories” so that the necessary change agents can be assessed and put into practice. Ultimately, the challenge set forth by Wallemacq and Sims is especially relevant and critical since the very definition of ROD suggests that communities need to accelerate the creation of new stories—stories that will occur at unpredictable intervals. Thus, the link among discourse, organi- zational learning, and technology is critical to providing ways in

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which to deal with individuals and organizations facing the chal- lenge of changing and evolving.

Grant’s (1996) research showed that sense making using media and stories provided effective ways of constructing and understand- ing organizational identities. Technology affects discourse in a similar way that it affects communities of practice; that is, it is a variable that affects the way discourse is used for organizational evolution. It also provides new vehicles on how such discourse can occur. However, it is important not to limit discourse analysis to merely being about “texts,” emotion, stories, or conversations in organizations. Discourse analysis examines “the constructing, situating, facilitating, and communicat- ing of diverse cultural, instrumental, political, and socio-economic parameters of ‘organizational being’” (Grant, 1996, p. 12). Hence, discourse is the essential component of every organizational learning effort. Technology accelerates the need for such discourse and lan- guage in becoming a more important part of the learning matura- tion process, especially in relation to “system” thinking and learning. I propose then, as part of a move toward ROD, that discourse theories must be integrated with technological innovation and be part of the maturation in technology and in organizational learning.

The overarching question is how to apply these theories of discourse and language to learning within the ROD framework and paradigm. First, let us consider the containers of types of talk discussed by Marshak (1998) as shown in Figure 4.7.

These types of talk can be mapped onto the technology wheel so that the most appropriate oral and written behaviors can be set forth within each quadrant and development life cycle as shown in Figure 4.8.

Mythopoetic-talk is most appropriate in Quadrant I (QI), where the fundamental ideas and issues can be discussed in communities of practice. These technological ideas and concepts deemed feasible are then analyzed through frame-talk, by which the technology can be evaluated in terms of how it meets the fundamental premises established in Quadrant I. Frame-talk also reinforces the conceptual legitimacy of how technology will transform the organization while providing appropriate ROI. Tool-talk represents the process of iden- tifying applications and actually implementing them. For this reason, tool-talk exists in both Quadrant III and Quadrant IV. The former

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quadrant represents the discussion-to-decision portion, and the latter represents the actual doing and completion of the project itself. In Quadrant III, table-talk requires knowledge management to transition technology concepts into real options. Quadrant IV transforms these real options into actual projects in which reflecting on actual practices

Tool-Talk: Instrumental

Frame-Talk: Interpretive

Mythopoetic-Talk: Ideogenic

Figure 4.7 Marshak’s type of talk containers.

Mythopoetic- Talk: Ground

ideas using communities of

practice

Frame-Talk: Transformation

Tool-Talk: Doing using reflective

practices

Tool-Talk: Discuss-Decide:

Knowledge Management

Feasibility—Why?

Im ple

me nta

tio n—

Wh at I

f?

Me asu

rem ent

& An

aly sis—

Wh at?

Planning & Design— How?

QI

QIIQIII

QIV

Figure 4.8 Marshak’s model mapped to the technology learning wheel.

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during implementation provides an opportunity for individual- and organizational-level learning.

Marshak’s (1998) concept of containers and cycles of talk and action are adapted and integrated with cyclical and linear maturity models of learning. However, discourse and language must be linked to per- formance, which is why it needs to be part of the discourse and lan- guage learning wheel. By integrating discourse and language into the wheel, individual and group activities can use discourse and language as part of reflective practices to create an environment that can foster action that leads to measurable outcomes. This process, as explained throughout this book, is of paramount importance in understanding how discourse operates with ROD in the information age.

Linear Development in Learning Approaches

Focusing only on the role of the individual in the company is an incom- plete approach to formulating an effective learning program. There is another dimension to consider that is based on learning maturation. That is, where in the life cycle of learning are the individuals and the organization? The best explanation of this concept is the learning mat- uration experience at Ravell. During my initial consultation at Ravell, the organization was at a very early stage of organizational learning. This was evidenced by the dependence of the organization on event- driven and individual reflective practice learning. Technology acted as an accelerator of learning—it required IT to design a new network during the relocation of the company. Specifically, the acceleration, operationalized by a physical move, required IT to establish new rela- tionships with line management. The initial case study concluded that there was a cultural change as a result of these new relationships— cultural assimilation started to occur using organizational learning techniques, specifically reflective practices.

After I left Ravell, another phase in the evolution of the company took place. A new IT director was hired in my stead who attempted to reinstate the old culture: centralized infrastructure, stated operational boundaries, and separations that mandated antilearning organizational behaviors. After 6 months, the line managers, faced with having to revert back to a former operating culture, revolted and demanded the removal of the IT director. This outcome, regrettable as it may be, is

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critical in proving the conclusion of the original study that the culture at Ravell had indeed evolved from its state at the time of my arrival. The following are two concrete examples that support this notion:

1. The inability of the new IT director to “roll back” the process to a former cultural state was unsuccessful, showing that a new evolving culture had indeed occurred.

2. Line managers came together from the established learning organization to deliver a concerted message to the executive team. Much of their learning had now shifted to a social organi- zation level that was based less on events and was more holistic with respect to the goals and objectives of the organization.

Thus, we see a shift from an individual-based learning process to one that is based more on the social and organizational issues to stimu- late transformation. This transformation in learning method occurred within the same management team, suggesting that changes in learning do occur over time and from experience. Another way of viewing the phenomenon is to see Ravell as reaching the next level of organizational learning or maturation with learning. Consistent with the conclusion of the original study, technology served to accelerate the process of change or accelerate the maturation process of organizational learning.

Another phase (Phase II) of Ravell transpired after I returned to the company. I determined at that time that the IT department needed to be integrated with another technology-based part of the business—the unit responsible for media and engineering services (as opposed to IT). While I had suggested this combination 8 months earlier, the organization had not reached the learning maturation to understand why such a combina- tion was beneficial. Much of the reason it did not occur earlier can also be attributed to their inability to manage ROD, which, if implemented, would have made the integration more obvious. The initial Ravell study served to bring forth the challenges of cultural assimilation to the extent that the organization needed to reorganize itself and change its behavior. In Phase II, the learning process matured by accelerating the need for structural change in the actual reporting processes of IT.

A year later, yet another learning maturation phase (Phase III) occurred. In Ravell Phase III, the next stage of learning maturation allowed the firm to better manage ROD. After completing the merger of the two technically related business units discussed (Phase II), it

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became necessary to move a core database department completely out of the combined technology department and to integrate it with a busi- ness unit. The reason for this change was compelling and brought to light a shortfall in my conclusions from the initial study. It appears that as organizational learning matures within ROD, there is an increasing need to educate the executive management team of the organization. This was not the case during the early stages of the case study. The limitation of my work then was that I predominantly interfaced with line management and neglected to include executives in the learning. During that time, results were encouraging, so there was little rea- son for me to include executives in event-driven issues—as discussed. Unfortunately, lacking their participation fostered a disconnection with the strategic integration component of ROD. Not participating in ROD created executive ignorance of the importance that IT had on the strategy of the business. Their lack of knowledge resulted in chronic problems with understanding the relationship and value of IT on the business units of the organization. This shortcoming resulted in continued conflicts over investments in the IT organization. It ulti- mately left IT with the inability to defend many of its cost require- ments. As stated, during times of economic downturns, firms tend to reduce support organizations. In other words, executive management did not understand the driver component of IT.

After the move of the cohort of database developers to a formal business line unit, the driver components of the group provided the dialogue and support necessary to educate executives. However, this education did not occur based on events but rather on using the social and group dynamics of organizational learning. We see here another aspect of how organizational and individual learning methods work together but evolve in a specific way, as summarized in Table 4.2.

Another way of representing the relationship between individual and organizational learning over time is to chart a “maturity” arc to illustrate the evolutionary life cycle of technology and organizational learning. I call this arc the ROD arc. The arc is designed to assess individual development in four distinct sectors of ROD, each in rela- tion to five developmental stages of organizational learning. Thus, each sector of ROD can be measured in a linear and integrated way. Each stage in the course of the learning development of an organiza- tion reflects an underlying principle that guides the process of ROD

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norms and behaviors; specifically, it guides organizations in how they view and use the ROD components available to them.

The arc is a classificatory scheme that identifies progressive stages in the assimilated uses of ROD. It reflects the perspective—paralleling Knefelkamp’s (1999) research—that individuals in an organization are able to move through complex levels of thinking and to develop inde- pendence of thought and judgment as their careers progress within the management structures available to them. Indeed, assimilation to learning at specific levels of operations and management are not necessarily an achievable end but one that fits into the psychological perspective of what productive employees can be taught about ROD adaptability. Figure 4.9 illustrates the two axes of the arc.

The profile of an individual who assimilates the norms of ROD can be characterized in five developmental stages (vertical axis) along four

Table 4.2 Analysis of Ravell’s Maturation With Technology

leARnInG PHAse I PHAse II PHAse III

Type of learning Individual reflective practices used to establish operations and line management

line managers defend new culture and participate in less event-driven learning

Movement away from holistic formation of IT into separate driver and supporter attributes. learning approaches are integrated using both individual and organizational methods and are based on functionality as opposed to being organizationally specific

learning outcomes

early stage of learning organization development

Combination of event-driven and early-stage social organizational learning formation

Movement toward social-based organizational decision making relative to the different uses of technology

Responsive organizational dynamism: cultural assimilation

established new culture; no change in organizational structure

Cultural assimilation stability with existing structures; early phase of IT organizational integration with similar groups

Mature use of cultural assimilation based on IT behaviors (drivers and supporters)

Responsive organizational dynamism: strategic integration

limited integration due to lack of executive involvement

early stages of value/ needs based on similar strategic alignment

social structures emphasize strategic integration based on business needs

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strategic integration

Cultural assimilation

organizational learning constructs

Management level

Figure 4.9 Reflective organizational dynamism arc model.

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sectors of literacy (horizontal axis). The arc characterizes an individual at a specific level in the organization. At each level, the arc identifies individual maturity with ROD, specifically strategic integration, cul- tural assimilation, and the type of learning process (i.e., individual vs. organizational). The arc shows how each tier integrates with another, what types of organizational learning theory best apply, and who needs to be the primary driver within the organization. Thus, the arc provides an organizational schema for how each concept component of organi- zational learning applies to each sector of ROD. It also identifies and constructs a path for those individuals who want to advance in organi- zational rank; that is, it can be used to ascertain an individual’s ability to cope with ROD requirements as a precursor for advancement in man- agement. Each position within a sector, or cell, represents a specific stage of development within ROD. Each cell contains specific definitions that can be used to identify developmental stages of ROD and organizational learning maturation. Figure 4.10 represents the ROD arc with its cell definitions. The five stages of the arc are outlined as follows:

1. Operational knowledge: Represents the capacity to learn, con- ceptualize, and articulate key issues relating to how technology can have an impact on existing processes and organizational structure. Organizational learning is accomplished through individual learning actions, particularly reflective practices. This stage typically is the focus for operations personnel, who are usually focused on their personal perspectives of how technology affects their daily activities.

2. Department/unit view as other: Indicates the ability to inte- grate points of view about using technology from diverse indi- viduals within the department or business unit. Using these new perspectives, the individual is in position to augment his understanding of technology and relate it to others within the unit. Operations personnel participate in small-group learn- ing activities using reflective practices. Lower levels of middle managers participate in organizational learning that is in transition from purely individual to group-level thinking.

3. Integrated disposition: Recognizes that individual and depart- mental views on using technology need to be integrated to form effective business unit objectives. Understanding that

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strategic integration operations personnel understand that technology has an impact on strategic development, particularly on existing processes

Individual beliefs of strategic impact are incomplete; individual needs to incorporate other views within the department or business unit

Recognition that individual and department views must be integrated to be complete and strategically productive for the department/unit

Changes made to processes at the department/unit level formally incorporate emerging technologies

Departmental strategies are propagated and integrated at organization level

Cultural assimilation

view that technology can and will affect the way the organization operates and that it can affect roles and responsibilities

Changes brought forth by technology need to be assimilated into departments and are dependent on how others participate

understands need for organizational changes; different cultural behavior new structures are seen as viable solutions

organizational changes are completed and in operation; existence of new or modified employee positions

Department-level organizational changes and cultural evolution are integrated with organization-wide functions and cultures

organizational learning constructs

Individual-based reflective practice

small group-based reflective practices

Interactive with both individual and middle management using communities of practice

Interactive between middle management and executives using social discourse methods to promote transformation

organizational learning at executive level using knowledge management

Management level operations operation and middle management

Middle management Middle management and executive

executive

Figure 4.10 Responsive organizational dynamism arc.

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organizational and cultural shifts need to include all mem- ber perspectives before formulating departmental decisions, organizational learning is integrated with middle managers using communities of practice at the department level.

4. Stable operations: Develops in relation to competence in sectors of ROD appropriate for performing job duties for emerging tech- nologies, not merely adequately but competitively with peers and higher ranking employees in the organization. Organizational learning occurs at the organizational level and uses forms of social discourse to support organizational transformation.

5. Organizational leadership: Ability to employ sectors of ROD to multiple aspects of the organization. Department concepts can be propagated to organizational levels, including strate- gic and cultural shifts relating to technology opportunities. Organizational learning occurs using methods of knowledge management with executive support. Individuals use their technology knowledge for creative purposes. They are will- ing to take risks using critical discernment and what Heath (1968) called “freed” decision making.

The ROD arc addresses both individual and organizational learn- ing. There are aspects of Senge’s (1990) “organizational” approach that are important and applicable to this model. I have mentioned its appropriateness in regard to the level of the manager—suggesting that the more senior manager is better positioned to deal with non- event learning practices. However, there is yet another dimension within each stage of matured learning. This dimension pertains to timing. The timing dimension focuses on a multiple-phase approach to maturing individual and organizational learning approaches. The multiple phasing of this approach suggests a maturing or evolutionary learning cycle that occurs over time, in which individual learning fos- ters the need and the acceptance of organizational learning methods. This process can be applied within multiple tiers of management and across different business units.

The ROD arc can also be integrated with the applied individual learn- ing wheel. The combined models show the individual’s cycle of learning along a path of maturation. This can be graphically shown to reflect how the wheel turns and moves along the continuum of the arc (Figure 4.11).

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Figure 4.11 shows that an experienced technology learner can max- imize learning by utilizing all four quadrants in each of the maturity stages. It should be clear that certain quadrants of individual learn- ing are more important to specific stages on the arc; however, move- ment through the arc is usually not symmetrical; that is, individuals do not move equally from stage to stage within the dimensions of learning (Langer, 2003). This integrated and multiphase method uses the applied individual learning wheel with the arc. At each stage of the arc, an individual will need to draw on the different types of learning that are available in the learning wheel. Figure 4.12 provides

Commu- nities of Practice

Trans- formative Learning

Action Learning

Knowledge Management

Feasibility—Why? Cre

atio n—

Wh at I

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Me asu

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- W hat

?Planning & Design— How?

QI

QIIQIII

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Tec hn

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Engaging in the Technology Process

Co nc

ep tua

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ive r &

Su pp

ort er

Lif e C

ycl es

Exploring Technology Opportunities

Opera tional

Know ledge

Depar tment

/Unit

View as Oth

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Integr ated

Dispo sition

Stable

Opera tions

Organ izatio

nal

Leade rship

Incre ased L

evels of Ma

turity with

Organ izatio

nal D ynam

ism

Figure 4.11 RoD arc with applied individual learning wheel.

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InTeGRATeD DIsPosITIon sTABle oPeRATIons

oRGAnIzATIonAl leADeRsHIP

strategic integration

Cultural assimilation

organizational learning constructs

Management level

Figure 4.12 sample RoD arc.

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108 InFormAtIon teChnology

an example of this concept, which Knefelkamp called “multiple and simultaneous” (1999), meaning that learning can take on multiple meanings across different sectors simultaneously.

Figure 4.12 shows that the dimension variables are not necessarily parallel in their linear maturation. This phenomenon is not unusual with linear models and in fact is quite normal. However, it also reflects the complexity of how variables mature and the importance of having the capability and infrastructure to determine how to measure such levels of maturation within dimensions. There are both qualitative and quantitative approaches to this analysis. Qualitative approaches typi- cally include interviewing, ethnographic-type experiences over some predetermined time period, individual journals or diaries, group meet- ings, and focus groups. Quantitative measures involve the creation of survey-type measures; they are based on statistical results from answer- ing questions that identify the level of maturation of the individual.

The learning models that I elaborate in this chapter are suggestive of the rich complexities surrounding the learning process for indi- viduals, groups, and entire organizations. This chapter establishes a procedure for applying these learning models to technology-specific situations. It demonstrates how to use different phases of the learning process to further mature the ability of an organization to integrate technology strategically and culturally.

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5 managing oRganizaTional leaRning anD TeChnology

The Role of Line Management

In Chapter 1, the results of the Ravell case study demonstrated the importance of the role that line managers have for the success of implementing organizational learning, particularly in the objective of integrating the information technology (IT) department. There has been much debate related to the use of event-driven learning. In particular, there is Senge’s (1990) work from his book, The Fifth Discipline. While overall I agree with his theories, I believe that there is a need to critique some of his core concepts and beliefs. That is, Senge tended to make broad generalizations about the limits of event-driven education and learning in organizations. He believed that there is a limitation of learning from experience because it can create limitations to learning based on actions—as he asked: “What happens when we can no longer observe the consequences of our actions?” (Senge, 1990, p. 23). My research has found that event- driven learning is essential to most workers who have yet to learn through other means. I agree with Senge that not all learning can be obtained through event-oriented thinking, but I feel that much of what occurs at this horizon pertains more to the senior levels than to what many line managers have to deal with as part of their functions in business. Senge’s concern with learning methods that focus too much on the individual perhaps is more powerful if we see the learning organization as starting at the top and then work- ing its way down. The position, however, particularly with respect to the integration of technology, is that too much dependence on executive-driven programs to establish and sustain organizational learning is dangerous. Rather, the line management—or middle managers who fundamentally run the business—is best positioned to

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make the difference. My hypothesis here is that both top-down and bottom-up approaches to organizational learning are riddled with problems, especially in their ability to sustain outcomes. We cannot be naïve—even our senior executives must drive results to maintain their positions. As such, middle managers, as the key business driv- ers, must operate in an event- and results-driven world—let us not underestimate the value of producing measurable outcomes as part of the ongoing growth of the organizational learning practicum.

To explore the role of middle managers further, I draw on the interesting research done by Nonaka and Takeuchi (1995). These researchers examined how Japanese companies manage knowledge creation by using an approach that they called “middle-up-down.” Nonaka and Takeuchi found that middle managers “best communi- cate the continuous iterative process by which knowledge is created” (p. 127). These middle managers are often seen as leaders of a team or task in which a “spiral conversion process” operates and that requires both executive and operations management personnel. Peters and Waterman (1982), among others, often have attacked middle man- agers as representing a layer of management that creates communica- tion problems and inefficiencies in business processes that resulted in leaving U.S. workers trailing behind their international competitors during the automobile crisis in the 1970s. They advocated a “flatten- ing” of the never-ending levels of bureaucracy responsible for inef- ficient operations. However, executives often are not aware of details within their operating departments and may not have the ability or time to acquire those details. Operating personnel, on the other hand, do not possess the vision and business aptitudes necessary to establish the kind of knowledge creation that fosters strategic learn- ing. Middle managers, or what I prefer to identify as line managers (Langer, 2001b), possess an effective combination of skills that can provide positive strategic learning infrastructures. Line managers understand the core issues of productivity in relation to competitive operations and return on investment, and they are much closer to the day-to-day activities that bring forth the realities of how and when new strategic processes can be effectively implemented. While many researchers, such as Peters and Waterman, found them to be syn- onymous with backwardness, stagnation, and resistance to change,

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middle managers are the core group that can provide the basis for continuous innovation through strategic learning. It is my perspective that the difference of opinion regarding the positive or negative sig- nificance middle managers have in relation to organizational learn- ing has to do with the wide-ranging variety of employees who fall into the category of “middle.” It strikes me that Peters and Waterman were somewhat on target with respect to a certain population of middle managers, although I would not characterize them as line managers. To justify this position, it is important to clearly establish the differences. Line managers should be defined as pre-executive employees who have reached a position of managing a business unit that contains some degree of return on investment for the business. In effect, I am suggesting that focusing on “middle” managers, as an identifiable group, is too broad. Thus, there is a need to further delineate the different levels of what comprises middle managers and their roles in the organization.

Line Managers

These individuals usually manage an entire business unit and have “return-on-investment” responsibilities. Line managers should be categorized as those who have middle managers reporting to them; they are, in effect, managers of managers, or, as in some organiza- tions, they serve a “director” function. Such individuals are in many ways considered future executives and perform many low-end execu- tive tasks. They are, if you will, executives in training. What is sig- nificant about this manager level is the knowledge it carries about operations. However, line managers are still involved in daily opera- tions and maintain their own technical capabilities.

First-Line Managers

First-line individuals manage nonmanagers but can have supervisory employees who report to them. They do not carry the responsibility for a budget line unit but for a department within the unit. These managers have specific goals that can be tied to their performance and to the department’s productivity.

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Supervisor

A supervisor is the lowest level middle manager. These individuals manage operational personnel within the department. Their manage- ment activities are typically seen as “functions,” as opposed to man- aging an entire operation. These middle managers do not have other supervisors or management-level personnel reporting to them.

We should remember that definitions typically used to character- ize the middle sectors of management, as described by researchers like Peters, Nonaka, and others, do not come from exact science. The point must be made that middle managers cannot be categorized by a single definition. The category requires distinctive definitions within each level of stratification presented. Therefore, being more specific about the level of the middle manager can help us determine the man- ager’s role in the strategic learning process. Given that Nonaka and Takeuchi (1995) provided the concept of middle-up-down as it related to knowledge management, I wish to broaden it into a larger sub- ject of strategic learning as a method of evolving changes in culture and organizational thinking. Furthermore, responsive organizational dynamism (ROD), unlike other organizational studies, represents both situational learning and ongoing evolutionary learning require- ments. Evolutionary learning provides a difficult challenge to organi- zational learning concepts. Evolutionary learning requires significant contribution from middle managers. To understand the complexity of the middle manager, all levels of the organization must be taken into consideration. I call this process management vectors.

Management Vectors

Senge’s (1990) work addressed some aspects of how technology might affect organization behavior: “The central message of the Fifth Discipline is more radical than ‘radical organization redesign’—namely that our organizations work the way they work, ultimately because of how we think and how we interact” (p. xiv). Technology aspires to be a new variable or catalyst that can change everyday approaches to things—to be the radical change element that forces us to reexamine norms no longer applicable to business operations. On the other hand, technology can be dangerous if perceived unrealistically as a power that

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possesses new answers to organizational performance and efficiency. In the late 1990s, we experienced the “bust” of the dot.com explosion, an explosion that challenged conventional norms of how businesses operate. Dot.coms sold the concepts that brick-and-mortar operations could no longer compete with new technology-driven businesses and that “older” workers could not be transformed in time to make dot. com organizations competitive. Dot.coms allowed us to depart from our commitment to knowledge workers and learning organizations, which is still true today. For example, in 2003, IBM at its corporate office in Armonk, New York, laid off 1,000 workers who possessed skills that were no longer perceived as needed or competitive. Rather than retrain workers, IBM determined that hiring new employees to replace them was simply more economically feasible and easier in terms of transforming their organization behaviors. However, in my interview with Stephen McDermott, chief executive officer (CEO) of ICAP ETC (electronic trading community), it became apparent that many of the mystiques of managing technology were incorrect, as he stated, “Managing a technology company is no different from manag- ing other types of businesses.” While the technical skills of the IBM workers may no longer be necessary, why did the organization not provide enough opportunities to migrate important knowledge work- ers to another paradigm of technical and business needs? Widespread worker replacements tell us that few organizational learning infra- structures actually exist. The question is whether technology can pro- vide the stimulus to prompt more organizations to commit to creating infrastructures that support growth and sustained operation. Most important is the question of how we establish infrastructures that can provide the impetus for initial and ongoing learning organizations. This question suggests that the road to working successfully with tech- nology will require the kind of organizational learning that is driven by both individual and organization-wide initiatives. This approach can be best explained by referring to the concept of driver and sup- porter functions and life cycles of technology presented in Chapter 3. Figure 5.1 graphically shows the relationship between organizational structure and organizational learning needs. We also see that this relationship maps onto driver and supporter functionality.

Figure 5.1 provides an operational overview of the relations between the three general tiers of management in most organizations. These

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levels or tiers are mapped onto organizational learning approaches; that is, organizational/system or individual. This mapping follows a general view based on what individuals at each of these tiers view or seek as their job responsibilities and what learning method best supports their activi- ties within their environment. For example, executive learning focuses on system-level thinking and learning because executives need to view their organizations in a longer-term way (e.g., return on investment) as opposed to viewing learning on an individual, transactional event way. Yet, executives play an integral part in long-term support for technol- ogy as an accelerator. Their role within ROD is to provide the stimulus to support the process of cultural assimilation, and they are also very much a component of strategic integration. Executives do not require as much event-driven reflective change, but they need to be part of the overall “social” structure that paves the way for marrying the benefits of technology with organizational learning. What executives do need to see are the planned measurable outcomes linked to performance from the investment of coupling organizational learning with technology. The lack of executive involvement and knowledge will be detrimental to the likelihood of making this relationship successful.

Operations, on the other hand, are based more on individual prac- tices of learning. Attempting to incorporate organizational vision and social discourse at this level is problematic until event-driven learning is experienced individually to prove the benefits that can be derived

Organizational Learning Method

Driver/Support Life Cycle

Involvement

Management/ Operational

Layers

Executive Tier Organization System

Middle Management

Tiers

Organization/ System on

Driver Individual on Support

Operations Tier

Learning Approach

Driver Knowledge Management

Driver/Support Life Cycle

Communities of Practice (Driver)

Reflective Practices (Supporter)

Support Event Driven Individual

Reflective Practices

Figure 5.1 Three-tier organizational structure.

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from reflective practices. In addition, there is the problem of the cred- ibility of a learning program. Workers are often wary of new pro- grams designed to enhance their development and productivity. Many question the intentions of the organization and why it is making the investment, especially given what has occurred in corporations over the last 20 years: Layoffs and scandals have riddled organizations and hurt employee confidence in the credibility of employer programs.

Ravell showed us that using reflective practices during events pro- duces accelerated change driven by technological innovation, which in turn supports the development of the learning organization. It is important at this level of operations to understand the narrow and pragmatic nature of the way workers think and learn. The way opera- tions personnel are evaluated is also a factor. Indeed, operations per- sonnel are evaluated based on specific performance criteria.

The most complex, yet combined, learning methods relate to the middle management layers. Line managers within these layers are engrossed in a double-sided learning infrastructure: On one side, they need to communicate and share with executives what they perceive to be the “overall” issues of the organization. Thus, they need to learn using an organizational learning approach, which is less dependent on event-driven learning and uses reflective practice. Line managers must, along with their senior colleagues, be able to see the business from a more proactive perspective and use social-oriented methods if they hope to influence executives. Details of events are more of an assumed responsibility to them than a preferred way of interacting. In other words, most executives would rather interface with line manag- ers on how they can improve overall operations efficiently and effec- tively, as opposed to dealing with them on a micro-, event-by-event basis. The assumption, then, is that line managers are expected to deal with the details of their operations unless there are serious problems that require the attention of executives; such problems are usually cor- related to failures in the line manager’s operations.

On the other side are the daily relationships and responsibilities managers face for their business units. They need to incorporate more individual-based learning techniques that support reflective practices within their operations to assist in the personal development of their staff. The middle management tier described in Figure 5.1 is shown at a summary level and needs to be further described. Figure 5.2 provides

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a more detailed analysis based on the three types of middle manag- ers described. The figure shows the ratio of organizational learning to individual learning based on manager type. The more senior the manager, the more learning is based on systems and social processes.

Knowledge Management

There is an increasing recognition that the competitive advantage of organizations depends on their “ability to create, transfer, utilize, and protect difficult-to-intimate knowledge assets” (Teece, 2001, p. 125). Indeed, according to Bertels and Savage (1998), the dominant logic of the industrial era requires an understanding of how to break the learning barrier of comprehending the information era. While we have developed powerful solutions to change internal processes and organizational structures, most organizations have failed to address the cultural dimensions of the information era. Organizational knowledge creation is a result of organizational learning through stra- tegic processes. Nonaka and Takeuchi (1995) defined organizational knowledge as “the capability of a company as a whole to create new knowledge, disseminate it throughout the organization, and embody it in products, services, and systems” (p. 3). Nonaka and Takeuchi used the steps shown in Figure 5.3 to assess the value and chain of events surrounding the valuation of organization knowledge.

If we view the Figure 5.3 processes as leading to competitive advan- tage, we may ask how technology affects the chain of actions Nonaka and Takeuchi (1995) identified. Without violating the model, we may insert technology and observe the effects it has on each step as shown in Figure 5.4.

According to Nonaka and Takeuchi (1995), to create new knowl- edge means to re-create the company and everyone in it in an ongoing

Supervisor Manager Director

High Individual- based Learning

Individual

High Org/System- based Learning

System

Figure 5.2 organizational/system versus individual learning by middle manager level.

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process that requires personal and organizational self-renewal. That is, knowledge creation is the responsibility of everyone in the organi- zation. The viability of this definition, however, must be questioned. Can organizations create personnel that will adhere to such parame- ters, and under what conditions will senior management support such an endeavor?

Again, technology has a remarkable role to play in substantiating the need for knowledge management. First, executives are still chal- lenged to understand how they need to deal with emerging technolo- gies as they relates to whether their organizations are capable of using them effectively and efficiently. Knowledge management provides a way for the organization to learn how technology will be used to sup- port innovation and competitive advantage. Second, IT departments need to understand how they can best operate within the larger scope of the organization—they are often searching for a true mission that contains measurable outcomes as defined by the entire organization,

Knowledge Creation

Continuous Innovation

Competitive Advantage

Figure 5.3 nonaka and Takeuchi steps to organizational knowledge.

Knowledge Creation: Technology provides more dynamic shifts in knowledge, thus accelerating the number of knowledge-creation events that can occur.

Continuous Innovation: Innovations are accelerated because of the dynamic nature of events and the time required to respond—therefore, continuous

innovation procedures are more significant to have in each department in order to respond to technological opportunities on an ongoing basis.

Competitive Advantage: Technology has generated more global competition. Competitive advantages that depend on technological innovation

are more common.

Figure 5.4 nonaka and Takeuchi organizational knowledge with technology extension.

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including senior management. Third, both executives and IT staff agree that understanding the uses of technology is a continuous process that should not be utilized solely in a reactionary and event- driven way. Finally, most employees accept the fact that technology is a major component of their lives at work and at home, that technology signifies change, and that participating in knowledge creation is an important role for them.

Again, we can see that technology provides the initiator for under- standing how organizational learning is important for competitive advantage. The combination of IT and other organizational depart- ments, when operating within the processes outlined in ROD, can significantly enhance learning and competitive advantage. To expand on this point, I now focus on the literature specifically relating to tacit knowledge and its important role in knowledge management. Scholars theorize knowledge management is an ability to transfer indi- vidual tacit knowledge into explicit knowledge. Kulkki and Kosonen (2001) defined tacit knowledge as an experience-based type of knowl- edge and skill and as the individual capacity to give intuitive forms to new things; that is, to anticipate and preconceptualize the future. Technology, by its very definition and form of being, requires this anticipation and preconceptualization. Indeed, it provides the perfect educational opportunity in which to practice the transformation of tacit into explicit knowledge. Tacit knowledge is an asset, and having individual dynamic abilities to work with such knowledge commands a “higher premium when rapid organic growth is enabled by technol- ogy” (Teece, 2001, p. 140). Thus, knowledge management is likely to be greater when technological opportunity is richer.

Because evaluating emerging technologies requires the ability to look into the future, it also requires that individuals translate valu- able tacit knowledge and creatively see how these opportunities are to be judged if implemented. Examples of applicable tacit knowledge in this process are here extracted from Kulkki and Kosonen (2001):

Cultural and social history Problem-solving modes Orientation to risks and uncertainties Worldview organizing principles Horizons of expectations

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I approach each of these forms of tacit knowledge from the perspec- tive of the components of ROD as shown in Table 5.1.

It is not my intention to suggest that all technologies should be, or can be, used to generate competitive advantage. To this extent, some technologies may indeed get rejected because they cannot assist the organization in terms of strategic value and competitive advantage.

Table 5.1 Mapping Tacit Knowledge to Responsive organizational Dynamism

TACIT KnoWleDGe sTRATeGIC InTeGRATIon CulTuRAl AssIMIlATIon

Cultural and social history

How the IT department and other departments translate emerging technologies into their existing processes and organization.

Problem-solving modes

Individual reflective practices that assist in determining how specific technologies can be useful and how they can be applied.

Technology opportunities may require organizational and structural changes to transfer tacit knowledge to explicit knowledge.

utilization of tacit knowledge to evaluate probabilities for success.

orientation to risks and uncertainties

Technology offers many risks and uncertainties. All new technologies may not be valid for the organization.

Tacit knowledge is a valuable component to fully understand realities, risks, and uncertainties.

Worldviews Technology has global affects and changes market boundaries that cross business cultures and requires tacit knowledge to understand existing dispositions on how others work together.

Review how technology affects the dynamics of operations.

organizing principles How will new technologies actually be integrated? What are the organizational challenges to “rolling out” products and to implementation timelines? What positions are needed, and who in the organization might be best qualified to fill new responsibilities?

Identify limitations of the organization; that is, tacit knowledge versus explicit knowledge realities.

Horizons of expectations

Individual limitations in the tacit domain that may hinder or support whether a technology can be strategically integrated into the organization.

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Indeed, as Teece (2001) stated, “Information transfer is not knowledge transfer and information management is not knowledge management, although the former can assist the latter. Individuals and organizations can suffer from information overload” (p. 129). While this is a signifi- cant issue for many firms, the ability to have an organization that can select, interpret, and integrate information is a valuable part of knowl- edge management. Furthermore, advances in IT have propelled much of the excitement surrounding knowledge management. It is impor- tant to recognize that learning organizations, reflective practices, and communities of practice all participate in creating new organizational knowledge. This is why knowledge management is so important. Knowledge must be built on its own terms, which requires intensive and laborious interactions among members of the organization.

Change Management

Because technology requires that organizations accelerate their actions, it is necessary to examine how ROD corresponds to theo- ries in organizational change. Burke (2002) stated that most orga- nizational change is evolutionary; however, he defined two distinct types of change: planned versus unplanned and revolutionary versus evolutionary. Burke also suggested that the external environmental changes are more rapid today and that most organizations “are play- ing catch up.” Many rapid changes to the external environment can be attributed to emerging technologies, which have accelerated the divide between what an organization does and what it needs to do to remain competitive. This is the situation that creates the need for ROD.

The catching-up process becomes more difficult because the amount of change required is only increasing given ever-newer technologies. Burke (2002) suggested that this catching up will likely require planned and revolutionary change. Such change can be mapped onto much of my work at Ravell. Certainly, change was required; I planned it, and change had to occur. However, the creation of a learning organization using many of the organizational learning theories addressed in Chapter 4 supports the eventual establishment of an operating organization that can deal with unplanned and evolutionary change. When using technol- ogy as the reason for change, it is then important that the components of ROD be integrated with theories of organizational change.

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History has shown that most organizational change is not success- ful in providing its intended outcomes because of cultural lock-in. Cultural lock-in was defined by Foster and Kaplan (2001) as the inabil- ity of an organization to change its corporate culture even when there are clear market threats. Based on their definition, then, technology may not be able to change the way an organization behaves, even when there are obvious competitive advantages to doing so. My con- cern with Foster and Kaplan’s conclusion is whether individuals truly understand exactly how their organizations are being affected—or are we to assume that they do understand? In other words, is there a pro- cess to ensure that employees understand the impact of not changing? I believe that ROD provides the infrastructure required to resolve this dilemma by establishing the processes that can support ongoing unplanned and evolutionary change.

To best show the relationship of ROD to organizational change theory, I use Burke’s (2002) six major points in assisting change in organizations:

1. Understanding the external environment: What are competitors and customers’ expectations? This is certainly an issue, specif- ically when tracking whether expected technologies are made available in the client–vendor relationship. But, more critical is the process of how emerging technologies, brought about through external channels, are evaluated and put into produc- tion; that is, having a process in place. Strategic integration of ROD is the infrastructure that needs to facilitate the moni- toring and management of the external environment.

2. Evaluation of the inside of the organization: This directly relates to technology and how it can be best utilized to improve inter- nal operations. While evaluation may also relate to a restruc- turing of an organization’s mission, technology is often an important driver for why a mission needs to be changed (e.g., expanding a market due to e-commerce capabilities).

3. Readiness of the organization: The question here is not whether to change but how fast the organization can change to address technological innovations. The ROD arc provides the steps nec- essary to create organizations that can sustain change as a way of operation, blending strategic integration with cultural assimila- tion. The maturation of learning: moving toward system-based

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learning also supports the creation of infrastructures that are vitally prepared for changes from emerging technologies.

4. Cultural change as inevitable: Cultural assimilation essentially demands that organizations must dynamically assimilate new technologies and be prepared to evolve their cultures. Such evolution must be accelerated and be systemic within business units to be able to respond effectively to the rate of change created by technological innovations.

5. Making the case for change: It is often difficult to explain why change is inevitable. Much of the need for change can be sup- ported using the reflective practices implemented at Ravell. However, such acceptance is directly related to the process of time. Major events can assist in establishing the many needs for change as discussed by Burke (2002).

6. Sustaining change: Perhaps the strongest part of ROD is in its ability to create a process that is evolutionary and systemic. It focuses on driving change to every aspect of the organization and provides organizational learning constructs to address each level of operation. It addresses what Burke (2002) called the “prelaunch, launch, postlaunch, and sustaining” in the important sequences of organization change (p. 286).

Another important aspect of change management is leadership. Leadership takes many forms and has multiple definitions. Technology plays an interesting role in how leadership can be presented to orga- nizations, especially in terms of the management style of leadership, or what Eisenhardt and Bourgeois (1988) have coined as “power cen- tralization.” Their study examined high-velocity environments in the microcomputer industry during the late 1980s. By high velocity, they referred to “those environments in which there is a rapid and discon- tinuous change in demand, competitors, technology, or regulation, so that information is often inaccurate, unavailable, or obsolete” (p. 738). During the period of their study, the microcomputer industry was undergoing substantial technological change, including the introduc- tion of many new competitors. As it turns out, the concept of high velocity is becoming more the norm today given the way organizations find themselves needing to operate in constant fluxes of velocity. The term power centralization is defined as the amount of decision-making

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control wielded by the CEO. Eisenhardt and Bourgeois’s study found that the more the CEO engaged in power-centralized leadership, the greater the degree of politics, which had a negative impact on the strategic performance of the firms examined. This finding suggests that the less democratic the leadership is in high-velocity environ- ments, the less productive the organization will be. Indeed, the study found that when individuals engaged in team learning, political ten- sion was reduced, and the performance of the firms improved.

The structure of ROD provides the means of avoiding the high- velocity problems discovered by the Eisenhardt and Bourgeois (1988) study. This is because ROD allows for the development of more indi- vidual learning, as well as system thinking, across the executive ranks of the business. If technology is to continue to establish such high velocities, firms need to examine the Eisenhardt and Bourgeois study for its relevance to everyday operations. They also need to use orga- nizational learning theories as a basis for establishing leadership that can empower employees to operate in an accelerated and unpredict- able environment.

Change Management for IT Organizations

While change management theories address a broad population in organizations, there is a need to create a more IT-specific approach to address the unique needs of this group. Lientz and Rea (2004) estab- lished five specific goals for IT change managers:

1. Gain support for change from employees and non-IT managers

2. Implement change along measurements for the work so that the results of the change are clearly determined

3. Implement a new culture of collaboration in which employees share more information and work more in teams

4. Raise the level of awareness of the technology process and work so that there is less of a tendency for reversion

5. Implement an ongoing measurement process for the work to detect any problems

Lientz and Rea’s (2004) position is that when a new culture is instilled in IT departments, it is particularly important that it should

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not require massive management intervention. IT people need to be self-motivated to keep up with the myriad accelerated changes in the world of technology. These changes occur inside IT in two critical areas. The first relates to the technology itself. For example, how do IT personnel keep up with new versions of hardware and software? Many times, these changes come in the form of hardware (often called system) and software upgrades from vendors who require them to maintain support contracts. The ongoing self-management of how such upgrades and changes will ultimately affect the rest of the organization is a major challenge and one that is difficult to man- age top-down. The second area is the impact of new or emerging technologies on business strategy. The challenge is to develop IT per- sonnel who can transform their technical knowledge into business knowledge and, as discussed, take their tacit knowledge and convert it into explicit, strategic knowledge. Further understanding of the key risks to the components of these accelerated changes is provided as follows:

System and software version control: IT personnel must continue to track and upgrade new releases and understand the impact of product enhancements. Some product-related enhance- ments have no bearing on strategic use; they essentially fix problems in the system or software. On the other hand, some new releases offer new features and functions that need to be communicated to both IT and business managers.

Existing legacy systems: Many of these systems cannot support the current needs of the business. This often forces IT staff to figure out how to create what is called “work-arounds” (quick fixes) to these systems. This can be problematic given that work-arounds might require system changes or modifications to existing software. The risk of these changes both short and long term need to be discussed between user and IT staff communities of practice.

Software packages (off-the-shelf software): Since the 1990s, the use of preprogrammed third-party software packages has become a preferred mode of software use among users. However, many of these packages can be inflexible and do not support the exact processes required by business users. IT personnel need

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to address users’ false expectations about what software pack- ages can and cannot do.

System or software changes: Replacement of systems or software applications is rarely 100% complete. Most often, remnants of old systems will remain. IT personnel can at times be insensi- tive to the lack of a complete replacement.

Project completion: IT personnel often misevaluate when their involvement is finished. Projects are rarely finished when the software is installed and training completed. IT staff tend to move on to other projects and tasks and lose focus on the like- lihood that there will be problems discovered or last-minute requests made by business users.

Technical knowledge: IT staff members need to keep their techni- cal skills up to date. If this is not done, emerging technolo- gies may not be evaluated properly as there may be a lack of technical ability inside the organization to map new technical developments onto strategic advantage.

Pleasing users: While pleasing business users appears to be a good thing, it can also present serious problems with respect to IT projects. What users want and what they need may not be the same. IT staff members need to judge when they might need assistance from business and IT management because users may be unfairly requesting things that are not feasible within the constraints of a project. Thus, IT staff must have the abil- ity to articulate what the system can do and what might be advisable. These issues tend to occur when certain business users want new systems to behave like old ones.

Documentation: This, traditionally, is prepared by IT staff and contains jargon that can confuse business users. Furthermore, written procedures prepared by IT staff members do not con- sider the entire user experience and process.

Training: This is often carried out by IT staff and is restricted to covering system issues as opposed to the business realities surrounding when, how, and why things are done.

These issues essentially define key risks to the success of imple- menting technology projects. Much of this book, thus far, has focused on the process of organizational learning from an infrastructure

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perspective. However, the implementation component of technology possesses new risks to successfully creating an organization that can learn within the needs of ROD. These risks, from the issues enumer- ated, along with those discussed by Lientz and Rea (2004) are sum- marized as follows:

Business user involvement: Continuous involvement from business users is necessary. Unfortunately, during the life of a proj- ect there are so many human interfaces between IT staff and business users that it is unrealistic to attempt to control these communications through tight management procedures.

Requirements, definition, and scope: These relate to the process by which IT personnel work with business users to deter- mine exactly what software and systems need to accomplish. Determining requirements is a process, not a predetermined list that business users will necessarily have available to them. The discourse that occurs in conversations is critical to whether such communities are capable of developing require- ments that are unambiguous in terms of expected outcomes.

Business rules: These rules have a great effect on how the organi- zation handles data and transactions. The difference between requirements and business rules is subtle. Specifically, busi- ness rules, unlike requirements, are not necessarily related to processes or events of the business. As such, the determination of business rules cannot be made by reviewing procedures; for example, all account numbers must be numeric.

Documentation and training materials: IT staff members need to interact with business users and establish joint processes that foster the development of documentation and training that best fit user needs and business processes.

Data conversion: New systems and applications require that data from legacy systems be converted into the new formats. This process is called data mapping; IT staff and key business users review each data field to ensure that the proper data are repre- sented correctly in the new system. IT staff members should not be doing this process without user involvement.

Process measurement: Organizations typically perform a post- completion review after the system or software application

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is installed. Unfortunately, this process measurement should occur during and after project completion.

IT change management poses some unique challenges to imple- menting organizational learning, mostly because managers cannot conceivably be available for all of the risks identified. Furthermore, the very nature of new technologies requires that IT staff mem- bers develop the ability to self-manage more of their daily functions and interactions, particularly with other staff members outside the IT department. The need for self-development is even more critical because of the existence of technological dynamism, which focuses on dynamic and unpredictable transactions that often must be han- dled directly by IT staff members and not their managers. Finally, because so many risks during technology projects require business user interfaces, non-IT staff members also need to develop better and more efficient self-management than they are accustomed to doing. Technological dynamism, then, has established another need for change management theory. This need relates to the implementation of self-development methods. Indeed, part of the reason for the lack of success of IT projects can be attributed to the inability of the core IT and business staff to perform in a more dynamic way. Historically, more management cannot provide the necessary learning and reduc- tion of risk.

The idea of self-development became popular in the early 1980s as an approach to the training and education of managers and man- agers to be. Thus, the focus of management self-development is to increase the ability and willingness of managers to take responsibility for themselves, particularly for their own learning (Pedler, Burgoyne, & Boydell, 1988). I believe that management self-development theory can be applied to nonmanagers or to staff members who need to prac- tice self-management skills that can assist them in transitioning to operating under the conditions of technological dynamism.

Management self-development draws on the idea that many people emphasize the need for learner centeredness. This is an important con- cept in that it ties self-development theory to organizational learning, particularly to the work of Chris Argyris and Malcolm Knowles. The concept of learner centeredness holds that individuals must take prime responsibility for their own learning: when and how to learn. The teacher

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(or manager) is assigned the task of facilitator—a role that fosters guid- ance as opposed to direct initiation of learning. In many ways, a facili- tator can be seen as a mentor whose role it is to guide an individual through various levels of learning and individual development.

What makes self-development techniques so attractive is that learners work on actual tasks and then reflect on their own efforts. The methods of reflective practice theory, therefore, are applicable and can be integrated with self-development practices. Although self-development places the focus on the individual’s own efforts, managers still have responsibilities to mentor, coach, and counsel their staff. This support network allows staff to receive appropriate feedback and guidance. In many ways, self- development relates to the professional process of apprenticeship but dif- fers from it in that the worker may not aspire to become the manager but may wish simply to develop better management skills. Workers are expected to make mistakes and to be guided through a process that helps them reflect and improve. This is why self-development can be seen as a management issue as opposed to just a learning theory.

A mentor or coach can be a supervisor, line manager, director, or an outside consultant. The bottom line is that technological dyna- mism requires staff members who can provide self-management to cope with constant project changes and risks. These individuals must be able to learn, be self-aware of what they do not know, and possess enough confidence that they can initiate the required learning and assistance that they need to be successful (Pedler et al., 1988). Self- development methods, like other techniques, have risks. Most notable is the initial decrement in performance followed by a slow increment as workers become more comfortable with the process and learn from their mistakes. However, staff members must be given support and time to allow this process to occur; self-development is a trial-and- error method founded on the basis of mastery learning (learn from one’s mistakes). Thus, the notion of self-development is both con- tinuous and discontinuous and must be implemented in a series of phases, each having unique outcomes and maturity. The concept of self-development is also consistent with the ROD arc, in which early phases of maturation require more individual learning, particularly reflective practices. Self-development, in effect, becomes a method of indirect management to assist in personal transformation. This personal transformation will inevitably better prepare individuals to

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participate in group- and organizational-level learning at later stages of maturation.

The first phase of establishing a self-development program is to create a “learning-to-learn” process. Teaching individuals to learn is a fundamental need before implementing self-development techniques. Mumford (1988) defined learning to learn as

1. Helping staff to understand the stages of the learning process and the pitfalls to not learning

2. Helping staff to find their own preferences to learning 3. Assisting staff in understanding their present learning prefer-

ences and how to deal and overcome learning weaknesses 4. Helping staff to build on their learning experience and apply

it to their current challenges in their job

The first phase of self-development clearly embraces the Kolb (1999) Learning Style Inventory and the applied individual learning wheel that were introduced in Chapter 4. Thus, all staff members should be provided with both of these learning wheels, made aware of their nat- ural learning strengths and weaknesses, and provided with exercises to help them overcome their limitations. Most important is that the Kolb system will make staff aware of their shortfalls with learning. The applied individual learning wheel will provide a perspective on how individuals can link generic learning preferences into organiza- tional learning needs to support ROD.

The second phase of self-development is to establish a formal learn- ing program in which staff members

Are responsible for their own learning, coordinated with a men- tor or coach

Have the right to determine how they will meet their own learning needs within available resources, time frames, and set outcomes

Are responsible for evaluating and assessing their progress with their learning

In parallel, staff coaches or mentors

Have the responsibility to frame the learning objectives so that they are consistent with agreed-on individual weaknesses

Are responsible for providing access and support for staff

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Must determine the extent of their involvement with mentoring and their commit to assisting staff members achieve stated outcomes

Are ultimately responsible for evaluation of individual’s progress and success

This program must also have a formal process and structure. According to Mossman and Stewart (1988), formal programs called self-managed learning (SML), need the following organization and materials:

1. Staff members should work in groups as opposed to on their own. This is a good opportunity to intermix IT and non-IT staff with similar issues and objectives. The size of these groups is (typically) from four to six members. Groups should meet every 2 to 3 weeks and should develop what is known as learn- ing contracts. Learning contracts specifically state what the individual and management have agreed on. Essentially, the structure of self-development allows staff members to expe- rience communities of practice, which by their very nature will also introduce them to group learning and system-level thinking.

2. Mentors or coaches should preside over a group as opposed to residing over just one individual. There are two benefits to doing this: (a) There are simply economies of scale for which managers cannot cover staff on an individual basis, and (b) facilitating a group with similar objectives benefits interac- tion among the members. Coaches obviously need to play an important role in defining the structure of the sessions, in offering ideas about how to begin the self-development pro- cess, and in providing general support.

3. Staff members need to have workbooks, films, courses, study guides, books, and specialists in the organization, all of which learners can use to help them accomplish their goals.

4. Typically, learning contracts will state the assessment meth- ods. However, assessment should not be limited only to indi- viduals but also should include group accomplishments.

An SML should be designed to ensure that the learning program for staff members represents a commitment by management to a for- mal process that can assist in the improvement of the project teams.

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The third phase of self-development is evaluation. This process is a mixture of individual and group assessments from Phase 2 coupled with assessments from actual practice results. These are results from proven outcomes during normal workday operations. To garner the appropriate practice evaluation, mentors and coaches must be involved in monitoring results and noting the progress on specific events that occur. For example, if a new version of software is implemented, we will want to know if IT staff and business users worked together to determine how and when it should be implemented. These results need to be formally communicated back to the learning groups. This pro- cess needs to be continued on an ongoing basis to sustain the effects of change management. Figure 5.5 represents the flow of the three phases of the process.

The process for self-development provides an important approach in assisting staff to perform better under the conditions of technological dynamism. It is one thing to teach reflective practice; it is another to get staff members to learn how to think in a manner that takes into consideration the many risks that have plagued systems and software

Phase 1: Establish

Learning to Learn

Objectives

Phase 2: Create Formal

Learning Program

Phase 3: Implement Evaluation

Make Necessary Changes to Self-

Development Learning

Individual Learning Contracts Learning Styles Inventory

Self-Managed Learning Program Communities of Practice IT and Non-IT Staff

Individual and Group Assessment Monitor Operations for Measurable Outcomes

Figure 5.5 Phases of self-development.

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projects for decades. While the role of management continues to play a major part in getting things done within strategic objectives, self- development can provide a strong learning method that can foster sustained bottom-up management, which is missing in most learning organizations.

The Ravell case study provides some concrete evidence on how self-development techniques can indeed get results. Because of the time pressures at Ravell, I was not able to invest in the learning-to- learn component at the start of the process. However, I used informal methods to determine the learning preferences of the staff. This can be accomplished through interviews in which staff responses can pro- vide a qualitative basis for evaluating how specific personnel prefer to learn. This helped me to formulate a specific training program that involved group meetings with IT and non-IT-oriented groups.

In effect, Phase II at Ravell had two communities. The first com- munity was the IT staff. We met each week to review progress and to set short-term objectives of what the community of IT wanted to accomplish. I acted as a facilitator, and although I was in a power position as their manager, I did not use my position unless there were clear signs of resistance in the team (which there were in specific situ- ations). The second community was formed with various line manager departments. This is where I formed “dotted-line” reporting struc- tures, which required IT staff members also to join other commu- nities of practice. This proved to be an invaluable strategy because it brought IT and business users together and formed the links that eventually allowed IT staff members to begin to learn and to form relationships with the user community; this fostered reflective think- ing and transformation.

As stated, there are setbacks at the start of any self-development program, and the experience at Ravell was no exception. Initially, IT staff members had difficulty understanding what was expected of them; they did not immediately perceive the learning program as an opportunity for their professional growth. It was through ongoing, motivated discourse in and outside of the IT community that helped achieve measurable increments of self-developmental growth. Furthermore, I found it necessary to integrate individual coaching sessions with IT staff. While group sessions were useful,

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they were not a substitute for individual discussions, which at times allowed IT staff members to personally discuss their concerns and learning requirements. I found the process to be ultimately valu- able, and I maintained the role of coach, as opposed to that of a manager who tells IT staff members what to do in every instance. I knew that direct management only would never allow for the devel- opment of learning.

Eventually, self-development through discourse will foster identity development. Such was the case at Ravell, where both user and IT groups eventually came together to form specific and interactive communities of practice. This helped form a clearer identity for IT staff members, and they began to develop the ability to address the many project risk issues that I defined in this chapter. Most important for the organization was that Ravell Phase I built the foundation for later phases that required more group and system thinking among the IT ranks.

Evaluation of the performance at Ravell (Phase III of the self- development process) was actually easier than expected, which means that if the first two phases are successful, evaluation will naturally be easy to determine. As reflective thinking became more evident in the group, it was easier to see the growth in transformative behavior; the IT groups became more proactive and critical by themselves, without necessarily needing my input. In fact, my participation fell into more of a supporter role; I was asked to participate more when I felt needed to provide a specific task for the group. Evaluation based on perfor- mance was also easier to determine, mainly because we had formed interdepartmental communities and because of the relationships I established with line managers.

Another important decision we made and one that nurtured our evaluation capabilities was the fact that line managers often joined our IT staff meetings. So, getting feedback on actual results was always open for discussion.

Viewing self-development in the scope of organizational learning and management techniques provides an important support method for later development in system thinking. The Ravel experience did just that, as the self-development process inevitably laid the foun- dation for more sophisticated organizational learning, required as a business matures under ROD.

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Social Networks and Information Technology

The expansion of social networks through the use of technologi- cal innovations has substantially changed the way information flows in and out of a business community. Some companies, particularly in the financial services communities, have attempted to “lock out” social network capabilities. These attempts are ways for organizations to control as opposed to change behavior. Historically, such controls to enforce compliance have not worked. This is particularly relevant because of the emergence of a younger generation of workers who use social networking tools as a regular way to communicate and carry out discourse. Indeed, social networking has become the main vehicle for social discourse both inside and outside organizations. There are those who feel that the end of confidentiality may be on the horizon. This is not to suggest that technology executives give up on security—we all know this would be ludicrous. On the other hand, the increasing pressure to “open” the Web will inevitably become too significant to ignore. Thus, the technology executive of the future must be prepared to provide desired social and professional networks to their employees while figuring out how to minimize risk—certainly not an easy objec- tive. Organizations will need to provide the necessary learning tech- niques to help employees understand the limits of what can be done.

We must remember that organizations, governments, and busi- nesses have never been successful at controlling the flow of information to any population to or from any specific interest group—inevitably, information flows through. As stated by Cross and Thomas (2009), “The network perspective could trigger new approaches to organiza- tion design at a time when environmental and competitive conditions seem to be exhausting conventional wisdom” (p. 186). Most important is the understanding that multinational organizations need to think globally and nationally at the same time. To do this, employees must transform their behavior and how they interact. Controlling access does not address this concern; it only makes communication more difficult and therefore does not provide a solution. Controls typically manifest themselves in the form of new processes and procedures. I often see technology executives proclaiming the need to change pro- cesses in the name of security without really understanding that they are not providing a solution but rather fostering new procedures that

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will allow individuals to evade the new security measures. As Cross and Thomas (2009) pointed out, “Formal structures often overlook the fact that every formal organization has in its shadow an infor- mal or ‘invisible’ organization” (p. 1). Instead, technology executives concerned with security need to focus on new organizational design to assist businesses to be “social network” ready. ROD must then be extended to allow for the expansion of social network integration, including but not limited to such products as LinkedIn, Facebook, and Twitter. It may also be necessary to create new internal network infra- structures that specifically cater to social network communication.

Many software application companies have learned that compat- ibility in an open systems environment is a key factor for success- ful deployment of an enterprise-wide application solution. Thus, all applications developed within or for an organization need to have compatibility with the common and popular social network prod- ucts. This popularity is not static but rather a constant process of determining which products will become important social networks that the company may want to leverage. We see social networks hav- ing such an impact within the consumer environment—or what we can consider to be the “market.” I explained in my definition of ROD that it is the acceleration of market changes—or the changing rela- tionship between a buyer and seller—that dictates the successes and failures of businesses. That said, technology executives must focus their attention on how such networks will require their organizations to embrace them. Obviously, this change carries risks: Adapting too early could be overreacting to market hype, while lagging could mean late entry.

The challenge, then, for today’s technology leaders is to cre- ate dynamic yet functional social networks that allow businesses to compete while maintaining the controls they must have to protect themselves. The IT organization must concentrate on how to provide the infrastructure that allows these dynamic connections to be made without overcontrol. The first mission for the technology executive is to negotiate this challenge by working with the senior management of the organization to reach consensus on the risk factors. The issues typically involve the processes, behavior patterns, and risks shown in Figure 5.6.

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136 InFormAtIon teChnology

Ultimately, the technology executive must provide a new road map that promotes interagency and cross-customer collaboration in a way that will assist the organization to attain a ROD culture. Social networks are here to stay and will continue to necessitate 24/7 access for everyone. This inevitably raises salient issues relating to the management structure within businesses and how best to man- age them.

BusIness PRoCess AsPIReD BeHAvIoR PATTeRns RIsKs

Design a social network that allows participants to respond dynamically to customer and business needs

users understand the inherent limits to what can be communicated outside the organization, limit personal transactions, and use judgment when foreign e-mails are forwarded.

users cannot properly determine the ethics of behavior and will not take the necessary precautions to avoid exposing the organization to outside security breaches.

Discern which critical functions are required for the social network to work effectively and maintain the firm’s competitive positioning

users are active and form strategic groups (communities of practice) that define needs on a regular basis and work closely with IT and senior management.

users cannot keep up with changes in social networks, and it is impossible to track individual needs and behaviors.

Provide a network design that can be scaled as needs change within the budget limitations of the organization

The organization must understand that hard budgets for social networking may not be feasible. Rather, the network needs are dynamic, and costs must be assessed dynamically within the appropriate operating teams in the organizations.

Reality tells us that all organizations operate within budget limitations. large organizations find it difficult to govern dynamically, and smaller organizations cannot afford the personnel necessary to manage dynamically.

Create a social network that “flattens” the organization so that all levels are accessible

Particularly large organizations need to have a network that allows its people better access to its departments, talent, and management. In the 1980s, the book In Search of Excellence (Peters & Waterman, 1982) was the first effort to present the value of a “flatter” organizational structure. social networks provide the infrastructure to make this a reality.

With access come the challenges of responding to all that connect to the system. The organization needs to provide the correct etiquette of how individuals respond dynamically without creating anarchy.

Figure 5.6 social network management issues.

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In Chapter 2, I defined the IT dilemma in a number of con- texts. During an interview, a chief executive raised an interest- ing issue that relates to the subject: “My direct reports have been complaining that because of all this technology that they cannot get away from—that their days never seem to end.” I responded to this CEO by asking, “Why are they e-mailing and calling you? Is it possible that technology has exposed a problem that has always existed?” The CEO seemed surprised at my response and said: “What do you mean?” Again I responded by suggesting that tech- nology allowed access, but perhaps that was not really the problem. In my opinion, the real problem was a weakness in management or organizational structure. I argued that good managers build orga- nizations that should handle the questions that were the subject of these executives complaints. Perhaps the real problem was that the organization or management was not handling day-to-day issues. This case supports my thesis that technology dynamism requires reevaluation of how the organization operates and stresses the need to understand the cultural assimilation abilities of dealing with change.

Another interesting aspect of social networks is the emergence of otherwise invisible participants. Technology-driven networks have allowed individuals to emerge not only because of the access determi- nant but also because of statistics. Let me be specific. Network traffic can easily be tracked, as can individual access. Even with limited his- tory, organizations are discovering the valued members of their com- panies simply by seeing who is active and why. This should not suggest that social networks are spy networks. Indeed, organizations need to provide learning techniques to guide how access is tracked and to highlight the value that it brings to a business. As with other issues, the technology executive must align with other units and individuals; the following are some examples:

Human resources (HR):• This department has specific needs that can align effectively with the entire social network. Obviously, there are compliance issues that limit what can be done over a network. Unfortunately, this is an area that requires reas- sessment: In general, governance and controls do not drive an organization to adopt ROD. There are other factors related to

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the HR function. First is the assimilation of new employees and the new talents that they might bring to the network. Second is the challenge of adapting to ongoing change within the network. Third is the knowledge lost of those who leave the organization yet may still want to participate socially within the organization (friends of the company). Gender:• Face-to-face meetings have always shown differences in participation by gender. Men tend to dominate meetings and the positions they hold in an organization. However, the advent of social virtual networks has begun to show a shift in the ways women participate and hold leadership positions among their peers. In an article in BusinessWeek (May 19, 2008), Auren Hoffman reported that women dominate social network traffic. This may result in seeing more women-centric communication. The question then is whether the expansion of social networks will give rise to more women in senior management positions. Marketing:• The phenomenon of social networking has allowed for the creation of more targeted connectivity; that is, the abil- ity to connect with specific clients in special ways. Marketing departments are undergoing an extraordinary transformation in the way they target and connect with prospective custom- ers. The technology executive essentially is at the center of designing networks that provide customizable responses and facilitate complex matrix structures. Having such abilities could be the differentiator between success and failure for many organizations.

One can see that the expansion of social networks is likely to have both good and bad effects. Thus far, in this section I have discussed the good. The bad relates to the expansion of what seems to be an unlim- ited network. How does one manage such expansion? The answer lies within the concept of alignment. Alignment has always been critical to attain organizational effectiveness. The heart of alignment is deal- ing with cultural values, goals, and processes that are key to meet stra- tegic objectives (Cross & Thomas, 2009). While the social network

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acts to expose these issues, it does not necessarily offer solutions to these differences. Thus, the challenge for the technology executive of today is to balance the power of social networks while providing direction on how to deal with alignment and control—not an easy task but clearly an opportunity for leadership. The following chapters offer some methods to address the challenges discussed in this chap- ter and the opportunities they provide for technology executives.

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141

6 oRganizaTional

TRansfoRmaTion anD The balanCeD sCoReCaRD

Introduction

The purpose of this chapter is to examine the nature of organiza- tional transformation, how it occurs, and how it can be measured. Aldrich (2001) defined organizational transformation along three possible dimensions: changes in goals, boundaries, and activities. According to Aldrich, transformations “must involve a qualitative break with routines and a shift to new kinds of competencies that challenge existing organizational knowledge” (p. 163). He warned us that many changes in organizations disguise themselves as trans- formative but are not. Thus, focusing on the qualifications of authen- tic or substantial transformation is key to understanding whether it has truly occurred in an organization. Technology, as with any independent variable, may or may not have the capacity to instigate organizational transformation. Therefore, it is important to integrate transformation theory with responsive organizational dynamism (ROD). In this way, the measurable outcomes of organizational learning and technology can be assessed in organizations that imple- ment ROD. Most important in this regard is that organizational transformation, along with knowledge creation, be directly corre- lated to the results of implementing organizational learning. That is, the results of using organizational learning techniques must result in organizational transformation.

Organizational transformation is significant for three key reasons:

1. Organizations that cannot change will fundamentally be at risk against competitors, especially in a quickly changing market.

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142 InFormAtIon teChnology

2. If the organization cannot evolve, it will persist in its norms and be unwilling to change unless forced to do so.

3. If the community population is forced to change and is con- strained in its evolutionary path, it is likely that it will not be able to transform and thus will need to be replaced.

Aldrich (2001) established three dimensions of organizational transformation. By examining them, we can apply technology-spe- cific changes and determine within each dimension what constitutes authentic organizational transformation.

1. Goals: There are two types of goal-related transformations: (a) change in the market or target population of the organiza- tion; (b) the overall goal of the organization itself changes. I have already observed that technology can affect the mission of an organization, often because it establishes new market niches (or changes them). Changed mission statements also inevitably modify goals and objectives.

2. Boundaries: Organizational boundaries transform when there is expansion or contraction. Technology has historically expanded domains by opening up new markets that could not otherwise be reached without technological innovation. E-business is an example of a transformation brought about by an emerging technology. Of course, business can contract as a result of not assimilating a technology; technology also can create organizational transformation.

3. Activity systems: Activity systems define the way things are done. They include the processing culture, such as behav- ioral roles. Changes in roles and responsibilities alone do not necessarily represent organizational transformation unless it is accompanied by cultural shifts in behavior. The cultural assimilation component of ROD provides a method with which to facilitate transformations that are unpredictable yet evolutionary. Sometimes, transformations in activity systems deriving from technological innovations can be categorized by the depth and breadth of its impact on other units. For example, a decision could be made to use technology as part of a total quality management (TQM) effort. Thus, activity

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transformations can be indirect and need to be evaluated based on multiple and simultaneous events.

Aldrich’s (2001) concept of organizational transformation bears on the issue of frequency of change. In general, he concluded that the changes that follow a regular cycle are part of normal evolution and “flow of organizational life” (p. 169) and should not be treated as trans- formations. Technology, on the other hand, presents an interesting case in that it can be perceived as normal in its persistence and regularity of change while being unpredictable in its dynamism. However, Aldrich’s definition of transformation poses an interesting issue for determining transformations resulting from technological innovations. Specifically, under what conditions is a technological innovation considered to have a transformative effect on the organization? And, when is it to be con- sidered as part of regular change? I refer to Figure 6.1, first presented in Chapter 3 on driver and supporter life cycles to respond to this question.

The flows in this cycle can be used as the method to determine tech- nological events that are normal change agents versus transformative ones. To understand this point, one should view all driver-related tech- nologies as transformational agents because they, by definition, affect strategic innovation and are approved based on return on investment

Evaluation Cycle

Technology Driver

Driver Maturation

Support Status

Econo- mies of Scale

Replacement or Outsource

Mini Loop Technology Enhancements

Figure 6.1 Driver to supporter life cycle.

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144 InFormAtIon teChnology

(ROI). Aldrich’s (2001) “normal ebb and flows” represent the “mini- loops” that are new enhancements or subtechnologies, which are part of normal everyday changes necessary to mature a technological inno- vation. Thus, driver variables that result from miniloops would not be considered transformational agents of change.

It is important to recognize that Aldrich’s (2001) definition of organizational transformation should not be confused with theories of transformative learning. As West (1996) proclaimed, “The goal of organizational learning is to transform the organization” (p. 54). The study of transformative learning has been relevant to adult education and has focused on individual as opposed to organizational devel- opment and learning. Thus, transformative learning has been better integrated in individual learning and reflective practice theories than in organizational ones. While these modes of learning are related to the overall learning in organizations, they should not be confused with organizations that are attempting to realize their performance objectives.

Yorks and Marsick (2000) offered two strategies that can produce transformative learning for individuals, groups, or organizations: action learning and collaborative inquiry. I covered action science in Chapter 4, particularly reflective practices, as key interventions to foster both individual and group evolution of learning, specifi- cally in reference to how to manage ROD. Aspects of collabora- tive inquiry are applied to later stages of maturation and to more senior levels of management based on systems-level learning. As they stated, “For the most part the political dimensions of how the organization functions is off limits, as are discussions of larger social consequences” (p. 274).

Technological innovations provide acceleration factors and foster the need for ROD. Technology also furnishes the potential tangible and measurable outcomes necessary to normalize York and Marsick’s (2000) framework for transformative learning theory into organiza- tional contexts as follows:

1. Technology, specifically e-business, has created a critical need for organizations to engage with clients and individuals in a new interactive context. This kind of discourse has established accelerated needs, such as understanding the magnitude of

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alternative courses of action between customer and vendor. The building of sophisticated intranets (internal Internets) and their evolution to assimilate with other Internet opera- tions have also fueled the need for learning to occur more often than before and at the organizational level.

Because technology can produce measurable outcomes, individuals are faced with accelerated reflections about the cultural impact of their own behaviors. This is directly related to the implementation of the cultural assimilation component of ROD, by which individuals determine how their behaviors are affected by emerging technologies.

2. Early in the process of implementing strategic integration, reflective practices are critical for event-driven technology projects. These practices force individuals to continually reex- amine their existing meaning perspectives (specifically, their views and habits of mind). Individual reflection in, on, and to practice will evolve to system-level group and organizational learning contexts as shown in the ROD arc.

3. The process of moving from individual to system-level learn- ing during technology maturation is strengthened by the learners’ abilities to comprehend why historical events have influenced their existing habits of mind.

4. The combination of strategic integration and cultural assimi- lation lays the foundation for organizational transformation to occur. Technology provides an appropriate blend of being both strategic and organizational in nature, thus allowing learners to confront their prior actions and develop new practices.

Aldrich (2001) also provided an interesting set of explanations for why it is necessary to recognize the evolutionary aspect of organiza- tional transformations. I have extended them to operate within the context of ROD as follows:

Variation: Defined as “change from current routines and compe- tencies and change in organizational forms” (Aldrich, 2001, p. 22). Technology provides perhaps the greatest amount of variation in routines and thereby establishes the need for something to manage it: ROD. The higher the frequency of

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146 InFormAtIon teChnology

variation, the greater the chance that organizational transfor- mation can occur. Variation is directly correlated to cultural assimilation.

Selection: This is the process of determining whether to use a technology variation. Selections can be affected by external (outside the organization) and internal (inside the organiza- tion) factors such as changes in market segments or new busi- ness missions, respectively. The process of selection can be related to the strategic integration component of ROD.

Retention: Selected variations are retained or preserved by the organization. Retention is a key way of validating whether organizational transformation has occurred. As Aldrich stated: “Transformations are completed when knowledge required for reproducing the new form is embodied in a com- munity of practice” (p. 171).

Because of the importance of knowledge creation as the basis of transformation, communities of practice are the fundamental struc- tures of organizational learning to support organizational transforma- tion. Aldrich (2001) also went beyond learning; he included policies, programs, and networks as parts of the organizational transformative process. Figure 6.2 shows Aldrich’s evolutionary process and its rela- tionship to ROD components.

Thus, we see from Figure 6.2 the relationships between the pro- cesses of creating organizational transformation, the stages required to reach it, the ROD components in each stage, and the correspond- ing organizational learning method that is needed. Notice that the mapping of organizational learning methods onto Aldrich’s (2001) scheme for organizational transformation can be related to the ROD arc. It shows us that as we get closer to retention, organizational learn- ing evolves from an individual technique to a system/organizational learning perspective. Aldrich’s model is consistent with my driver- versus-supporter concept; he noted, “When the new form becomes a taken-for-granted aspect of every day life in the organization, its legitimacy is assumed” (p. 175).

Hence, the assimilation of new technologies cannot be consid- ered transformative until it behaves as a supporter. Only then can we

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determine that the technology has changed organizational biases and norms. Re-presenting the driver and supporter life cycle to include this important relationship is shown in Figure 6.3.

Methods of Ongoing Evaluation

If we define organizational transformation as the retention of knowl- edge within the body of communities of practice, the question to be answered is how this retention actually is determined in practice. The possibility often occurs that transformations are partial or in some phase of completion. This would mean that the transformation is incomplete or needs to continue along some phase of approach. Indeed, cultural assimilation does not occur immediately but rather over periods of transition. Much of the literature on organizational

Technology

Variation

Selection

Retention

Individual Reflective Practices

Group-based Reflective Practices

Social Discourse Using Communities

of Practice

Communities of Practice & Knowledge

Management

Strategic Integration– assess value of technology

Cultural Assimilation– assess extent of what to implement and determine effects on structure

Strategic Integration– determine which technologies best fit corporate needs and provide highest ROI

Validation of Organizational Transformation– technology has provided strategic outcomes and modified stuctures and processes

Corresponding Organizational Learning Methods

Figure 6.2 stages of organizational transformation and RoD.

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148 InFormAtIon teChnology

transformation does not address the practical aspects of evaluation from this perspective. This lack of information is particularly prob- lematic with respect to technology since so much of how technology is implemented relates to phased steps that rarely happen in one major event. Thus, it is important to have some method of ongoing evalua- tion to determine the extent of transformation that has occurred and which organizational learning methods need to be applied to help continue the process toward complete transformation.

Aldrich’s (2001) retention can also be misleading. We know that organizational transformation is an ongoing process, especially as advocated in ROD. It is probable that transformations continue and move from one aspect of importance to another, so a completed transformation may never exist. Another way of viewing this concept is to treat transformations as event milestones. Individuals and com- munities of practice are able to track where they are in the learning process. It also fits into the phased approach of technology imple- mentation. Furthermore, the notion of phases allows for integration of organizational transformation concepts with stage and develop- ment theories. With the acceptance of this concept, there needs to be a method or model that can help organizations define and track such phases of transformation. Such a model would also allow for mapping

Evaluation Cycle

Technology Driver

Driver Maturation

Support Status

Economies of Scale

Replacement or Outsource

Mini Loop Technology Enhancements

Group-Based Reflective Practice

Communities of Practice

Knowledge Management

Organizational Transformation

Individual Reflective Practice

Figure 6.3 organizational transformation in the driver to supporter life cycle.

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outcomes onto targeted business strategies. Another way of under- standing the importance of validating organizational transformation is to recognize its uniqueness since most companies fail to execute their strategies.

The method that can be applied to the validation of organiza- tional transformation is a management tool called the balanced scorecard. The balanced scorecard was introduced by Kaplan and Norton (2001) in the early 1990s as a tool to solve measurement problems. The ability of an organization to develop and opera- tionalize its intangible assets has become more and more a critical component for success. As I have already expressed regarding the work of Lucas (1999), financial measurement may not be capable of capturing all IT value. This is particularly true in knowledge- based theories. The balanced scorecard can be used as a solution for measuring outcomes that are not always financial and tangi- ble. Furthermore, the balanced scorecard is a “living” document that can be modified as certain objectives or measurements require change. This is a critical advantage because, as I have demonstrated, technology projects often change in scope and in objectives as a result of internal and external factions.

The ultimate value, then, of the balanced scorecard, in this con- text, is to provide a means for evaluating transformation, not only for measuring completion against set targets but also for defining how expected transformations map onto the strategic objectives of the organization. In effect, it is the ability of the organization to execute its strategy. Before explaining the details of how a balanced scorecard can be applied specifically to ROD, I offer Figure 6.4, which shows exactly where the scorecard fits into the overall pic- ture of transitioning emerging technologies into concrete strategic benefit.

The generic objectives of a balanced scorecard are designed to create a strategy-focused organization. Thus, all of the objectives and mea- surements should be derived from the vision and strategy of the orga- nization (Kaplan & Norton, 2001). These measurements are based on the fundamental principles of any strategically focused organization and on alignment and focus. Kaplan and Norton defined these prin- ciples as the core of the balanced scorecard:

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1. Translate the strategy to operational terms: This principle includes two major components that allow an organization to define its strategy from a cause-and-effect perspective using a strategy map and scorecard. Thus, the strategy map and its correspond- ing balanced scorecard provide the basic measurement system.

2. Align the organization to the strategy: Kaplan and Norton defined this principle as favoring synergies among organiza- tional departments that allow communities of practice to have a shared view and common understanding of their roles.

3. Make strategy everyone’s everyday job: This principle supports the notion of a learning organization that requires everyone’s participation, from the chief executive officer (CEO) to cleri- cal levels. To accomplish this mission, the members of the organization must be aware of business strategy; individuals may need “personal” scorecards and a matching reward sys- tem for accomplishing the strategy.

4. Make strategy a continual process: This process requires the linking of important yet fundamental components, includ- ing organizational learning, budgeting, management reviews,

Strategy

Balanced

Scorecard

Mobilize Change through Executive

Leadership

Make Strategy a Continual Process

Make Strategy Everyone’s Job

Align Organizational to

the Strategy

Translate the Strategy to

Operational Terms

Figure 6.4 Balanced scorecard. (From Kaplan, R. s., & norton, D. P. The strategy-focused organi- zation. Cambridge, MA: Harvard university Press, 2001.)

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and a process of adaptation. Much of this principle falls into the areas of learning organization theories that link learning and strategy in ongoing perpetual cycles.

5. Mobilize change through executive leadership: This principle stresses the need for a strategy-focused organization that incorporates the involvement of senior management and can mobilize the organization and provide sponsorship to the overall process.

Using the core balanced scorecard schematic, I have modified it to operate with technology and ROD as shown in Figure 6.5.

1. Evaluation of technology: The first step is to have an infrastruc- ture that can determine how technology fits into a specific strategy. Once this is targeted, the evaluation team needs to define it in operational terms. This principle requires the stra- tegic integration component of ROD.

2. Align technology with business strategy: Once technology is evaluated, it must be integrated into the business strategy. This involves ascertaining whether the addition of technology will change the current business strategy. This principle is also connected to the strategic integration component of ROD.

Responsive Org Dynamism

Strategy

Balanced

Scorecard

Executive Interfaces

Phase Technology Implementation

Make Technology Project Part of

Communities of Practice

Align Technology with Business

Strategy

Evaluation of Technology

Figure 6.5 Balanced scorecard RoD.

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152 InFormAtIon teChnology

3. Make technology projects part of communities of practice: Affected communities need to be strategically aware of the project. Organizational structures must determine how they distrib- ute rewards and objectives across departments. This principle requires the cultural assimilation component of ROD.

4. Phased-in technology implementation: Short- and long-term project objectives are based on driver and supporter life cycles. This will allow organizational transformation phases to be linked to implementation milestones. This principle maps onto the cultural assimilation component of ROD.

5. Executive interface: CEO and senior managers act as executive sponsors and project champions. Communities of practice and their common “threads” need to be defined, including middle management and operations personnel, so that top-down, middle-up-down, and bottom-up information flows can occur.

The balanced scorecard ultimately provides a framework to view strategy from four different measures:

1. Financial: ROI and risk continue to be important components of strategic evaluation.

2. Customer: This involves the strategic part of how to create value for the customers of the organization.

3. Internal business processes: This relates to the business pro- cesses that provide both customer satisfaction and operational efficiency.

4. Learning and growth: This encompasses the priorities and infra- structure to support organizational transformation through ROD.

The generic balanced scorecard framework needs to be extended to address technology and ROD. I propose the following adjustments:

1. Financial: Requires the inclusion of indirect benefits from technology, particularly as Lucas (1999) specified, in non- monetary methods of evaluating ROI. Risk must also be fac- tored in based on specific issues for each technology project.

2. Customer: Technology-based products are integrated with cus- tomer needs and provide direct customer package interfaces. Further, Web systems that use the Internet are dependent on

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consumer use. As such, technology can modify organizational strategy because of its direct effect on the customer interface.

3. Internal business processes: Technology requires business pro- cess reengineering (BPR), which is the process of reevaluat- ing existing internal norms and behaviors before designing a new system. This new evaluation process addresses customers, operational efficiencies, and cost.

4. Learning and growth: Organizational learning techniques, under the umbrella of ROD, need to be applied on an ongoing and evolutionary basis. Progress needs to be linked to the ROD arc.

The major portion of the balanced scorecard strategy is in its initial design; that is, in translating the strategy or, as in the ROD score- card, the evaluation of technology. During this phase, a strategy map and actual balanced scorecards are created. This process should begin by designing a balanced scorecard that articulates the business strat- egy. Remember, every organization needs to build a strategy that is unique and based on its evaluation of the external and internal situa- tion (Olve, Petri, Roy, & Roy, 2003). To clarify the definition of this strategy, it is easier to consider drawing the scorecard initially in the form of a strategy map. A generic strategy map essentially defines the components of each perspective, showing specific strategies within each one, as shown in Figure 6.6.

We can apply the generic strategy map to an actual case study, Ravell’s Phase I, as shown in Figure 6.7.

Recall that Ravell Phase I created a learning organization using reflective practices and action science. Much of the organization transformation at Ravell was accelerated by a major event—the relo- cation of the company. The move was part of a strategic decision for the organization, specifically the economies of scale for rental expense and an opportunity to retire old computers and replace them with a much needed state-of-the-art network. Furthermore, there was a grave need to replace old legacy applications that were incapable of operating on the new equipment and were also not providing the competitive advantage that the company sought. In using the strategy map, a balanced scorecard can be developed containing the specific outcomes to achieve the overall mission. The balanced scorecard is shown in Figure 6.8.

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154 InFormAtIon teChnology

Stronger Finances

Improve Profitability

Perspective:

Financial

Increase Customer

Base More Satisfied Customers

Customer

Increase Customer

Service

Increase Efficiency

Process

Establish New Markets

Improve Staff Skills

Improve Technology

Learning & Growth

Figure 6.6 strategy map. (From olve, n., Petri, C., Roy, J., & Roy, s. Making scorecards action- able: Balancing strategy and control. Wiley, new york, 2003.)

Reduce Technology Overhead Improve Return on

Project Investments

Perspective:

Financial

Increase User IT Support More Satisfied

Users Users

Improved Systems

Provide Accurate and Timely Information Process

Establish New Organization

Structure

New Ways of Staff Interaction

New Technology Products

Learning & Growth

Figure 6.7 Technology strategy map.

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sTRATeGy MAP PeRsPeCTIve

MeAsuRABle ouTCoMes sTRATeGIC oBJeCTIves

oRGAnIzATIonAl TRAnsFoRMATIon

Financial • Improve returns on project investments

• Reduce technology overhead costs

• Combine IT expenses with relocation and capitalize entire expense

• Integrate new telephone system with computer network expenses

• Leverage engineering and communications expenses with technology

• Retire old equipment from financial statements

Combination of expenses requires formation of new communities of practice, which includes finance, engineering, and IT

users • More satisfied users

• Increase user IT support

• Increase access to central applications

• Integrate IT within other departments to improve dynamic customer support requirements

• Provide new products to replace old e-mail system and make standard applications available to all users

• Establish help desk personnel

Process of supporting users requires IT staff to embrace reflective practices. user relationship formed through new communities of practice and cultural assimilation with user community

new culture at Ravell established

Process • Provide accurate and timely information

• Improved systems

• Improve decision support for improved reporting and strategic marketing

• Upgrade new internal systems, including customer relationship management (CRM), general ledger, and rights and royalties

strategic integration occurs through increased discourse and language among communities of practice engaged in making relocation successful. new knowledge created and needs knowledge management

learning and growth

• New technology products

• New ways of staff interaction structure

• Establish new organization

• Investigate new voice-messaging technology to improve integration of e-mail and telephone systems

• Physically relocate IT staff across departments

• Modify IT reporting structure with “dotted line” to business units

IT becomes more critically reflective, understands value of their participation with learning organization. IT staff seeks to know less and understands view of the “other”

Figure 6.8 Ravell Phase I balanced scorecard.

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The Ravell balanced scorecard has an additional column that defines the expected organizational transformation from ROD. This model addresses the issue of whether a change is truly a transformation. This method also provides a systematic process to forecast, understand, and present what technology initiatives will ultimately change in the stra- tegic integration and cultural assimilation components of ROD.

There are two other important factors embedded in this modified balanced scorecard technique. First, scorecards can be designed at varying different levels of detail. Thus, two more balanced scorecards could be developed that reflect the organizational transformations that occurred in Ravell Phases II and III, or the three phases could be summarized as one large balanced scorecard or some combination of summary and detail together. Second, the scorecard can be modified to reflect unexpected changes during implementation of a technology. These changes could be related to a shifting mission statement or to external changes in the market that require a change in business strat- egy. Most important, though, are the expected outcomes and trans- formations that occur during the course of a project. Essentially, it is difficult to predict how organizations will actually react to changes during an IT project and transform.

The balanced scorecard provides a checklist and tracking system that is structured and sustainable—but not perfect. Indeed, many of the outcomes from the three phases of Ravell were unexpected or certainly not exactly what I expected. The salient issue here is that it allows an organization to understand when such unexpected changes have occurred. When this does happen, organizations need to have an infrastructure and a structured system to examine what a change in their mission, strategy, or expectations means to all of the components of the project. This can be described as a “rippling effect,” in which one change can instigate others, affecting many other parts of the whole. Thus, the balanced scorecard, particularly using a strategy map, allows practitioners to reconcile how changes will affect the entire plan.

Another important component of the balanced scorecard, and the reason why I use it as the measurement model for outcomes, is its applicability to organizational learning. In particular, the learning and growth perspective shows how the balanced scorecard ensures that learning and strategy are linked in organizational development efforts.

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Implementing balanced scorecards is another critical part of the project—who does the work, what the roles are, and who has the responsibility for operating the scorecards. While many companies use consultants to guide them, it is important to recognize that bal- anced scorecards reflect the unique features and functions of the com- pany. As such, the rank and file need to be involved with the design and support of balanced scorecards.

Every business unit that has a scorecard needs to have someone assigned to it, someone accountable for it. A special task force may often be required to launch the training for staff and to agree on how the scorecard should be designed and supported. It is advisable that the scorecard be implemented using some application software and made available on an Internet network. This provides a number of benefits:

Reduces paper or local files that might get lost or not be secured. Allows for easy “roll-up” of multiple scorecards to a summary level. Access via the Internet (using an external secured hookup); allows

the scorecard to be maintained from multiple locations. This is particularly attractive for staff members and management individuals who travel.

According to Olve et al. (2003), there are four primary responsi- bilities that can support balanced scorecards:

1. Business stakeholders: These are typically senior managers who are responsible for the group that is using the score- card. These individuals are advocates of using scorecards and require compliance if deemed necessary. Stakeholders use scorecards to help them manage the life cycle of a technol- ogy implementation.

2. Scorecard designers: These individuals are responsible for the “look and feel” of the scorecard as well as its content. To some extent, the designers set standards for appearance, text, and terminology. In certain situations, the scorecard designers have dual roles as project managers. Their use of scorecards helps them understand how the technology will operate.

3. Information providers: These people collect, measure, and report on the data in the balanced scorecard. This function can be implemented with personnel on the business unit level

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or from a central services department. Reporting information often requires support from IT staff, so it makes sense to have someone from IT handle this responsibility. Information pro- viders use the scorecard to perform the measurement of proj- ect performance and the handling of data.

4. Learning pilots: These individuals link the scorecard to organiza- tional learning. This is particularly important when measuring organizational transformation and individual development.

The size and complexity of an organization will ultimately deter- mine the exact configuration of roles and responsibilities that are needed to implement balanced scorecards. Perhaps the most appli- cable variables are

Competence: Having individuals who are knowledgeable about the business and its processes as well as knowledgeable about IT.

Availability: Individuals must be made available and appropri- ately accommodated in the budget. Balanced scorecards that do not have sufficient staffing will fail.

Executive management support: As with most technology projects, there needs to be a project advocate at the executive level.

Enthusiasm: Implementation of balanced scorecards requires a cer- tain energy and excitement level from the staff and their manage- ment. This is one of those intangible, yet invaluable, variables.

Balanced Scorecards and Discourse

In Chapter 4, I discussed the importance of language and discourse in organizational learning. Balanced scorecards require ongoing dia- logues that need to occur at various levels and between different com- munities of practice. Therefore, it is important to integrate language and discourse and communities of practice theory with balanced scorecard strategy. The target areas are as follows:

Developing of strategy maps Validating links across balanced scorecard perspectives Setting milestones Analyzing results Evaluating organizational transformation

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Figure 6.9 indicates a community of practice relationships that exists at a company. Each of these three levels was connected by a concept I called “common threads of communication.” This model can be extended to include the balanced scorecard.

The first level of discourse occurs at the executive community of practice. The executive management team needs to agree on the specific business strategy that will be used as the basis of the mis- sion statement for the balanced scorecard. This requires conversa- tions and meetings that engage the CEO, executive board members (when deemed applicable), and executive managers like the chief operating officer (COO), chief financial officer (CFO), chief infor- mation officer (CIO), and so on. Each of these individuals needs to represent his or her specific area of responsibility and influence from an executive perspective. The important concept is that the balanced scorecard mission and strategy should be a shared vision and responsibility for the executive management team as a whole.

CEO Americas

Executive Board Consultants

CEO Americas

Senior Management

Middle ManagementNew Ideas and

Adjustments

Operations

Adjustments as a result of discourse with operations community

Executive Community of Practice

Operations Management Community of Practice

Implementation Community of Practice

Middle Management

Figure 6.9 Community of practice “threads”.

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To accomplish this task, the executive team needs to be instructed on how the balanced scorecard operates and on its potential for accomplishing organizational transformation that leads to strategic performance. Ultimately, the discourse must lead to a discussion of the four balanced scorecard perspectives: financial, customer, pro- cess, and learning and growth.

From a middle management level, the balanced scorecard allows for a measurable model to be used as the basis of discourse with execu- tives. For example, the strategy map can be the vehicle for conduct- ing meaningful conversations on how to transform executive-level thinking and meaning into a more operationally focused strategy. Furthermore, the scorecard outlines the intended outcomes for strat- egy and organizational learning and transformation.

The concept of using the balanced scorecard as a method with which to balance thinking and meaning across communities of prac- tice extends to the operational level as well. Indeed, the challenge of making the transition from thinking and meaning at the executive level of operations is complicated, especially since these communi- ties rarely speak the same language. The measurable outcomes section of the scorecard provides the concrete layer of outcomes that opera- tions staff tend to embrace. At the same time, this section provides corresponding strategic impact and organizational changes needed to satisfy business strategies set by management.

An alternative method of fostering the need forms of discourse is to create multiple-tiered balanced scorecards designed to fit the language of each community of practice as shown in Figure 6.10. The diagram in Figure 6.10 shows that each community can maintain its own lan- guage and methods while establishing “common threads” to foster a transition of thinking and meaning between it and other communi- ties. The common threads from this perspective look at communica- tion at the organizational/group level as opposed to the individual level. This relates to my discussion in Chapter 4, which identified individual methods of improving personal learning and development within the organization. This suggests that each balanced scorecard must embrace language that is common to any two communities to establish a working and learning relationship—in fact, this common language is the relationship.

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Knowledge Creation, Culture, and Strategy

Balanced scorecards have been used as a measurement of knowledge creation. Knowledge creation, especially in technology, has significant meaning, specifically in the relationship between data and information. Understanding the sequence between these two is interesting. We know that organizations, through their utilization of software applications, inevitably store data in file systems called databases. The information stored in these databases can be accessed by many different software applications across the organization. Accessing multiple databases and

Organization Level Balanced Scorecard

Executive Level Balanced Scorecard

Managment Level Balanced Scorecard

Operational Level Balanced Scorecard

Common Discourse Threads

Common Discourse Threads

Common Discourse Threads

Figure 6.10 Community of practice “common threads.”

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integrating them across business units creates further valuable informa- tion. Indeed, the definition of information is “organized” data. These organized data are usually stored in data infrastructures called data warehouses or data marts, where the information can be queried and reported on to assist managers in their decision-making process. We see in the Ravell balanced scorecard that decision-support systems were actually one of the strategic objectives for the process perspective.

Unfortunately, information does not ensure new knowledge cre- ation. New knowledge can only be created by individuals who evolve in their roles and responsibilities. Individuals, by participating in groups and communities of practice, can foster the creation of new organizational knowledge. However, to change or evolve one’s behav- ior, there must be individual or organizational transformation. This means that knowledge is linked to organizational transformation. The process to institutionalize organizational transformation is dependent on management interventions at various levels. Management needs to concentrate on knowledge management and change management and to act as a catalyst and advocate for the successful implementation of organizational learning techniques. These techniques are necessary to address the unique needs of ROD.

Ultimately, the process must be linked to business strategy. ROD changes, through the process of cultural assimilation, the culture of an organization. Thus, there is an ongoing need to reestablish align- ment between culture and strategy, with culture altered to fit new strategy or strategy first, then culture (Pietersen, 2002). We see this as a recurring theme, particularly from the case studies, that busi- ness strategy must drive organizational behavior, even when technol- ogy acts as a dynamic variable. Pietersen identified what he called six myths of corporate culture:

1. Corporate culture is vague and mysterious. 2. Corporate culture and strategy are separate and distinct

things. 3. The first step in reducing our company should be defining

our values. 4. Culture cannot be measured or rewarded. 5. Our leaders must communicate what our culture is. 6. Our culture is the one constant that never changes.

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Resulting for these myths, Pietersen (2002) established four basic rules of success for creating the right starting point for creating the balance between culture and strategy:

1. Company values should directly support strategic priorities. 2. They should be described as behaviors. 3. They should be simple and specific. 4. They should be arrived at through a process of enrollment

(motivation).

Once business synergy is created, sustaining the relationship becomes an ongoing challenge. According to Pietersen (2002), this must be accom- plished by continual alignment, measurement, setting examples, and a reward system for desired behaviors. To lead change, organizations must create compelling statements of the case for change, communicate con- stantly and honestly with its employees, maximize participation, remove ongoing resistance in the ranks, and generate some wins. The balanced scorecard system provides the mechanism to address the culture–strat- egy relationship while maintaining an important link to organizational learning and ROD. These linkages are critical because of the behavior of technology. Sustaining the relationship between culture and strategy is simply more critical with technology as the variable of change.

Ultimately, the importance of the balanced scorecard is that it forces an understanding that everything in an organization is con- nected to some form of business strategy. Strategy calls for change, which requires organizational transformation.

Mission: To accelerate investment in technology during the reloca- tion of the company for reasons of economies of scale and competitive advantage.

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7 viRTual Teams anD

ouTsouRCing

Introduction

Much has been written and published about virtual teams. Most define virtual teams as those that are geographically dispersed, although oth- ers state that virtual teams are those that primarily interact electroni- cally. Technology has been the main driver of the growth of virtual teams. In fact, technology organizations, due mostly to the advent of competitive outsourcing abroad, have pushed information technol- ogy (IT) teams to learn how to manage across geographical locations, in such countries as India, China, Brazil, Ireland, and many others. These countries are not only physically remote but also present barriers of culture and language. These barriers often impede communications about project status and affect the likelihood of delivering a project timely and within forecasted budgets.

Despite these major challenges, outsourcing remains attractive due to the associated cost savings and talent supply. These two advantages are closely associated. Consider the migration of IT talent that began with the growth of India in providing cheap and educated talent. The promise of cost savings caused many IT development departments to begin using more Indian-based firms. The ensuing decline in IT jobs in the United States resulted in fewer students entering IT curricu- lums at U.S. universities for fear that they would not be able to find work. Thus began a cycle of lost jobs in the United States and further demand for talent abroad. Now, technology organizations are faced with the fact that they must learn to manage virtually because the tal- ent they need is far away.

From an IT perspective, successful outsourcing depends on effec- tive use of virtual teams. However, the converse is not true; that is, virtual teams do not necessarily imply outsourcing. Virtual teams can

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be made up of workers anywhere, even those in the United States who are working from a distance rather than reporting to an office for work. A growing number of employees in the United States want more personal flexibility; in response, many companies are allow- ing employees to work from home more often—and have found the experience most productive. This type of virtual team management generally follows a hybrid model, with employees working at home most of the time but reporting to the office for critical meetings, an arrangement that dramatically helps with communication and allows management to have quality checkpoints.

This chapter addresses virtual teams working both within the United States and on an outsource basis and provides readers with an understanding of when and how to consider outsource partners. Chapter topics include management considerations, dealing with multiple locations, contract administration, and in-house alternatives. Most important, this chapter examines organizational learning as a critical component of success in using virtual teams. Although the advent of virtual teams creates another level of complexity for design- ing and maintaining learning organizations, organizational learning approaches represent a formidable solution to the growing dilemma of how teams work, especially those that are 100% virtual.

Most failures in virtual management are caused by poor communica- tion. From an organizational learning perspective, we would define this as differences in meaning making—stemming mostly from cultural dif- ferences in the meaning of words and differing behavioral norms. There is also no question that time zone differences play a role in certain mal- functions of teams, but the core issues remain communication related.

As stated concerning the Ravell case study, cultural transforma- tion is slow to occur and often happens in small intervals. In many virtual team settings, team members may never do more than com- municate via e-mail. As an example, I had a client who was outsourc- ing production in China. One day, they received an e-mail stating, “We cannot do business with you.” Of course, the management team was confused and worried, seeking to understand why the business arrangement was ending without any formal discussions of the prob- lem. A translator in China was hired to help clarify the dilemma. As it turned out, the statement was meant to suggest that the com- pany needed to provide more business—more work, that is. The way

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the Chinese communicated that need was different from the Western interpretation. This is just a small example of what can happen with- out a well-thought-out organizational learning scheme. That is, indi- viduals need to develop more reflective abilities to comprehend the meaning of words before they take action, especially in virtual envi- ronments across multiple cultures. The development of such abilities is consistent with my theory of responsive organizational dynamism (ROD)—the continual need for organizations to respond effectively to dynamic changes brought about by technology, in this case, e-mail. The e-mail established a new dynamic of communication. Think how often specifications and product requirements are changing and need virtual teams to somehow come together and agree on how to get the work done—or think they agree.

Prior research and case studies provide tools and procedures as ways to improve productivity and quality of virtual team operations. While such processes and methodologies are helpful, they will not necessar- ily ensure the successful outcomes that IT operations seek unless they also change. Specifically, new processes alone are not sufficient or a substitute for learning how to better communicate and make mean- ing in a virtual context. Individuals must learn how to develop new behaviors when working virtually. We must also remember that vir- tual team operations are not limited to IT staffs. Business users often need to be involved as they would in any project, particularly when users are needed to validate requirements and test the product.

Status of Virtual Teams

The consensus tells us that virtual teams render results. According to Bazarova and Walther (2009), “Virtual groups whose members com- municate primarily or entirely via email, computer conferencing, chat, or voice—has become a common feature of twenty-first century orga- nizations” (p. 252). Lipnack and Stamps (2000) stated that virtual teams will become the accepted way to work and will likely reshape the work world. While this prediction seems accurate, there has also been evidence of negative attribution or judgment about problems that arise in virtual team performance. Thus, it is important to understand how virtual teams need to be managed and how realistic expectations of such teams might be formed. So, while organizations understand

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the need for virtual teams, they are not necessarily happy with proj- ect results. Most of the disappointment relates to a lack of individual development that helps change the mindset of how people need to communicate coupled with updated processes.

Management Considerations

Attribution theory “describes how people typically generate expla- nations for outcomes and actions—their own and others” (Bazarova & Walther, 2009, p. 153). This theory explains certain behavior pat- terns that have occurred during dysfunctional problems occurring in managing virtual teams. Virtual teams are especially vulnerable to such problems because their limited interactions can lead to members not having accurate information about one another. Members of vir- tual teams can easily develop perceptions of each other’s motives that are inaccurate or distorted by differing cultural norms. Research also shows us that virtual team members typically attribute failure to the external factors and successes to internal factors; that is, of members of the physical community and problems blamed on the virtual or outside members for not being available or accountable to the physical community. The successes then tend to reinforce that virtual teams are problematic because of their very nature. This then establishes the dilemma of the use of virtual teams and organizations—its use will continue to increase and dominate workplace structures and yet will present challenges to organizations that do not want to change. The lack of support to change will be substantiated during failures in expected outcomes. Some of the failures, however, can and should be attributable to distance. As Olson and Olson (2000) stated: “Distance will persist as an important element of human experience” (p. 172). So, despite the advent of technology, it is important not to ignore the social needs that teams need to have to be effective.

Dealing With Multiple Locations

Perhaps the greatest difficulty in implementing virtual teams is the reality that they span multiple locations. More often, these locations can be in different time zones and within multiple cultures. To prop- erly understand the complexity of interactions, it makes sense to revisit

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the organizational learning tools discussed in prior chapters. Perhaps another way of viewing virtual teams and their effects on organiza- tion learning is to perceive it as another dimension—a dimension that is similar to multiple layers in a spreadsheet. This notion means that virtual teams do not upset the prior relations between technology as a variable from a two-dimensional perspective rather in the depth of how it affects this relationship in a third dimension. Figure 7.1 reflects how this dimension should be perceived.

In other words, the study of virtual teams should be viewed as a subset of the study of organizations. When we talk about workplace activities, we need to address issues at the component level. In this example, the

Technology as an independent

variable

Virtual Organizational Dynamism Dimension

Physical Organizational Dynamism Dimension

Virtual Acceleration Dimension

Virtual Cultural Assimilation Dimension

Cultural Assimilation

Strategic Integration

Virtual Strategic Integration Dimension

Acceleration of events that require different

infrastructures and organizational processes

Creates

Total Organizational

Dynamism

Figure 7.1 The three-dimensional RoD.

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components are the physical organization and the virtual organization. The two together make up the superset or the entire organization. To be fruitful, any discussion of virtual organizations must be grounded in the context of the entire organization and address the complete topic of workplace learning and transformation. In Chapter 4, I discussed orga- nizational learning in communities of practice (COPs). In this section, I expand that discussion to include virtual organizational structures.

The growing use of virtual teams may facilitate the complete inte- gration of IT and non-IT workers. The ability to connect from various locations using technology itself has the potential to expand COPs. But, as discussed in Chapter 4, it also presents new challenges, most of which relate to the transient nature of members, who tend to par- ticipate based more on a subject or transactional basis rather than being permanent members of a group. Table 7.1 reflects some of the key differences between physical and virtual teams.

There has been much discussion about whether every employee is suited to perform effectively in a virtual community. The consensus is that effective virtual team members need to be self-motivated, able to work independently, and able to communicate clearly and in a posi- tive way. However, given that many workers lack some or all of these skills, it seems impractical to declare that workers who do not meet

Table 7.1 operating Differences Between Traditional and virtual Teams

TRADITIonAl oR PHysICAl TeAMs vIRTuAl TeAMs

Teams tend to have fixed participation and members.

Membership shifts based on topics and needs.

Members tend to be from the same organization.

Team members can include people from outside the organization (clients and collaborators).

Team members are 100% dedicated. Members are assigned to multiple teams. Team members are collocated geographically

and by organization. Team members are distributed geographically

and by organization. Teams tend to have a fixed term of

membership; that is, start and stop dates. Teams are reconfigured dynamically and may

never terminate. Teams tend to have one overall manager. Teams have multiple reporting relationships

with different parts of the organization at different times.

Teamwork is physical and practiced in face-to-face interactions.

Teamwork is basically social.

engagement is often during group events and can often be hierarchical in nature.

Individual engagement is inseparable from empowerment.

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these criteria should be denied the opportunity to work in virtual teams. A more productive approach might be to encourage workers to recognize that they must adapt to changing work environments at the risk of becoming marginal in their organizations.

To better understand this issue, I extended the COPs matrix presented in Chapter 4 to include virtual team considerations in Table 7.2.

Item 7 in Table 7.2 links the study of knowledge management with COPs. Managing knowledge in virtual communities within an orga- nization has become associated directly with the ability of a firm to sustain competitive advantage. Indeed, Peddibhotla and Subramani (2008) stated that “virtual communities are not only recognized as important contributors to both the development of social networks among individuals but also towards individual performance and firm performance” (p. 229). However, technology-enabled facilities and support, while providing a repository for better documentation, also create challenges in maintaining such knowledge. The process of how information might become explicit has also dramatically changed with the advent of virtual team communications. For example, much technology-related documentation evolves from bottom-up sources rather than the traditionally top-down process. In effect, virtual com- munities share knowledge more on a peer-to-peer basis or through mutual consensus of the members. As a result, virtual communities have historically failed to meet expectations, particularly those of management, because managers tend to be uninvolved in communi- cation. While physical teams can meet with management more often before making decisions, virtual teams have no such contact available. To better understand the complexities of knowledge management and virtual teams, Sabherwal and Becerra-Fernandez (2005) expanded on Nonaka’s (1994) work on knowledge management, which outlined four modes of knowledge creation: externalization, internalization, combination, and socialization. Each of these modes is defined and discussed next.

Externalization

Externalization is the process of converting or translating tacit knowl- edge (knowledge not documented) into explicit forms. The problem with this concept is whether individuals really understand what they

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Table 7.2 Communities of Practice: virtual Team extensions

sTeP CoMMunITIes-oF-

PRACTICe sTeP TeCHnoloGy exTensIon vIRTuAl exTensIon

1 understanding strategic knowledge needs: what knowledge is critical to success

understanding how technology affects strategic knowledge and what specific technological knowledge is critical to success.

understanding how to integrate multiple visions of strategic knowledge and where it can be found across the organization.

2 engaging practice domains: where people form communities of practice to engage in and identify with

Technology identifies groups based on business-related benefits, requiring domains to work together toward measurable results.

virtual domains are more dynamic and can be formed for specific purposes and then reconfigured based on practice needs of subjects discussed.

3 Developing communities: how to help key communities reach their full potential

Technologies have life cycles that require communities to continue; treats the life cycle as a supporter for attaining maturation and full potential.

Communities can be reallocated to participate in multiple objectives. Domains of discussion have no limits to reach organizational needs.

4 Working the boundaries: how to link communities to form broader learning systems

Technology life cycles require new boundaries to be formed. This will link other communities that were previously outside of discussions and thus expand input into technology innovations.

virtual abilities allow for customer interfaces, vendors, and other interested parties to join the community.

5 Fostering a sense of belonging: how to engage people’s identities and sense of belonging

The process of integrating communities: IT and other organizational units will create new evolving cultures that foster belonging as well as new social identities.

Communities establish belonging in a virtual way. Identities are established more on content of discussion than on physical attributes of members.

6 Running the business: how to integrate communities of practice into running the business of the organization

Cultural assimilation provides new organizational structures that are necessary to operate communities of practice and to support new technological innovations.

The organization functions more as a virtual community or team, being more agile to demands of the business, and interactions may not always include all members.

7 Applying, assessing, reflecting, renewing: how to deploy knowledge strategy through waves of organizational transformation

The active process of dealing with multiple new technologies that accelerates the deployment of knowledge strategy. emerging technologies increase the need for organizational transformation.

virtual systems allow for more knowledge strategy because of the ability to deploy information and procedures. Tacit knowledge is easier to transform to explicit forms.

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know and how it might affect organizational knowledge. Virtual communities have further challenges in that the repository of tacit information can be found in myriad storage facilities, namely, audit trails of e-mail communications. While Sabherwal and Becerra- Fernandez (2005) suggested that technology may indeed assist in providing the infrastructure to access such information, the reality is that the challenge is not one of process but rather of thinking and doing. That is, it is more a process of unlearning existing processes of thinking and doing into new modes of using knowledge that is abundantly available.

Internalization

Internalization is a reversal of externalization: It is the process of transferring explicit knowledge into tacit—or individualized learn- ing. The individual thus makes the explicit process into his or her own stabilized thinking system so that it becomes intuitive in operation. The value of virtual team interactions is that they can provide more authentic evidence of why explicit knowledge is valuable to the indi- vidual. Virtual systems simply can provide more people who find such knowledge useful, and such individuals, coming from a more peer relationship, can associate with others why their procedures can be internalized and become part of the self.

Combination

Combination allows individuals to integrate their physical processes with virtual requirements. The association, particularly in a global environment, allows virtual team members to integrate new explicit forms into their own, not by replacing their beliefs but rather by estab- lishing new hybrid knowledge systems. This is particularly an advan- tage across multiple cultures and business systems that differ among countries that hold different and possibly complimentary knowledge about how things can get done. Nonaka’s (1994) concept of combina- tion requires participants in the community to be at later stages of multiplicity—suggesting that this form can only be successful among certain levels or positions of learners.

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Socialization

As Nonaka (1994) noted, individuals learn by observation, imitation, and practice. The very expansion of conversations via technology can provide a social network in which individuals can learn simply through discourse. Discourse, as I discussed in Chapter 4, is the basis of suc- cessful implementations of COPs. The challenge in virtual social net- works is the difficulty participants have in assessing the authenticity of the information provided by those in the community.

The four modes of knowledge management formulated by Nonaka (1994) need to be expanded to embrace the complexities of virtual team COPs. Most of the adjustments are predicated on the team’s ability to deal with the three fundamental factors of ROD that I introduced in this book; that is, acceleration, dynamic, and unpre- dictability. The application of these three factors of ROD to Nonaka’s four modes is discussed next.

Externalization Dynamism

The externalization mode must be dynamic, ongoing, with little ability to forecast the longevity of any tacit-to-explicit formulation. In other words, tacit-to-explicit change may occur daily but may only operate effectively for a shorter period due to additional changes brought on by technology dynamism. This means that members in a community must continually challenge themselves to revisit previous tacit pro- cesses and acknowledge the need to reformulate their tacit systems. Thus, transformation from tacit knowledge to explicit knowledge can be a daily challenge for COP virtual organizations.

Internalization Dynamism

Careful reflection on this process of internalizing explicit forms must be done. Given the differences in cultures and acceleration of busi- ness change, individualized learning creating new tacit abilities may not operate the same in different firm settings. It may be necessary to adopt multiple processes depending on the environment in which tacit operations are being performed. As stated, what might work in China may not work in Brazil, for example. Tacit behavior is culture oriented, so multiple and simultaneous versions must be respected

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and practiced. Further expansion of internalization is a virtual team’s understanding of how such tacit behaviors change over time due to the acceleration of new business challenges.

Combination Dynamism

I believe the combination dynamism mode is the most important com- ponent of virtual team formation. Any combination or hybrid model requires a mature self—as specified in my maturity arcs discussed in Chapter 4. This means that individuals in virtual teams may need to be operating at a later stage of maturity to deal with the complexities of changing dispositions. Members of COPs must be observed, and a determination of readiness must be made for such new structures to develop in a virtual world. Thus, COP members need training; the lack of such training might explain why so many virtual teams have had disappointing results. Readiness for virtual team participa- tion depends on a certain level of relativistic thinking. To be suc- cessful, virtual team members must be able to see themselves outside their own world and have the ability to understand the importance of what “others” need. This position suggests that individuals need to be tested to the extent that they are ready for such challenges. Organizational learning techniques remain a valid method for devel- oping workers who can cope with the dynamic changes that occur in virtual team organizations.

Socialization Dynamism

Socialization challenges the virtual team members’ abilities to under- stand the meaning of words and requires critical reflection of its con- stituents. ROD requires that virtual teams be agile and especially that they be responsive to the emotions of others in the community. This may require individuals to understand another member’s matu- rity. Thus, virtual team members need to be able to understand why another member is behaving as he or she is or reacting in a dualistic manner. Assessment in a virtual collaboration becomes a necessity especially given the unpredictability of technology-based projects.

In Chapter 5, Table 5.1, I showed how tacit knowledge is mapped to ROD. Table 7.3 further extends this mapping to include virtual teams.

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Table 7.3 Tacit Knowledge and virtual Teams

TACIT KnoWleDGe sTRATeGIC InTeGRATIon sTRATeGIC InTeGRATIon

vIRTuAl CulTuRAl AssIMIlATIon CulTuRAl AssIMIlATIon

vIRTuAl

Cultural and social history

How the IT department and other departments translate emerging technologies into their existing processes and organization.

How can virtual and nonvirtual departments translate emerging technologies into their projects across multiple locations and cultures?

Problem-solving modes

Individual reflective practices that assist in determining how specific technologies can be useful and how they can be applied; utilization of tacit knowledge to evaluate probabilities for success.

Individual reflective practices and intercultural communications needed to determine how tacit knowledge should be applied to specific group and project needs.

Technology opportunities may require organizational and structural changes to transfer tacit knowledge to explicit knowledge.

Technological opportunities may require configuration of virtual communities of practice and explicit knowledge.

orientation to risks and uncertainties

Technology offers many risks and uncertainties. All new technologies may not be valid for the organization. Tacit knowledge is a valuable component to fully understand realities, risks, and uncertainties.

Technology risks and uncertainties need to be assessed by multiple virtual and physical teams to determine how technologies will operate across multiple locations and cultures.

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market boundaries that cross business cultures and requires tacit knowledge to understand existing dispositions on how others work together. Reviews how technology affects the dynamics of operations.

Market boundaries are more dynamic across virtual teams that operate to solve cross-cultural and business problems. Worldviews are more the norm than the exception.

organizing principles

How will new technologies actually be integrated? What are the organizational challenges to “rolling out” products and to implementation timelines? What positions are needed, and who in the organization might be best qualified to fill new responsibilities? Identify limitations of the organization; that is, tacit knowledge versus explicit knowledge realities.

What are the dynamic needs of the virtual team to handle new technologies on projects? What are the new roles and responsibilities of virtual team members? Determine what tacit and explicit knowledge will be used to make decisions.

Horizons of expectation

Individual limitations in the tacit domain that may hinder or support whether a technology can be strategically integrated into the organization.

Individuals within the virtual community need to understand the limitations on strategic uses of technology. This may vary across cultures.

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The requirements support research findings that knowledge man- agement in a virtual context has significant factors that must be addressed to improve its success. These factors include management commitment, resource availability, modification of work practices, marketing of the initiative, training, and facilitation of cultural dif- ferences (Peddibhotla & Subramani, 2008).

The following are some action steps that organizations need to take to address these factors:

1. The executive team needs to advocate the commitment and support for virtual teams. The chief information officer (CIO) and his or her counterparts need to provide teams with the “sponsorship” that the organization will need to endure set- backs until the virtual organization becomes fully integrated into the learning organization. This commitment can be accomplished via multiple actions, including but not limited to a kickoff meeting with staff, status reports to virtual teams on successes and setbacks, e-mails and memos on new vir- tual formations, and a general update on the effort, perhaps on a quarterly basis. This approach allows the organization to understand the evolution of the effort and know that virtual teams are an important direction for the firm.

2. There should be training and practice sessions with collocated groups that allow teams to voice their concerns and receive direction on how best to proceed. Practice sessions should focus on team member responsibilities and advocating their ownership of responsibility. These sessions should cover lessons learned from actual experiences so that groups can learn from others. Training should set the goals and establish the criteria for how virtual teams interact in the firm. This should include the application software and repositories in place and the pro- cedures for keeping information and knowledge current.

3. External reminders should be practiced so that virtual teams do not become lax and develop bad habits since no one is moni- toring or measuring success. Providing documented processes, perhaps a balanced scorecard or International Organization for Standardization (ISO) 9000-type procedures and mea- surements, is a good practice for monitoring compliance.

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vIrtuAl teAms And outsourCIng 179

Dealing With Multiple Locations and Outsourcing

Virtual organizations are often a given in outsourcing environ- ments, especially those that are offshore. Offshore outsourcing also means that communications originate in multiple locations. The first step in dealing with multiple locations is finding ways to deal with different time zones. Project management can become more complicated when team meetings occur at obscure times for certain members of the community. Dealing with unanticipated problems can be more challenging when assembling the entire team may not be feasible because of time differences. The second challenge in running organizations in multiple locations is cul- ture. Differing cultural norms can especially cause problems dur- ing off-hour virtual sessions. For example, European work culture does not often support having meetings outside work hours. In some countries, work hours may be regulated by the government or powerful unions.

A further complication in outsourcing is that the virtual team members may be employed by different companies. For instance, part of the community may include a vendor who has assigned staff resources to the effort. Thus, these outsourced team members belong to the community of the project yet also work for another organiza- tion. The relationship between an outside consultant and the internal team is not straightforward and varies among projects. For example, some outsourced technical resources may be permanently assigned to the project, so while they actually work for another firm, they behave and take daily direction as if they were an employee of the focal busi- ness. Yet, in other relationships, outsourced resources work closely under the auspices of the outsourced “project manager,” who acts as a buffer between the firm and the vendor. Such COP formations vary. Still other outsourcing arrangements involve team members the firm does not actually know unless outsourced staff is called in to solve a problem. This situation exists when organizations outsource complete systems, so that the expectation is based more on the results than on the interaction. Notwithstanding the arrangement or level of integra- tion, a COP must exist, and its behavior in all three of these examples varies in participation, but all are driven in a virtual relationship more by dynamic business events than by preplanned activities.

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If we look closely at COP approaches to operations, it is necessary to create an extension of dynamism in a virtual team community. The extension reflects the reliance on dynamic transactions, which creates temporary team formations based on demographic similarity needs. This means that virtual teams will often be formed based on specific interests of people within the same departments. Table 7.4 shows the expansion of dynamism in a virtual setting of COPs.

Thus, the advent of modern-day IT outsourcing has complicated the way COPs function. IT outsourcing has simultaneously brought attention to the importance of COPs and knowledge management in general. It also further supports the reality of technology dyna- mism as more of a norm in human communication in the 21st century.

Table 7.4 CoP virtual Dynamism

CoP PHysICAl soCIAl seTTInGs CoP vIRTuAl DynAMIsMs

There is shared pursuit of interest accomplished through group meetings.

Interest in discussion based more on dynamic transactions and remote needs to satisfy specific personal needs.

Creation of the “community” is typically established within the same or similar departments.

The notion of permanency is deemphasized. specific objectives based on the needs of the group will establish the community.

Demographic similarity is a strong contributor to selection of community members.

Demographic similarity has little to do with community selection. selection is based more on subject matter expertise.

situated learning is often accomplished by assisting members to help develop others. learning occurs within a framework of social participation.

situated learning to help others has less focus. It may not be seen as the purpose or responsibility of virtual team members. social participation has more concrete perspective.

Community needs to assess technology dynamism using RoD in more physical environments requiring a formal infrastructure.

Community is less identifiable from a physical perspective. RoD must be accomplished by members who have special interests at the subject level as opposed to the group level.

CoP works well with cultural assimilation of formal work groups where participants are clearly identified.

Cultural assimilation in virtual settings is more transaction-based. Assimilation can be a limited reality during the time of the transaction to ensure success of outcomes.

CoP can be used for realignment of work departments based on similar needs.

CoP in a virtual environment creates temporary realignments based on similar needs during the process.

CoP supports continual learning and dealing with unplanned action.

CoPs are continually reconfigured and do not have permanency of group size or interest.

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Revisiting Social Discourse

In Chapter 4, I covered the importance of social discourse and the use of language as a distinct component of how technology changes COPs. That section introduced three components that linked talk and action according to the schema of Grant et al. (1998): Identity, Skills and Emotion. Figure 7.2 shows this relationship again. The expansion of virtual team communications further emphasizes the importance of discourse and the need to rethink how these three components relate to each other in a virtual context.

Identity

I spoke about the “cultures of practice” due to expansion of contacts from technology capacities. This certainly holds true with virtual teams. However, identities can be transactional—in ways such that an individual may be a member of multiple COP environments and have different identities in each. This fact emphasizes the multitasking aspect of the linear development modules discussed throughout this book. Ultimately, social discourse will dynamically change based on

Conversational Activity

Conversational Content

Action

Skills

Emotions

Identity

Figure 7.2 Grant’s schema of the relationship between talk and action.

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182 InFormAtIon teChnology

the COP to which an individual belongs, and that individual needs to be able to “inventory” these multiple roles and responsibilities. Such roles and responsibilities themselves will transform due to the dynamic nature of technology-driven projects. Individuals will thus have multiple identities and must be able to manage those identities across different COPs and in different contexts within those COPs. This requires individual maturities that must be able to cope with the “other” and understand the relativistic nature of multiple cultures and the way discourse transforms into action.

Skills

I mentioned the importance of persuasion as a skill to transform talk into action. Having the ability to persuade others across virtual teams is critical. Often, skills are misrepresented as technical abilities that give people a right of passage. Across multiple cultures, individuals in teams must be able to recognize norms and understand how to communicate with others to get tangible results on their projects. It is difficult to make such determinations about individuals that one has never met face to face. Furthermore, virtual meetings may not provide the necessary background required to properly understand a person’s skill sets, both “hard” and “soft.” The soft skills analysis is more important as the individual’s technical credentials become assumed. We see such assumptions when individuals transition into management positions. Ascertaining technical knowledge at the staff level is easier—almost like an inventory analysis of technical requirements. However, assessing an individual’s soft skills is much more challenging. Virtual teams will need to create more complex and broadened inventories of their team’s skill sets, as well as estab- lish better criteria on how to measure soft skills. Soft skills will require individuals to have better “multicultural” abilities so that team members can be better equipped to deal with multinational and cross-cultural issues.

Emotion

Like persuasion, emotion involves an individual’s ability to motivate others and to create positive energy. Many of those who successfully

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vIrtuAl teAms And outsourCIng 183

use emotion are more likely to have done so in a physical context than a virtual one. Transferring positive emotion in a virtual world can be analogous to what organizations experienced in the e-commerce world, in which organizations needed to rebrand themselves across the Web in such a way that their image was reflected virtually to their customers. Marketing had to be accomplished without expo- sure to the buyer during purchase decisions. Virtual COPs are simi- lar: Representation must be what the individual takes away, without seeing the results physically, certainly a new dimension for manag- ing teams. This means that the development requirements for virtual members must include advanced abstract thinking so that the indi- vidual can better forecast virtual team reactions to what will be said, as opposed to reacting while the conversation is being conducted or thinking about what to do after virtual meetings.

In Chapter 4, I presented Marshak’s (1998) work on types of talk that lead to action: tool-talk, frame-talk, and mythopoetic-talk. Virtual teams require modification to the sequence of talk; that is, the use of talk is altered. Let us first look at Figure 7.3, represent- ing Marshak’s model. To be effective, virtual teams must follow this sequence from the outside inward. That is, the virtual team must focus on mythopoetic-talk in the center as opposed to an outer ring. This means that ideogenic issues must precede interpretation in a virtual world. Thus, tool-talk, which in the physical world lies at the center of types of tools, is now moved to the outside rectangle. In other words, instrumental actions lag those of ideology and interpretation. This is restructured in Figure 7.4.

Tool-Talk: Instrumental

Frame-Talk: Interpretive

Mythopoetic-Talk: Ideogenic

Figure 7.3 Marshak’s types of talk.

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184 InFormAtIon teChnology

Mythopoetic-talk is at the foundation of grounding ideas in a virtual COP. It would only make sense that a COP-driven talk requires ideo- genic behavior before migrating to instrumental outcomes. Remember that ideogenic talk allows for concepts of intuition and ideas for con- crete application especially relevant among multiple cultures and societies. So, we again see that virtual teams require changes in the sequence of how learning occurs. This change in sequence places more emphasis on the need for an individual to be more developmentally mature—mature with respect to thinking, handling differences, and thinking abstractly. This new “abstract individual” must be able to reflect before action and reflect in action to be functionally competent in virtual team participation.

Because ROD is relevant, it is important to determine how vir- tual teams affect the ROD maturity arc first presented in Chapter 4, Figure 4.10, and redisplayed in Figure 7.5.

Figure 7.6 represents the virtual team extension to the ROD arc. The changes to the cells are shown in italics. Note that there are no changes to operational knowledge because this stage focuses solely on self-knowledge learned from authoritative sources. However, as the individual matures, there is greater need to deal with uncertainty. This includes the uncertainty that conditions in a COP may be tempo- rary, and thus knowledge may need to vary from meeting to meeting. Furthermore, while operational realities may be more transactional, it does not necessarily mean that adopted changes are not permanent. Most important is the reality that permanence in general may no lon- ger be a characteristic of how the organization operates; this further

Tool-Talk: Instrumental

Frame-Talk: Interpretive

Mythopoetic-Talk: Ideogenic

Figure 7.4 virtual team depiction of Marshak’s types of talk.

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5 sTAGes oF InDIvIDuAl AnD oRGAnIzATIonAl leARnInG

seCToR vARIABle oPeRATIonAl KnoWleDGe

DePARTMenT/unIT vIeW As oTHeR InTeGRATeD DIsPosITIon sTABle oPeRATIons

oRGAnIzATIonAl leADeRsHIP

strategic integration operations personnel understand that technology has an impact on strategic development, particularly on existing processes

Individual beliefs of strategic impact are incomplete; individual needs to incorporate other views within the department or business unit

Recognition that individual and department views must be integrated to be complete and strategically productive for the department/unit

Changes made to processes at the department/unit level formally incorporate emerging technologies

Departmental strategies are propagated and integrated at organization level

Cultural assimilation view that technology can and will affect the way the organization operates and that it can affect roles and responsibilities

Changes brought forth by technology need to be assimilated into departments and are dependent on how others participate

understands need for organizational changes; different cultural behavior new structures are seen as viable solutions

organizational changes are completed and in operation; existence of new or modified employee positions

Department-level organizational changes and cultural evolution are integrated with organization-wide functions and cultures

organizational learning constructs

Individual-based reflective practice

small-group-based reflective practices

Interactive with both individual and middle management using communities of practice

Interactive between middle management and executives using social discourse methods to promote transformation

organizational learning at executive level using knowledge management

Management level operations operation and middle management

Middle management Middle management and executive

executive

Figure 7.5 Responsive organizational dynamism arc model.

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DePARTMenT/unIT vIeW As oTHeR InTeGRATeD DIsPosITIon sTABle oPeRATIons

oRGAnIzATIonAl leADeRsHIP

strategic integration operations personnel understand that technology has an impact on strategic development, particularly on existing processes

Individual beliefs of strategic impact are incomplete; individual needs to incorporate views of other cultures within and outside the department or business unit. Understanding that what might work in local setting may not be acceptable in other operations in virtual operations

Recognition that individual and department views must be integrated across multiple locations and cultures to be complete and strategically productive for the department/unit

Changes made to processes at the department/unit level may formally incorporate emerging technologies or be temporary based on dynamic needs of the COP members. Additions and removals of COP members could require temporary or permanent changes based on cultural norms

Departmental strategies are propagated and integrated at business unit levels that may or may not become organizational norms due to differences in virtual memberships

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assimilation view that technology

can and will affect the way the organization operates, and that it can affect roles and responsibilities

Changes brought forth by technology need to be assimilated into departments and are dependent on how others participate. Assimilation of cultural norm may have very different roles and responsibilities in other cultures. Shifting assimilation needs may differ as different members join or leave the COP

Understands need for organizational changes across multiple organizations. Different cultural behaviors and new structures are seen as viable solutions that can be permanent or temporary because of the dynamic memberships in COP

Organizational changes are never completed and may be in temporary operation. Existence of new or modified COP member positions could be permanent or transitional based on project needs

Department-level organizational changes and cultural evolution may remain separate and case driven. Some assimilation may be integrated with organization-wide functions and cultures

organizational learning constructs

Individual-based reflective practice

Virtual group-based reflective practices are necessary to understand how to operate in a COP environment with individuals who have different perspectives

Interactive with individual, middle management, and executive using virtual communities of practice

Interactive between middle management and executives using social discourse methods to promote more transactional behavioral transitions. Some transitions may lead to transformation

Organizational learning at executive level incorporates virtual team needs using more dynamic COP structures and broadened knowledge management that is more situational

Management level

operations Operations, middle management, and executive

Middle management and executive

Middle management and executive

Executive

Figure 7.6 virtual team extension to the RoD arc. Changes are shown in italics.

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188 InFormAtIon teChnology

emphasizes ROD as a way of life. As a result of this extreme complex- ity in operations, there is an accelerated requirement for executives to become involved earlier in the development process. Specifically, by Stage 2 (department/unit view of the other), executives must be engaged in virtual team management considerations.

Ultimately, the virtual team ROD arc demonstrates that virtual teams are more complex and therefore need members who are more mature to ensure the success of outsourcing and other virtual con- structs. It also explains why virtual teams have struggled, likely because their members are not ready for the complex participation necessary for adequate outcomes.

We must also remember that maturity growth is likely not paral- lel in its linear progression. This was previously shown in Chapter 4, Figure 4.12.

This arc demonstrates the challenge managers face in gauging the readiness of their staff to cope with virtual team engagement. On the other hand, the model also provides an effective measurement schema that can be used to determine where members should be deployed and their required roles and responsibilities. Finally, the model allows man- agement to prepare staff for the training and development they need as part of the organizational learning approach to dealing with ROD.

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8 syneRgisTiC union of iT anD

oRganizaTional leaRning

Introduction

This chapter presents case studies that demonstrate how information technology (IT) and organizational learning occur in the real corpo- rate world. It examines the actual processes of how technological and organizational learning can be implemented in an organization and what management perspectives can support its growth so that forms of responsive organizational dynamism can be formed and developed. I will demonstrate these important synergies through three case stud- ies that will show how the components of responsive organizational dynamism, strategic integration and cultural assimilation, actually operate in practice.

Siemens AG

The first case study offers a perspective from the chief information officer (CIO). The CIO of Siemens of the Americas at the time of this study was Dana Deasy, and his role was to introduce and expand the use of e-business across 20 discrete separate businesses. The Siemens corporation worldwide network was comprised of over 150 diverse sets of businesses, including transportation, health care, and telecom- munications. Deasy’s mission was to create a common road map across different businesses and cultures. What makes this case so distinct from others is that each business is highly decentralized under the umbrella of Siemens corporate. Furthermore, each company has its own mission; the companies have never been asked to come together and discuss common issues with regard to technology. That is, each business focused on itself as opposed to the entire organization. Deasy

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had to deal with two sectors of scope and hence two levels of learning: the Americas as a region and the global firm internationally.

The challenge was to introduce a new e-business strategy from the top down in each business in the Americas and then to integrate it with the global firm. Ultimately, the mission was to review what each business was doing in e-business and to determine whether there was an opportunity to consolidate efforts into a common direction.

IT was, for the most part, viewed as a back office operation— handling services of the company as a support function as opposed to thinking about ways to drive business strategy. In terms of IT reporting, most CIOs reported directly to the chief financial offi- cer (CFO). While some IT executives view this as a disadvantage because CFOs are typically too focused on financial issues, Deasy felt that a focus on cost containment was fine as long as the CIO had access to the chief executive officer (CEO) and others who ultimately drove business strategy. So, the real challenge was to ensure that CIOs had access to the various strategic boards that existed at Siemens.

What are the challenges in transforming an organization the size of Siemens? The most important issue was the need to educate CIOs on the importance of their role with respect to the business as opposed to the technology. As Deasy stated in an interview, “Business must come first; and we need to remind our CIOs that all technology issues must refer back to the benefits it brings to the business.” The question then is how to implement this kind of learning.

Perhaps the best way to understand how Siemens approached this dilemma is to understand Deasy’s role as a corporate CIO. The reality is that there was no alternative but to create his position. What drove Siemens to this realization was fear that they needed someone to drive e-business, according to Deasy—fear of losing competitive edge in this area, fear that they were behind the competition and that smaller firms would begin to obtain more market share. Indeed, the growth of e-business occurred during the dot.com era, and there were huge pressures to respond to new business opportunities brought about by emerging technologies, specifically the Internet. It was, therefore, a lack of an internal capacity, such as responsive organizational dyna- mism, that stimulated the need for senior management to get involved and provide a catalyst for change.

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synergIstIC unIon oF It 191

The first aspect of Siemens’ approach can be correlated to the stra- tegic integration component of responsive organizational dynamism. We see that Siemens was concerned about whether technology was properly being integrated in strategic discussions. It established the Deasy role as a catalyst to begin determining the way technology needed to be incorporated within the strategic dimension of the business. This process cannot occur without executive assistance, so evolutionary learning must first be initiated by senior management. Unfortunately, Deasy realized early on that he needed a central pro- cess to allow over 25 CIOs in the Americas to interact regularly. This was important to understand the collective needs of the com- munity and to pave the way for the joining of technology and stra- tegic integration from a more global perspective. Deasy established an infrastructure to support open discourse by forming CIO forums, similar to communities of practice, in which CIOs came together to discuss common challenges, share strategies, and have workshops on the ways technology could help the business. Most important at these forums was the goal of consolidating their ideas and their com- mon challenges.

There are numerous discussions regarding the common problems that organizations face regarding IT expenditures, specifically the approach to its valuation and return on investment (ROI). While there are a number of paper-related formulas that financial executives use (e.g., percentage of gross revenues within an industry), Deasy uti- lized learning theories, specifically communities of practice, to foster more thinking and learning about what was valuable to Siemens, as opposed to using formulas that might not address important indi- rect benefits from technology. In effect, Deasy promoted learning among a relatively small but important group of CIOs who needed to better understand the importance of strategic innovation and the value it could bring to the overall business mission. Furthermore, these forums provided a place where CIOs could develop their own community—a community that allowed its members to openly par- ticipate in strategic discourse that could help transform the organiza- tion. It was also a place to understand the tacit knowledge of the CIO organization and to use the knowledge of the CIOs to summarize common practices and share them among the other members of the community.

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192 InFormAtIon teChnology

Most of the CIOs at Siemens found it challenging to understand how their jobs were to be integrated into business strategy. Indeed, this is not a surprise. In Chapter 1, I discuss the feedback from my research on CEO evaluation of technology; I found that there were few IT executives who were actually involved in business strategy. Thus, the organization sought to create an advocate in terms of a centralized corporate headquarter that could provide assistance as opposed to forcing compliance. That is, it sought a structure with which to foster organizational learning concepts and develop an approach to create a more collective effort that would result in global direction for IT strategic integration.

To establish credibility among the CIO community, Deasy needed to ensure that the CIOs of each individual company were able to interact with board-level executives. In the case of Siemens, this board is called the President’s Council. The President’s Council has regu- larly held meetings in which each president attends and receives pre- sentations on ideas about the regional businesses. Furthermore, there are quarterly CFO meetings as well, where CIOs can participate in understanding the financial implications of their IT investments. At the same time, these meetings provided the very exposure to the executive team that CIOs needed. Finally, Deasy established a CIO advisory board comprised of CIOs who actually vote on the common strategic issues and thus manage the overall direction of technology at Siemens. Each of these groups established different types of com- munities of practice that focused on a specific aspect of technology. The groups were geared to create better discourse and working rela- tionships among these communities to, ultimately, improve Siemens’ competitive advantage. The three communities of practice at work in the Siemens model—executive, finance, and technology—suggest that having only one general community of practice to address technology issues may be too limiting. Thus, theories related to communities of practice may need to be expanded to create discourse among multiple communities. This might be somewhat unique for IT, not in that there is a need for multiple communities but that the same individuals must have an identity in each community. This shows the complexity of the CIO role today in the ability to articulate technology to different types and tiers of management. Figure 8.1 shows the interrelation- ships among the CIO communities of practice at Siemens.

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synergIstIC unIon oF It 193

Another way to represent these communities of practice is to view them as part of a process composed of three operating levels. Each level represents a different strategic role of management that is responsible for a unique component of discourse and on the authorization for uses of technology. Therefore, if the three different communities of prac- tice are viewed strategically, each component could be constructed as a process leading to overall organizational cooperation, learning, and strategic integration as follows:

Tier 1: CIO Advisory Board: This community discusses issues of technology standards, operations, communications, and ini- tiatives that reflect technology-specific areas. Such issues are seen as CIO specific and only need this community’s agree- ment and justification. However, issues or initiatives that require financial approval, such as those that may not yet be budgeted or approved, need to be discussed with group CFOs. Proposals to executive management—that is, the President’s Council—also need prior approval from the CFOs.

President’s Council

CFO Quarterly Meetings

CIO Advisory Board

Communities of practice consist of presidents from each company. Regular meetings are designed for discussion over common issues on business strategy. Corporate CIOs can use this forum to present new proposals on emerging technologies and seek approval for their plans and vision.

Communities of practice consist of CFOs from each company. Discussions relate to how strategies can be implemented with respect to ROI. CIOs need to understand IT costs, both direct and indirect.

Communities of practice consist of CIOs from each company. Forum is designed to openly discuss common challenges, agree on technology initiatives, foster a more united community and build on shared knowledge across businesses.

Corporate CIO of the Americas

Figure 8.1 Inter-relationships among CIo communities of practice at siemens.

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Tier 2: CFO Quarterly: CFOs discuss new emerging technolo- gies and ascertain their related costs and benefits (ROI). Those technologies that are already budgeted can be approved based on agreed ROI scenarios. Proposals for new technology proj- ects are approved in terms of their financial viability and are prepared for further discussion at the President’s Council.

Tier 3: President’s Council: Proposals for new technology projects and initiatives are discussed with a focus on their strategic implications on the business and their expected outcome.

Deasy realized that he needed to create a common connection among these three communities. While he depended on the initia- tives of others, he coordinated where these CIO initiatives needed to be presented based on their area of responsibilities.

Graphically, this can be shown in Figure 8.2 as a linear progression of community-based discussions and approvals.

The common thread to all three tiers is the corporate CIO. Deasy was active in each community; however, his specific activities within each community of practice were different. CIOs needed to establish peer relationships with other CIOs and share their tacit knowledge and contribute ideas that can be useful to other Siemens companies. Thus, CIOs needed to transform their personal views of technology and expand them to a group-level perspective. Their challenge was to learn how to share concepts and how to understand new ones that emanated at the CIO Advisory Board level. From this perspective, they could create the link between the local strategic issues and those discussed at the regional and global levels as shown in Figure 8.3.

Using this infrastructure, Siemens organizational learning in tech- nology occurred at two levels of knowledge management. The first is represented by Deasy’s position, which effectively represents a top- down structure to initiate the learning process. Second are the tiers of communities of practice when viewed hierarchically. This view reflects a more bottom-up learning strategy, with technological opportunities initiated by a community of regional, company CIOs, each repre- senting the specific interests of their companies or specific lines of business. This view can also be structured as an evolutionary cycle in which top-down management is used to initiate organizational learning from the bottom up, the bottom in this case represented by

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local operating company CIOs. This means that the CIO is seen relatively in this case as the lower of the senior management popula- tion. Figure 8.4 depicts the CIO as this “senior lower level.”

From this frame of reference, the CIO represents the bottom-up approach to the support of organizational learning by addressing the technology dilemma created by technological dynamism—specifically in this case e-business strategy.

The role of IT in marketing and e-business was another important factor in Siemens’ model of organizational learning. The technology strategy at Siemens was consistent with the overall objectives of the organization: to create a shared environment that complements each

CIO Advisory Board

CFO Quarterly

President’s Council

Tier 1

Tier 2

Tier 3

Requires Financial Approval

Requires Strategic Approval

Outcomes

Outcomes

Outcomes

Local or pre-budgeted technology specific

implementation issues

Budgeted but not approved implementations. Projects are

approved within budget constraints

Proposals reviewed based on strategy and corporate

direction, and approved for implementation, including

financial commitment

Co rpo

rat e C

IO Ov

ers igh

t an d M

ana gem

ent

Figure 8.2 siemens’ community-based links.

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CIO Advisory Board

Company President

Company CFO

Technology issues related to sharing across businesses or issues for discussion that require consesus among CIO population

Company-specific strategic issues regarding how technology affects specific corporate goals and objectives

Financial implications and direct reporting at the company level

Figure 8.3 siemens’ local to global links.

President & Executive

Management

Chief Financial Officer

Local CIO

Dana Deasy Strategic Senior Management Level

Financial Senior Management Level

Senior Lower Level

Figure 8.4 CIo as the “senior lower level.”

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business by creating the opportunity to utilize resources. This shared environment became an opportunity for IT to lead the process and become the main catalyst for change. I discuss this kind of support in Chapter 5, in which I note that workers see technology as an accept- able agent of change. Essentially, the CIOs were challenged with the responsibility of rebranding their assets into clusters based on their generic business areas, such as hospitals, medical interests, and com- munications. The essence of this strategic driver was to use e-business strategy to provide multiple offerings to the same customer base.

As with the Ravell case discussed in Chapter 1, the Siemens’ case represents an organization that was attempting to identify the driver component of IT. To create the driver component, it became necessary for executive management to establish a corporate position (embodied by Deasy) to lay out a plan for transformation through learning and through use of many of the organizational learning theories presented in Chapter 4.

The Siemens challenge then was to transform its CIOs from being back office professionals to proactive technologists focused primar- ily on learning to drive business strategy. That is not to say that back office issues became less important; they became, instead, responsi- bilities left to the internal organizations of the local CIOs. However, back office issues can often become strategic problems, such as with the use of e-mail. This is an example of a driver situation even though it still pertains to a support concern. That is, back office technologies can indeed be drivers, especially when new or emerging technologies are available. As with any transition, the transformation of the CIO role was not accomplished without difficulty. The ultimate message from executive management to the CIO community was that it should fuse the vital goals of the business with their technology initiatives. Siemens asked its CIOs to think of new ways that technology could be used to drive strategic innovations. It also required CIOs to change their behavior by asking them to think more about business strategy.

The first decision that Deasy confronted was whether to change the reporting structure of the CIO. Most CIOs at Siemens reported directly to the CFO as opposed to the CEO. After careful thought, Deasy felt that to whom the CIO reported was less important than giving access and exposure to the President’s Council meetings. It was Deasy’s perspective that only through exposure and experience

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could CIOs be able to transform from back office managers to strate- gic planners. As such, CIO training was necessary to prepare them for participation in communities of practice. Eventually, Siemens recog- nized this need and, as a result, sponsored programs, usually lasting 1 week, in which CIOs would be introduced to new thinking and learning by using individual-based reflective practices. Thus, we see an evolutionary approach similar to that of the responsive organiza- tional dynamism arc presented in Chapter 4; that is, one that uses both individual and organizational learning techniques.

Deasy also understood the importance of his relationship and role with each of the three communities of practice. With respect to the CEOs of each company, Deasy certainly had the freedom to pick up the phone and speak with them directly. However, this was rarely a realistic option as Deasy knew early on that he needed the trust and cooperation of the local CIO to be successful. The community with CEOs was then broadened to include CIOs and other senior manag- ers. This was another way in which Deasy facilitated the interaction and exposure of his CIOs to the executives at Siemens.

Disagreement among the communities can and does occur. Deasy believed in the “pushing-back” approach. This means that, inevitably, not everyone will agree to agree, and, at times, senior executives may need to press on important strategic issues even though they are not mutually in agreement with the community. However, while this type of decision appears to be contrary to the process of learning embedded in communities of practice learning, it can be a productive and accept- able part of the process. Therefore, while a democratic process of learn- ing is supported and preferred, someone in the CIO position ultimately may need to make a decision when a community is deadlocked.

The most important component of executive decision making is that trust exists within the community. In an organizational learning infrastructure, it is vital that senior management share in the value proposition of learning with members of the community. In this way, members feel that they are involved and are a part of decision making as opposed to feeling that they are a part of a token effort that allows some level of participation. As Deasy stated, “I was not trying to create a corporate bureaucracy, but rather always representing myself as an ambassador for their interest, however, this does not guarantee that I will always agree with them.” Disagreements, when managed properly,

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require patience, which can result in iterative discussions with mem- bers of the community before a consensus position may be reached, if it is at all. Only after this iterative process is exhausted does a senior overarching decision need to be made. Deasy attributed his success to his experience in field operations similar to those of his constitu- ents. As a prior business-line CIO, he understood the dilemma that many members of the community were facing. Interestingly, because of his background Deasy was able to “qualify” as a true member of the CIO community of practice because of his experience. This truth establishes an important part of knowledge management and change management—senior managers who attempt to create communities of practice will be more effective when they share a similar back- ground and history with the community that they hope to manage. Furthermore, leaders of such communities must allow members to act independently and not confuse that independence with autonomy. Finally, managers of communities of practice are really champions of their group and as such must ensure that the trust among mem- bers remains strong. This suggests that CIO communities must first undergo their own cultural assimilation to be prepared to integrate with larger communities within the organization.

Another important part of Deasy’s role was managing the technol- ogy itself. This part of his job required strategic integration in that his focus was more about uses of technology, as opposed to commu- nity behavior or cultural assimilation. Another way of looking at this issue is to consider the ways in which communities of practice actually transform tacit knowledge and present it to senior management as explicit knowledge. This explicit knowledge about uses of technology must be presented in a strategic way and show the benefits for the organization. The ways that technology can benefit a business often reside within IT as tacit knowledge. Indeed, many senior manag- ers often criticize IT managers for their inability to articulate what they know and to describe it so that managers can understand what it means to the business. Thus, IT managers need to practice trans- forming their tacit knowledge about technology and how to present it effectively as it relates to business strategy.

Attempting to keep up with technology can be a daunting, if not impossible, task. In some cases, Siemens allows outside consultants to provide help on specific applications if there is not enough expertise

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within the organization. The biggest challenge, however, is not neces- sarily in keeping up with new technologies but rather in testing tech- nologies to determine exactly the benefit they have on the business. To address this dilemma, Deasy established the concept of “revali- dation.” Specifically, approved technology projects are reviewed every 90 days to determine whether they are indeed providing the planned outcomes, whether new outcomes need to be established, or whether the technology is no longer useful. The concept of revalidation can be associated with my discussion in Chapter 3, which introduced the con- cept of “driver” aspects of technology. This required that IT be given the ability to invest and experiment with technology to fully maximize the evaluation of IT in strategic integration. This was particularly use- ful to Deasy, who needed to transform the culture at Siemens to one that recognized that not all approved technologies succeed. In addi- tion, he needed to dramatically alter the application development life cycle and reengineer the process of how technology was evaluated by IT and senior management. This challenge was significant in that it had to be accepted by over 25 autonomous presidents, who were more focused on short and precise outcomes from technology investments.

Deasy was able to address the challenges that many presidents had in understanding IT jargon specifically as it related to benefits of using technology. He engaged in an initiative to communicate with non-IT executives by using a process called storyboarding. Storyboarding is the process of creating prototypes that allow users to actually see exam- ples of technology and how it will look and operate. Storyboarding tells a story and can quickly educate executives without being intimi- dating. Deasy’s process of revaluation had its own unique life cycle at Siemens:

1. Create excitement through animation. What would Siemens be like if … ?

2. Evaluate the way the technology would be supported. 3. Recognize implementation considerations about how the

technology as a business driver is consistent with what the organization is doing and experiencing.

4. Technology is reviewed every 90 days by the CIO Advisory Board after experimental use with customers and presented to the President’s Council on an as-needed basis.

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5. Establish responsive organizational dynamism with cultural assimilation; that is, recognize the instability of technol- ogy and that there are no guarantees to planned outcomes; instead, promote business units to understand the concept of “forever prototyping.”

Thus, Siemens was faced with the challenge of cultural assimi- lation, which required dramatic changes in thinking and business life cycles. This process resembles Bradley and Nolan’s (1998) Sense and Respond—the ongoing sensing of technology opportunities and responding to them dynamically. This process disturbs traditional and existing organizational value chains and therefore represents the need for a cultural shift in thinking and doing. Deasy, using technology as the change variable, began the process of reinventing the operation of many traditional value chains.

Siemens provides us with an interesting case study for responsive organizational dynamism because it had so many diverse companies (in over 190 countries) and over 425,000 employees. As such, Siemens represents an excellent structure to examine the importance of cul- tural assimilation. Deasy, as a corporate CIO, had a counterpart in Asia/Australia. Both corporate CIOs reported to a global CIO in Germany, the home office of Siemens. There was also a topic-centered CIO responsible for global security and application-specific planning software. This position also reported directly to the global CIO. There were regional and local CIOs who focused on specific geographical areas and vertical lines of business and operating company CIOs. This organization is shown in Figure 8.5.

Deasy’s operation represents one portion (although the most quickly changing and growing) of Siemens worldwide. Thus, the issue of globalization is critical for technologies that are scalable beyond regional operating domains. Standardization and evaluations of tech- nology often need to be ascertained at the global level and as a result introduce new complexities relating to cultural differences in business methods and general thinking processes. Specifically, what works in one country may not work the same way in another. Some of these matters can be legally based (e.g., licensing of software or assumptions about whether a technology is legally justified). To a large extent, solv- ing legal matters relating to technology is easier than cultural ones.

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Cultural assimilation matters about technology typically occur in global organizations with respect to acceptability of operational norms from one country to another. This becomes a particularly difficult situa- tion when international firms attempt to justify standards. At Siemens, Deasy introduced three “standards” of technology that defined how it could be used across cultures and communities of practice:

1. Corporate services: These are technologies that are required to be used by the business units. There are central service charges for their use as well.

2. Mandatory services: Everyone must comply with using a par- ticular type of application; that is, mandatory software based on a specific type of application. For example, if you use a Web browser, it must be Internet Explorer.

3. Optional: These are technologies related to a specific business and used only within a local domain. There may be a preferred solution, but IT is not required to use it.

This matrix of standards allows for a culture to utilize technolo- gies that are specific to its business needs when justified. Standards at Siemens are determined by a series of steering committees, starting at the regional level, that meet two to three times annually. Without question, implementing standards across cultures is, as Deasy phrased it, “a constant wrestling match which might need to change by the time

Siemens Global CIO (Germany)

Corporate CIO Americas (Deasy)

Corporate CIO Asia/Australia

Regional CIOs Regional CIOsOperatingCompany CIO Operating

Company CIO

Topic Centered CIO

Figure 8.5 siemens’ CIo organization.

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a standard is actually reached.” This is why strategic integration is so important given the reality that technology cannot always be controlled or determined at senior levels. Organizations must be able to dynami- cally integrate technology changes parallel to business changes.

Deasy’s longer-term mission was to provide a community of CIOs who could combine the business and technology challenges. It was his initial vision that the CIO of the future would be more involved than before with marketing and value chain creation. He felt that “the CIO community needed to be detached from its technology-specific issues or they would never be a credible business partner.” It was his intent to establish organizational learning initiatives that helped CIOs “seize and succeed,” to essentially help senior management by creating vision and excitement, by establishing best practices, and by learning better ways to communicate through open discourse in communities of practice.

Three years after his initial work, I reviewed the progress that Deasy had made at Siemens. Interestingly, most of his initiatives had been implemented and were maturing—except for the role of e-business strategy. I discovered, after this period, that the organization thought that e-business was an IT responsibility. As such, they expected that the CIOs had not been able to determine the best business strategy. This was a mistake; the CIO could not establish strategy but rather needed to react to the strategies set forth by senior management. This means that the CIO was not able to really establish stand-alone strat- egies as drivers based on technology alone. CIOs needed, as Deasy stated, “to be a participant with the business strategist and to replace this was inappropriate.” This raises a number of questions:

1. Did this occur because CIOs at Siemens do not have the edu- cation and skills to drive aspects of business strategy?

2. Did the change in economy and the downfall of the dot.coms create a negative feeling toward technology as a business driver?

3. Are CEOs not cognizant enough about uses of technology, and do they need better education and skills to better under- stand the role of technology?

4. Is the number of communities of practice across the organiza- tion integrated enough so that IT can effectively communicate

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and form new cultures that can adapt to the changes brought about by emerging technologies?

5. Is there too much impatience with the evolution of tech- nology? Does its assimilation in an organization the size of Siemens simply take too long to appreciate and realize the returns from investments in technology?

I believe that all of these questions apply to some extent and are part of the challenges that lie ahead at Siemens. The company has now ini- tiated a series of educational seminars designed to provide more busi- ness training for CIOs, which further emphasizes the importance of focusing on business strategy as opposed to just technology. It could also mean the eventual establishment of a new “breed” of CIOs who are better educated in business strategy. However, it is inappropri- ate for non-IT managers to expect that the CIOs will be able to handle strategy by themselves; they must disconnect e-business as solely being about technology. The results at Siemens only serve to strengthen the concept that responsive organizational dynamism requires that cultural assimilation occur within all the entities of a company.

Aftermath

Dana Deasy left Siemens a few years after this case study was com- pleted. During that time, the executive team at Siemens realized that the CIO alone could not provide business strategy or react quickly enough to market needs. Rather, such strategy required the integra- tion of all aspects of the organization, with the CIO only one part of the team to determine strategic shifts that lead or use components of technology. Thus, the executives realized that they needed to become much better versed in technology so that they also could engage in strategic conversations. This does not suggest that executives needed technology training per se, but that they do need training that allows them to comment intelligently on technology issues. What is the best way to accomplish this goal? The answer is through short seminars that can provide executives with terminology and familiarize them

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with the processes their decisions will affect. The case also raised the question whether a new wave of executives would inevitably be required to move the organization forward to compete more effec- tively. While these initiatives appear to make sense, they still need to address the fundamental challenges posed by technology dynamism and the need to develop an organization that is positioned to respond (i.e., responsive organizational dynamism). We know from the results of the Ravell case that executives cannot be excluded; however, the case also showed that all levels of the organization need to be involved. Therefore, the move to responsive organizational dynamism requires a reinvention of the way individuals work, think, and operate across multiple tiers of management and organizational business units. This challenge will continue to be a difficult but achievable objective of large multinational companies.

ICAP

This second case study focuses on a financial organization called ICAP, a leading money and securities broker. When software development exceeded 40% of IT activities, ICAP knew it was time to recognize IT as more than just technical support. Stephen McDermott provided the leadership, leaving his role as CEO of the Americas at ICAP to become CEO of the Electronic Trading Community (ETC), a new entity focused solely on software development. This IT community needed to be integrated with a traditional business model that was undergoing significant change due to emerging technologies, in this specific case the movement from voice to electronic trading systems.

This case study reflects many aspects of the operation of responsive organizational dynamism. From the strategic integration perspec- tive, ICAP needed to understand the ways electronic trading could ultimately affect business strategy. For example, would it replace all voice-related business interactions, specifically voice trading? Second, what would be the effect on its culture, particularly with respect to the way the business needed to be organizationally structured? This study focuses on the role of the CEO as a pioneer in reexamining his own biases, which favored an old-line business process, and for developing

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a realization to manage a major change in business strategy and orga- nizational philosophy. Indeed, as McDermott stated, “It was the challenge of operating at the top, yet learning from the bottom.” This sentiment essentially reflects the reality of a management dilemma. Could a CEO, who, without question, had substantial knowledge of securities trading, learn to lead a technology-driven operation for which he had little knowledge and experience?

To better understand the impact of technology on the business of ICAP, it is important to have some background information. Since 1975, the use of technology at ICAP was limited to operations of the back office type. Brokers, the front-end or sales force of a trading busi- ness, communicated with customers via telephone. As such, process- ing transactions was always limited to the time necessary to manually disseminate prices and trading activity over the phone to a securities trader. However, by 1997 a number of technological advancements, particularly with the proliferation of Internet-based communication and the increased bandwidth available, enabled brokers and dealers to communicate bidirectionally. The result was that every aspect of the trade process could now be streamlined, including the ability for the trader to enter orders directly into the brokers’ trading systems. The technological advancements and the availability of capital in the mid- 1990s made it difficult to invest in computer operations. Specifically, the barriers to investing in technology had been high as developing proprietary trading systems and deploying a private network were all costly. The market of available products was scarce, filled with rela- tively tiny competitors with little more than a concept than an inte- grated product that could do what a company like ICAP needed to do to maintain its competitive position. The existing system, called the ICAP Trading Network, application was far from a trading sys- tem that would compete against the newer emerging technologies. The goal was to develop a new trading system that would establish an electronic link between the back office systems of ICAP and its clients. The system would need to be simple to use as the traders were not necessarily technology literate. It would need to be robust, include features that were specific to the markets, and easily installed and distributed. In addition, as ICAP decided to fund the entire project, it would have to be cost effective and not burden the other areas of the business. As competitive systems were already being introduced, the

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new system needed to be operational within 3 to 6 months for ICAP to remain competitive.

McDermott recognized that designing a new product would require that IT developers and business matter experts learn to work together. As a result of this realization, a representative from the operation was selected to see if a third-party developer could modify an existing product. After exploring and evaluating responses, the search team concluded that off-the-shelf solutions, prohibitive in cost, were not available that would meet the critical timing needs of the business. However, during the period when IT and the business users worked together, these groups came to realize that the core components of its own trading system could be modified and used to build the new system. This realization resulted from discussions between IT and the business users that promoted organizational learning. This process resembles the situation in the Ravell study, in which I concluded that specific events could accelerate organizational learning and actually provide an opportunity to embed the process in the normal discourse of an organization. I also concluded that such learning starts with individual reflective practices and understanding how both factions, in this case IT and the business community, can help each other in a common cause. In the case of Ravell, it was an important relocation of the business that promoted integration between IT and the busi- ness community. At ICAP, the common cause was about maintaining competitive advantage.

The project to develop the new electronic trading application was approved in August 1999, and the ETC was formed. The new entity included an IT staff and selected members from the business com- munity, who moved over to the new group. Thus, because of technol- ogy dynamism, it was determined that the creation of a new product established the need for a new business entity that would form its own strategic integration and cultural assimilation. An initial test of the new product took place in November, and it successfully executed the first electronic trade via the Internet. In addition to their design responsibility, ETC was responsible for marketing, installing, and training clients on the use of the product. The product went live in February 2000. Since its introduction, the ETC product has been modified to accommodate 59 different fixed-income products, serving more than 1,000 users worldwide in multiple languages.

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While the software launch was successful, McDermott’s role was a challenge, from coordinating the short- and long-term goals of ETC with the traditional business models of ICAP to shifting from management of a global financial enterprise to management of an IT community. The ICAP case study examines the experiences and per- ceptions 1 year after the launch of the new entity.

The first most daunting result after a year of operations was the significant growth of technology uses in the business. Initially, McDermott noted that electronic trading was about 40% of opera- tions and that it had grown over 60%. He stated that ETC had become without question the single most important component of the ICAP international business focus. The growth of electronic trad- ing created an accelerated need for transformation within ICAP and its related businesses. This transformation essentially changed the balance between voice or traditional trading and electronic trading. McDermott found himself responsible for much of this transforma- tion and was initially concerned whether he had the technical exper- tise to manage it.

McDermott admitted that as a chief executive of the traditional ICAP business, he was conservative and questioned the practicality and value of many IT investments. He often turned down requests for more funding and looked at technology as more of a supporter of the business. As I explain in Chapter 3, IT as a supporter will always be managed based on efficiencies and cost controls. McDermott’s view was consistent with this position. In many ways, it was ironic that he became the CEO of the electronic component of the business. Like many CEOs, McDermott initially had the wrong impression of the Internet. Originally looking at it as a “big threat,” he eventually realized from the experience that the Internet was just another way of communicating with his clients and that its largest contribution was that it could be done more cost-effectively, thus leading to higher profits.

One of the more difficult challenges for McDermott was develop- ing the mission for ETC. At the time of the launch of the new product, this mission was unclear. With the assistance of IT and the business community, the mission of ETC has been developing dynamically; the business is first trying to protect itself from outside competition. Companies like IBM, Microsoft, and others might attempt to invade

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the business market of ICAP. Thus, it is important that ETC con- tinue to produce a quality product and keep its competitive edge over more limited competitors that are software-based organizations only. The concept of a dynamic mission can be correlated to the fundamen- tal principles of responsive organizational dynamism. In fact, it seems rather obvious that organizations dealing with emerging technolo- gies might need to modify their missions to parallel the accelerated changes brought about by technological innovation. We certainly see this case with ICAP, for which the market conditions became volatile because of emerging electronic trading capacities. Why, then, is it so difficult for organizations to realize that changing or modifying their missions should not be considered that unusual? Perhaps the approach of ICAP in starting a completely separate entity was correct. However, it is interesting that this new organization was operating without a consistent and concrete mission.

Another important concept that developed at ETC was that technology was more of a commodity and that content (i.e., the dif- ferent services offered to clientele) was more important. Indeed, as McDermott often stated, “I assume that the technology works, the real issue is the way you intend to implement it; I want to see a compa- ny’s business plan first.” Furthermore, ETC began to understand that technology could be used to leverage ICAP businesses in areas that they had never been able to consider before the advent of the technol- ogy and the new product. McDermott knew that this was a time, as Deasy often stated, to “seize and succeed” the moment. McDermott also realized that organizational learning practices were critical for ideas to come from within the staff. He was careful not to require staff to immediately present a formal new initiative, but he allowed them to naturally develop a plan as the process became mature. That is one of the reasons that ETC uses the word community in its name. As he expressed it to me during a conversation:

Now that is not my mandate to grow into other areas of opportunity, my initial responsibility is always to protect our businesses. However, I will not let opportunities go by which can help the business grow, especially things that we could never do as a voice broker. It has been very exciting and I can see ICAP becoming a considerably larger company than we have been historically because of our investment in technology.

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McDermott also was challenged to learn what his role would be as a chief executive of a software technology organization. In the early stages, he was insecure about his job because for the first time he knew less than his workers about the business. Perhaps this provides organizational learning practitioners with guidance on the best way of getting the CEO engaged in the transformative process; that is, getting the CEO to understand his or her role in an area in which typically he or she does not have expertise. McDermott represented an executive who reached that position coming up through the ranks. Therefore, much of his day-to-day management was based on his knowledge of the business—a business that he felt he knew as well as anyone. With technology, and its effect as technological dynamism, CEOs face more challenges, not only because they need to manage an area they may know little about but also because of the dynamic aspects of technology and the way it causes unpredictable and acceler- ated change. McDermott realized this and focused his attention on discovering what his role needed to be in this new business. There was no question in McDermott’s mind that he needed to know more about technology, although he also recognized that management was the fundamental responsibility he would have with this new entity:

[Although] I was insecure at the beginning I started to realize that it does not take a genius to do my job. Management is management, and whether you manage a securities brokering firm or you manage a deli or manage a group of supermarkets or an IT or an electronic company, it is really about management, and that is what I am finding out now. So whether I am the right person to bring ETC to the next level is irrelevant at this time. What is more important is that I have the skills that are necessary to manage the business issues as opposed to the tech- nological ones.

However, McDermott did have to make some significant changes to operate in a technology-based environment. ETC was now des- tined to become a global organization. As a result, McDermott had to create three senior executive positions to manage each of the three major geographic areas of operation: North America, Europe, and Asia. He went from having many indirect reports to having just a few. He needed four or five key managers. He needed to learn to trust that they were the right people, people who had

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the ability to nurture the parts of each of their respective divi- sions. “What it leaves now is being a true CEO,” he stated, “and that means picking your people, delegating the responsibility and accepting that they know the business.” Thus, we see technology dynamism actually realigning the reporting structure and social discourse of the company.

My presentation in previous chapters focused on helping orga- nizations transform and change. Most important in organizational learning theories is the resistance to change that most workers have, particularly when existing cultural norms are threatened. ICAP was no exception to the challenges of change management. The most sig- nificant threat at ICAP was the fear that the traditional voice broker was endangered. McDermott understood this fear factor and pre- sented electronic trading not as replacement but rather a supplement to the voice broker. There was no question that there were certain areas of the business that lent themselves more to electronic trading; however, there are others that will never go electronic or at least pre- dominantly electronic. Principles of responsive organizational dyna- mism suggest that accelerated change becomes part of the strategic and cultural structure of an organization. We see both of these com- ponents at work in this case.

Strategically, ICAP was faced with a surge in business opportuni- ties that were happening at an accelerated pace and were, for the most part, unplanned, so there was little planned activity. The business was feeling its way through its own development, and its CEO was pro- viding management guidance, as opposed to specific solutions. ICAP represents a high-velocity organization similar to those researched by Eisenhardt and Bourgeois (1988) and supports their findings that a democratic, less power-centralized management structure enhances the performance of such a firm. From a cultural assimilation perspec- tive, the strategic decisions are changing the culture and requiring new structures and alignments. Such changes are bound to cause fears.

As a result of recognizing the inevitable changes that were becom- ing realities, McDermott reviewed the roles and responsibilities of his employees on the brokering side of the business. After careful analy- sis, he realized that he could divide the brokers into three different divisions, which he branded as A, B, and C brokers. The A brokers were those who were fixed on the relational aspect of their jobs, so

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voice interaction was the only part of their work world. Such indi- viduals could do things in the voice world that electronic means could not reach. They were personal experts, if you will, who could deal with clients requiring a human voice. Thus, the A broker would exist as long as the broker wanted to work—and would always be needed because a population of clients wants personal support over the phone. This is similar to the opposition to the Internet in which we find that some portion of the population will never use e-commerce because they prefer a live person. The B broker was called the hybrid bro- ker—an individual who could use both voice and electronic means. Most important, these brokers were used to “convert” voice-based cli- ents into electronic ones. As McDermott explained:

Every day I see a different electronic system that someone is trying to sell in the marketplace. Some of these new technologies are attempting to solve problems that do not exist. I have found that successful systems address the content more than the technology. Having a relationship for many of our customers is more important. And we can migrate those relationships from voice to electronic or some sort of a hybrid combi- nation. The B brokers will end up with servicing some combination of these relationships or migrate themselves to the electronic system. So I believe they have nothing to fear.

The C brokers, on the other hand, represented the more average voice brokers who would probably not have a future within the busi- ness. They would be replaced by electronic trading because they did not bring the personal specialization of the A broker. The plight of the C broker did raise an important issue about change management and technological dynamism: Change will cause disruption, which can lead to the elimination of jobs. This only further supported the fears that workers had when faced with dynamic environments. For McDermott, this change would need to be openly discussed with the community, especially for the A and B brokers, who in essence would continue to play an important role in the future of the business. C brokers needed to be counseled so that they could appropriately seek alternate career plans. Thus, honesty brings forth trust, which inevita- bly fosters the growth of organizational learning. Another perspective was that the A and B brokers understood the need for change and

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recognized that not everyone could adapt to new cultures driven by strategic integration, so that they understood why the C broker was eliminated.

In Chapter 2, I discussed the dilemma of IT as a “marginalized” component of an organization. This case study provides an oppor- tunity to understand how the traditional IT staff at ICAP made the transition into the new company—a company in which they repre- sented a direct part of its success. As noted, ICAP considered the IT department as a back office support function. In the new orga- nization, it represented the nucleus or the base of all products and careers. Hence, McDermott expected ETC employees to be tech- nology proficient—no longer were IT people just coders or hardware specialists—he saw technology people as lawyers, traders, and other businesspeople. He related technology proficiency in a similar way that his business used to view an master’s degree in business (MBA) in the late 1980s. This issue provides further support for the cultural assimilation component of responsive organizational dynamism. We see a situation in which the discrepancy between who is and is not a technology person beginning to dwindle in importance. While there is still clear need for expertise and specialization, the organization as a whole has started the process of educating itself on the ways in which technology affects every aspect of its corporate mission, operations, and career development.

ICAP has not been immune to the challenges that have faced most technology-driven organizations. As discussed in Chapter 2, IT proj- ects typically face many problems in terms of their ability to complete projects on time and within budget. ICAP was also challenged with this dilemma. Indeed, ICAP had no formal process but focused on the criterion of meeting the delivery date as the single most impor- tant issue. As a result, McDermott was attempting to instill a new culture committed to the importance of what he called the “real date of delivery.” It was a challenge to change an existing culture that had difficulty with providing accurate dates for delivery. As McDermott suggested:

I am learning that technology people know that there is no way that they can deliver an order in the time requested, but they do not want to disappoint us. I find that technology people are a different breed from

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the people that I normally work with. Brokers are people looking for immediate gratification and satisfaction. Technology people, on the other hand, are always dedicated to the project regardless of its time commitment.

McDermott was striving to attain a mix or blend of the traditional culture with the technology culture and create a new hybrid organiza- tion capable of developing realistic goals and target dates. This process of attainment mirrors the results from the Ravell case, which resulted in the formation of a new hybrid culture after IT and business staff members were able to assimilate one another and find common needs and uses for technology and the business.

McDermott also understood his role as a leader in the new orga- nization. He realized early on that technology people are what he called more “individualistic”; that is, they seemingly were reluctant to take on responsibility of other people. They seemed, as McDermott observed, “to have greater pleasure in designing and creating some- thing and they love solving problems.” This was different from what CEOs experienced with MBAs, who were taught more to lead a group as opposed to being taught to solve specific problems. Yet, the integra- tion of both approaches can lead to important accomplishments that may not be reachable while IT and non-IT are separated by depart- mental barriers.

Ultimately, the cultural differences and the way they are managed lead to issues surrounding the basis of judging new technologies for future marketing consideration. McDermott understood that this was a work in progress. He felt strongly that the issue was not technology, but that it was the plan for using technology competitively. In other words, McDermott was interested in the business model for the tech- nology that defined its benefits to the business strategically. As he put it, “Tell me how you are going to make money, tell me what you can do for me to make my life easier. That is what I am looking at!” While McDermott felt that many people were surprised by his response, he believed its reality was taken too much for granted. During the dot. com era, too many investors and businesses assumed that technologi- cal innovation would somehow lead to multiples of earnings—that simply did not happen. Essentially, McDermott realized that good technology was available in many places and that the best technology

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is not necessarily the one that will provide businesses with the highest levels of success.

Judging new technologies based on the quality of the business plan is an effective method of emphasizing the importance of why the entire organization needs to participate and understand technology. This inevitably leads to questions about the method in which ROI is or should be measured. The actual measurement of ROI for ICAP was remarkably simple yet effective. There were four methods of deter- mining ROI. The first and most significant was whether the technol- ogy would increase volume of trades along the different product lines. The second was the amount in dollars of the securities being traded. That is, did technology provide a means for clients to do larger dollar trades? The third factor could be an increase in the actual number of clients using the electronic system. The fourth might be alleviating existing bottlenecks in the voice trading process, whether it was a legal issue or the advantage provided by having electronic means. We see here that some of the ROI factors ware direct and monetary. As expected methods, the first and second were very much direct mone- tary ways to see the return for investing in electronic trading systems. However, as Lucas (1999) reminded us, many benefits derived from IT investments are indirect, and some are impossible to measure. We see this with the third and fourth methods. Increasing the number of clients indirectly suggested more revenue but did not guarantee it. An even more abstract benefit was the improvement of throughput, what is typically known as improved efficiency in operations.

While all of the accomplishments of ICAP and McDermott seem straightforward, they were not accomplished without challenges; perhaps the most significant was the approach, determination, and commitment that were needed by the executive team. This chal- lenge is often neglected in the literature on organizational learn- ing. Specifically, the executive board of ETC needed to understand what was necessary in terms of funding to appropriately invest in the future of technology. To do that, they needed to comprehend what e-business was about and why it was important for a global business to make serious investments in it to survive. In this context, then, the executive board needed to learn about technology as well and found themselves in a rather difficult position. During this period, McDermott called in an outside consultant who could provide a

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neutral and objective opinion. Most important was to define the issue in lay terms so that board members could correlate it with their traditional business models. Ultimately, the learning consisted of understanding that technology and e-commerce were about expand- ing into more markets that ICAP could not reach using traditional approaches. There was a realization that ICAP was too focused on its existing client base as opposed to reaching out for new ones— and there was also the reverse reality that a competitor would figure out a strategy to reach out to the client base of ICAP. What is also implied in expanding one’s client base is that it means going outside one’s existing product offerings. This had to be carefully planned as ICAP did not want to venture outside what it was—an intermediary brokering service. So, expansion needed to be carefully planned and discussed first among the executive members, then presented as a challenge to the senior management, and so on.

This process required some modifications to the organizational learning process proposed by such scholars as Nonaka and Takeuchi (1995). Specifically, their models of knowledge management do not typically include the executive boards; thus, they are not considered a part of the learning organization. The ICAP case study exposes the fact that their exclusion can be a serious limitation, especially with respect to the creation of responsive organizational dynamism. In previous chapters, I presented a number of management mod- els that could be used to assist in developing and sustaining orga- nizational learning. They focused fundamentally on the concept of whether such management should be top down, bottom up, or, as Nonaka and Takeuchi suggested, “middle-up-down.” I laid out my case for a combination of all of them in a specific order and process that could maximize each approach. However, none of these models really incorporates the outside executive boards that have been chal- lenged to truly understand what technology is about, their approach to management, and what their overall participation should be in organizational learning.

Perhaps the most significant historical involvement of executive boards was with the Y2K (Year 2000) event. With this event, execu- tive boards mandated that their organizations address the potential

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technology crisis at the turn of the century. My CEO interviews verified that, if anything, the Y2K crisis served to educate execu- tive boards by forcing them to focus on the issue. Boards became unusually involved with the rest of the organization because inde- pendent accounting firms, as outside objective consultants, were able to expose the risks for not addressing the problem. The handling of e-commerce by ICAP was in many ways similar but also sug- gests that executive boards should not always wait for a crisis to occur before they get involved. They also must be an important component of organizational learning, particularly in responsive organizational dynamism. While organizational learning fosters the involvement of the entire community or workers, it also needs advocates and sup- porters who control funding. In the case of ICAP, organizational learning processes without the participation of the executive board ultimately would not have been successful. The experience of ICAP also suggests that this educational and learning process may need to come from independent and objective sources, which integrates another component of organizational learning that has not been effectively addressed: the role of outside consultants as a part of a community of practice. Figure 8.6 depicts the addition of the ICAP ETC executive board and outside consultants in the organizational learning management process.

The sequential activities that occurred among the different com- munities are shown in Table 8.1. While Table 8.1 shows the sequen- tial steps necessary to complete a transformation toward strategic integration and cultural assimilation, the process is also very iterative. Specifically, this means that organizations do not seamlessly move from one stage to another without setbacks. Thus, transformation depends heavily on discourse as the main driver for ultimate organi- zational evolution.

Figure 8.7 shows a somewhat messier depiction of organizational learning under the auspices of responsive organizational dynamism. The changes brought on by dynamic interactions foster top-down, mid- dle-up-down, and bottom-up knowledge management techniques— all occurring simultaneously. This level of complex discourse creates a number of overlapping communities of practice that have similar, yet

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unique, objectives in learning. These communities of practice overlap at certain levels as shown in Figure 8.8.

As stated, organizational learning at the executive levels tends to be ignored in the literature. At ICAP, an important community of practice emerged that created a language discourse essential to its overall success in dealing with technological dynamism brought on by technological innovation in electronic communications. Language

ICAP ETC Executive Board

CEO

Senior Management

Overall changes to corporate mission Financial Commitments Approve Major Organizational Changes–form ETC

Independent Consultants

Specific skills in technology strategy Objective analysis of business realignment Education of Executive Board

Initiator of change Knowledge and strategic management Organizational change agent

Individual reflective practice, tacit knowledge of how to actually implement changes at the individual and group levels

Middle Management

Operations

Buy in Modify strategic plans based on discourse and knowledge of specific areas of the business

Buy in Modify implementation plans based on discourse and knowledge of how the business operates

Discourse and learning at the organizational level, non-event specific. ICAP board focused on impact of technology on trading operations.

Senior management team meets and determines strategy and organization for creating new corporate entity.

Middle managers determine how and when operations will be changed. �is includes personnel changes and development of specific implementation schedules through group discourse.

Operations personnel work with middle management to determine change in organization structure and duties and responsibilies of new and old positions.

Advisement on E-commerce business opportunities

Figure 8.6 ICAP eTC management tiers.

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Table 8.1 ICAP—steps to Transformation

sTeP leARnInG enTITy(s) leARnInG ACTIvITy

1 Ceo Americas Initiates discourse at board level on approaches to expanding electronic trading business

2 executive board Decides to create separate corporate entity eTC to allow for the establishment of a new culture

3 outside consultant e-commerce discourse, ways in which to expand the domain of the business

4 executive board Discussion of corporate realignment of mission, goals, and objectives

5 Ceo/senior management establishes strategic direction with senior management 6 senior management/

middle management Meet to discuss and negotiate details of the procedures to

implement 7 Middle management/

operations communities Meet with operations communities to discuss impact on

day-to-day processes and procedures

CEO Americas

Executive Board

Consultants

Senior Management

Middle Management

Operations

Discourse initiated

Interactive Discussions

Questions and responses

Objective advice and education

Objective advice and education

Rollout of new organization and

strategies

New ideas and adjustments

Discourse on “how” to

implement

Adjustments as a result of discourse with operations

community

Meetings and discussions on

day-to-day operations

Operations adjustments based on reflective practices

Figure 8.7 ICAP—Responsive organizational dynamism.

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was critical at this level; ICAP is a U.K.-based organization and as such has an international board. As McDermott explained:

As you know, from travelling anywhere around the world, cultures are different. And even the main office for our company, ICAP in England, and even with the English, we are separated by a common language, as we often say. There is a very, very different culture everywhere in the world. I will tell you that information technology in our company is separated from electronic trading—there is a difference.

Thus, McDermott’s challenge was to establish a community that could reach consensus not only on strategic issues but also on the very nomenclature applied to how technology was defined and procedures adopted among the international organizations within ICAP. That is why outside consultation could be effective as it provided independent and objective input that could foster the integration of culture-based concepts of technology, strategy, and ROI. Key to understanding the role of executive communities of practice is their overall importance to organizational learning growth. Very often we have heard, “Can we create productive discourse if the executive team cannot discuss and agree on issues themselves?” Effectively, ICAP created this com- munity to ensure consistency among all the levels within the business. Consistent with the responsive organizational dynamism arc, learn- ing in this community was at the “system” or organizational level as opposed to based on specific events like Y2K. These concerns had a broader context, and they affected both short- and long-term issues of business strategy and culture.

CEO Americas

Executive Board

Consultants

Discourse initiated

Interactive Discussions

Questions and responses

Objective advice and education

Objective advice and education

Figure 8.8 ICAP—Community of practice.

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Another community of practice was the operations management team, which was the community responsible for transforming strategy into a realistic plan of strategic implementation. This team consisted of three levels (Figure 8.9). We see in this community of practice that the CEO was common to both this community and the executive community of practice. His participation in both provided the consis- tency and discourse that pointed to three valuable components:

1. The CEO could accurately communicate decisions reached at the board level to the operations management team.

2. The operations team could provide important input and sug- gestions to the CEO, who could then provide this informa- tion to the executive community.

3. The CEO interacted in different ways between the two com- munities of practice. This was critical because the way things were discussed, the language used, and the processes of con- sensus were different in each community.

The operations management community was not at the detailed level of implementation; rather, it was at the conceptual one. It needed to

CEO Americas

Senior Management

Middle Management

Rollout of new organization and

strategies

New ideas and adjustments

Discourse on “how” to

implement

Adjustments as a result of discourse with operations

community

Figure 8.9 ICAP—Community of practice interfaces.

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222 InFormAtIon teChnology

embrace the strategic and cultural outcomes discussed at the executive community, suggest modifications if applicable, and eventually reach consensus within the community and with the executive team. The operations management community, because of its conceptual per- spectives, used more organizational learning methods as opposed to individual techniques. However, because of their relationship with operations personnel, they did participate in individual reflective practices. Notwithstanding their conceptual nature, event-driven issues were important for discussion. That is why middle management needed to be part of this community, for without their input, concep- tual foundations for implementing change may very well have flaws. Middle management participated to represent the concrete pieces and the realities for modifications to conceptual arguments. As such, middle managers could indirectly affect the executive board commu- nity since their input could require change in the operations man- agement community, which in turn could foster the need for change requests back to the board. This process provided the very essence of why communities of practice need to work together, especially with the dynamic changes that can occur from technological innovations.

The third community of practice at ICAP was at the operations or implementation tier. It consisted of the community of staff that needed to transition conceptual plans into concrete realities. To ensure that conceptual ideas of implementation balanced with the concrete events that needed to occur operationally, middle managers needed to be part of both the operations management and implementation communities as shown in Figure 8.10.

Because of the transitory nature of this community, it was important that both organizational learning and individual learning occurred simultaneously. Thus, it was the responsibility of middle managers to provide the transition of organizational-based ideas to the event and concrete level so that individuals understood what it ultimately meant to the operations team. As one would expect, this level operated on individual attainment, yet through the creation of a community of practice, ICAP could get its operations members to begin to think more at the conceptual level. This provided management with the opportunity to discuss conceptual and system-level ideas with opera- tions personnel. Operations personnel could review them and, under a managed and controlled process, could reach consensus. That is,

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changes required by the implementation community could be rep- resented to the operations management community through middle management. If middle management could, through discourse and language, reach consensus with the operations management commu- nity, then the CEO could bring them forth to the executive commu- nity for further discussion. We can see this common thread concept among communities of practice as a logical process among tiers of operations and management and one that can foster learning matura- tion as identified in the responsive organizational dynamism arc. This is graphically shown in Figure 8.11.

Figure 8.11 shows the relationships among the three communities of practice at ICAP and how they interacted, especially through upward feedback using common threads of communication. Thus, multiple communities needed to be linked via common individuals to maintain threads of communication necessary to support responsive organiza- tional dynamism and learning across organizational boundaries.

Another important observation is the absence of independent consul- tants from the operations management and implementation communi- ties of practice. This does not suggest that consultants were not needed or used by these communities. The independent consultant in the executive community provides organizational-level learning, as opposed to the con- sultant who is, for example, a specialist in database design or training.

This case study provides an example of how an international firm dealt with the effects of technology on its business. The CEO, Stephen McDermott in this case, played an important role, using many forms

Middle Management

Operations

Meetings and discussions on

day-to-day operations

Operations adjustments based on reflective practices

Figure 8.10 Middle-management community of practice at ICAP.

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224 InFormAtIon teChnology

of responsive organizational dynamism, in managing the organiza- tion through a transformation. His experience fostered the realiza- tion that CEOs and their boards need to reinvent themselves on an ongoing basis. Most important, this case study identified the number of communities of practice that needed to participate in organiza- tional transformation. The CEO continued to have an important role; in many ways, McDermott offered some interesting advice for other chief executives to consider:

1. The perfect time may or may not exist to deal with changes brought on by technology. The CEO may need to just “dive in” and serve as a catalyst for change.

2. Stay on course with the fundamentals of business and do not believe everything everyone tells you; make sure your busi- ness model is solid.

3. Trust that your abilities to deal with technology issues are no different from managing any other business issue.

CEO Americas

Executive Board Consultants

CEO Americas

Senior Management

Middle Management

Middle Management

New ideas and adjustments

Operations

Adjustments as a result of discourse with operations community

Executive Community of Practice

Operations Management Community of Practice

Implementation Community of Practice

Figure 8.11 ICAP—CoP common threads.

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As a result of the commitment and the process for adapting tech- nology at ICAP, it has realized many benefits, such as the following:

Protection of tacit knowledge:• By incorporating the existing trading system, ICAP was able to retain the years of experi- ence and expertise of its people. As a result, ICAP devel- oped an electronic system that better served the needs of broker users; this ability gave it an advantage over competi- tor systems. Integrated use:• The combination of the new system and its compatibility with other ICAP legacy systems enabled the organization to continue to service the core business while increasing access for new clients. This resulted in a reduction of costs and an increase in its user base. Transformation of tacit knowledge to explicit product knowledge:• By providing an infrastructure of learning and strategic inte- gration, ICAP was able to bridge a wide range of its employ- ees’ product knowledge, particularly of those outside IT with a specific understanding of trading system design, and to transform their tacit knowledge into explicit value that was used to build on to the existing trading systems. Flexibility: • Because multiple communities of practice were formed, IT and non-IT cultures were able to assimilate. As a result, ICAP was able to reduce its overall development time and retain the functionality necessary for a hybrid voice and electronic trading system. Expansion: • Because of the assimilation of cultures, ICAP was able to leverage its expertise so that the design of the electronic system allowed it to be used with other third-party trading systems. For example, it brought together another trading system from ICAP in Europe and enabled concurrent development in the United States and the United Kingdom. Evolution: • By incorporating existing technology, ICAP con- tinued to support the core business and gradually introduced new enhancements and features to serve all of its entities. Knowledge creation: • By developing the system internally, ICAP was able to increase its tacit knowledge base and stay current with new trends in the industry.

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ICAP continues to evolve its organization as a result of its adop- tion of technology and its implementation of responsive organiza- tional dynamism. The company reinvented itself again. McDermott has become the chief operating officer (COO) for what are now three business units in the Americas; all specific business lines, yet linked by their integrated technologies and assimilated cultures. In addi- tion, ICAP purchased a competitor electronic trading product and as a result was in the process of integrating their combined technolo- gies and assimilating them into a new organization. Business revenues rose from $350 million 4 years ago to over $1 billion in 2002. The company also had more than 2,800 staff members and operated from 21 offices worldwide. Much has been attributed to their investment in electronic trading systems and other emerging technologies.

Five Years Later

I returned to meet with Stephen McDermott almost 5 years after our original case study. Many of the predictions about how technology would affect the business had indeed become reality. In 2010, technol- ogy at ICAP had become the dominant component of the business. The C brokers had all but disappeared, with the organization now con- sisting of two distinct divisions: voice brokers and electronic brokers. The company continued to expand by acquiring other smaller compet- itors in the technology space. The electronic division now consisted of three distinct divisions from these acquisitions, with ETC just one of those divisions. In effect, the expansion led to more specialization and leveraging of technology to capture larger parts of various markets.

Perhaps the unseen reality was how quickly technology became a commodity. As McDermott said to me, “Everbody [our competi- tors] can do it; it’s now all about your business strategy.” While the importance of strategy was always part of McDermott’s position, the transition from product value to market strategy was much more trans- formative on the organization’s design and how it approached the mar- ket. For example, the additional regulatory controls on voice brokering actually forced many brokers to move to an electronic interface, which reduces liability between the buyer and the broker. McDermott also emphasized how “technology has created overnight businesses,” forc- ing the organization to understand how technology can provide new

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competitive advantages that otherwise did not exist. Today, 50% of the trading dollars, some $2 trillion, occurs over electronic technology- driven platforms. Undoubtedly, these dynamic changes brought on by technology dynamism continue to challenge ICAP on how they stra- tegically integrate new opportunities and how the organization must adapt culturally with changes in individual roles and responsibilities.

HTC

HTC (a pseudoacronym) is a company that provides creative business services and solutions. The case study involving HTC demonstrates that changes can occur when technology reports to the appropriate level in an organization. This case study offers the example of a com- pany with a CEO who became an important catalyst in the successful vitalization of IT. HTC is a company of approximately 700 employees across 16 offices. The case involves studying the use of a new applica- tion that directly affected some 200 staff people.

The company was faced with the challenge of providing accurate billable time records to its clients. Initial client billings were based on project estimates, which then needed to be reconciled with actual work performed. This case turned out to be more complex than expected. Estimates typically represented the amount of work to which a client agreed. Underspending the budget agreed to by the client, however, could lead to lost revenue opportunities for the firm. For example, if a project was estimated at 20 hours but the actual work took only 15 hours, then most clients would seek an additional 5 hours of service because they had already budgeted 20 hours total. If the reconciliation between hours bud- geted and hours worked was significantly delayed, clients might lose their window of opportunity to spend the remaining 5 hours (in the example situation). Thus, the incapacity to provide timely reporting of this infor- mation resulted in the actual loss of revenue as well as upset clients. If cli- ents did not spend their allocated budget, they stood to lose the amount of the unused portion in their future budget allocations. Furthermore, clients had expectations that vendors were capable of providing accurate reporting, especially given that present-day technology could automate the recording and reporting of this information. Finally, in times of a tight economy, businesses tend to manage expenditures more closely and insist on more accurate record keeping than at other times.

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The objective at HTC was to transform its services to better meet the evolving changes of its clients’ business requirements. While the requirement for a more timely and accurate billing system seems straightforward, it became a greater challenge to actually implement than it otherwise seemed.

The first obstacle for HTC to overcome was the clash between this new requirement and the existing ethos or culture of the business. HTC provided creative services; 200 of its staff members were artisti- cally oriented and were uncomfortable with focusing on time-based service tracking; they were typically engrossed in the creative per- formance required by their clients. Although it would seem a simple request to track time and enter it each day, this projected change in business norms became a significant barrier to its actual implementa- tion. Project managers became concerned that reporting requirements would adversely affect performance and thus inevitably hurt the busi- ness. Efforts to use blunt force—do it or find another job—were not considered a good long-term solution. Instead, the company needed to seek a way to require the change while demonstrating the value of focusing on time management.

Many senior managers had thought of meeting with key users to help determine a workable solution, but they were cognizant of the fact that such interactive processes with the staff do not always lead to agreement on a dependable method of handling the prob- lem. This is a common concern among managers and researchers working in organizational behavior. While organizational learning theorists advocate this mediating, interactive approach, it may not render the desired results in time and can even backfire if staff mem- bers are not genuinely willing to solve the problem or if they attempt to make it seem too difficult or a bad idea. The intervention of the CEO of HTC together with the change in time reporting methods, directly involving IT, made a significant difference in overcoming the obstacle.

IT History at HTC

When I first interviewed the CEO, I found that she had little direct interaction with the activities of the IT department. IT reported to the CFO, as in many companies, because it was seen as an operational

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support department. However, the CEO subsequently became aware of certain shortfalls associated with IT and with its reporting structure. First, the IT department was not particularly liked by other depart- ments. Second, the department seemed incapable of implementing software solutions that could directly help the business. Third, the CFO did not possess the creativity beyond accounting functions to provide the necessary leadership needed to steer the activities of IT in a more fruitful direction. As a result, the CEO decided that the IT department should report directly to her. She was also concerned that IT needed a more senior manager and hired a new CTO (chief technology officer).

Interactions of the CEO

My research involving 40 chief executives showed that many execu- tives are unsure about what role they need to take with their chief IT managers. However, the CEO of HTC took on the responsibility to provide the financial support to get the project under way. First, the CEO made it clear that a solution was necessary and that appropri- ate funds would be furnished to get the project done. Second, the new CTO was empowered to assess the needs of the business and the staff and to present a feasible solution for both business and cultural adaptation needs.

The CEO was determined to help transform the creative-artistic service business into one that would embrace the kinds of controls that were becoming increasingly necessary to support clients. Addressing the existing lag in collecting time records from employees, which directly affected billing revenue, seemed like the logical first step for engaging the IT department in the design and implementation of new operating procedures and cultural behavior.

Because middle managers were focused on providing services to their clients, they were less concerned with the collection of time sheets. This need was a low priority of the creative workers of the firm. Human resources (HR) had been involved in attempting to address the problem, but their efforts had failed. Much of this difficulty was attributed to an avoidance by middle managers of giving ultimatums as a solution; that is, simply demanding that workers comply. Instead, management subsequently became interested in a middle-ground

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approach that could possibly help departments realize the need to change and to help determine what the solution might be. The ini- tial thinking of the CEO was to see if specialized technology could be built that would (a) provide efficiency to the process of recording time and (b) create a form of controls that would require some level of compliance.

With the involvement of the CEO, the embattled IT depart- ment was given the authority to determine what technology could be employed to help the situation. The existing application that had been developed by the IT department did not provide the kind of ease of use and access that was needed by operations. Previous attempts to develop a new system, without the intervention of the CEO, had failed for a number of reasons. Management did not envision the potential solution that software was capable of delivering. It was not motivated in getting the requisite budget support; no one was in position to champion it, to allocate the needed budget. Ultimately, management individuals were not convinced of the importance of providing a bet- ter solution.

The Process

The new CTO determined that there was a technological solution that could provide greater application flexibility, while maintaining its necessary integrity, through the use of the existing e-mail system. The application would require staff to enter their project time spent before signing on to the e-mail system. While this procedure might be seen as a punishment, it became the middle-ground solution for securing compliance without dramatically dictating policy. There was initial rejection of the procedure by some of the line managers, but it was with the assistance of the CEO, who provided the necessary support and enforcement, that the new procedure took hold. This enforcement became crucial when certain groups asked to be excluded from the process. The CEO made it clear that all departments were expected to comply.

The application was developed in 3 months and went into pilot implementation. The timely delivery of the application by the IT department gave IT its first successful program implementation and helped change the general view of IT among its company colleagues.

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It was the first occasion in which IT had a leadership role in guiding the company to a major behavioral transformation. Another positive outcome that resulted from the transition occurred in the way that resistance to change was managed by the CTO. Simply put, the cre- ative staff was not open to a structured solution. The CTO’s response was to implement a warning system instead of immediately disallow- ing e-mail access. This procedure was an important concession as it allowed staff and management to deal with the transition, to meet them halfway.

Transformation From the Transition

After the pilot period, the application was implemented firmwide. The results of this new practice have created an interesting internal transformation: IT is now intimately engaged in working on new enhancements to the time-recording system. For instance, a “digital dashboard” is now used to measure performance against estimates. More important, however, are the results of the new application. The firm has shown substantial increases in revenue because its new time- recording system enabled it to discover numerous areas in which it was underbilling its clients. Its clients, on the other hand, are happier to receive billing statements that can demonstrate more accurately than before just how time was spent on their projects. Hence, the IT-implemented solution proved beneficial not only to the client but also to the firm.

Notwithstanding the ultimate value of utilizing appropriate tech- nology and producing measurable outcomes, IT has also been able to assist in developing and establishing a new culture in the firm. Staff members are now more mindful and have a greater sense of cor- porate-norm responsibility than they did before. They have a clearer understanding of the impact that recording their time will have and of how this step ultimately contributes to the well-being of the business. Furthermore, the positive results of the new system have increased attention on IT spending. The CEO and other managers seek new ways in which technology can be made to help them; this mindset has been stressed further down to operating departments. The methods of IT evaluation have also evolved: There is now a greater clarification of technology benefits, a better articulation of technology problems,

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less trial and error, and more time spent on understanding how to use the technology better.

Another important result from this project has been the cascad- ing effect of the financial impact. The increased profits have required greater infrastructure capacity. A new department was created with five new business managers whose responsibility it is to analyze and interpret the time reports so that line managers, in turn, can think of ways to generate greater profit through increased services. The project in essence has merged the creative performance of the firm with new business initiatives, resulting in a higher ROI.

In analyzing the HTC case study, we see many organizational learning techniques that were required to form a new community that could assimilate multiple cultures. However, while the organiza- tion saw the need, it could not create a process without an advocate. This champion was the CEO, who had the ability to make the salient organizational changes and act as a catalyst for the natural processes that HTC hoped to achieve. This case also provides direction on the importance of having the right resource to lead IT. At HTC, this person was the CTO; in actuality, this has little bearing on the over- all role and responsibilities that were needed at HTC. At HTC, it became more apparent to the CEO that she had the wrong individual running the technology management of her firm. Only the CEO in this situation was able to foster the initial steps necessary to start what turned out to be a more democratic evolution of using technol- ogy in the business.

Companies that adapt to technological dynamism find that the existing leadership and infrastructure may need to be enhanced or replaced as well as reorganized, particularly in terms of reporting structure. This case supports the notion that strategic integration may indeed create the need for more cultural assimilation. One question to ask, certainly to avoid if possible, is why the CEO waited so long to make the changes. This was not a situation of a new CTO who inher- ited resources. Indeed, the former CTO was part of her regime. We must remember that CEOs typically concentrate on driving revenue. They hope that what is considered “back-end” support issues will be handled by other senior managers. Furthermore, support structures

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are measured differently and from a specific frame of reference. I have found that CEOs intervene in supporter departments only when there are major complaints that threaten productivity, customer support, sales, and so on. The other threat is cost, so CEOs will seek to make supporter departments more efficient. These activities are consistent with my earlier findings regarding the measurement and role of sup- porter departments.

In the case of HTC, the CEO became more involved because of the customer service problems, which inevitably threatened revenues. On her review of the situation, she recognized three major flaws in the operation:

The CFO was not in a position to lead the organizational • changes necessary to assimilate a creative-based department. Technology established a new strategy (strategic integration), • which necessitated certain behavioral changes within the organization (cultural assimilation). The creative department was also key to make the organizational transition possible. The current CTO did not have the management and business • skills that were necessary to facilitate the integration of IT with the rest of the organization.

HTC provides us with an interesting case of what we have defined as responsive organizational dynamism, and it bears some parallels to the Ravell study. First, like Ravell, the learning process was trig- gered by a major event. Second, the CTO did not dictate assimi- lation but rather provided facilitation and support. Unlike Ravell, the CEO of the organization was the critical driver to initiate the project. Because of the CEO’s particular involvement, organiza- tional learning started at the top and was thus system oriented. At the same time, the CTO understood that individual event-driven learning using reflective practices was critical to accomplish orga- nizational transformation. In essence, the CTO was the interme- diary between organizational-level and individual-level learning. Figure 8.12 depicts this relationship.

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Five Years Later

HTC has been challenged because of the massive changes that adver- tising companies have faced over this timeframe, particularly with the difficulty of finding new advertising revenue sources for their clients. The CEO has remained active in technology matters, and there has also been turnover in the CTO role at the company. The CEO has been challenged to find the right fit—a person who can understand not only the technology but also the advertising business. With media companies taking over much of the advertising space, the CEO clearly recognizes the need to have a technology-driven market strategy. Most important is the dilemma of how to transform what was once a “paper” advertising business to what has become a lower-cost media market. “Advertising companies need to do more business just to keep the same revenue stream and that is a big challenge in today’s volatile mar- ket,” the CEO stated. The time-recording system has gone through other changes to provide what is known as value-added services not necessarily tied to time effort but rather the value of the output itself.

CEO

Middle Management

Creative Operations

CTO

Learning Facilitator

Organizational and System Level Learning

Organizational and Individual Level Learning

Individual Learning

Figure 8.12 HTC—Role of the CTo as an intermediary.

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The experience at HTC shows the importance of executive partici- pation, not just sponsorship. Many technology projects have assumed the need for executive sponsorship. It is clear to me that this position is obsolete. If the CEO at HTC had not become involved in the prob- lem 5 years ago, then the organization would not be in the position to embrace the newest technology dynamism affecting the industry. So, the lessons learned from this case, as well as from the Ravell case, are that all levels of the organization must be involved, and that executives are not sacred. Responsive organizational dynamism and the use of organizational learning methods to develop staff remain key concepts for adapting to market changes and ensuring economic survival.

Summary

This chapter has provided three case studies that show the ways tech- nology and organizational learning operate and lead to results through performance. The Siemens example provided us with an opportunity to see a technology executive formulate relationships, form multiple communities of practice, and create an infrastructure to support responsive organizational dynamism. This case provides a method in which IT can offer a means of handling technology as new informa- tion and, through the formation of communities of practice, it can generate new knowledge that leads to organizational transformation and performance.

The case study regarding ICAP again shows why technology, as an independent variable, provides an opportunity, if taken, for an inter- national firm to move into a new competitive space and improve its competitive advantage. ICAP was only successful because it under- stood the need for organizational learning, communities of practice, and the important role of the CEO in facilitating change. We also saw why independent consultants and executive boards need to par- ticipate. ICAP symbolizes the ways in which technology can change organizational structures and cultural formations, the very heart of why we need to understand responsive organizational dynamism. The creation of a new firm, ETC, shows us the importance of these changes. Finally, it provided us with an example of how technology

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came to the forefront of an organization and became the major driver of performance.

HTC, on the other hand, described two additional features of how responsive organizational dynamism can change internal processes that lead to direct returns. The CEO, as in the ICAP case, played an important yet different role. This case showed that the CTO could also be used to facilitate organizational learning, becoming the nego- tiator and coordinator between the CEO, IT department, and cre- ative user departments.

All three of these cases reflect the importance of recognizing that most technology information exists outside the organization and needs to be integrated into existing cultures. This result is consistent with the findings of Probst, Büchel, and Raub (1998), which showed that long-term sustained competitive advantage must include the “incor- poration and integration of information available outside the borders of the company” (p. 247). The reality is that technology, as an inde- pendent and outside variable, challenges organizations in their abili- ties to absorb external information, assimilate it into their cultures, and inevitably apply it to their commercial activities as a function of their existing knowledge base.

These case studies showed that knowledge creation most often does not get created solely by individuals. It is by using communities of practice that knowledge makes its way into the very routines of the organization. Indeed, organizational learning must focus on the trans- formation of individual skills into organizational processes that gen- erate measurable outcomes. Probst, Büchel, and Raub’s (1998) work also showed that the development of organizational knowledge is mediated via multiple levels. Walsh (1995) further supported Probst et al.’s findings that there are three structures of knowledge devel- opment in an organization. The first is at the individual level; inter- pretation is fostered through reflective practices that eventually lead to personal transformation and increased individual knowledge. The second structure is at the group level; individual knowledge of the group is combined into a consensus leading to a shared belief system. The third structure resides at the organizational level; knowledge ema- nates from the shared beliefs and the consensus of the groups, which creates organizational knowledge. It is important to recognize, how- ever, that organizational knowledge is not established or created by

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combining individual knowledge; this is a common error, particularly among organizational learning practitioners. Organizational knowl- edge must be accomplished through social discourse and common language interactions so that knowledge can be a consensus among the communities of practice.

Each of the case studies supported the formation of tiers of learn- ing and knowledge. The individuals in these cases all created multi- ple layers that led to structures similar to those suggested by scholars. What makes these cases so valuable is that technology represented the external knowledge. Technological dynamism forced the mul- tiple structures from individual-based learning to organizational- level learning, and the unique interactions among the communities in each example generated knowledge leading to measurable per- formance outcomes. Thus, as Probst and Büchel (1996) concluded, “Organizational learning is an increase in organizational knowledge base, which leads to the enhancement of problem-solving potential of a company” (p. 245).

However, these case studies also provide important information about the process of the interactions. Many tiered structures tend to be viewed as a sequential process. I have presented theories suggest- ing that knowledge management is conditioned either from the top down, middle-up-down, or bottom up. It has been my position that none of these processes should be seen as set procedures or meth- odologies. In each of these cases, as well as in the Ravell case, the flow of knowledge occurs differently and in some ways unique to the culture and setting of the organization. This suggests that each orga- nization must derive its own process, adhering more to the concept of learning, management, and outcomes, as opposed to a standard system of how and when they need to be applied. Table 8.2 summa- rizes the different approaches of organizational learning of the three case studies.

Such is the challenge of leaders who aspire to create the learning organization. Technology plays an important role because, in reality, it tests the very notions of organizational learning theories. It also creates many opportunities to measure organizational learning and its impact on performance. Indeed, technology is the variable that provides the most opportunity to instill organization learning and knowledge management in a global community.

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The case studies also provided an understanding of the transforma- tional process and the complexities of the relationships between the different learning levels. It is not a single entity that allows a company to be competitive but the combination of knowledge at each of the different tiers. The knowledge that exists throughout a company is typically comprised of three components: processes, technology, and organization (Kanevsky & Housel, 1998). I find that, of these three components, technology is more variable than the others and, as stated many times in this book, at a dynamic and unpredictable fashion (that condition called technological dynamism). Furthermore, the technol- ogy component has direct effects on the other two. What does this mean? Essentially, technology is at the core of organizational learning and knowledge creation.

This chapter has shown the different ways in which technology has been valued and how, through organizational learning, tacit knowl- edge is transformed into explicit knowledge and used for competi- tive advantage. We have seen that not all of this value creation can be directly attributed to technology; in fact, this is rarely the case. Most

Table 8.2 summary of organizational learning Approaches

suBJeCT sIeMens ICAP/eTC HTC

Knowledge management participation

CIo as middle-up- down

Top-down from Ceo and bottom-up from operations

Top-down from Ceo and middle-up-down from CTo

Community of practices

President’s Council CFo

CIo advisory board

executive Board operations Management Implementation

Ceo/CTo CTo operations

Participating entities Presidents executive board Ceo CFos outside consultants CTo Global CIo Ceo Middle management Corporate CIos senior management Creative operations Regional CIos Middle management operating CIos operations Central CIos

Common thread Corporate CIo Ceo CTo senior management Middle management

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value derived from technology is indirect, and it must be recognized by management as maximizing outcomes. Two of the case studies looked at the varying roles and responsibilities of the CEO. I believe their involvement was critical. Indeed, the conclusions reached from the Ravell case showed further support that the absence of the CEO will limit results. Furthermore, the CEO was crucial to sustaining organizational learning and the responsive organizational dynamism infrastructure.

Much has been written about the need to link learning to knowl- edge and knowledge to performance. This process can sometimes be referred to as a value chain. Kanevsky and Housel (1998) created what they called a “learning-knowledge-value spiral” comprised of six spe- cific steps to creating value from learning and ultimately changing product or process descriptions as shown in Figure 8.13.

I have modified Figure 8.13 to include “technology”; that is, how technology affects learning, learning affects knowledge, and so on. Table 8.3 is a matrix that reflects the specific results in each phase for the three case studies.

Table 8.3 reflects the ultimate contribution that technology made to the learning-knowledge-value chain. I have also notated the ROI generated from each investment. It is interesting that two of the three

Learning

Knowledge

Process

ProductValue

Change in product/process

description

Competition Market

Figure 8.13 The learning-knowledge-value cycle. (From Kanevsky, v., & Housel, T. In G. v. Krogh, J. Roos, & D. Kleine (eds.), Knowing in firms: Understanding, managing and measuring knowledge, pp. 240–252, london: sage, 1998.)

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2 4

0

In F

o r

m A

t Io

n t

e C

h n

o l

o g

y Table 8.3 IT Contribution to the learning-Knowledge-value Chain

CoMPAny TeCHnoloGy leARnInG GeneRATeD KnoWleDGe PRoCess PRoDuCT vAlue

siemens e-business Communities of practice Consensus across multiple communities on how to relate tacit knowledge about technology to strategic business processes

90-Day “reinvention” life-cycle method

Consolidated e-commerce Web sites providing consistency of product and service offerings

leveraging of same clients; providing multiple product offerings to same client base

RoI: Indirect ICAP electronic trading Ceo/executive

committee Ability to provide and

integrate business and technology knowledge to create new product

establish new company, eTC, to support cultural assimilation and evolution

electronic trading Created most competitive product in the financial industry

leveraging independent consultants

Infiltration into new markets

Group learning RoI: Direct Multiple communities of

practice HTC e-mail Ceo at organizational

level; individual learning using reflective practices

understanding how to integrate IT department with creative management group

establish new procedures for using e-mail to record client billable hours

new client billing system

Clients happy

More competitive Additional revenues RoI: Direct

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cases generated identifiable direct revenue streams from their invest- ment in technology.

This chapter has laid the foundation for Chapter 9, which focuses on the ways IT can maximize its relationship with the community and contribute to organizational learning. To accomplish this objec- tive, IT must begin to establish best practices.

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243

9 TowaRD besT pRaCTiCes

Introduction

The previous chapters provided the foundation for the formation of “best practices” to implement and sustain responsive organizational dynamism (ROD). First, it is important to define what we mean by best practices and specify which components comprise that definition. Best practices are defined as generally accepted ways of doing spe- cific functions or processes by a particular profession or industry. Best practices, in the context of ROD, are a set of processes, behaviors, and organizational structures that tend to provide successful foun- dations to implement and sustain organizational learning. I defined responsive organizational dynamism as the disposition of a company to respond at the organizational level to the volatility of advancing technologies—technologies that challenge the organization to man- age a constant state of dynamic and unpredictable change. Second, best practices are those that need to be attributed to multiple commu- nities of practice as well as to the different professions or disciplines within a learning organization.

However, these multiple tiers of best practices need to be integrated and to operate with one another to be considered under the rubric. Indeed, best practices contained solely within a discipline or com- munity are limited in their ability to operate on an organization-wide level. It is the objective of this chapter, therefore, to formulate a set of distinctive yet integrated best practices that can establish and support ROD through organizational learning. Each component of the set of best practices needs to be accompanied by its own maturity arc, which defines and describes the stages of development and the dimensions that comprise best practices. Each stage defines a linear path of con- tinued progress until a set of best practices is reached. In this way, organizations can assess where they are in terms of best practices and determine what they need to do to progress. Ultimately, each maturity

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arc will represent a subset of the overall set of best practices for the organization.

The discipline that lays the foundation for ROD is information technology (IT). Therefore, the role of the chief IT executive needs to be at the base of organizational best practices. As such, I start build- ing the organizational best practices model with the chief IT execu- tive at the core.

Chief IT Executive

I use the title “chief IT executive” to name the most senior IT indi- vidual in an organization. Because of the lack of best practices in this profession, a number of different titles are used to describe this job. While these titles are distinct among themselves, I have found that they are not consistently followed in organizations. However, it is important to understand these titles and their distinctions, partic- ularly because an organizational learning practitioner will encoun- ter them in practice. These titles and roles are listed and discussed next:

Chief information officer (CIO): This individual is usually the most senior IT executive in an organization, although not every organization has such a person. The CIO is not necessarily the most technical of people or even someone who has come through the “ranks” of IT. Instead, this individual is consid- ered an executive who understands how technology needs to be integrated within the organization. CIOs typically have other general IT executives and managers who report directly to them. As shown in the Siemens case study, there can be a number of alternate levels of CIOs, from corporate CIOs to local CIOs of a company division. For the purposes of this discussion, I look at the corporate CIO, who is considered part of the senior executive management team. My research on chief executive officer (CEO) perceptions of technology and business strategy showed that only a small percentage of CIOs report directly to the CEO of their organization, so it would be incorrect to generalize that they report to the most senior executive. In most cases, the CIO reports to the

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chief operating officer or the chief financial officer (CFO). As stated, the role of the CIO is to manage information so that it can be used for business needs and strategy. Technology, then, is considered a valuable part of knowledge management from a strategic perspective as opposed to just a technical one.

Chief technology officer (CTO): This individual, unlike the CIO, is very much a senior technical person. The role of the CTO is to ensure that the organization is using the best and most cost- effective technology to achieve its goals. One could argue that the CTO holds more of a research-and-development type of position. In many organizations, the CTO reports directly to the CIO and is seen as a component of the overall IT infra- structure. However, some companies, like Ravell and HTC, only have a CTO and view technology more from the techni- cal perspective.

Chief knowledge officer (CKO): This role derives from library management organizations because of the relevance of the word knowledge. It also competes somewhat with the CIO when organizations view technology from a perspective that relates more to knowledge. In larger organizations, the CKO may report directly to the CIO. In its purest role, the CKO is responsible for developing an overall infrastructure for managing knowledge, including intellectual capital, shar- ing of information, and worker communication. Based on this description, the CKO is not necessarily associated with technology but is more often considered part of the tech- nology infrastructure due to the relevance of knowledge to technology.

To define best practices for this function, it is necessary to under- stand the current information and statistics about what these people do and how they do it. Most of the statistical data about the roles and responsibilities of chief IT executives are reported under the auspices of the CIO. According to an article by Jerry Gregoire in CIO magazine in March 2002, 63% of IT executives held the title CIO, while 13% were CTOs; there were few to no specific statistics available on the title of CKO. This report further supported the claim that there is limited use of the CKO title and function in organizations at this time.

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From a structural point of view, 63% of IT organizations are cen- trally structured, while 23% are decentralized with a central reporting structure. However, 14% are decentralized without any central head- quarters or reporting structure. From a spending perspective, organi- zations spend most of their budgets on integrating technology into existing applications and daily processing (36% of budget); 26% is related to investments in emerging or new technologies, 24% is based on investing in e-commerce activities, and 24% is spent on customer relationship management (CRM), which is defined as applications that engage in assisting organizations to better understand and support their customer base; 25% is spent on staff development and retention.

Compensation of IT chief executives still comes predominantly from base salary, as opposed to bonus or equity positions with the company. This suggests that their role is not generally viewed as top management or based on a role as a partner in the business. This opinion was supported by the results of my CEO study discussed in Chapter 2. The issue of executive seniority can be determined on whether the chief IT executive is “corporate” driven or business unit driven. This means that some executives have corporate-wide respon- sibilities as opposed to a specific area or business unit. The issue of where IT departments provide value to the organization was discussed in Chapter 3, which showed that there are indeed different ways to manage and structure the role of IT. However, in general, corporate IT executives are responsible for IT infrastructure, shared technol- ogy services, and global technology architecture, while business unit CIOs concentrate on strategically understanding how to use applica- tions and processes to support their business units. This is graphically depicted in Figure 9.1.

From a best practices perspective, the following list has historically suggested what chief IT executives should be doing. The list empha- sizes team building, coaching, motivating, and mentoring as tech- niques for implementing these best practices.

Strategic thinking: Must understand the business strategy and competitive landscape of the company to apply technology in the most valuable way to the organization.

Industry expertise: Must have the ability to understand the prod- uct and services that the company produces.

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Create and manage change: Must have the ability to create change, through technology, in the operating and business pro- cesses of the organization to gain efficiency and competitive advantage.

Communications: Must have the ability to communicate ideas, to give direction, to listen, to negotiate, to persuade, and to resolve conflicts. Must be able to translate technical informa- tion to those who are not technologically literate or are outside IT. Chief IT executives also need to be comfortable speaking in public forums and in front of other executives.

Relationship building: Must have the ability to interface with peers, superiors, and customers by establishing and maintain- ing strong rapport, bond, and trust between individuals.

Business knowledge: Must have the ability to develop strong busi- ness acumen and have peripheral vision across all functional areas of the business.

Technology proficiency: Must have the knowledge to identify appro- priate technologies that are the most pragmatic for the busi- ness and can be delivered quickly at the lowest cost, produce an impact on the bottom line (return on investment, ROI), and have longevity.

Local Applications Business Level CIOs

Standard IT Applications

Shared IT Technology Services

IT Infrastructure

Corporate CIOs

Public Available Infrastructure (Internet, Portals, etc.)

Figure 9.1 Business-level versus corporate-level CIos.

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Leadership: Must be a visionary person, inspirational, influential, creative, fair, and open minded with individuals within and outside the organization.

Management skills: Must have the ability to direct and supervise people, projects, resources, budget, and vendors.

Hiring and retention: Must have the ability to recognize, culti- vate, and retain IT talent.

While this list is not exhaustive, it provides a general perspective, one that appears generic; that is, many management positions in an orga- nization might contain similar requirements. A survey of 500 CIOs conducted by CIO magazine (March 2002) rated the top three most important concerns among this community in terms of importance:

1. Communications: 70% 2. Business understanding: 58% 3. Strategic thinking: 46%

What is interesting about this statistic is that only 10% of CIOs identified technical proficiency as critical for their jobs. This finding supports the notion that CIOs need to familiarize themselves with busi- ness issues as opposed to just technical ones. Furthermore, the major- ity of a CIO’s time today has been recorded as spent communicating with other business executives (33%) and managing IT staffs (28%). Other common activities reported in the survey were as follows:

Operate the baseline infrastructure and applications• Act as technology visionary• Implement IT portions of new business initiatives• Design infrastructure and manage infrastructure projects• Allocate technology resources• Measure and communicate results• Serve as the company spokesperson on IT-related matters• Select and manage product and service providers• Recruit, retain, and develop IT staff• Participate in company and business unit strategy development•

These results further confirm that chief IT executives define best practices based on understanding and supporting business strategy.

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This survey also reported common barriers that chief IT executives have to being successful. The overarching barrier that most IT execu- tives face is the constant struggle between the business expectation to drive change and improve processes and at the same time reduce costs and complete projects faster. The detailed list of reported problems by rank was as follows:

1. Lack of key staff, skill sets, and retention: 40% 2. Inadequate budgets and prioritizing: 37% 3. Shortage of time for strategic thinking: 31% 4. Volatile market conditions: 22% 5. Ineffective communications with users: 18% 6. Poor vendor support and service levels and quality: 16% 7. Overwhelming pace of technological change: 14% 8. Disconnection with executive peers: 12% 9. Difficulty proving the value of IT: 10% 10. Counterproductive office politics: 6%

Chief IT executives also felt that their roles were ultimately influ- enced by two leading factors: (a) changes in the nature and capabilities of technology and (b) changes in the business environment, includ- ing marketplace, competitive, and regulatory pressures. This can be graphically viewed in Figure 9.2.

Figure 9.2 has a striking similarity to Figure 3.1 outlining ROD. That diagram represented technology as an independent variable

Technology Drivers

Business Environment

Strategic Options

Inspires Im po

ses

Figure 9.2 Chief IT executives—factors influencing strategic options.

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creating the need for ROD, which is composed of strategic integra- tion and cultural assimilation, as shown in Figure 9.3.

Figure 9.3 shows many similarities to Figure 9.2. The difference between these two diagrams defines what is missing from many best practices: the inclusion of organizational learning practices that would enable chief IT executives to better manage business and technology issues. In effect, if organizational learning techniques were included, they could reduce many barriers between business and IT. Thus, the solution to providing best practices for the IT community rests with the inclusion of organizational learning along the constructs of ROD.

Responsive Organizational

Dynamism

Technology Creates

Acceleration of events that require different

infrastructures and organizational processes

Symptoms and Implications

Strategic Integration

Cultural Assimilation

Requires

Organization Structures (System)

Individual Actions

Renegotiation of Relationship

Organizational Learning Techniques

Figure 9.3 RoD and organizational learning techniques.

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The inclusion of organizational learning is crucial because the best practices, as reported among the community of chief IT executives, has not produced the performance outcomes sought by chief execu- tives. I refer to Chapter 2, in which I first defined the IT dilemma. While many IT initiatives are credible, they often fall short of includ- ing critical business issues. As a result, IT project goals are not com- pletely attained. This suggests that the problem is more related to the process and details of how to better implement good ideas. As further support for this position, the Concours Group (an international exec- utive managing consulting organization) published a list of emerging roles and responsibilities that chief IT executives will need to under- take as part of their jobs in the near future (Cash & Pearlson, 2004):

Shared services leader: More companies are moving to the shared services model for corporate staff functions. CIOs’ experi- ences may be invaluable in developing and managing these organizations.

Executive account manager: More companies today are involv- ing the CIO in the management of relationships between the company and its customers.

Process leader: As companies move toward organizing around major business processes, a CIO is in a good role to temporar- ily lead this effort since applications and databases are among the business resources that must be revamped to implement process management.

Innovation leader: A CIO is starting to act as the innovation leader of the corporation when a company is seeking to achieve substantial improvements in process performance or operational efficiencies or to implement IT since innovation may center on the application of IT.

Supply chain executive: Purchasing, warehousing, and transpor- tation are among the most information-intensive activities undertaken by a business. As companies look to improve these overall processes, the CIO may become the most knowledge- able executive about the supply chain.

Information architect: Companies are recognizing the benefit of a consolidated view of customers, vendors, employees, and so on. CIOs are finding themselves taking on the leadership role

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of information architect by cultivating commitment and con- sensus around this challenging task.

Change leader: CIOs are playing an increasingly important role in business change management. Their role is in either direct change leadership (developing new business models) or, more often, indirect; that is, change process is behind the scenes (get other leaders to think about new possibilities).

Business process outsourcing leader: CIOs tend to have some of the most extensive experience in company outsourcing. This makes them a logical internal consultant and management practice leader in business process outsourcing.

These issues all suggest that the role of the chief IT executive is growing and that the need for these executives to become better inte- grated with the rest of their organizations is crucial for their success. Much more relevant, though, is the need for ROD and the role that the chief IT executive has as a member of the overall community. To create best practices that embrace organizational learning and foster ROD, a chief IT executive maturity arc needs to be developed that includes the industry best practices presented here integrated with organizational learning components.

The chief IT executive best practices arc is an instrument for assess- ing the business maturity of chief IT executives. The arc may evaluate a chief IT executive’s business leadership using a grid that measures competencies ranging from essential knowledge in technology to more complex uses of technology in critical business thinking. Thus, the chief IT executive best practices arc provides executives with a method of integrating technology knowledge and business by present- ing a structured approach of self-assessment and defined milestones.

The model measures five principal facets of a technology execu- tive: cognitive, organization culture, management values, business ethics, and executive presence. Each dimension or sector is measured in five stages of maturation that guide the chief IT executive’s growth. The first facet calls for becoming reflectively aware about one’s existing knowledge of technology and what it can do for the organization. The second calls for other centeredness, in which chief IT executives become

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aware of the multiplicity of technology perspectives available (e.g., other business views of how technology can benefit the organization). The third is comprehension of the technology process, in which a chief IT executive can begin to merge technology issues with business concepts and functions.

The fourth is stable technology integration, meaning that the chief IT executive understands how technology can be used and is resil- ient to nonauthentic sources of business knowledge. Stage 4 repre- sents an ongoing implementation of both technology and business concepts. The fifth stage is technology leadership, in which chief IT executives have reached a stage at which their judgment on using technology and business is independent and can be used to self- educate from within. Thus, as chief IT executives grow in knowl- edge of technology and business, they can become increasingly more other centered, integrated, stable, and autonomous with the way they use their business minds and express their executive leadership and character.

Definitions of Maturity Stages and Dimension Variables in the Chief IT Executive Best Practices Arc

Maturity Stages

1. Technology competence and recognition: This first stage repre- sents the chief IT executive’s capacity to learn, conceptualize, and articulate key issues relating to cognitive technological skills, organization culture/etiquette, management value sys- tems, business ethics, and executive presence needed to be a successful chief IT executive in business.

2. Multiplicity of technology perspectives: This stage indicates the chief IT executive’s ability to integrate multiple points of view about technology from others in various levels of workplace hierarchies. Using these new perspectives, the chief IT execu- tive augments his or her skills with the technology necessary for career success, expands his or her management value sys- tem, is increasingly motivated to act ethically, and enhances his or her executive presence.

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3. Comprehension of technology process: Maturing chief IT executives accumulate increased understanding of workplace cooperation, competition, and advancement as they gain new cognitive skills about technology and a facility with business culture/etiquette, expand their management value system, perform business/ workplace actions to improve ethics about business and tech- nology, and develop effective levels of executive presence.

4. Stable technology integration: Chief IT executives achieve inte- gration with the business community when they have levels of cognitive and technological ability, organization etiquette/ culture, management values, business ethics, and execu- tive presence appropriate for performing job duties not only adequately but also competitively with peers and even higher- ranking executives in the workplace hierarchy.

5. Technology leadership: Leadership is attained by the chief IT executive when he or she can employ cognitive and tech- nological skills, organization etiquette, management, a sense of business ethics, and a sense of executive presence to compete effectively for executive positions. This chief IT executive is capable of obtaining increasingly executive-level positions through successful communication and workplace performance.

Performance Dimensions

1. Technology cognition: Concerns skills specifically related to learning, applying, and creating resources in IT, which include the necessary knowledge of complex operations. This dimen- sion essentially establishes the CIO as technically proficient and forms a basis for movement to more complex and mature stages of development.

2. Organizational culture: The knowledge and practice of proper etiquette in organizational settings with regard to dress, tele- phone and in-person interactions, punctuality, work comple- tion, conflict resolution, deference, and other protocols in workplace hierarchies.

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3. Management values: Measures the individual’s ability to articu- late and act on mainstream organizational values credited with shaping the work ethic: independent initiative, dedication, honesty, and personal identification with career goals based on the organization’s philosophy of management protocol.

4. Business ethics: Reflects the individual’s commitment to the education and professional advancement of other employees in technology.

5. Executive presence: Involves the chief IT executive’s view of the role of an executive in business and the capacity to succeed in tandem with other executives. Aspects include a devotion to learning and self-improvement, self-evaluation, the ability to acknowledge and resolve business conflicts, and resilience when faced with personal and professional challenges.

Figure 9.4 shows a graphical view of the chief IT executive best practices arc. Each cell in the arc provides the condition for assess- ment. The complete arc is provided in Figure 9.5.

Chief Executive Officer

When attempting to define CEO best practices, one is challenged with the myriad material that attempts to determine the broad, yet important, role of the CEO. As with most best practices, they are typically based on trends and percentages of what most CEOs do— assuming of course that the companies they work for are successful. That is, if their organization is successful, then their practices must be as well. This type of associative thinking leads to what scholars often term false generalizations. Indeed, these types of inadequate methods lead to false judgments that foster business trends that are misinter- preted as best practices. Reputation is what would better define these trends, which usually after a period of time can become ineffective and unpopular. We must also remember the human element of suc- cess: Certain individuals succeed based on natural instincts and tal- ent, hard work and drive, and so on. These components of success should not be confused with theories that are scalable and replicable to practice; that is what best practices need to accomplish.

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This section focuses on technology best practices of the CEO. These best practices are based on my research as well as other positions and facts that provide a defendable context of how and why they appear to be effective. However, as with the chief IT executive model, best practices cannot be attained without an arc that integrates mature organizational learning and developmental theories. Many of the CEO best practices reconcile with my interviews with CEOs and, in particular, with the two CEO case studies (of ICAP and HTC) discussed in Chapter 8. Other published definitions and support are referenced in my presentation.

In February 2002, Hackett Benchworking, a part of Answerthink Corporation, issued its best practices for IT. Their documentation stated:

In compiling its 2002 best practices trend data, Hackett evaluated the effectiveness (quality and value) and efficiency (cost and productivity) of the information technology function across five performance dimensions: strategic alignment with the business; ability to partner with internal and external customers; use of technology; organization; and processes.1

Their findings as they apply to the CEO function provide the follow- ing generalizations:

There was an 85% increase in the number of CIOs who • reported directly to the CEO. This increase would suggest that CEOs need to directly manage the CIO function because of its importance to business strategy. CEOs supporting outsourcing did not receive the cost-cut-• ting results they had hoped. In fact, most broke even. This suggests that CEOs should not view outsourcing as a cost- cutting measure but rather foster its use if there are identifi- able business benefits.

1 Hackett Benchmarking has tracked the performance of nearly 2,000 complex, global organizations and identified key differentiators between world-class and average com- panies across a diverse set of industries. In addition to information technology, staff functions studied include finance, human resources, procurement, and strategic decision making, among others. Study participants comprised 80% of the Dow Jones Industrials, two thirds of the Fortune 100, and 60% of the Dow Jones Global Titans Index. Among the IT study participants are Agilent Technologies, Alcoa, Capital One Financial Corporation, Honeywell International, Metropolitan Life Insurance, SAP America, and TRW. (From PR Newswire, February 2002.)

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t

o w

A r

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e s

t p

r A

C t

IC e

s

2 5

7

DeveloPMenTAl DIMensIons oF MATuRInG

DIMensIon sKIll

TeCHnoloGy CoMPeTenCe AnD

ReCoGnITIon

MulTIPlICITy oF TeCHnoloGy

PeRsPeCTIves CoMPReHensIon oF

TeCHnoloGy PRoCess sTABle TeCHnoloGy

InTeGRATIon TeCHnoloGy leADeRsHIP

Technology cognition

organization culture

Management values

Business ethics

executive presence

Figure 9.4 The chief IT executive best practices arc.

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DIMensIon vARIABle TeCHnoloGy CoMPeTenCe AnD

ReCoGnITIon MulTIPlICITy oF TeCHnoloGy

PeRsPeCTIves

Technology Cognition understands how technology operates in business. Has mastered how systems are developed, hardware interfaces, and the software development life cycle. Has mastery of hardware, compilers, run-time systems. Has core competencies in distributed processing, database development, object-oriented component architecture, and project management. Is competent with main platform operating systems such as unIx, WInDoWs, MAC. Has the core ability to relate technology concepts to other business experiences. Can also make decisions about what technology is best suited for a particular project and organization. Can be taught how to expand the use of technology and can apply it to other business situations.

understands that technology can have multiple perspectives. Able to analyze what are valid vs. invalid opinions about business uses of technology. Can create objective ideas from multiple technology views without getting stuck on individual biases. An ability to identify and draw upon multiple perspectives available from business sources about technology. Developing a discriminating ability with respect to choices available. Realistic and objective judgment, as demonstrated by the applicability of the technology material drawn for a particular project or task and tied to functional/pragmatic results.

organization Culture understands that technology can be viewed by other organizations in different ways. uses technology as a medium of communication. understands that certain technological solutions, Web pages, and training methods may not fit all business needs and preferences of the business. Has the ability to recommend/suggest technological solutions to suite other business needs and preferences

seeks to use technology as a vehicle to learn more about organization cultures and mindsets. strives to care about what others are communicating and embraces these opinions. Tries to understand and respect technologies that differ from own. understands basic technological needs of others.

Figure 9.5 The chief IT executive best practices arc—detail.

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CoMPReHensIon oF TeCHnoloGy PRoCess

sTABle TeCHnoloGy InTeGRATIon TeCHnoloGy leADeRsHIP

Has the ability to relate various technical concepts and organize them with non- technical business issues. Can operate with both automated and manual business solutions. Can use technology to expand reasoning, logic, and what-if scenarios. Ability to use the logic of computer programs to integrate the elements of non-technological tasks and business problems. Ability to discern the templates that technology has to offer in order to approach everyday business problems. This involves the hypothetical (inductive/ deductive) logical business skill.

Knowledge of technology is concrete, accurate, and precise, broad and resistant to interference from non-authentic business sources. Ability to resist or recover from proposed technology that is not realistic—and can recover resiliently.

Methods and judgment in a multidimensional business world is independent, critical discernment. Knowledge of technology and skills in technology can be transferred and can be used to self-educate within and outside of technology. Can use technology for creative purposes to solve business challenges and integrate with executive management views.

Can deal with multiple dimensions of criticism about technology. Can develop relationships (cooperative) that are dynamic and based on written communication and oral discourse. Ability to create business relations outside of technology departments. Has an appreciation of cyberspace as a communication space—a place wide open to dialogue (spontaneous), to give and take, or other than voyeuristic, one-sidedness. Ability to produce in teamwork situations, rather than solely in isolation.

loyalty and fidelity to relations in multiple organizations. Commitment to criticism and acceptance of multiple levels of distance and local business relationships. Ability to sustain non-traditional types of inputs from multiple sources.

Can utilize and integrate multidimensions of business solutions in a self-reliant way. Developing alone if necessary using other technical resources. Can dynamically select types of interdependent and dependent organizational relationships. Ability to operate within multiple dimensions of business cultures, which may demand self-reliance, independence of initiative, and interactive communications.

Figure 9.5 Continued.

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DIMensIon vARIABle TeCHnoloGy CoMPeTenCe

AnD ReCoGnITIon MulTIPlICITy oF TeCHnoloGy

PeRsPeCTIves

Management values Technology and cultural sensitivity. Global communication, education, and workplace use of technology can be problematic—subject to false generalizations and preconceived notions. Awareness of assumptions about how technology will be viewed by other organizations and about biases about types of technology (MAC vs. PC).

Can appreciate need to obtain multiple sources of information and opinion. The acceptance of multi- dimensional values in human character.

Business ethics using technology with honesty re: privacy of access and information. Development of ethical policies governing business uses of the Internet, research, intellectual property rights and plagiarism.

The use of information in a fair way—comparison of facts against equal sources of business information. Compassion for business information for which sources are limited because of inequality of technology access. Compassion for sharing information with other business units from a sense of inequality.

executive Presence Has accurate perception of one’s own potential and capabilities in relation to technology in the business—the technologically realizable executive self.

understands how other executives can view self from virtual and multiple perspectives. understands or has awareness of the construction of self that occurs in business. Focuses on views of other executives in multiple settings. understands that the self (through technology) is open for more fluid constructions, able to incorporate diverse views in multiple settings.

Figure 9.5 Continued.

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CoMPReHensIon oF TeCHnoloGy PRoCess

sTABle TeCHnoloGy InTeGRATIon TeCHnoloGy leADeRsHIP

Can operate within multiple dimensions of value systems and can prioritize multi- tasking events that are consistent with value priorities. Ability to assign value to new and diverse technology alternatives— integrating them within a system of pre-existing business and technology values.

Testing value systems in new ways due to technology is integrated with long-term values and goals for business achievement. some concepts are naturally persistent and endure despite new arenas in the technological era.

use of technology and business are based on formed principles as opposed to dynamic influences or impulses. Formed principles establish the basis for navigating through, or negotiating the diversity of business influences and impulses.

Consistent values displayed on multiple business communications, deliverables of content, and dedication to authenticity. Maintains consistency in integrating values within technology business issues.

Technology is a commitment in all aspects of value systems, including agility in managing multiple business commitments. Commitment to greater openness of mind to altering traditional and non-technological methods.

Technological creativity with self-defined principles and beliefs. Risk-taking in technology-based ventures. utilizing technology to expand one’s arenas of business freedom. exploring the business-liberating capacities of technology.

operationalizes technology to unify multiple components of the self and understands its appropriate behaviors in varying executive situations.

Has regulated an identity of self from a multiplicity of executive venues. Methods of business interaction creates positive value systems that generate confidence about operating in multiple business communities.

Acceptance and belief in a multidimensional business world of the self. Can determine comfortably the authenticity of other executives and their view of the self. Can confirm disposition independently from others’ valuations, both internally and from other organization cultures. Beliefs direct and control multi- dimensional executive growth.

Figure 9.5 Continued.

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CEOs have found that IT organizations that have central-• ized operations save more money, have fewer help-line calls than decentralized organizations, and do not sacrifice service quality. This suggests that the CEOs should consider less- business-specific support structures, especially when they conduct their business at multiple locations. CEOs are increasingly depending on the CIO for advice on • business improvements using technology. As a result, their view is that IT professionals need advanced business degrees. CEOs should know that consistent use of IT standards has • enabled firms to trim IT development costs by 41%, which has reduced costs for end-user support and training opera- tions by 17%. CEOs need to increase support for risk management. Only • 77% of average companies maintained disaster recovery plans.

As we can see from these generalizations, they are essentially based on what CEOs are doing and what they have experienced. Unfortunately, this survey addressed little about what CEOs know and exactly what their role should be with respect to overall manage- ment, participation, and learning of technology. These “best practices” are particularly lacking in the area of organizational learning and the abilities of the firm to respond to changing conditions as opposed to searching for general solutions. Let us look at each of these generaliza- tions and discuss what they lack in terms of organizational learning.

CIO Direct Reporting to the CEO

The fact that more CIOs are reporting directly to the CEO shows an escalation of their importance. But, what is more relevant as a best practice is what that relationship is about. Some report about how often they meet. What is more important is the content of the inter- actions. What should the CEOs know, how should the CEOs con- duct themselves? What management and learning techniques do they apply? How do they measure results? My CEO interview research exposed the fact that many CEOs simply did not know what they needed to do to better manage the CIO and what they needed to know in general about technology.

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Outsourcing

Outsourcing can be a tricky endeavor. In Chapter 3, I introduced the concept of technology as a driver and a supporter. I presented a model that shows how emerging technologies are initially drivers and need to be evaluated and measured using similar models embraced by marketing-oriented communities. I then showed how through matu- ration emerging technologies become supporters, behaving more as a commodity within the organization. I explained that only then can a technology be considered for outsourcing because supporter operations are measured by their economies of scale, reduced costs, increased productivity, or both (efficiency). Figure 9.6 shows that cycle.

Thus, what is missing from the survey information is the knowl- edge of where such technologies were with respect to this technology life cycle. Knowing this dramatically affects what the CEO should be expecting and what organizational learning concepts and factors are needed to maximize benefit to the organization.

Centralization Versus Decentralization of IT

The entire question of how IT should or should not be organized must be based on a business that implements ROD. ROD includes the component called cultural assimilation, which provides a process, using organizational learning, to help businesses determine the best IT struc- ture. To simply assume that centralizing operations saves money is far

Evaluation Cycle

Technology Driver

Driver Maturation

Support Status

Economies of

Scale

Replacement or Outsource

Mini Loop Technology Enhancements

Figure 9.6 Driver to supporter life cycle.

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too narrow; the organization may need to spend more money on a spe- cific technology in the short term to get long-term benefits. Where is this included in the best practices formula? My research has shown that more mature uses of technology in organizations require more decen- tralization of IT personnel within the business units. The later stages of IT organizational structure at Ravell supported this position.

CIO Needs Advanced Degrees

I am not sure that anyone could ever disagree with the value of advanced degrees. Nevertheless, the survey failed to provide content on what type of degree would be most appropriate. It also neglected to address the issue of what may need to be learned at the undergradu- ate level. Finally, what forms of education should be provided on the job? What exactly are the shortfalls that CIOs need to know about business? And, equally important is the consideration of what educa- tion and learning is needed by CEOs and whether should they be so dependent on advice from their CIOs.

Need for Standards

The need for standards is something that most organizations would support. Yet, the Siemens case study showed us that too much control and standardization can prove ineffective. The Siemens model allowed local organizations to use technology that was specific to their busi- ness as long as it could be supported locally. The real challenge is to have CEOs who understand the complexity of IT standards. They also need to be cognizant that standards might be limited to the structure of their specific organization structure, its business, and its geographical locations.

Risk Management

The survey suggested that CEOs need to support risk management because their backup recovery procedures may be inadequate. The question is whether the problem stems from a lack of support or from a lack of knowledge about the topic. Is this something that the chief IT executive needs to know, or is it just about the CEO’s unwill- ingness to spend enough funds? The best practice component of risk management must be broader and answer these questions.

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By contrast to the survey, we may consider a report issued by Darwin Research (“A CRM Success Story,” November 1, 2002), which cited the recommended best practices of Christopher Milliken, CEO of Boise Cascade Office Products. He offered the kind of in- depth view of best practices that I feel is needed to be consistent with my research on ROD. Milliken participated in the implementation of a large-scale CRM system needed to give his customers a good reason to choose Boise. The project required an investment of more than $20 million. Its objective was to provide customers with better service. At the time of the investment, Milliken had no idea what his ROI would be, only that the project was necessary to distinguish Boise Cascade from myriad competitors in the same industry.

After the successful implementation of the project, Milliken was now in a position to offer his own thoughts about technology-related best practices that a CEO might want to consider. He came up with these six:

1. The CEO must commit to a technology project: Milliken was keen to express the reasons why the CRM project was important; he was intimately involved with its design and made it clear that he had to be consulted should there be any delays in the project schedule. KPMG (a major consulting firm) was also hired as a consultant to help implement the schedule and was held to the same level of excellence. What Milliken accom- plished, significantly, was to show his interest in the project and his willingness to stay involved at the executive level. Milliken’s best practice here lies in his commitment, which is consistent with that of McDermott from ICAP and the CEO from HTC. They both realized, as Milliken did, that the CEO must have an active role in the project and not just allow the management team to get it done. Milliken, as did McDermott and the CEO of HTC, issued specific perfor- mance-related requirements to his employees and consultants. His participation sent a valuable message: The CEO is part of the supporting effort for the project and is also part of the learning process of the organization. Indeed, the situa- tion that Milliken faced and resolved (i.e., to jump in without knowing the expected returns of the project) is exemplary of

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the core tenets of ROD, which require the ability for an orga- nization to operate with dynamic and unpredictable change brought about by technology. In this case, the technology was crucial to distinguishing Boise Cascade, in the same way that electronic trading was for ICAP and the billing system was for HTC. Yet, all three of these situations required a certain behavior and practice from their CEO. Thus, the most impor- tant best practice lies in the commitment and learning to the learning organization format.

2. Think business first, then technology: To understand why a tech- nology is needed, there must first be a supporting business plan; that is, the business plan must drive the technology or support its use. This best practice concept is consistent with my research. Indeed, Dana Deasy from Siemens realized it after a 3-year investment in e-business, and McDermott clearly advocated the importance of a business plan over embellished technology. Another interesting and important result of the business plan was that it called for the creation of a centralized CRM system. Therefore, it became necessary to consolidate the separate business units at Boise into one corporate entity—providing central support and focus. This is another example of how ROD operates. The CRM proj- ect, through a validation process in a business plan, provided the strategic integration component of ROD. The strategy then influenced cultural assimilation and required a reorga- nization to implement the strategy or the new CRM system. Furthermore, Boise Cascade allowed its staff to experiment in the project, to make mistakes, without criticizing them. They were in effect implementing the driver-related concepts of technology. These driver concepts must be similar to the way organizations support their marketing activities, by which they accept a higher error ratio than when implementing a supporter activity. The CEO wanted everyone to give it their best and to learn from the experience. This position is a key best practice for the CEO; it promotes organizational learn- ing throughout the business.

3. Handcuff business and technology leaders to each other: Milliken understood that technology projects often fail because of a

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lack of communication between IT and other business enti- ties. The project represented many of the IT dilemmas that I discussed in Chapter 2, particularly relating to the new CRM system and its integration with existing legacy applications and, at the same time, creating a culture that could implement the business strategy. To address this, Milliken first appointed a new CIO to foster better communication. He also selected a joint project leader from the business side, thus creating a joint project leadership team. What Milliken did was to form a new community of practice that did not exist before the project. The project, as with Ravell, represented an event that fostered the creation of organizational learning opportunities. As with ICAP, they enlisted the support of executive-level consultants to help finalize the business plan and marketing strategy as well as assist with change management. What exactly did Milliken do that represents a best practice? From an organizational learning perspective, he created communi- ties of practice between IT and the business. That then is a true best practice for a CEO.

4. Get the show on the road: There was a not-to-be-questioned deadline that was instituted by Milliken. As I noted in Chapter 4, this type of management seems undemocratic, but it should not be confused with being nonparticipatory. Someone had to get this going and set expectations. In this case, both IT and business users were set to make things happen. Senior man- agement endorsed the project and openly stated that it repre- sented what could be a one-time opportunity to “do something of great magnitude” (Dragoon, 2002). From a best practices perspective, this means that the CEO can and should pro- vide the leadership to get projects done and that part of that leadership could be setting strategic dates. However, CEOs should not confuse this leadership with power-centralized management over IT-related projects. Communities of prac- tice still need to be the driving force for inevitable success in ROD. Another important factor was Milliken’s decision to create dual management over the project. Thus, Milliken was able to create an environment that required discourse between IT and the business.

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5. Win over the masses for massive changes: As stated, the business plan called for a reorganization of other business units. This also required executives to rethink job descriptions and titles in relation to new processes. It also eliminated six redundant management–level jobs. Milliken engaged employees in a massive “external–internal” marketing campaign. Employees participated in ad campaigns, and brochures were created for all staff. A video was also produced that defined the benefits to Boise customers. In essence, Milliken was committed to com- munication and training. Similar to my experience at Ravell, not everyone is comfortable with change, and resistance in the ranks is inevitable. As a result, the education and training programs at Boise were not enough. What was lacking was true organizational learning and knowledge management. There are two best practices that were defined from this expe- rience. First, the CEO needs to engage in actively showing the importance that technology has to the organization, not only from an economic perspective but also from a staff devel- opment point of view. The second best practice comes from the example of what Boise Cascade did not do enough of: provide organizational transformation through knowledge management, reflective practices, and communities of prac- tice. This suggests that CEOs need to better understand and incorporate organizational learning concepts so that they can be the catalyst for change as they are in other areas of the business. We saw support for this concept from both ICAP and HTC, at which the actions of the CEO came from an organizational learning perspective.

6. Know that technology projects never end: ROD assumes by defi- nition that technology is a variable, albeit an insistent one. Milliken’s experience further supported this notion, in that he realized that Boise Cascade must continue to assess the impact of the CRM application. Another way of saying this is that the technology will continue to be viewed as a means to transform the business on an ongoing basis. Indeed, Milliken was planning to spend another $10 million on the next phase. So, from a best practices perspective, CEOs must recognize that technology investment never ends, but it moves to other

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phases of maturation, similar to the driver/supporter life cycle. Finally, the buy-in to this reality ensures the recognition of organizational dynamism.

Based on the case studies and research presented thus far in this book, I can now formulate a list of 11 key planks that represent the core of what constitutes a technology CEO’s set of best practices:

1. The chief IT executive should report directly to the CEO. 2. CEOs should be actively committed to technology on an

ongoing basis, as opposed to project-by-project involvement. 3. CEOs should be willing to be management catalysts to sup-

port new technology-driven projects. They, in effect, need to sometimes play the role of technology champion.

4. CEOs should focus on business concepts and plans to drive technology. In other words, technology should not drive the business.

5. CEOs should use consultants to provide objective input to emerging technology projects.

6. CEOs should establish organizational infrastructures that foster the creation of communities of practice. They need to create joint ownership of IT issues by fostering discourse between IT, business managers, and staff.

7. CEOs may need to take control of certain aspects of tech- nology investments, such as setting milestones and holding management and staff to making critical project dates.

8. CEOs need to foster cultural assimilation, which may lead to reorganization since technology changes processes.

9. CEOs need to understand organizational learning and knowledge management theories and participate in organi- zational transformation.

10. CEOs need to understand how the technology life cycle behaves, with specific attention to the transition from driver activities to supporter functions. To that end, CEOs need to understand the short- and long-term investments that need to be made in technology.

11. CEOs should create organizations that can effectively operate within technological dynamism. This process will educate man- agement and staff to handle the dynamic and unpredictable

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effects of emerging technologies. It will also foster the devel- opment of both middle-up-down and bottom-up manage- ment of technology.

The issue is now to provide a linear development model for CEOs that enables them to measure where they are in relation to ROD and the best practices outlined.

The CEO Best Practices Technology Arc

Similar to the chief IT executive arc, the CEO best practices arc is an instrument for assessing the technology best practices of CEOs. The arc evaluates a CEO’s strategic uses of technology and leader- ship by using a grid that charts competencies ranging from conceptual knowledge about technology to more complex uses of technology and business and how they are integrated in strategic business planning.

As with all arc models, the CEO version measures five principal stages of a CEO’s maturity with respect to business applications of technology: conceptual, structural, executive values, executive ethics, and executive leadership. Each dimension or sector is measured in five stages of maturation that guide the CEO’s executive growth man- aging technological dynamism. The first stage is in being reflectively aware about their conceptual knowledge of technology and what it can do for the organization. The second is other centeredness, by which CEOs become aware of the multiplicity of business uses of technology and the different views that can exist inside and outside the organiza- tion. The third is integration of business use of technology; a CEO can begin to combine how business plans foster the need for technology.

The fourth is implementation of business/technology process, meaning that the CEO understands how business applications and technology are used together and is resilient to nonauthentic sources of emerging technologies. Stage 4 represents an ongoing commitment to implement both technology and business applications. The fifth is strategic uses of technology; CEOs have reached a stage at which their judgment on using technology and business is independent and can be used to self-educate. Thus, as CEOs grow in knowledge of business uses of technology, they can become increasingly more understand- ing of the multiplicity of uses, can become more integrated in how they conceptualize technology, can manage its implementation from

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an executive position, and can apply strategies to support new applica- tions of technology in the organization.

Definitions of Maturity Stages and Dimension Variables in the CEO Technology Best Practices Arc

Maturity Stages

1. Conceptual knowledge of technology: This first stage represents the CEO’s capacity to learn, conceptualize, and articulate key issues relating to business uses of technology, organizational structures available, executive value methods, executive ethi- cal issues surrounding technology, and leadership alternatives needed to be successful with technology applications.

2. Multiplicity of business perspectives of technology: This stage indicates the CEO’s ability to integrate multiple points of view from management, staff, and consultants about technol- ogy applications in business. Using these new perspectives, the CEO augments his or her conceptual skills with technol- ogy, has an expanded view of what organizational structures might work best, expands his or her executive values about technology uses, is increasingly aware of the ethical dilemmas with technology, and enhances his or her leadership abilities.

3. Integration of business uses of technology: Maturing CEOs accu- mulate increased understanding of how technology can sup- port the business, provide more competitive advantage, and have a more integrated understanding of how to use their conceptual skills about technology, of the alternative organi- zational structures available, of how to combine their business executive value and ethical systems, and how to develop effec- tive levels of executive leadership.

4. Implementation of business/technology process: CEOs achieve inte- gration when they can regularly apply their conceptual knowl- edge of technology, organization structures, executive values and ethics about technology, and executive leadership appropriate for performing their job duties not only adequately but at a level that provides a competitive advantage for the organization.

5. Strategic uses of technology: Leadership is attained by the CEO when he or she can employ conceptual skills, develop new

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organizational structures as necessary, establish new values and ethics that are appropriate for the organization, and create a sense of executive presence to lead the organization strategi- cally. This CEO is capable of having new vision about how business and technology can be expanded into new endeavors.

Performance Dimensions

1. Technology concepts: Concerns conceptual skills specifically related to understanding how technology can be used in the business. This dimension essentially establishes the CEO as technically proficient conceptually and forms a basis for movement to more complex and mature stages of business/ technology development.

2. Organizational structures: The knowledge of the alternative organizational structures that can support the application of emerging technology in corporate settings with regard to roles, responsibilities, career paths, and organizational report- ing alternatives.

3. Executive values: Measures the CEO’s ability to articulate and act on mainstream technological values credited with shap- ing the work ethic: independent initiative, dedication, honesty, and personal identification with career goals based on the phi- losophy of the management protocol of the organization.

4. Executive ethics: Reflects the CEO’s commitment to the edu- cation and professional advancement of the behavior of the organization as it relates to business uses of technology.

5. Executive leadership: Involves the CEO’s view of the role of an executive in business and the capacity to succeed in tan- dem with his or her organizational resources. Aspects include a devotion to organizational learning and self-improvement, self-evaluation, the ability to acknowledge and resolve busi- ness/technology conflicts, and resilience when faced with per- sonal and professional challenges.

Figure 9.7 shows a graphical view of the CEO technology best prac- tices arc. Each cell in the arc provides the condition for assessment. The complete arc is provided in Figure 9.8.

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Technology cognition

organizational structures

executives values

executives ethics

executive leadership

Figure 9.7 Ceo technology best practices arc.

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Technology Concept

understands concepts and definitions about technology and how it relates to business. Has conceptual knowledge of the software development life cycle. understands high-level concepts about distributed processing, database development, and project management. understands the definition and role of operating systems such as unIx, WInDoWs, MAC. Has the ability to relate technology concepts to other business experiences. understands that different technology may be required for a particular project and organization. Can conceptualize how to expand the use of technology and apply it to business situations.

seeks to manage by appreciating that technology can have multiple perspectives. Able to manage a process that requires validation about different opinions about business uses of technology. Can manage the different objective ideas from multiple technology views without getting stuck on personal biases. Has an ability to identify and draw upon multiple perspectives available from business sources about technology, particularly from independent sources. Developing a discriminating ability to create an infrastructure that can operate with multiple views. Committed to creating an organization that can learn through realistic and objective judgment, as demonstrated by the applicability of the technology material drawn for a particular project or task and tied to business outcomes.

organizational structures

understands that technology can be viewed by other organizations in different ways and may need different organizational structures. Can use technology as a medium of communication. understands that certain technologies may need to be managed differently and need specific types of structures and expertise. Has the ability to comprehend recommend/ suggested technological solutions to suite business needs and preferences.

seeks to manage technology as a vehicle to learn more about what alternative organization structures are available from others. strives to create a learning organization that cares about what other staff perceive as solutions. Committed to cultural assimilation that can change the need to restructure the organization. Tries to understand and respect technologies that differ from what the organization is currently using. understands that the organization has multiple and different technological needs.

Figure 9.8 Ceo Technology best practices arc—detail.

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InTeGRATIon oF BusIness uses oF TeCHnoloGy

IMPleMenTATIon oF BusIness/TeCHnoloGy

PRoCess sTRATeGIC uses oF

TeCHnoloGy

Creates an organization that has the ability to relate various technical concepts and organize them with non-technical business issues. Can manage by operating with both automated and manual business solutions. Can use technology to expand business reasoning, logic, and what-if scenarios. establishes business templates that allow technology to offer everyday business solutions. This involves the hypothetical (inductive/deductive) logical business issues.

organization’s use of technology is concrete, accurate, and precise, broad and resistant to interference from non-authentic technology business sources. Ability to resist or recover from faulty uses of technology that is not realistic without a supporting business plan.

Methods and judgment as a multidimensional Ceo is independent, has critical discernment. Conceptual knowledge of technology can be transferred and can be used to self-educate within and outside of technology. Can use technology for creative purposes to create new business initiatives and integrate them with short- and long-term business goals.

Can deal with multiple dimensions of criticism about how technology can be used in the organization. Can develop relationships (cooperative) that are dynamic and based on written communication and oral discourse about how business can drive technological investments. Ability to create new business relations using technology with new and existing customers. Has an appreciation of cyberspace as a new market—a place wide open to dialogue (spontaneous), to provide new opportunities for business growth.

Commitment to open discussion of alternating opinions on technology and acceptance of varying types of structures to accommodate technology opportunities. Ability to sustain dynamic organizational structures.

Can design new structures to integrate multidimensions of business and technology solutions. Can dynamically manage different types of interdependent and dependent organizational relationships. Ability to manage within multiple dimensions of business cultures, which may demand self-reliance and confidence in independence of initiatives.

Figure 9.8 Continued.

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DIMensIon vARIABle ConCePTuAl KnoWleDGe oF

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executive values understanding of technology and cultural differences. Conceptually understands that global communication, education, and workplace use of technology can be problematic—subject to false generalizations and precon- ceived notions. Management awareness of responsibilities to address assumptions about how technology will be viewed by other departments and customers.

sets conditions that foster the need to obtain multiple sources of information and opinion about how technology values. The propagation organizationally of acceptance that there can be multidimensional values in human character.

executive ethics understands that there is a need to use technology with honesty re: privacy of access and information. supports the development of ethical policies governing business uses of the Internet, research, intellectual property rights, and plagiarism.

Committed to creating an organization that uses information in a fair way—comparison of facts against equal sources of business information. understands and is compassionate that business and technology information may have different levels of knowledge access. Recognizes the need for sharing information with other business units from a sense of inequality.

executive leadership Conceptualizes the need to have a leadership role with respect to technology in the business—the business and technologically realizable executive self.

understands how other executives can view technology leadership differently. understands or has awareness of the construction of self that occurs when taking on the integration of technology in business operations. Focuses on views of other Ceos in multiple settings. understands that the self (through technology) is open for more fluid constructions, able to incorporate diverse views in multiple technology settings.

Figure 9.8 Continued.

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InTeGRATIon oF BusIness uses oF TeCHnoloGy

IMPleMenTATIon oF BusIness/ TeCHnoloGy PRoCess

sTRATeGIC uses oF TeCHnoloGy

Can manage multiple dimensions of value systems and can prioritize multi- tasking events that are consistent with value priorities. Ability to assign value to new and diverse technology business alternatives—linking them to legacy systems and processes.

Managing value systems in new ways because technology changes long-term values and goals for business objectives. Recognition that some concepts remain unchanged despite emerging technologies.

Management of technology and business are based on formed principles as opposed to dynamic influences or impulses. Formed executive principles establish the basis for navigating through or negotiating the diversity of business opportunities and impulses for investment in technologies.

Consistent management values displayed on multiple business goals, mission, and dedication to authenticity. Maintains management consistency in combining values regarding technology issues.

Business and technology are a commitment in all aspects of management value systems, including agility in managing multiple business commitments. Commitment to greater openness of mind to altering traditional and non-technological management methods.

Technology management creativity with self-defined principles and beliefs. Risk-taking in technology- based ventures. utilizing technology to expand one’s arenas of business development. Manages the business liberating capacities of technology.

Manages technology to unify multiple parts of the organization and understands how the process behaves in different business situations.

Has developed an executive identity of self from a multiplicity of management venues. Method of management creates positive value systems that generate confidence about how multiple business communities need to operate.

Acceptance and belief in a multidimensional business world of how to lead with technology. Can determine comfortably, authenticity of organization’s executives and their view of the self. Can confirm disposition on technology independently from others’ valuations, both internally and from other organizations. Beliefs direct and control multi-dimensional leadership growth.

Figure 9.8 Continued.

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Middle Management

Middle management, which comprises a number of tiers, is perhaps the most challenging of best practices to define. In Chapter 3, I strati- fied the different types of positions that make up middle managers into three tiers: directors, line managers, and supervisors. What is most important at this point is to determine the set of technology best prac- tices for managers so that they can effectively operate under ROD. That is, technology best practices must be designed to contain the insights and skills for effective management of technology. This must include

1. Working with IT personnel 2. Providing valuable input to the executive management team,

including the CEO 3. Participating and developing a technology strategy within

their business units 4. Effectively managing project resources, including technical

staff 5. Leading innovative groups in their departments 6. Incorporating technology into new products and services 7. Developing proactive methods of dealing with changes in

technology 8. Investigating how technology can improve competitive

advantage

As with CEO research, there are myriad best practices that have been offered as a method of dealing with the subject of technology management. Unfortunately, these practices usually are vague and intermingle management levels and departments; that is, it is difficult to know whether the best practice is for the chief IT executive, the CEO, or some other level of management. We know from the research from Bolman and Deal (1997) that middle managers feel torn by con- flicting signals and pressures they get from both senior management and the operations that report to them: “They need to understand the difference in taking risks and getting punished for mistakes” (p. 27). According to Bolman and Deal (1997), best practices for middle man- agers need to cover the following areas:

1. Knowledge management 2. Alignment

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3. Leadership and commitment 4. Organization 5. Human resources 6. Opportunity management 7. Leveraging 8. Performance assessment

Their study covered more than 400 companies in the eight areas of concern. I extracted 10 middle management-related best practices from their study results and concluded that middle managers need to

1. Understand how to take a strategy and implement it with tech- nology; that is, they need to create tactics for completing the project.

2. Establish team-building measures for linking technology with daily operations of the staff.

3. Foster the aggregation and collaboration of business unit assets to form peer groups that can determine joint efforts for implementing new technologies.

4. Stimulate their staffs using innovative strategies of value propositions and reward systems.

5. Create multifunctional teams that can focus on particu- lar aspects of how technology affects their specific area of expertise.

6. Follow common project management practices so that mul- titier and department projects can be globally reviewed by senior management.

7. Form project teams that can respect and perform on an action basis; that is, teams that are action oriented.

8. Understand how to communicate with and use IT staff on projects.

9. Have a systematic process for gathering intelligence relating to pertinent technology developments.

10. Understand that customers are the drivers for technology tools provided by the organization.

On reviewing the different aspects of middle manager best practices with technology research, it appears that there are two focal points: (a) those best practices that address the needs of senior management, the

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CIO, and the CEO; and (b) those that are geared toward the manage- ment of the staffs who need to implement emerging technology projects.

This makes sense, given that the middle manager, notwithstanding whether a director, line manager, or supervisor, needs to deal with executive productivity-related issues as well as staff implementation ones. They are, as Bolman and Deal (1997) stated, “torn” by these two competing organizational requirements. Table 9.1 represents the combined list of technology-based best practices organized by execu- tive best practices and implementation best practices.

Table 9.1 exemplifies the challenge that middle managers have in balancing their priorities. In accordance with the research, the best practices mentioned are implemented using methods of knowledge

Table 9.1 Middle Manager executive and Implementation Best Practices

exeCuTIve-BAseD MIDDle MAnAGeR BesT PRACTICes

IMPleMenTATIon-BAseD MIDDle MAnAGeR BesT PRACTICes

1. Provide valuable input to the executive management team, including the Ceo

1. understand how to communicate with and use IT staff on projects

2. Incorporate technology into new products and services

2. effectively manage project resources, including technical staff

3. Participate in developing a technology strategy within their business units

3. lead innovative groups in their departments

4. Have proactive methods of dealing with changes in technology

4. understand how to take a strategy and implement it with technology; that is, create tactics for completing the project

5. Focus on how technology can improve competitive advantage

5. establish team-building measures for linking technology with staff’s daily operations

6. Have a systematic process for gathering intelligence relating to pertinent technology developments

6. Foster the aggregation and collaboration of business unit assets to form peer groups that can determine joint efforts for implementing new technologies

7. understand that customers are the drivers for technology tools provided by the organization reward

7. stimulate their staffs using innovative strategies of value propositions and systems

8. Create multifunctional teams that can focus on particular aspects of how technology affects their specific area of expertise

9. Follow common project management practices so that multitier and department projects can be globally reviewed by senior management

10. Form project teams that can respect and perform on an action basis; that is, teams that are action oriented

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management, alignment, leadership and commitment, human re- sources, opportunity management, leveraging, and performance assess- ment. As with the other best practices, the middle manager technology best practices are limited because they do not address the specific needs of ROD, particularly organizational learning theories (with the exception of knowledge management). This shortfall is integrated into another developmental arc model that combines these theories with the preceding definitions of best practices.

The Middle Management Best Practices Technology Arc

The middle management best practices technology arc, as with others, can be used to evaluate a middle manager’s strategic and operational uses of technology by using a grid that measures competencies rang- ing from conceptual knowledge about technology to more complex uses of technology and business operations.

The five principal stages defined by the arc determine the middle manager’s maturity with business implementations of technology: cognitive, organization interactions, management values, project ethics, and management presence. There are five stages of matura- tion that guide the middle manager’s growth. The first is becom- ing reflectively aware about one’s existing knowledge with business technology and how it can be implemented. The second is the rec- ognition of the multiplicity of ways that technology can be imple- mented on projects (e.g., other business views of how technology can benefit the organization). The third is integration of business imple- mentation of technology, in which a middle manager can begin to combine technology issues with business concepts and functions on a project basis. The fourth is stability of business/technology imple- mentation, in which the middle manager has integrated business/ technology as a regular part of project implementations. The fifth is technology project leadership, in which the middle manager can use their independent judgment on how best to use technology and business on a project-by-project basis. Thus, as middle managers grow in knowledge of technology and business projects, they can become increasingly more open to new methods of implementation and eventually autonomous with the way they implement projects and provide leadership.

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Definitions of Maturity Stages and Dimension Variables in the Middle Manager Best Practices Arc

Maturity Stages

1. Technology implementation competence and recognition: This first stage represents the middle manager’s capacity to learn, conceptualize, and articulate key issues relating to cogni- tive business technological skills, organizational interactions, management value systems, project management ethics, and management presence.

2. Multiplicity of business implementation of technology: Indicates the middle manager’s ability to integrate multiple points of view during technical project implementations. Using these new perspectives, the middle manager augments his or her skills with business implementation with technology career advancement, expands his or her management value system, is increasingly motivated to act ethically during projects, and enhances his or her management presence.

3. Integration of business implementation of technology: Maturing middle managers accumulate increased understanding of how business and technology operate together and affect one another. They gain new cognitive skills about technology and a facility with how the organization needs to interact, expand their management value system, perform business/technology actions to improve ethics about business and technology, and develop effective levels of management presence.

4. Stability of business/technology implementation: Middle managers achieve stable integration when they implement projects using their cognitive and technological ability; have organization interactions with operations; have management values with their superiors, peers, and subordinates; possess project ethics; and have the management presence appropriate for performing job duties not only adequately but also competitively (with peers and higher ranking executives in the organization hierarchy).

5. Technology project leadership: Leadership is attained by the mid- dle manager when he or she can employ cognitive and techno- logical skills, organization interactions, management, a sense of business ethics, and a sense of management presence to compete

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effectively for executive positions. This middle manager is capa- ble of obtaining increasingly executive-level positions through successful interviewing and organization performance.

Performance Dimensions

1. Business technology cognition: Pertains to skills specifically related to learning, applying, and creating resources in business and technology, which include the necessary knowledge of complex operations. This dimension essentially establishes the middle manager as “operationally” proficient with technology and forms a basis for movement to more complex and mature stages of development when managing technology projects.

2. Organizational interactions: Focus on the knowledge and practice of proper relationships and management interactions during technology projects. This pertains to in-person inter- actions, punctuality of staff, work completion, conflict resolu- tion, deference, and other protocols in technology projects.

3. Management values: Measures the middle manager’s ability to articulate and act on mainstream corporate values credited with shaping technology project work ethic: independent ini- tiative, dedication, honesty, and personal identification with technology project goals based on the philosophy of manage- ment protocol of the organization.

4. Project ethics: Reflects the middle manager’s commitment to the education and professional advancement of other persons in technology and in other departments.

5. Management presence: Involves the middle manager’s view of the role of a project-based manager during a technology proj- ect implementation and the capacity to succeed in tandem with other projects. Aspects include a devotion to learning and self- improvement, self-evaluation, the ability to acknowledge and resolve business conflicts, and resilience when faced with personal and professional challenges during technology implementations.

Figure 9.9 shows a graphical view of the middle management technology best practices arc. Each cell in the arc provides the con- dition for assessment. The complete arc is provided in Figure 9.10.

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The challenge of the middle management best practices arc is whether to emphasize executive management concepts (more organizationally intended) or event-driven concepts (project oriented). This arc focuses on project implementation factors and deals with best practices that can balance executive pressures with implementation realities. I sug- gest that senior middle managers, at the director level, who do not participate in implementation, set their best practices based on the CEO maturity arc. Indeed, creating a separate arc for upper manage- ment would contain too many overlapping cells.

Summary

The formation of best practices to implement and sustain ROD is a complex task. It involves combining traditional best practice methods (i.e., what seems to work for proven organizations and individuals) with developmental theory on individual maturation. The combina- tion of these two components provides the missing organizational learning piece that supports the attainment of ROD. Another way of comprehending this concept is to view the ROD arc as the overarch- ing or top-level model. The other maturity arcs and best practices rep- resent the major communities of practice that are the subsets of that model. This is graphically depicted in Figure 9.11.

Thus, the challenge is to create and sustain each community and, at the same time, establish synergies that allow them to operate together. This is the organizational climate created at ICAP, where the execu- tive board, senior and middle managers, and operations personnel all formed their own subcommunities; at the same time, all had the abil- ity for both downward and upward communication. In summary, this particular model relies on key management interfaces that are needed to support ROD.

Ethics and Maturity

The word ethics is defined in many different ways. Reynolds (2007) defined ethics as “a set of rules that establishes the boundaries of gen- erally accepted behaviour” (p. 3). Ethics can also mean conforming to social norms and rules, which can be challenged by deviant behaviors of “others.” Still other groups construct ethics as a moral code that a

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leADeRsHIP

Business technology cognition

organizational interactions

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Management presence

Figure 9.9 Middle management technology best practices arc.

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TeCHnoloGy

Business Technology Cognition

understands how technology operates during projects. Has conceptual knowledge about hardware interfaces, and the software development life cycle. Has the core ability to relate technology concepts to other business experiences. Can also participate in the decisions about what technology is best suited for a particular project. Can be taught how to expand the use of technology and can apply it to other business situations.

understands that technology projects can have multiple perspectives on how to implement them. Able to analyze what is valid vs. invalid opinions about business uses of technology. Can create objective ideas from multiple technology views without getting stuck on individual biases. An ability to identify and draw upon multiple perspectives available from project sources about technology. Developing a discriminating ability with respect to choices available. Realistic and objective judgment, as demonstrated by the applicability of the technology material drawn for a particular project or task and tied to functional/pragmatic outcomes.

organizational Interactions

understands that technology projects require the opinions of other departments and staff in multiple ways. understands that certain technological solutions and training methods may not fit all project needs and preferences of the business. Has the ability to recommend/suggest alternative technological solutions to suite other business and project needs and preferences.

seeks to use technology projects as a vehicle to learn more about organization interactions and mindsets. strives to care about what others are communicating and embraces these opinions on a project basis. Tries to understand and respect technologies that differ from own. understands basic technological project needs of others.

Figure 9.10 Middle management technology best practices arc—detail.

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InTeGRATIon oF BusIness IMPleMenTATIon oF TeCHnoloGy

sTABIlITy oF BusIness/ TeCHnoloGy

IMPleMenTATIon TeCHnoloGy PRoJeCT

leADeRsHIP

Has the ability to relate various technical project concepts and organize them with non-technical business issues. Can operate with both business and technical solutions. Can use technology to expand reasoning, logic, and what-if scenarios. Ability to discern the templates that technology has to offer in order to approach everyday technology project problems. This involves the hypothetical (inductive/ deductive) logical business and technology skills.

Knowledge of technology projects are concrete, accurate, and precise, broad and resistant to interference from non-authentic business and technical project sources. Ability to resist or recover from proposed technology that is not realistic—and can recover resiliently.

Methods and judgment in multidimensional technology projects are independent and use critical discernment. operational knowledge of technology and project management skills can be transferred and can be used to self-educate within and outside of technology. Can use technology for creative purposes to solve business and project challenges and integrate with executive management views.

Can deal with multiple dimensions of criticism about technology-based projects. Can develop relationships (cooperative) that are dynamic and based on discourse. Ability to create project relations with IT, other departments, and customers. Has an appreciation of project communication—to foster open dialogue (spontaneous), to give and take, or other than voyeuristic, one-sidedness about the project. Ability to produce in teamwork situations, rather than solely in isolation.

loyalty and fidelity to relations in multiple organizations. Commitment to criticism and acceptance of multiple levels of IT and business relationships. Ability to sustain non-traditional types of inputs from multiple sources during projects.

Can utilize and integrate multidimensions of project solutions in a self-reliant way. Developing alone if necessary using other technical and non-technical resources. Can dynamically select types of interdependent and dependent organizational relationships. Ability to operate within multiple dimensions of business cultures, which may demand self-reliance, independence of initiative, and interactive communications during project implementations.

Figure 9.10 Continued.

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DIMensIon vARIABle

TeCHnoloGy IMPleMenTATIon CoMPeTenCe AnD

ReCoGnITIon MulTIPlICITy oF BusIness

IMPleMenTATIon oF TeCHnoloGy

Management values Technology and cultural sensitivity during project implementations. Global communication, education, and project use of technology can be problematic—subject to false generalizations and preconceived notions. Awareness of assumptions about how technology will be viewed by other departments and staff and about biases about types of technology used (MAC vs. PC).

Can appreciate need to obtain multiple sources of information and opinions during project implementations. The acceptance of multidimensional values in human character as value during project design and completion.

Project ethics using technology on the project with honesty re: privacy of access and information. Development of ethical policies governing project uses of the Internet, research, intellectual property rights, and plagiarism.

The use of information in a fair way—comparison of facts against equal sources of project information. Compassion for differences in project information for which sources are limited because of inequality of technology access. Compassion for sharing information with other business units from a sense of inequality.

Management Presence Has accurate perception of one’s own potential and capabilities in relation to technology projects—the technologically realizable manager.

understands how other managers can view self from a virtual and multiple perspectives. understands or has awareness of the construction of self that occurs in projects. understands views of other executives and managers in multiple project settings. understands that the self (thru technology projects) are open for more fluid constructions, able to incorporate diverse views in multiple settings.

Figure 9.10 Continued.

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InTeGRATIon oF BusIness IMPleMenTATIon oF TeCHnoloGy

sTABIlITy oF BusIness/ TeCHnoloGy

IMPleMenTATIon TeCHnoloGy PRoJeCT

leADeRsHIP

Can operate project within multiple dimensions of value systems and can prioritize multitasking events that are consistent with value priorities. Ability to assign value to new and diverse technology project alternatives—integrating them within a system of pre-existing business and technology project implementation values.

Testing technology value systems in new ways during the project implementation is integrated with long-term values and goals for business achievement. some project concepts are naturally persistent and endure despite new arenas in the technological era.

use of technology and business during project implementation are based on formed principles as opposed to dynamic influences or impulses. Formed principles establish the basis for navigating through, or negotiating the diversity of business influences and impulses during the project.

Consistent values displayed on multiple project communications, deliverables of content, and dedication to authenticity. Maintains consistency in integrating values within technology business issues during project implementation.

Technology is a commitment in all aspects of value systems, including agility in managing multiple project commitments. Commitment to greater openness of mind to altering traditional and non-technological methods on project implementations.

Technological project creativity with self-defined principles and beliefs. Risk-taking in technology-based projects. utilizing technology to expand one’s arenas of project freedom. exploring the project management liberating capacities of technology.

operationalizes technology projects to unify multiple components of the self and understands its appropriate behaviors in varying management situations.

Has regulated an identity of self from a multiplicity of management venues. Method of project interaction creates positive value systems that generate confidence about operating in multiple organizational communities.

Can determine comfortably, authenticity of other managers and their view of the self. Can confirm project-related disposition independently from others’ valuations, both internally and from other department cultures. Has direct beliefs and controls multi- dimensional management growth.

Figure 9.10 Continued.

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2 9

0

In F

o r

m A

t Io

n t

e C

h n

o l

o g

y

Organizational Level

Maturity Arc

Chief IT Executive Best Practices Maturity Arc

CEO Technology Best Practices Maturity Arc

Middle Management

Technology Best Practices

Maturity Arc

Underlining Best Practices: Strategic �inking Industry Expertise Change Management Communications Business Knowledge Technology Proficiency Hiring and Retention Innovation and Outsourcing Leadership Information Architect

Underlining Best Practices: Committed to Technology Technology Catalyst and Champion Business First, �en Technology Use Consultants for Objective Input Support Communities of Practice Set Project Milestones Foster Cultural Assimilation Understand Organizational Learning Understand Technology Life Cycle Have Chief IT Exec Report Directly Support Organizational Dynamism

Underlining Best Practices:

Utilization of IT Staff on Projects Leading Innovative Groups Effectively Managing Project Resources Strategic Use of Technology Establish Team-Building Measures Foster Aggregation and Collaboration Stimulate Staff with Value Propositions Create Multi-Functional Teams Support Common Project Mgmt Practices Form Action-Oriented Teams

Interact with Executive Management Incorporate Technology into New Products Use Technology for Competitive Advantage Process for Evaluating New Technologies Understand Driver Role of Customers

Implementation-Based:

Best Practices: Strategic Integration Cultural Assimilation Organizational Learning Constructs Varying Levels of Mgmt Participation

Management-Based:

Figure 9.11 RoD and best practices arcs.

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community agrees to uphold. Ethics often map to our values—like integrity and loyalty to others. What is ethical for one person may not be ethical for another. This issue frames yet another question: How does ethics relate to leadership, specifically leadership in technology?

Ethics became a heightened issue after the Enron scandal in the United States. The scandal had a huge effect on the IT industry because it resulted in Congress enacting the Sarbanes-Oxley (SOX) Act, which placed significant audit trail requirements on document- ing processes. Most of these processes existed in automated applica- tions; thus, IT was required to comply with the rules and regulations that the SOX Act mandated. Implementing the SOX Act became an immense challenge for IT organizations mostly because the rules of compliance were vague.

Most would agree that ethics are a critical attribute for any leader. The challenge is how to teach it. The SOX Act “teaches” ethics by establishing governance by control—control of unethical behavior through catching deviants. However, history has shown us that devi- ants are not cured by laws and punishment; rather, they are simply contained. Unfortunately, containment does not eliminate or cure unethical behavior. Furthermore, deviants tend to find new ways to bypass controls and get around the system in time. On the other hand, educators more often see the solution as transforming behavior of the individual; that is, ethics can only be taught if the individual realizes its value. Value in ethical behavior becomes a systemic transforma- tion when the individual believes in its self-realization; being ethical is then aligned with self-actualization and adult maturity. So, ethics can be aligned with maturity in the same ways that the maturity arcs presented were mapped to leadership. Why is this so important for IT leaders? The SOX Act answered this question because it clearly identified the IT function as the most critical component of compli- ance. Unethical behavior in technology-based systems can damage the greater good, which places a big responsibility on the IT function.

I would suggest that IT ethics and leadership are very much linked. It is a very important responsibility for technology executives to pro- vide direction to their firms on how technology and ethics are inte- grated and how they can transform individuals to value conformance without the overuse of governing controls. Firms must use organi- zational learning tools as the vehicle to promote such conformance

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through changes in behavior. Unfortunately, many executives, includ- ing those in IT, practice governance much more than influence. I am not suggesting the elimination of controls but rather that leadership should depend less on governance and more on effecting behavioral change. In other words, they key to developing strong ethics within an IT organization is leadership, not governance. An important com- ponent of leadership is the ability to influence the behaviors of others (without exerting control or power). The real power of leadership is to use influence to effect ethical behavior as opposed to demanding it.

How do we create ethical IT organizations? Further, how can a tech- nology executive provide the necessary strategy and influence to accom- plish firmwide ethical transformation? The first strategy, for a number of reasons, should be to create an ethical IT organization as the model:

1. The technology executive has control over that organization. 2. Most IT ethical problems today emanate from technol-

ogy personnel because of their unusual access to data and information.

3. IT is positioned to lead the direction since it is its area of expertise.

So, IT can set the example for technology-related ethics for the entire organization by establishing its own level of compliance by a “way of being” as opposed to a way of being managed. Often, this way of being can evolve into a code of behavior that can become the cultural “code” of the organization itself. This code of ethics should address and be limited to such IT-related issues as:

Privacy:• Because of their access to transactions over the Internet, IT professionals must respect the privacy of infor- mation of others. Their code of ethics should go beyond just e-mail transactions to include access to personal data that may be stored on desktops or data files. Confidentiality:• This differs from privacy because the data are available to IT in the normal transactions of business. That is, the data are captured or used in the development of an application. IT personnel need to keep such information con- fidential at all times—not only for the employees of the firm but also for clients and vendors.

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Moral responsibility:• IT needs to protect the organization from outside abuses or questionable transactions coming into and leaving the company. Protection can also include blocking access to certain Web sites that are dangerous or inappro- priate. This practice should not be regarded as a control but rather as a moral responsibility of any employee. Of course, there needs to be careful objectivity in how the moral code is actually executed when a problem is identified. Theft:• Removing information that belongs to someone else can be construed as a form of theft. Theft should always be regarded as an offense punishable by law—that is, above and beyond rules and regulations of the company.

These are only examples of areas in which an ethical code might be applied. Such a code must be implemented in IT as a framework for how people are employed and as a basis for promotion. Again, gover- nance plays an important part because unfortunately there will always be individuals who violate ethics. What we need are organizations that promote and defend ethics to the greatest possible extent. This way of being is consistent with the core definition of a learning organiza- tion in that ethics must inevitably be part of the fabric of the culture and evolved within it. With IT serving as a model, the technology executive can act as the champion for implementation company-wide. This chapter has shown that ethics are intrinsically linked to maturity. Indeed, every “arc” contained a dimension that contained an ethi- cal dimension. Perhaps if such ethical practices existed at Enron, the “learning organization” there could have stopped the abuses.

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295

10 ConClusions

Introduction

This book has explored many conceptual aspects of information tech- nology (IT) and organizational learning and how they can be utilized together to help firms compete in a rapidly changing world. Case stud- ies were presented to show how these concepts, and the theories they derive from, could be implemented into practice. It is most important, however, to remember that each organization is unique and that the implementation of organizational learning methods must therefore be tailored to the particular dynamics at play in a given organiza- tion. Hence, there can be no boilerplate methodology for the strategic employment of technology; such an approach could never guarantee maximum benefit to the organization. My position involves employ- ing various organizational learning methods that must be carefully chosen and implemented based on the projected target audience and on the particular stage of growth of the organization and its mature use of technology.

In my study of chief executive officer (CEO) perceptions of IT, I found that the role of IT was not generally understood in most of the organizations I surveyed, especially at the CEO level. There appears to be inconsistent reporting structures within the IT organization, and there is a lack of IT-related discussion at the strategic and senior executive levels. Furthermore, most executives are not satisfied with IT performance, and while most agree that technology should play a larger role in marketing, few have been able to accomplish this. The general dilemma has involved an inability to integrate technology effectively into the workplace.

Certainly, a principle target of this book is to answer the question of what chief IT executives need to do and in what directions their roles need to evolve regarding IT. Other concerns center on general organizational issues surrounding who IT people are, where they

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report, and how they should be evaluated. IT must also provide better leadership with respect to guiding a company through the challenges of unproven technologies. While technology behaves dynamically, we still need processes that can validate its applicability to the organiza- tion. Another way of viewing this is to accept the idea that certain technologies need to be rejected because of their inappropriateness to drive strategy.

IT is unique in that it is often viewed from a project perspective; for instance, that which is required to deliver technology and the cul- tural impact it has on the organization tend to be measured by project deliverables due to the pressure to see measurable outcomes. From a project perspective, IT staff members typically take on the role of project managers, which requires them to communicate with multiple business units and management layers. They need to establish shorter project life cycles and respond to sudden changes to the requirements. No longer does a traditional project life cycle with static dates and deliverables work with the fast-paced businesses of today. Rather, these projects are living and breathing entities that must be in balance with what is occurring in the business at all times. Most important is that project measurable outcomes must be defined and seen in balance with expected organizational transformations.

I began my explanation of the role of technology by establishing it as a dynamic variable, which I termed technological dynamism. Responsive organizational dynamism (ROD) represents my attempt to think through a range of responses to the problems posed by tech- nological dynamism, which is an environment of dynamic and unpre- dictable change resulting from the advent of innovative technologies. This change can no longer be managed by a group of executives or managers; it is simply too complex, affecting every component of a business. A unilateral approach does not work; the problem requires an environmental approach. The question is how to create an orga- nization that can respond to the variability of technologies in such a way that its responses become part of its everyday language and discourse. This technological state of affairs is urgent for two major reasons. First, technology not only is an accelerator of change but also requires accelerated business responses. Organizations cannot wait for a committee to be formed or long bureaucratic processes to act. Second, the market is unforgiving when it comes to missing business

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opportunities. Every opportunity missed due to lack of responding in a timely fashion can cost an organization its livelihood and future. As stated by Johansen, Saveri, and Schmid (1995):

The global marketplace requires constant product innovation, quick delivery to market, and a large number of choices for the consumer, all of which are forcing us to rethink the way we structure our business organizations to compete. Indeed, many businesses are finding their traditional structure cumbersome—the way they work is more of an obstacle than help in taking advantage of global opportunities. (p. 1)

While responsive organizational dynamism is the overarching approach for a firm that can perform in a dynamic and unpredictable environment, there are two major components to that approach that I raised for further consideration. I discussed how technology, as a variable, is unique in that it affects two areas of any organization. The first is the technology itself and how it operates with business strategy. I called this the strategic integration component of responsive organi- zational dynamism. The challenge here is to have organizations cre- ate processes that can formally and informally determine the benefit of new and emerging technologies on an ongoing basis. The second component is cultural assimilation, which is about managing the cul- tural and structural changes that are required when new strategies are adopted by the organization.

Creating an environment of responsive organizational dynamism requires processes that can foster individual and organizational-level thinking, learning, and transformation. Organizational learning tech- niques best fit the need as they contain the core capabilities to assist organizations in reinventing themselves as necessary and to build an organization that can evolve with technology, as opposed to one that needs to be reorganized. I have presented many organizational learn- ing concepts and modified them to provide specific remedies to the challenges required to create responsive organizational dynamism. I have also presented the complex vectors that determine which learn- ing theory should be applied and integrated with others so that every aspect of individual and organizational evolution can be supported. I chose to use the term vector to describe this force or influence because of the different ways in which these learning methods can help in

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creating and sustaining firmwide responses to technological dyna- mism. Perhaps the most important learning process among these is that of linear development, leading to maturation. My use of matu- rity arcs permits me a framework for the development and integration of models that can measure where individuals and organizations are in their trajectory toward the integration of emerging technologies in their business strategies. These maturity arcs provide a basis for how to measure where the organization is, what types of organizational learn- ing methods to consider, and what outcomes to expect. Indeed, pro- viding measurable outcomes in the form of strategic performance is the very reason why executives should consider embracing this model.

I also discussed a number of methods to manage organizational learning, modifying theories of knowledge management and change management so that they specifically addressed the unique aspects of change brought about by new technologies. I looked at how the CEO needs to become more knowledgeable about technology, and, based on case studies and research, I provided sets of best prac- tices to suggest that staff members cannot become part of a learn- ing organization without the participation of the CEO and his or her executive committees. On the other hand, I investigated the interesting work of Nonaka and Takeuchi (1995) and their middle- up-down theory of middle management. I modified Nonaka and Takeuchi’s idea by complicating the strata that can be used to define the middle, and I established three tiers of middle management and integrated them into organizational learning theories. Finally, I used the Ravell case study to show how operations personnel continue to play an important role in organizational learning and how the maturity arc can be used to transform individual learning practices into less event-driven learning at the organizational level. I formulated best practices for each of these three major organi- zational structures along with corresponding maturity arcs to lay the foundation of what each community needs to do to properly participate in the transformations indicated for responsive orga- nizational dynamism. To this end, I proposed certain road maps that, if followed, could provide the mechanisms that lead to the kind of organizational transformation that is empowered to handle the challenges of new technologies. This process is summarized in Figure 10.1.

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I have taken a strong position regarding the debate over whether learning occurs best on the individual level or at the system-orga- nizational one, particularly as learning affects the establishing and sustaining of responsive organizational dynamism. My response to this debate is “yes”—yes in the sense that both are very much needed and part of a process that leads to a structured way of maturing the use of organizational learning by an organization to improve strategic performance. I believe the Ravell case study provides an example of how learning maturation operates in a dynamic environment. We see that operations personnel tend to rely on event-driven and individual- based reflective practices before being able to think at an organiza- tional level. My prior research (Langer, 2002) on reflective practices

Technology Dynamism

�e “Technology”

Variable

Requirements for Organizational

Change

Responsive Organizational Dynamism

Strategic Integration

Cultural Assimilation

Strategic Performance

Organizational Learning

Figure 10.1 Technology “road map.”

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clearly shows that many adults do not necessarily know how to reflect. The important work of Argyris and Schön (1996) on introducing and sustaining individual learning, specifically using double-loop learn- ing, should be used when implementing an organizational learning program. Ravell also showed us that time is an important factor for individual development and that political factions are part of that pro- cess. With patience and an ongoing program, group learning activi- ties can be introduced to operations personnel, thereby supporting the kind of system-level thinking proposed by Senge (1990).

A critical part of organizational learning, in particular the nec- essary steps to establish a learning organization, is the formation of communities of practice. Communities of practice in all of the case studies were the cornerstones in the transition from individual-based learning to group learning. Communities of practice begin the matu- ration process of getting organizations to change to learning based on organizational goals. This is critical for responsive organizational dynamism because technology requires planning and vision that are consistent with business strategy. While much of the literature inte- grates the notion of communities of practice with knowledge man- agement, I expanded its use and defined the community as the single most important organizational structure for dealing with emerging technologies. The reason for this is the very challenge facing IT orga- nizations today: to be able to integrate their efforts across business units. This has been proven to be the most difficult challenge for the chief information officers (CIOs) of today. This was further supported by the Siemens AG case study, in which Dana Deasy, the corporate CIO of the Americas, provided a detailed picture of the complex world of a CIO in a global firm with over 400,000 employees. Yet, it was the creation of multiple layers of communities of practice that enables firms to create what I call “common threads” of communication. Thus, the linkage across communities of practice is a central theme of this book, providing guidance and education to organizations to establish processes that support their evolution in a responsive way.

The key word that I have used here is evolution. In the past, infor- mation traveled much slower, and there was more time to interpret its impact on the organization. Today, the travel time is shrinking; there- fore, evolution can and should occur at a quicker pace. Indeed, orga- nizational evolution is intertwined with the dynamics of community

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legitimization (Aldrich, 2001). Technological development for a par- ticular population has widespread consequences for the rest of the orga- nization. In these cases, technological innovations represent a form of collective learning that is different from direct learning from expe- rience alone (Miner & Haunschild, 1995). There are many scholars who believe that change management must be implemented through top-down management approaches. However, I hope this book dem- onstrates that leadership through top-down management will never be solely sufficient to establish the organizational structure needed to handle technological innovations properly. Many such efforts to reor- ganize or reengineer organizations have had disappointing results. Many of these failures, I believe, are attributable to a dependence on management intervention as opposed to strategic integration and cul- tural assimilation. Technology only serves to expose problems that have existed in organizations for decades: the inability to drive down responsibilities to the operational levels of the organization.

My case studies provide, I trust, a realistic and pragmatic view toward the attainment of responsive organizational dynamism, assuming the appropriate roles and responsibilities are available. Furthermore, the case studies also reflect that progress toward orga- nizational learning and maturity is a gradual one. As such, I deter- mined that organizational transformation must be addressed along the same basis; that is, transformation is a gradual process as opposed to a planned specific outcome. I showed that organizations could and should look at transformation in much shorter “chunks,” as opposed to long-term “big-bang” approaches that rarely work and are difficult to measure. Measurement was applied to organizational transforma- tion via the implementation of the balanced scorecard. The scorecard model I modified is tied to the chunk approach.

Another important concept in this book is the reconciliation between control and empowerment. As organizations find that their traditional structures are cumbersome when dealing with emerging technologies, they realize the need to empower employ- ees to do more dynamically. With this empowerment, employees may make more mistakes or seem less genuine at times. When this occurs, there may be a need for management controls to be instituted and power-centralized management styles to be incor- porated. Unfortunately, too many controls end any hope of creating

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a learning organization that can foster the dynamic planning and needs of responsive organizational dynamism. They also block the molding of communities of practice that require common threads of discourse and language. Indeed, it is communities of practice and discourse that lay the foundations for addressing the dilemma of employee control versus empowerment.

We are really beginning to experience the results of emerging tech- nologies, particularly for products traded internationally. We have seen an unusual trend occur in which off-shore product development and maintenance is at an all-time high, local employment is down, and corporate earnings are growing. The advent of this cycle lays a foundation for the new trends of global worker operations, many of which are shifting from a labor-intensive process to needs for think- ing, planning, and management.

Unskilled or less-skilled workers, partly because of new technolog- ical automation, are allowing organizations to displace higher-costing local labor to international outsourced operations. This means an increase in management learning related to supervision and coordina- tion in a technology-driven world. We must be aware of the concern expressed by O’Sullivan (2001) that “new technologies have created unemployed workers with no rights” (p. 159). The way individuals communicate or the rules of their engagement are quickly chang- ing, particularly in the need to create more research and develop- ment (R&D) infrastructures that can respond quicker to innovation opportunities brought about by emerging technologies. We saw this dilemma occur at Siemens, where business strategy and technology became a major investment, and the realization that e-business was more about business than just technology.

To address the lack of understanding of the technology life cycle, I presented my concept of driver and supporter functions and mapped them onto evolutionary transformation. This life cycle is one that ties business strategy into technology and should be used to convey responsive organizational dynamism to executives. Driver functions explain why strategic integration is so important and present a case that requires more marketing-based philoso- phies when investing in technologies. This means that early adap- tation of technology requires, as Bradley and Nolan (1998) called it, “sense-and-respond” approaches, by which IT organizations can

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experiment with business units on how a technology may benefit the business. Siemens and ICAP provided good examples of dif- ferent ways of creating infrastructures that can support technology exploration, including Deasy’s 90-day program, by which technol- ogy investments were reviewed periodically to see what adjustments are required to maximize the investment. It also provided a way to cancel those investments that were not paying off as originally forecast. Understanding that changes along the way are needed or that there are technologies that do not provide the intended benefits must become a formal part of the process, one that CEOs must recognize and fund.

On the other hand, the supporter role is one that addresses the operational side of IT, such that executives and managers understand the difference. I treated the concept of supporter as an eventual real- ity, the reality that all technologies once adopted by operations must inevitably become a commodity. This realization paves the way to understanding when and how technologies can be considered for out- sourcing based on economies of scale. The adoption of this philoso- phy creates a structured way of understanding the cost side of the IT dilemma and requires business units to integrate their own plans with those offered by emerging technologies. The supporter aspect of technology became the base of cultural assimilation because once a technology is adapted by operations, there must be a correspond- ing process that fosters its impact on organizational structures and cultural behaviors. It also provides the short- and long-term expected transformations, which ultimately link technology and strategic performance.

The driver/supporter philosophy also shows the complexity of the many definitions of technology and that executives should not attempt to oversimplify it. Simply put, technology must be discussed in differ- ent ways, and chief IT executives need to rise to the occasion to take a leadership role in conveying this to executives, managers, and opera- tions through organizational learning techniques. Organizations that can implement driver/supporter methods will inevitably be better positioned to understand why they need to invest in certain technolo- gies and technology projects. My initial case study at Ravell exposed the potential limit of only operating on the unit levels and not getting executives involved in the system thinking and learning phases.

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These general themes can be formulated as a marriage between business strategy and technological innovation and can be represented as follows:

1. Organizations must change the business cycles of technology investment; technology investment must become part of the everyday or normative processes, as opposed to specific cycles based on economic opportunities or shortfalls. Emerging technologies tend to be implemented based on “stop and goes,” or breakthroughs followed by discontinuities (Tushman & Anderson, 1997).

2. The previous experiences that organizations have had with technology are not a good indicator for its future use. Technology innovations must evolve through infrastructure, learning, and process evaluation.

3. Technology is central to competitive strategy. Executives need to ensure that technology opportunities are integrated with all discussions on business strategy.

4. R&D is at the center of systems/organizational-level think- ing and learning. Companies need to create R&D operations not as separate entities but as part of the evaluation processes within the organizational structure.

5. Managing technology innovations must be accomplished through linkages. Thus, interfaces across communities of practice via common threads are essential to have learning improve the ability of the organization to operate within responsive organizational dynamism.

6. Managing intellectual capital is an exercise of linking the various networks of knowledge in the organization. Managing this knowledge requires organizational learning to transfer tacit knowledge to explicit knowledge. The cul- tural assimilation component of responsive organizational dynamism creates complex tacit knowledge between IT and non-IT business units.

7. There are multiple and complex levels of management that need to be involved in responsive organizational dynamism. Successful management utilizes organizational learning prac- tices to develop architectures, manage change, and deal with

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short- and long-term projects simultaneously. Strong leader- ship will understand that the communities of practice among the three primary levels (executive, middle management, and operations) constitute the infrastructure that best sus- tains the natural migration toward responsive organizational dynamism.

This book looked at business strategy from yet another perspec- tive, beyond its relationship with emerging technologies. Because organizational learning is required to foster responsive organizational dynamism, strategy must also be linked to learning. This linkage is known as strategic learning, which if implemented helps organizations to continually adapt to the changing business environment, including changes brought about by technology.

However, due to the radical speed, complexity, and uncertainty, traditional ways of doing strategy and learning can no longer ignore the importance of technology. The old methods of determining busi- ness strategy were based on standard models that were linear and “plug-in.” As stated, they were also very much based on projects that attempted to design one-time efforts with a corresponding result. As Pietersen (2002) explained, “These processes usually produce oper- ating plans and budgets rather than insights and strategic break- throughs” (p. 250). Technological dynamism has accelerated the need to replace these old traditions, and I emphasized that organizations that practice responsive organizational dynamism must

Evaluate and implement technology in an ongoing process and • embed it as part of normal practices. This requires a change in integration and culture. Comprehend that the process of responsive organizational • dynamism is not about planning; it is about adaptation and strategic innovation. The process must feed on the creation of new knowledge • through organizational learning that leads to strategic orga- nizational transformation.

Many scholars might correlate strategic success with leadership. While leadership, in itself, is an invaluable variable, it is just that. To attain ongoing evolution, I believe we need to move away from relying

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on individual leadership efforts and move toward an infrastructure that has fewer leaders and more normative behavior that can support and sustain responsive organizational dynamism. Certainly, this fos- ters the important roles and responsibilities of CEOs, managers, and boards, but to have an ongoing process that changes the thinking and the operational fundamentals of the way the organization functions is more important and more valuable than individual leadership. That is why I raised the issues of discourse and language as well as self- development. Therefore, it is the ability of an organization to trans- form its entire community that will bring forth long-term strategic performance.

What this book really commits to is the importance of lifelong learning. The simple concept is that adults need to continually chal- lenge their cultural norms if they are to develop what Mezirow (1990) called “new meaning perspectives.” It is these new meaning perspec- tives that lay the foundation for responsive organizational dynamism so that managers and staff can continually challenge themselves to determine if they are making the best strategic decisions. Furthermore, it prepares individuals to deal with uncertainty as well as the ongoing transitions in the way they do their jobs. It is this very process that ultimately fosters learning in organizations.

While on-the-job training is valuable, Ravell shows us that move- ment, or rotation of personnel, often supports individual learning. Specifically, the relocation of IT personnel to a business unit envi- ronment during Ravell Phase I served to get IT staff more accli- mated to business issues. This relocation helped IT staff members to begin to reflect about their own functions and their relationship to the overall mission of the organization. Ravell Phase III showed yet another transition: taking a group of IT staff members and perma- nently integrating them in a non-IT business-specific department. Ravell also teaches us that reflection must be practiced; time must be devoted to its instruction, and it will not occur automatically with- out interventions from the executive rank. The executive must be a “champion” who demonstrates to staff that the process is important and valued. Special sessions also need to be scheduled that make the process of learning and reflection more formal. If this is done and nurtured properly, it will allow communities to become serious about best practices and new knowledge creation.

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ConClusIons 307

Although I used technology as the basis for the need for responsive organizational dynamism, the needs for its existence can be attrib- uted to any variable that requires dynamic change. As such, I suggest that readers begin to think about the next “technology” or variable that can cause the same needs to occur inside organizations. Such accelerations are not necessarily limited to technology. For example, we are experiencing the continuation of organizational downsizing from acquisitions. These acquisitions present similar challenges in that organizations must be able to integrate new cultures and “other” business strategies and attempt to form new holistic directions— directions that need to be formed quickly to survive.

The market per se also behaves in a similar way as technology. The ability to adjust to consumer needs and shifting market segments is certainly not always related to technological change. My point is that responsive organizational dynamism is a concept that should be embraced notwithstanding whether technology seems to have slowed or to have no effect on a specific industry at a particular moment. Thus, I challenge the organizations of today to develop new strate- gies that embrace the need to become dynamic throughout all of their operations and to create communities of practice that plan for ongoing strategic integration and cultural assimilation.

This book looked at the advent of technology to uncover a dilemma that has existed for some time. Perhaps a more general way of defin- ing what responsive organizational dynamism offers is to compare it to another historical concept: “self-generating organizations.” Self- generating organizations are known for their promotion of autonomy with an “underlying organic sense of interdependence” (Johansen, Saveri, & Schmid, 1995). Based on this definition, a self-generating organization is like an organism that evolves over time. This notion is consistent with organizational learning because they both inherently support inner growth stemming from the organization as opposed to its executives. The self-generating organization works well with responsive organizational dynamism in the following ways:

Traditional management control systems do not apply.• Risks are higher given that these organizational workers are • granted a high degree of autonomy and empowerment that will lead to processes that break with the norms of the business.

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Adjustments and new processes should be expected.• These organizations tend to transform political activity into • strong supporting networks. Leadership definitions do not work. You cannot lead what • you cannot control.

Self-generating organizations have scared traditional managers in the past due to the fear they have of losing control. Responsive organi- zational dynamism provides a hybrid model that allows for self-gener- ating infrastructures while providing certain levels of control fostered by organizational learning. Specifically, this means that the control is not traditional control. Responsive organizational dynamism, for example, embraces the breaking of rules for good reasons; it allows individuals to fail yet to reflect on the shortfall so that they do not repeat the same errors. It also allows employees to take risks that show promise and lead to increased critical thinking and to strategic action. Indeed, management and leadership become more about framing con- ditions for operations, observing the results, and making adjustments that maintain stability. Thus, seeing responsive organizational dyna- mism as a form of self-generation is the basis of sustaining innovative infrastructures that can respond to dynamic variables like technology.

I have emphasized the need for organizational learning as the key variable to make responsive organizational dynamism a reality. While I have modified many of the organizational learning theories to fit this need, I must acknowledge that a portion of the “learning” should be considered “organizing.” Vince (2002) provided an analysis of how organizational learning could be used to sustain an “organized” reflection. He provided an interesting matrix of how the two theories can be integrated. After reviewing many of the ways in which organi- zational learning affects responsive organizational dynamism, I have developed a modified chart of Vince’s original framework as shown in Table 10.1.

Table 10.1 shows the three kinds of reflective practices that can operate in an organization: individual, group, and organizational. I emphasized in Chapter 9 that the extent of organizational learning maturation is directly related to the sophistication of reflections among the communities of practice. The more learning that occurs based on individual reflection, the earlier the stage at which organizational

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C

o n

C l

u s

Io n

s

3 0

9

Table 10.1 Individual, Group, and organizational and Reflective Practices

InDIvIDuAl GRouP oRGAnIzATIonAl

Relations between the person, role, and the organization-in-the-mind

Relations across the IT boundaries of self or other and of subdepartments within IT

The relations between IT and other business units

Peer consulting groups (nonmanagerial self-governing IT groups of at least three individuals)

Making connections for the self: review and reflection within IT community by friendship and mutuality of interests and needs

Making connections in small groups with “others” across IT organization; develop interpersonal communication and dialogue within IT communities

Making connections with the entire organization: reflection on ways that technology affects other groups in the organization

Organizational role analysis (linking individuals with “others” inside the IT organization)

organizational role analysis: understanding the connections between the person, the person in IT, and his or her role in organization

Role analysis groups: the ways in which technology roles and the understanding of those roles interweave within an IT community or department

Technology role provides the framework within which the person and are integrated

Communities of practice (groups of individuals united in actions that contribute to the production of IT ideas in practice)

Involvement: providing personal experience as the vehicle to organize the use of technology

engagement: experience used to apply technology across IT organization; understanding of importance of IT interdepartment communication

establishment: experience of power relations as they react and respond to technology uses among communities of practice

Group relations conferences (reveal the complexities of feelings, interactions, and power relations that are integral to the process of organizing technology implementations)

experiencing and rethinking technology authority and the meaning and consequences of leadership and followership

experiencing defensive mechanisms and avoidance strategies across IT departments; experience of organizing, belonging, and representing across IT organizations

experiencing the ways in which IT and the organization become integrated using collective emotional experience, politics, leadership, authority, and organizational transformation

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310 InFormAtIon teChnology

learning maturity occurs. Thus, more mature organizations reflect at the group and organizational level. Becoming more mature requires a structured process that creates and maintains links between reflection and democratic thinking. These can be mapped onto the responsive organizational dynamism arc, showing how, from an “organizing” perspective, reflective practices serves as a process to “outline what is involved in the process of reflection for learning and change” (Vince, 2002, p. 74). Vince did not, however, establish a structure for imple- mentation, for which responsive organizational dynamism serves that very purpose, as shown in Figure 10.2.

Figure 10.2 graphically shows how organized reflection maps to the linear stages of the responsive organizational dynamism arc (the orga- nizational-level maturity arc), which in turn maps onto the three best practices arcs discussed in Chapter 9. Each of the management arcs represents a level of management maturity at the organizational level, with Vince’s (2002) matrix providing the overarching concepts on how to actually organize the progression from individual-based thinking

Organizational Level

Maturity Arc

Chief IT Executive Best Practices Maturity Arc

CEO Technology Best Practices Maturity Arc

Middle Management

Technology Best Practices

Maturity Arc

Vince’s “Organizing” Reflection Matrix

Strategic Integration Cultural Assimilation Organizational Learning Constructs Varying Levels of Mgmt Participation

Individual Reflection

Organizational ReflectionLinear Stages Learning Maturation

Individual Reflection

Group Reflection

Organizational Reflection

Figure 10.2 RoD and vince’s reflection matrix.

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ConClusIons 311

and reflection to a more comprehensive and systems-level thinking and learning base. The emphasis, overall, is that individual learning alone will undermine collective governance. Therefore, the movement from individual to organizational self-management remains a critical part of understanding how technology and other dynamic variables can foster new strategies for competitive advantage.

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Glossary of Terms

Business process reengineering: A process that organizations undertake to determine how best to use technology to improve business performance.

Customer relationship management (CRM): The development and maintenance of integrated relationships with the customer base of an organization. CRM applications provide organizations with integrated tools that allow individuals to store and sustain valuable information about their customers.

Data mapping: The process of comparing the data fields in one data- base to another or toward a new application database.

Decision support systems (DSS): Assist managers to make better decisions by providing analytical results from stored data.

Enterprise resource planning (ERP): A set of multimodule appli- cations that supports an entire manufacturing and business operation, including product planning, purchasing, main- taining inventories, interacting with suppliers, providing customer service, accounting interfaces, and tracking order shipments. These systems are also known as enterprise-level applications.

Garbage can: An abstract concept for allowing individuals a place to suggest innovations brought about by technology. The inven- tory of technology opportunities needs regular evaluation.

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314 glossAry oF terms

Internet: A cooperative message-forwarding system that links com- puter networks all over the world.1

Intranet: A network confined to a single organization or unit.2 ISO 9000: A set of quality assurance standards published by the

91-nation International Organization for Standardization (ISO). ISO 9000 requires firms to define and implement quality processes in their organization.

Legacy: An existing software application or system that is assumed to operate. By definition, all applications in production become legacies.

Operational excellence: A philosophy of continuous improvement throughout an organization by enhancing efficiency and qual- ity across operations.

Storyboarding: The process of creating prototypes that allow users to actually see examples of technology and how it will look and operate. Storyboarding tells a story and can quickly edu- cate executives without being intimidating.

Technology definitions branding: The process of determining how an organization wants to be viewed by its customers. Branding includes not only the visual view but also the emo- tional, rational, and cultural image that consumers associate with an organization, its products, and services.

User interface: The relationship with end users that facilitates the process of gathering and defining logical requirements.

User level: The tier of computer project experience of the user. There are three levels: (a) knowledgeable, (b) amateur, and (c) novice.

Virtual teams: Groups of people geographically disbursed and linked together using communication technologies.

Web (World Wide Web): Loosely organized set of computer sites that publish information that anyone can read via the Internet using mainly HTTP (Hypertext Transfer Protocol).

Y2K (Year 2000): A monumental challenge to many organizations due to a fear that software applications could not handle the turn of the century. Specifically, calculations that used the year portion of a date would not calculate properly. As such, there was a huge investment in reviewing legacy systems to uncover where these flaws existed.

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glossAry oF terms 315

Organizational Learning Definitions Action science: Pioneered by Argyris and Schön (1996), action science

was designed to promote individual self-reflection regarding behavior patterns and to encourage a productive exchange among individuals. Action science encompasses a range of methods to help individuals learn how to be reflective about their actions. A key component of action science is the use of reflective practic- es—including what is commonly known among researchers and practitioners as reflection in action, and reflection on action.

Balanced scorecard: A means for evaluating transformation, not only for measuring completion against set targets but also for defining how expected transformations map onto the strate- gic objectives of the organization. In effect, it is the ability of the organization to execute its strategy.

Communities of practice: Are based on the assumption that learn- ing starts with engagement in social practice and that this practice is the fundamental construct by which individuals learn. Thus, communities of practice are formed to get things done using a shared way of pursuing interest.

Cultural assimilation: A process that focuses on the organizational aspects of how technology is internally organized, including the role of the IT department and how it is assimilated within the organization as a whole. It is an outcome of responsive organizational dynamism.

Cultural lock-in: The inability of an organization to change its corpo- rate culture even when there are clear market threats (Foster & Kaplan, 2001).

Double-loop learning: Requires individuals to reflect on a prior action or habit that needs to change in behavior and change to operational procedures. For example, people who engage in double-loop learning may need to adjust how they perform their job as opposed to just the way they communicate with others.

Drivers: Those units that engage in frontline or direct revenue- generating activities.

Experiential learning: A type of learning that comes from the experiences that adults have accrued over the course of their

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individual lives. These experiences provide rich and valuable forms of “literacy” that must be recognized as important com- ponents to overall learning development.

Explicit knowledge: Documented knowledge found in manuals, documentation, files, and other accessible places and sources.

Flame: A lengthy, often personally insulting, debate in an elec- tronic community that provides both positive and negative consequences.

Frame-talk: Focuses on interpretation to evaluate the meanings of talk.

Knowledge management: The ability to transfer individual tacit knowledge into explicit knowledge.

Left-hand column: A technique by which individuals use the right- hand column of a piece of paper to transcribe dialogues that they feel have not resulted in effective communication. In the left-hand column of the same page, participants write what they were really thinking at the time of the dialogue but did not say.

Management self-development: Increases the ability and willing- ness of managers to take responsibility for themselves, par- ticularly for their own learning (Pedler, Burgoyne, & Boydell, 1988).

Mythopoetic-talk: Communicates ideogenic ideas and images that can be used to communicate the nature of how to apply tool- talk and frame-talk within the particular culture or society. This type of talk allows for concepts of intuition and ideas for con- crete application.

Organizational knowledge: Is defined as “the capability of a com- pany as a whole to create new knowledge, disseminate it throughout the organization, and embody it in products, ser- vices, and systems” (Nonaka & Takeuchi, 1995, p. 3).

Organizational transformation: Changes in goals, boundaries, and activities. According to Aldrich (2001), organizational trans- formations “must involve a qualitative break with routines and a shift to new kinds of competencies that challenge existing organizational knowledge” (p. 163).

Reflection with action: Term used as a rubric for the various meth- ods involving reflection in relation to activity.

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Responsive organizational dynamism: The set of integrative responses by an organization to the challenges raised by technology dyna- mism. It has two component outcomes: strategic integration and cultural assimilation.

Single-loop learning: Requires individuals to reflect on a prior action or habit that needs to be changed in the future but that does not require individuals to change their operational procedures with regard to values and norms.

Strategic integration: A process that addresses the business-strategic impact of technology on organizational processes. That is, the business-strategic impact of technology requires immediate organizational responses and, in some instances, zero latency. It is an outcome of responsive organizational dynamism, and it requires organizations to deal with a variable that forces acceleration of decisions in an unpredictable fashion.

Supporters: Units that do not generate obvious direct revenues but rather are designed to support frontline activities.

Tacit knowledge: An experience-based type of knowledge and skill with the individual capacity to give intuitive forms to new things; that is, to anticipate and preconceptualize the future (Kulkki & Kosonen, 2001).

Technological dynamism: Characterizes the unpredictable and accelerated ways in which technology, specifically, can change strategic planning and organizational behavior/culture. This change is based on the acceleration of events and interactions within organizations, which in turn create the need to better empower individuals and departments.

Tool-talk: Includes instrumental communities required to discuss, conclude, act, and evaluate outcomes.

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