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Chapter9.DesignsforDigitalOrganizationsandBigData.pptx

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Chapter 9 Designs for Digital Organizations and Big Data Analytics

Organization Theory and Design

Thirteenth Edition

Richard L. Daft

Chapter

Learning Objectives (slide 1 of 2)

Explain the impact of digital technology on organizations as it evolved from mainframe computers to the Internet of Things.

Describe the differences between a traditional “pipe” organization and a new “platform” organization.

Define how big data analytics is distinct from previous data analysis activities within organizations and specify various approaches to organizing big data scientists within an organization.

Explain how artificial intelligence improves efficiency and decision making in organizations and discuss its potential downsides.

Learning Objectives (slide 2 of 2)

Explain how IT can be used for social network analysis and knowledge management in organizations.

Describe how organizational design is changing because of advances in artificial intelligence.

The Digital Information Explosion (slide 1 of 2)

Digital media means that information or data can be both created and consumed by machines, and thereby be generated, modified and distributed on digital electronic devices

In the evolution of IT, mainframe computer systems in organizations were applied to operations

These systems became transaction processing systems (TPSs), which automate the organization’s routine, day-to-day business transactions

Evolution of Information Technology

The Digital Information Explosion (slide 2 of 2)

Mainframes also enabled the subsequent use of:

Data warehousing (use of huge databases)

Internal business intelligence (data mining)

Mobile Internet has enabled big data analytics—new sensing technologies and processes for gathering, searching and analyzing massive, complex sets of data

Most recent jump in the information explosion is to the “Internet of Things”: every “thing” can have a chip inserted to communicate data to other devices

Pipes versus Platforms: A New Organization Form

Traditional organizations, or “pipe” firms, acquire resources at one end of the pipe, make stuff within the pipe, and push the result out the other end for sale to customers

In platform-based organizations, producers and consumers are connected via digital technology

Platforms harness and create large networks of users (consumers) and resources (producers) that can be accessed on demand

A platform-based business is a complete organizational form

Platform-Based Digital Organization Ecosystem

Two Types of Platform-Based Organizations

Exchange platforms facilitate 1:1 interactions among members

Example: Lyft

Maker platforms facilitate 1:1,000s interactions among members

Example: YouTube

Foundational Assumptions

Pipe Firms

Pipe Assumption 1: Organizations create competitive advantage through increasing size of capital assets, including buildings and manufacturing facilities

Pipe Assumption 2: Organizations act as information processing structures or hierarchies

Pipe Assumption 3: Managers are promoted into positions of increasing responsibility as they gain experience and show talent for making bigger decisions for the company

Platform-Based Organizations

Platform Assumption 1: Capital assets can be owned by the connected producers and consumers of the platform; the platform can minimize rather than add assets

Platform Assumption 2: Information in the digital era travels extremely fast and widely

Platform Assumption 3: Algorithmic systems embedded in the platform software are more consistent, impartial, and faster for making decisions than are humans in many areas

Platform Design Recommendations

While there are no hard and rules for this organizational form, recommendations for effectively designing a platform-based organization include:

Envisioning a constructive culture

Investing in digital talent

Promoting soft skills and team building

Big Data Analytics and Requirements

Big data is any massive data set that exceeds the boundaries and conventional processing capabilities of traditional IT

The five elements of big data are:

Volume

Use all data

Use messy data

Adopt new mindset

Organization structure

Big Data is Really Big

Elements of Big Data Function

Big Data and Organization Structure

There is no “one best way” to organize big data activity within an enterprise

Various structural options may work, depending on the size and type of organization:

Outsourcing (including the use of data intermediaries)

Centralized

Balanced (or hybrid) design

Decentralized

Alternative Structures for Organizing Big Data Analytics

Artificial Intelligence

Computer-based artificial intelligence (AI) has the ability to make decisions equal to or better than human beings

Companies have adopted AI in core manufacturing technologies and in aspects of organization management, such as accounting, customer service, and HR

Though it can “see” data in ways that were not previously possible, AI is not completely objective and can have its own biases

New Information Technologies Used in Organizations

Nudge Management and Algorithmic Control

AI coaching programs nudge management, or nudges, toward desired behaviors

Nudge management theory is based on research into how people make decisions based on what is easier rather than on what is in their best interest

Algorithmic control is the use of software algorithms to set targets, measure performance, provide feedback, and decide rewards for employees

Organizations use algorithms for such intense control because it reduces employee variability and slack

AI Implications for Organization Design

Due to the rapid growth of artificial intelligence applications, organizations should make two adjustments to their design:

Add a chief artificial intelligence officer

Decentralize authority to employees doing nonroutine work

Social Network Analysis

Social network analysis (SNA) shows informal relationships and network structures within an organization

There are three roles within a firm’s social network:

Hubs are at the center of the network

Peripheral players have the fewest connections and operate on the network’s boundaries

Brokers connect people across boundaries and subgroups

Social network analysis offers clear delineation of relationships through data, facts, and statistics

Roles in a Social Network

Knowledge Management

Knowledge management refers to the systematic efforts of organizing and making the company’s intellectual capital available as well as fostering a culture of learning

Intellectual capital is the sum of knowledge, experience, understanding, relationships, processes, innovations, and discoveries

Codified knowledge is formal, systematic, and passed on to others in documents, rules, or general instructions

Tacit knowledge is gained through personal experience, rules of thumb, intuition, and judgment

Two Approaches to Knowledge Management

Digital Impact on Organization Design

Implications of the advances in digital IT for organization design are:

Smaller organizations

Decentralized organization structures

Improved horizontal coordination and collaboration

Enhanced network structures

Organizational Design Essentials (slide 1 of 2)

Mainframe computers allowed organizations to undertake transaction processing systems, data warehousing, and internal business intelligence.

Later developments in personal computers and the Internet supported knowledge management, social network analysis, and external business intelligence.

The Internet and mobile devices enabled the development of the platform-based digital organization, a new organizational form that digitally connects producers and consumers rather than producing a product or service of its own to sell.

Big data analytics uses digital technologies to examine huge data sets to uncover hidden patterns, correlations, and other useful information and to make better decisions.

Organizational Design Essentials (slide 2 of 2)

Companies can outsource, centralize, decentralize, or use a Center of Excellence for their big data activities.

Artificial intelligence encompasses techniques used to teach computer systems to learn, reason, perceive, infer, communicate and make decisions similar to or better than human beings.

Algorithmic control systems can measure every aspect of routine work to seemingly gain more work from employees with the loss of employee autonomy.

Managers can use social network analysis to increase coordination and collaboration.

Advances in IT are having a significant impact on organization design, including the creation of virtual network organization structures.