Introduction to
E-business and understanding Business
ITU
Spring 2013
Any questions so far?
2
I have some questions!
•
•
•
•
What is e-business?
What is e-commerce?
Dis-, Re- and Counter-intermediation?
Major market models?
3
We must still understand business
• Way to many business fail when trying to transform into ebusiness
• That is often because they don’t understand the basics of their
own organization, strategy, culture and leadership
• It furthermore takes a new understanding of customers
• An how to transform and change – while the environment
change..
Waves of change
Customer Segmentation
E-business environment
Preparing for next time
• What is an organization?
Organizations
• Organization:
– a social arrangement which pursues collective goals,
controls its own performance, and has a boundary
separating it from its environment.
Images of Organization
- Morgan, G. (1998)
What is a good metaphor for an
organization?
Cultural Studies
Literary Theory
Poststructural Philosophy
Postmodern Architecture
Linguistics
Semiotics and Hermeneutics
Folklore Studies
Cultural Anthropology
Social Psychology
Biology-Ecology
Political Science
Sociology
Engineering
Economics
PREHISTORY
1900-1950’s
Smith (1776)
Marx (1867)
Durkheim(1893)
Taylor (1911)
Follett (1918)
Fayol (1919)
Weber (1924)
Gulick (1937)
Barnard (1938)
Fig 1.1
MODERN
1960’s & 70’s
Von Bertalanffy (1950)
Trist & Bamforth (1951)
Boulding (1956)
March &Simon (1958)
Emery (1960)
Burns & Stalker (1961)
Woodward (1965)
Lawrence & Lorsch (1967)
Thompson (1967)
SYMBOLICINTERPRETIVE
1980’s
Schutz (1932)
Whyte (1943)
Selznick (1949)
Goffman (1959)
Gadamer (1960)
Berger & Luckmann (1966)
Weick (1969)
Geertz (1973)
Clifford & Marcus (1986)
POSTMODERN
1990’s
Saussure (1959)
Foucault (1972)
Bell (1973)
Jencks (1977)
Derrida (1978)
Lyotard (1979)
Rorty (1980)
Lash & Urry (1987)
Baudrillard (1988)
Sources of inspiration for organization theory
Why methaphors?
• Metaphor is a way in which humans create meaning by using one
element of experience to understand another.
• Metaphors gives us the opportunity to stretch our thinking and
deepen our understanding, therefore allowing us to see things in new
ways and act in new ways.
• Applied in this way, metaphor becomes a tool for creating an
understanding about what we now recognize as organization and
management.
• To achieve greater effectiveness, managers must become skilled at
analyzing organizations from different perspectives and develop
action strategies that are consistent with the insights they glean.
• Managers who are skilled in the art of reading organizational life have
a capacity to remain open and flexible, suspending immediate
judgements until a more comprehensive view of the situation
emerges.
Machine
• Theorist Henri Fayol, F.W. Mooney, and Col. Lyndall Urwick
• Interest in rational planning, organization, budgetting, command,
coordination, and control.
• Organization seen as a form of engineering. Just like an engineer
designs a machine, classical theorists were attempting to achieve a
similar design approach to organizations:
1) conceived organization as a network of parts
2) they designed the organizational structure to operate as precise
as possible.
• The whole thrust of classical management theory suggest that
organizations can or should be rational systems that operate in as
efficient manner as possible. This is easier said than done, because we
are dealing with people, not inanimate cogs and wheels.
Strenght and limitations
• Some organizations are run as a machine. Max
Weber’s bureaucracy – precision, speed, clarity,
regularity, reliability, efficiency is achieved
through a fixed division of tasks, hierarchy,
supervision, detailed rules, regulations.
• Strengths:
• 1) Mechanistic approaches work well under
conditions where machines work well:
straightforward task, consistency, precision is a
premium (fast food example).
Organisms
• Whereas under “Taylorism” organizations were viewed as a technical
problem (machines) and reduced to “paying the right rate for the
job,” much of organizational theory since the late 1920’s has focused
the limitations of the machine perspective and sought to identify the
social and psychological needs of people in organizations.
• The Hawthorne Studies (1920’s-1930’s), lead by Elton Mayo are now
famous for identifying the importance of social needs in the
workplace.
• A new theory of organization began to emerge, built on the idea that
individuals and groups, like biological organisms, operate most
effectively when their needs are satisfied.
• Abraham Maslow’s theory suggests that humans are motivated by a
hierarchy of needs, not just money as suggested in bureaucratic
organizations.
Revelations
•
The Organismic metaphor has helped organizational theorist to identify:
•
•
•
•
•
•
1) Organizations as “open systems”
2) The process of adapting organizations to environments
3) Organizational life cycles
4) Factors influencing organizational health and development
5) Different species of organizations
6) The relations between species and their ecology
•
Open system theory emphasizes the importance of environment in which the
organization exists.
Organizations are seen as sets of interrelated sub-systems.
The open systems approach encourages us to establish contingencies or alignments
between different systems and to identify and eliminate potential dysfunctions.
•
•
Mechanistic vs. Organic
(Burns&Stalker (1961)
Stable environment
Works best when the environment is Dynamic and uncertain
relatively stable.
environment
Works best when the environment is
relatively dynamic and uncertain.
Low differentiation of
tasks
Tasks will not be differentiated much, High differentiation of
because each subtask is relatively
tasks
stable and easy to control.
Because tasks are often changing, tasks
may need to be differentiated, so
specialists, each responsible for one or
few tasks, are able to respond quickly.
Low integration of e.g.
departments and
functional areas
Due to the stability of tasks, there will High integration of e.g.
be low integration between
departments and
departments and functional areas,
functional areas
because tasks stay relatively stable, and
because the functional areas are not
heavily dependent on each other.
In complex environments, rapid
communication and information
sharing is necessary. Therefore,
departments and different functional
areas need to be tightly integrated
Centralized decisionmaking
When the environment is stable, there Decentralized decisionis no need for complex decision-making making
that involves people at lower levels.
Therefore, decision-making is
centralized at the top of the
organization.
When the environment is dynamic and
uncertain, there is a need for complex
decision-making that involves people
at lower levels. Therefore, decisionmaking power should be distributed to
lower ranks, which should get
empowered in making decisions.
Standardization and
formalization
When tasks are stable, tasks should be Little Standardization and
standardized and formalized, so that formalization
operations can run smoothly without
breakdowns.
When tasks change rapidly, it is
unfeasible to institute standardization
and formalized procedures. Instead,
tasks should be mutually adjusted, so
that each subtask is balanced with
other subtasks.
Validate e-business concept
•
•
•
•
•
Why is it an e-business concept?
How can you create value on the idea?
Who are the potential customers?
What could be the competition?
Is the technology available or…?
• Desirable – Feasible - Viable
Apply the theory!
• What kind of model are you using in your
concept?
• Use proper references!
• Presentation next time:
– Application of all the relevant theory from chapter
1,2 and 4