Object-oriented strategy
Richard T. Watson
The University of Georgia
rwatson@mis.terry.uga.edu
1
Frederick R. Weisman Art Museum,
by Frank O. Gehry
University of Minnesota
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Weatherhead School of Management
by Frank O. Gehry
Case Western Reserve University
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OO design
The goal of OO design is to identify
accurately the principal roles in an
organization or process, assign
responsibilities to each of these roles,
and define the circumstances under
which roles interact with one another
Pancake, C. M. 1995. The promise and cost of object technology:
a five-year forecast. Communications of the ACM. 38 (10):33-49.
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Chandler’s thesis
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Strategy structure
New structures reflect changes in the
economy
Organizations are influenced by the
state of administrative art
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Administrative art is influenced by the
vocabulary of discourse
Why OO?
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Success in building complex systems
It provides a vocabulary for thinking
about networks of cooperating firms
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The network economy
Virtual corporation
Networks have nodes (objects) and links
Classes
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A group of objects
with similar
properties
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A group of firms
with similar
properties
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An industry
Objects
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Software containing
data and methods
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Firms with an
organizational
memory and
business rules
Messages
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Means by which
objects
communicate
Objects request
services from each
other
Objects cooperate by
exchanging
messages
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Means by which
firms communicate
Firms request
services from each
other
Firms cooperate by
exchanging
messages
Generalization/specialization
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Classes can be
specializations or
generalizations of
other classes
A multi-divisional
corporation
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General
Motors
Cadillac
Catera
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Chevrolet
Deville
Aurora
Buick
Riveria
Oldsmobile
Century
Pontiac
Saturn
Inheritance
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Classes inherit
properties from
their superclass
Inherited properties
can be reused or
overridden
Eliminates
redundancy
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Divisions inherit
properties of their
corporation
Inherited properties
can be reused or
overridden
Eliminates
redundancy
A design decision
Encapsulation
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All processing that
changes the state of
an object is done
within that object
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A firm is an
autonomous unit, but
there are situations
where deencapsulation is
beneficial
Levels of encapsulation
Know what
Know how
Know why
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Trade-off
Cost
Coordination
Suboptimality
costs
costs
Low
High
Encapsulation
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Types of messages
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Operational
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Tactical
Encapsulation
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Relationship
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Strategic
De-encapsulation
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Know what
Know how
Know why
Reuse
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A new application
can be built from
existing objects
Code must be
written to exchange
messages between
objects
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A new firm can be
built from existing
firms
Procedures must be
developed for
exchanging
messages between
firms
Calyx & Corolla
Bank
payment
check
physical flow
electronic flow
credit card statement
credit
authorization
credit card
account details
Calyx & Corolla
sales
marketing
IS
R&D
Grower
picking
packing
order
tracking data
sale
Retailer
sales
Parcel service
delivery
order
Customer
order
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flowers
flowers
Calyx & Corolla
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“Ruth created the relationship with
FedEx, but when it comes to managing
the logistics on a daily basis, she does
not get involved. All Ruth wants to know
is that the package got there eventually;
how it gets there is my problem and Fed
Ex's problem.”
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A grower
Amazon.com
Bank
payment
check
physical flow
electronic flow
credit card statement
credit
authorization
Book
wholesaler
inventory
Amazon.com
sales
marketing
IS development
server operations
editorial
order
book
Affinity group
sales
credit card
account details
sale
sale
link to Web site
Author
marketing
Parcel service
delivery
tracking
book
order
editorial
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service
request
Customer
editorial
sales
ezgov.com—Portal
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ezgov.com—Payments
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ezgov.com—Competitors
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Some principles
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Encapsulation enables executive management to
focus on the core object
Significant IT investment is frequently required to tie
the objects together
The core object must encapsulate knowledge critical
to long-term success
Where possible get customers to add value to other
customers
By using other business objects an organization can
reduce transaction diversity
Theory of the firm
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Coase
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“A firm, therefore, consists of the system of
relationships which comes into existence
when the direction of resources is
dependent on an entrepreneur.”
Williamson’s organizational
forms
Organizing mode
Integrated hierarchy
Semi-hierarchy
Co-contracting
Coordinated
contracting
Coordinated revenue
links
Spot networks
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Distinguishing feature in objectorientation terms
A large core object
Multiple large core objects.
Inheritance is a key consideration.
A small number of large core objects, who
agree to give up encapsulation,
A network of highly encapsulated objects.
Usually there is a coordinating, marketfocused object.
A central marketing object with many
independent production objects.
Inheritance is high.
Many instances of the buyer and seller
object classes
Example
A single product
firm
A multi-divisional
firm
Joint venture
Contractors and
subcontractors
Franchising
A stock exchange
low
Encapsulation
low
high
Mess aging
low
A taxonomy of
organizations
high
Encapsulation
low
high
Inheritance
low
high
Encapsulation
low
high
Mess aging
low
high
Encapsulation
few
high
Objects
low
many
low
Encapsulation
high
Mess aging
high
low
low
Encapsulation
high
Inheritance
low
high
Encapsulation
low
high
Mess aging
low
high
Encapsulation
high
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Market
The fully functional firm and
the network organization
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Ownership of most
functions
Hierarchy of
authority
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Separate companies
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Coordinated by
mutual interest or
network integrator
High encapsulation
Low inheritance
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Low encapsulation
High inheritance
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Networks
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Relatively large core object
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Relatively small core object
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Nike
Benetton
Calyx & Corolla
Amazon.com
CDNow
Travel Bids
A design methodology
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Identify the methods the business must perform
Identify the competitiveness preserving methods and
allocate these to the core object
Identify reusable objects with competitive
competency in any of the unallotted methods and
allocate methods to them
Allocate remaining methods to other reusable objects
or the core object
Specify the message passing protocol between objects
Examine each object to determine the level of
encapsulation
Rethinking strategy
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Existing theory based on studies of
industrial era firms
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Economics is being rethought
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From Chandler to Prahalad and Hamel
Arthur and increasing returns
Revising Chandler
Structure
Available
objects
Strategy
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Coping with information
overloading
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Allocate less time to each input
Disregard low priority inputs
Reduce the reception of messages by
filtering
Redraw boundaries to shift transactions
to other parties
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Fragmentation
Encapsulation
OO strategy
Economies of agglomeration
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The utility of an economy, just like a
network, grows exponentially as the
number and diversity of objects
increases
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Pockets of industry
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Metcalfe’s law
Silicon Valley and computers
Dallas and telecommunications
Northern Italy and textiles
Economies of agglomeration
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Declining factors
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Growing factors
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Electronic networks
Language (English + jargon)
Standards
Knowledge-based agglomerations
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Geography
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Consulting partnerships
Software ecologies
Contribution
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A concise and complete set of concepts for describing
complex systems that interact electronically
Extends the network model to focus on the nodes as
well as the links
Unites a variety of strategic thinking notions (e.g.,
core competency and empowerment as
encapsulation)
A tool for designing organizations
A theoretical foundation for studying information age
organizations
Conclusion
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The modern firm
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Endoskeletial
Integration
Differentiation
Conglomerate
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The postmodern
firm?
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Exoskeletial
Fragmentation
Dedifferentiation
Core object