Information, Organizations, Processes and
Control
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Hierarchical organizations of past years
Today
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Process-oriented, Learning, Team-based, and Fastcycle organizational models
Flat, flexible, focused on core competence
Inside, empowered, interfunctional teams of
knowledge workers are reengineering and
continually improving core business processes.
Think globally and act locally
Information, Organizations,
Processes and Control
 Strategic alliance and partnership that will
enable them to focus on core competence
while expanding capabilities, scale and
scope.
 Creation of virtual organizations
 Challenge:
 How do we meet these challenges?
 How can organization be both global and local,
big and small, and radically decentralized with
centralized reporting and control?
Flattening the Organizational Structure
Matrix Organizational
Structure
But, hybrid designs bred conflict,
confusion, information overload, and
costly duplication of resources
Virtual Organizational
Structure
Information, Organizations,
Processes and Control
 Question: Can firms take the advantage of the
information management communication tools this
revolution provides to create an “information age
organization” that simultaneously manages speed
and complexity?
Information, Organizations,
Processes and Control

Notes:
 Although the networked IT infrastructure can provide important
tools, it can not define neither the information that needs to be
in the systems nor the meaning of the information and how to
use it to coordinate and manage the business.

Nor can the networked IT infrastructure define the
organizational structures, processes, and culture required to
enable people to use the information to make decisions and
take actions.

These tools cannot provide incentives that would motivate
people to use the information to meet both organizational and
personal objectives.

What should firms do?
Information, Organizations,
Processes and Control
 To accomplish the organizations of the year 2000 and
beyond firms must change the way they are
organized, and employees at all levels must become
information literate - not just computer literate.
Information, Organizations,
Processes and Control
 Notes:
 Implementing networked information and
communication system in a traditional, hierarchically
structured organization will not work.
 A much more comprehensive approach to
organizational change is required.
 In general implementing the technology is the least
complicated part; redesigning the organization and
defining the information to manage it constitute
major constraints on organizations’ attempts to meet
the challenges of the the year 2000s
Creating the Information Age
Organization
 Speed Counts, but not at the Expense of Control
 New products must be introduced quicker, order
processing cycle must be cut dramatically, etc.
 The faster the pace, the greater the need to
monitor business operations and clearly define and
enforce rules.
 Empowerment is not Anarchy
 In an empowered organization, senior managers
are more involved, not less; and organizational
boundaries and value systems must be more
clearly communicated, closely monitored, and
more consistently enforced.
Creating the Information Age
Organization

Transforming an Organization Requires more than just Changing
the Structure.
 True change occurs deep within the organization as individuals
and work teams redefine the way they work and the values
that guide decision making and action.

Managers need to rethink the nature of control and authority

Smashing together the features of the hierarchy with features
of an entrepreneurial firm will not work.

Work must change and people must change

New knowledge and skills are needed
Creating the Information Age
Organization

Transforming an Organization Requires more than just Changing
the Structure.
 The personal values and frameworks that people people use
to make decisions and take actions must be realigned with
new organizational priorities and goals.

The ability to transform the firms information infrastructure
is a critical component that both supports and enables the
organizational transformation

Change must not stop at the doors of the corporate
headquarters but must be infused throughout every part of
the organization

Laying collaborative structures (e.g. team-based units and
incentives) over a traditionally structured organization will
not work neither.
Streamlining the Business Cycle
 Operating Cycle
 The activities through which an organization
designs, produces, markets, delivers, and supports
its product and services
 Management Cycle
 The activities through which an organization
manages the design, produces, markets, delivers,
and supports its product and services
Operational
Process
Strategic Alignment
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Basic questions confronting managers
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What are the implication of IT in my business operations? Today
and in the future?
What are the alternative perspectives for leveraging IT capabilities
for business operations?
Is the locus of IT component “inside” or “outside” the operation?
What is the executive role of senior management for leveraging IT
capabilities?
How should the IT function be organized, and what is the role of IT
outsourcing
What are the appropriate criteria for assessing IT based benefits
Building the Networked Business
 “Our dream and our plan well over a
decade ago was simple. We set out to
shape a global enterprise that preserve the
classic big company advantages while
eliminating the big company drawbacks.
What we wanted to build was a hybrid
enterprise with the … body of a big
company and … the soul of a small
company”

Jack Welch Former GE CEO
Building the Networked Business
 “ABB is an organization with three
internal contradictions. We want to be
global and local, big and small,
radically decentralized with
centralized reporting and control. If
we resolve those contradictions, we
create real competitive advantage”

Percy Barnevik, CEO Asea Brown Boveri
(ABB)
Building the Networked Business
 “We saw two challenges ahead of us, one external and
one internal… Externally, we faced a world economy
that would be characterized by slower growth, with
stronger global competitors going after a small piece
of the pie. Internally, our challenge was even bigger.
We had to find a way to combine the power,
resources, and reach of a large company with the
hunger, agility, spirit, and fire of a small one.”

Jack Welch Former CEO of GE.
The Orga niza tion Design Ch allenge
Building the Networked Business
Organization
Complex &
Global
?
Hierarchy
Simple &
Local
Entrepreneurial
Organization
Stable &
Certain
Environment
Dynamic &
Uncertain
Source: Applegate, Lynd a M., Rober t D. Austi n, and F. War r en McF arla n, Corporate I nfor mation Strategy and M anagement . Bur r Ridge, IL:
McGr aw-Hill/Irwin, 2002.
Chapter 3 Figur e 3-1
Building the Networked Business
 Hybrid Organization design
 To improve control and efficiency while
simultaneously enabling flexibility and
speed of response
 But, hybrid designs bred conflict,
confusion, information overload, and
costly duplication of resources
Building the Networked Business
 Note
 Although the networked IT infrastructure can
provide important tools, it cannot define the
information that needs to be in the system.
 In addition, while the networked infrastructure
can enable new organization structures and
systems, it cannot motivate people to use the
information to make decisions and take actions
on behalf of the organization.
 New organization capabilities are required to
execute the sophisticated network strategies
and business models
Blueprint for the Networked
Organization
 Challenge
 Designing, implementing, and constantly evolving the
structure and systems that enable an organization to
executes its strategies and accomplish its goals is one
of the most formidable tasks facing 21st century
executives
 Continuous change is one of the most challenging
issues facing the 21st century executives
 Operating and Innovating
 Managing and Learning
 Leading and Engaging
Blueprin t for a “Big-Small” Business
Sample Organizational
Components
Sample Technology
Components
Leading & Engaging
•
•
•
•
•
Human Resources Management
Strategic Alliances
Customer Loyalty
Supplier Loyalty
Partnerships
•
•
•
•
•
HR Systems
Customer Relationship Management (CRM)
Personalization
Communication Infrastructure
User Access Devices
Managing & Learning
•
•
•
•
Planning and Budgeting
Performance Monitoring
Organization Structure and Reporting
Organization Decision Making and
Learning
•
•
•
•
Management Reporting
Decision Support Systems and Tools
Business Intelligence Systems
Data and Knowledge Management
•
•
•
•
•
Enterprise Resource Planning (ERP)
Supply Chain Management
Order Fulfillment
New Product Development
Distributed Information Processing
Infrastructure
Operating & Innovating
• Operating Process
• New Product Development
• Business Venturing
Source: Applegate, Lynd a M., Rober t D. Austi n, and F. War r en McF arla n, Corporate I nfor mation Strategy and M anagement . Bur r Ridge, IL:
McGr aw-Hill/Irwin, 2002.
Chapter 3 Figur e 3-3
Blueprint for a Networked
Organization
 Operating and Innovating
 The operating processes of a firm include all the
activities a firm and its suppliers and partners
undertake to design, build, market, sell, and
deliver products and services for customers,
suppliers, and business partners.
 Ability to flexibly adapt to constantly changing
business environment is the key to success.
Blueprint for a Networked
Organization
 Operation and Innovating
 Hierarchical Operations
 Define rigid procedures, top down
 Entrepreneurial Operation
 Company do not depend on well-defined polices and
procedures or structured jobs.
 Networked Operations
 Big-small companies,
 Precision execution and fast-cycled innovation
 Operation is designed to fully exploit the power of both
people and technology whether this assets are in your
firm or in someone else’s.
 Technology can ensure precision and people can use the
information in real-time to deal with unforeseen problems
Blueprint for a Networked
Organization
Blueprint for a Networked
Organization
 Managing and Learning
 The management processes and structures of a
firm include all the activities that a firm and its
business community undertake to:
 Plan strategy and how it will be executed
 Allocate resources
 Organize people into groups and coordinate
work
 Monitor and measure performance
 Adjust strategies, plans, budgets, and
organizations based on learning
Blueprint for a Networked
Organization
 Traditional Management Process
 Driven from top down, incremental goals and
allocation of resources to carry them out.
 Entrepreneurial Management Process
 Planning, decision making, action, and
performance management are informal and
ad hoc.
 Ability to respond quickly on the basis of
what is being learned are fundamental to
effective entrepreneurial management
Blueprint for a Networked
Organization
 Network Management Process
 Big-Small most provide assess to a shared
source of real-time information on market
dynamics, operations, and performance that
enables real-time planning and performance
monitoring.
 Networked management Process
 Improved access to information enables
employees, customers, and partners to invent
new ways of working and to respond quickly.
Blueprint for a Networked
Organization
 Leading and Engaging
 While management is all about coping with
complexity, leadership is all about attracting and
mobilizing the resources for change
 Leadership involves defining a clear, compelling vision
and ensuring that is translated into a set of actionable
strategies and initiatives.
 Attracting, motivating, energizing, and retaining top
talent inside an organization and within partner,
supplier, and customer networks
 Creates a culture and ensures that values, beliefs and
behaviors are deeply ingrained and reflected in the
decisions made and actions taken
Blueprint for a Networked
Organization
 Hierarchal Leadership
 Emphasis managing complexity and minimizing it.
 Management process overshadowed leadership
 Risk were minimized by centralizing decision making,
segregating activities and structuring work rigidly.
 Entrepreneurial Leadership
 “Create or seize an opportunity and pursue it
regardless of the resources currently controlled”
 Attract, motivate and engage people, partners and
investors in the task of working together to create a
clear and compelling vision that excites and deeply
engaged all involved.
Blueprint for a Networked
Organization

Networked Leadership
 In the Networked Economy, the free flow of information
throughout the company enhances the ability of
employees, customers, partners, and executives to share in
defining both a clear and compelling vision for change and
the necessary tactical initiatives required to achieve
business goals

When aligned with incentives and motivations that foster
commitment rather than simply compliance.

In complex global organizations senior executives cannot
oversee every decision or action taken by empowered
teams. So, it more important for them to identify key
strategic risks – critical success factors – and ensure that
they have effective control systems in place.
Networked Organizations (cont.)
Building Value Networks
 Building the value chain network
 Where Should Activities Be Performed?
 How Should We Relate to Market Participants?
Building Value Networks
 Building the value chain network
 Where Should Activities Be Performed
Options
Vertical Integration
Selective Sourcing
Virtual Integration
Description
Locate all but the most routine, transaction-oriented activities inside the
firm.
Source selected activities from the outside. Traditionally, sourced activities
were controlled through short-term contracts.
Become part of a network of highly specialized, independent parties that
work together to perform, coordinate, and control value chain activities.
Building Value Networks
 Building the value chain network
 How Should We Relate to Market Participants?
Basis of
Interaction
Duration of
Interaction
Level of
Business
Integration
Coordination
and Control
Information
Flow
Transaction
Discrete exchange of
goods, services, and
payments (simple
buyer/seller exchange)
Immediate
Low
Supply and demand
(market)
Primarily one way;
Limited in scope and
amount;
Low level of customization
Contract
Prior agreement governs
exchange (e.g., service contract,
lease, purchase agreement)
Usually short-term and defined
by the contract
Low to Moderate
Terms of contract define
procedures, monitoring, and
reporting
One or two way;
Scope & amount are usually
defined in the contract
Partnership
Shared goals and processes for
achieving them (e.g.,
collaborative product
development)
Usually long term and defined
by the relationship
High
Interorganizational structures,
processes, and systems;
Mutual adjustment
Two-way (interactive);
Extensive exchange of rich,
detailed information;
Dynamically changing;
Customizable
Impact of Information Technology on Market Evolution
Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/Irwin, 2002.
Chapter 3 Figure 3-7
Evolving Market Structures
Proprietary Capabilities and Infrastructure Create Walls
Inside an Organization and Among Members of a Value Chain Network
Questions that can help executives to
evaluate organization capabilities

What are your organization’s core capabilities, strengths and
weaknesses

What operating processes, policies, structures, and systems must be
changed to enable you to operate efficiently

What management system must be changed to enable you to ensure
that the company is in control yet is able to “learn by doing”

Is leadership stressed throughout the company. What organizational
structures, incentives. And cultural changes need to be made to enable
the company to act both big and small simultaneously.

Within which market do you currently participate? How do the market
participants relate.

Given your current and future strategy, what is the stream that must
be accomplished to develop products and services that create value for
all stakeholders