Management memo outline

The following is my content outline for the final paper in IDSC.

Takeaways from IDSC lectures

Week 1 lecture

  • This class is about the strategic role of IT in firms
  • What differentiates organizations is not level of investment, it’s the level of management involvement in IT
  • Prototypes being built now will launch in 2-to-3 years, need to know where the company is going to be at that point in the future when developing systems
  • Complements - A + B = more than the sum of its parts. Example of a complement is having software plus smart & trained staff
  • Governance question - what systems need to be company-wide versus department by department?

Week 2 lecture

  • Early on in transformation, you need heavy structure to effect change
  • No technology is going to solve your problem, it needs to come from understanding the business problem at hand
  • Concept of strategic alignment
  • To be effective bringing products to market, have to be able to put yourself in the customer’s shoes
  • Most important consideration is having a vision of the future. Defining that vision is the key question to get right when planning IT investment
  • Things go both ways. You have a tech strategy driven by business, and a business strategy driven by tech. Needs to be a bit of both.
  • Almost all tech investments need a business case
  • Good to have a balanced portfolio, including some moonshots

Week 3 lecture

  • Need to see IT as part of larger transformation of the business IT management and governance are mechanisms, goal is business operations and transformation
  • IT is very powerful at shaping processes
  • Question of balancing short term capabilities with long term needs
  • Significant nexus between business capability & IT decision units needs to speak up if needs not well met
  • Balancing act between centralization and decentralization
  • Decentralized = every unit gets what it wants
  • Centralized takes away control but increases cost effectiveness and efficiencies
  • “One face to the customer is not an easy capability to deliver”
  • System fragmentation can serve an individual business unit well, becomes a problem when stands in the way of decisions that you need to make
  • When metrics shift from growth to cost, priorities change
  • Roles in a company are bundles of decision rights
  • Places that manage to pull off transformation have a leader with vision able to pull off good governance
  • With careful selection of IT investments, you can transform a company one project at a time
  • In the absence of strategy, IT becomes like a shopping cart
  • How do you change decision rights and patterns of accountability?
  • See things not just in IT terms, bit’s about taking the company from one way of operating to another
  • IT governance and the way projects are approved has very powerful shaping effects
  • Difference between strategy and an operating model - strategy is a statement of intent, operating model guides processes
  • Disconnect between strategy and systems is real problem with not getting value out of technology

Week 4 lecture

  • IT gets involved with big company wide initiatives often because it’s the only unit talking and working with everyone already
  • For enterprise IT, transformation efforts fail when change management fails
  • Success needs to be driven by change management on the business side
  • Competitive advantage and value = human capital in the organization
  • Ecosystem view versus homogeneous governance
  • Once you have standardized operational infrastructure in place, people can work together in flexible ways to produce efficiencies and value
  • Design systems that truly value people
  • All of the unprogrammed tasks which happen around systems benefit from strengthened interaction

Week 5 lecture

  • There is a systematic way to do some testing and come out with actionable insights
  • Ability to use a lot of data hinges on ability to combine data across the organization
  • Trend towards data based decision making has pushed people to think about implementing common systems
  • Figure out a customer’s pain point and find ways to make them feel better about bad experiences
  • It’s not enough to just build a data science team. About building a system of value
  • Competitive advantage comes from human capital and business strategies that effectively leverage smart people who manage to work together and collaborate

Week 6 lecture

  • Knowledge about social media & how to use data to create value is still in its infancy

Week 7 lecture

  • How to make strategic use of IT?
  • Encourage everyone to be good stewards of technology
  • Stabilize -> Simplify -> Transform
  • Getting people comfortable with change, putting it in perspective, showing them what it will enable them to do - these are the challenges
  • Culture of an organization matters a lot in the context of change
  • Development within platform needs governance
  • At the heart of transformation is the question, what business problem are you trying to solve?
  • Challenge assumptions, ask how new approaches can solve old problems
  • Spectrum of business models with product pipeline on one end and platform on the other. Not a binary
  • Thinking in terms of platforms is very powerful
  • A platform is a set of shared components which can then be expanded upon by third parties, and where use is subject to network effects
  • A platform becomes a very flexible thing with multiple sides
  • Value of the platform is value of the customer data that you’re a custodian of
  • Capabilities needed to manage a platform are very different from the capabilities needed to manage a product
  • Key value of network effect is the ability to leverage innovation of third parties
  • Technology is too important to be left up to IT
  • Encourage everyone in the organization to take charge of technology and leverage capabilities

Takeaways from IDSC readings

McAffee, A. Mastering the Three Worlds of Information Technology. Harvard Business Review, November 2006

  • Executives have three roles to play: help select technologies, nurture their adoption, ensure their exploitation
  • Critical that executives stop looking at IT projects as technology installations and start looking at them as periods of organizational change that they have a responsibility to manage
  • One way to build a comprehensive model is to place IT in a historical context. IT is the latest in a series of general-purpose technologies (GPTs), innovations so important that they cause jumps in an economy’s normal march of progress
  • four organizational complements—better-skilled workers, higher levels of teamwork, redesigned processes, and new decision rights—allow process GPTs to deliver improved performance
  • In stark contrast to FIT and NIT, enterprise IT is hard for companies to adopt. The benefits often look great to people at the top, but employees often dislike EIT technologies
  • Executives must intervene forcefully throughout EIT adoption efforts because new processes, changed decision rights, and greater interdependence come hand in hand
  • the biggest mistake business leaders make is to underestimate resistance
  • For a resource to have an impact on a company’s competitive position, it must be valuable, rare, inimitable, and nonsubstitutable. People often forget that while the software itself might not be any of those things, a successfully implemented system isn’t easy to replicate.
  • How to Create a Great Digital Strategy, CISR Research Briefing, Ross et al 2016
  • A digital strategy is a business strategy inspired by the capabilities of powerful, readily accessible technologies, intent on delivering unique, integrated business capabilities that are responsive to constantly changing market conditions.
  • three characteristics of an effective digital strategy: focused on building one clear competitive strength, directional rather than targeted, enabled by existing or readily developed digital capabilities
  • two types of digital strategies: customer engagement, digitized solutions
  • Research suggests that companies need to focus on one of these types of digital strategies. Both types require business integration
  • The success of digital strategies depends on your ability to execute flawlessly
  • An operational backbone is essential to delivering this kind of consistency
  • Start designing a digital services backbone to enable a constant flow of digital innovations and connections with partners
  • The CIO as Venture Capitalist, CISR Research Briefing Vol XVI, June 2016
  • CIOs of top-performing firms spend 53% of their time on innovation, CIOs at bottom performing firms spend only 19%
  • change can’t happen overnight-the IT unit has to be perceived not only as being business focused but also possessing strong innovation and technology skills
  • Four skills that are key for a more proactive role in innovation: scanning the environment, experimenting, collaborating with executives to identify value creation opportunities, championing enterprise integration

Ross, J and Beath C. “Beyond the Business Case: New Approaches to IT Investments”, Sloan Management Review, Winter 2002

  • Investments differ along two dimensions: strategic objectives and technology scope
  • To address both dimensions companies need to make four distinct types of investment: transformation, renewal, process improvement, experiments
  • Investments in shared infrastructure will shape, for better or worse, the opportunities available
  • multipronged approach to IT investment is crucial for companies attempting to harness the power of IT in shaping business opportunities

Nils Fonstad and David Robertson, “Transforming a Company Project by Project: the IT Engagement Model”, MISQ Executive, Vol 5(1), 2006

  • successful approaches address two fundamental goals: alignment between IT and the rest of the business, coordination across multiple organizational levels
  • IT engagement model defined as the system of mechanisms that brings together key stakeholders to ensure that projects achieve both local and company-wide objectives. Three general components: company-wide IT governance, project management, linking mechanisms
  • Success requires the concerted efforts of multiple stakeholders and maintaining a healthy balance between strategic and tactical demands
  • Top-down research has focused on IT governance, bottom-up research has focused on project management. Neither approach fully addresses how IT organizations can simultaneously pursue both company-wide and local objectives
  • two major predictors of the strategic effectiveness of architectural initiatives: degree to which senior managers were involved in defining and overseeing architecture initiatives, degree to which the architecture effort was well linked to project activities
  • By effectively engaging across all parts of the company, real company-wide transformation can be achieved, funded by business-driven initiatives, one project at a time

A Matrixed Approach to Designing IT Governance, Weill & Ross (2005)

  • Without formal IT governance, individual managers are left to resolve isolated issues as they arise, and those individual actions can often be at odds with each other
  • IT governance is a mystery to key decision makers at most companies. Just one in three senior managers know how IT is governed
  • When senior managers take the time to design, implement, and communicate IT governance processes, companies get more value from IT.
  • senior management awareness of IT governance is the single best indicator of its effectiveness
  • IT governance can be assessed by evaluating how well it enables IT to deliver on four objectives: cost-effectiveness, asset utilization, business growth and business flexibility
  • first step in designing IT governance is to determine who should make and be held accountable for each decision area
  • Three kinds of governance mechanisms: decision-making structures, alignment processes, formal communications
  • more communication generally means more effective governance
  • Well-designed, well-understood and transparent mechanisms promote desirable IT behaviors and individual accountability
  • effective IT governance should be evident in business-performance metrics
  • Key mechanisms for centralized approaches include executive committees for decision making, centralized processes for architecture compliance and exceptions, enterprise-wide IT investment decision processes, and formal post-implementation assessments of IT-related projects
  • Companies that have not been effective in using IT strategically should expect to invest in organizational learning

Forget Strategy: Focus IT on your Operating Model, Ross (2005)

  • strategy rarely offers sufficiently clear direction for development of stable IT and business process capabilities, leaving IT to align with strategic initiatives after they’re launched and becoming a persistent bottleneck
  • To make IT a proactive force in creating business value, companies should define an operating model, defined as the necessary level of business process integration and standardization for delivering goods and services to customers
  • Four operating models: diversification, unification, coordination, replication
  • select a single operating model to guide management thinking and system implementation
  • In adopting an operating model a company benefits from a paradox: standardization leads to flexibility. An operating model provides needed direction for building a reusable foundation for business execution. IT becomes an asset instead of a bottleneck

Building IT Infrastructure for Strategic Agility, Weill, Subramani, & Broadbent (2002)

  • few choices more critical than deciding which IT investments will be needed for future strategic agility. those choices can significantly enable or impede business initiatives
  • ln leading enterprises, each type of strategic agility requires distinct patterns of IT-infrastructure capability. And any company that can determine the type of agility it will need for specific business initiatives is more likely to make sensible infrastructure investments
  • tailored, strategy-enabling infrastructure can be reused for many business initiatives
  • An integrated IT infrastructure combines the enterprise’s shared IT capabilities into a platform for all business processes
  • Companies establish their infrastructure gradually through incremental modular investments
  • IT infrastructure is a collection of reliable, centrally coordinated services budgeted by senior managers and comprising both technical and human capability
  • If managers can identify their strategic agility, they can create a distinctive competence
  • For internal and supply-side initiatives, data management is best provided locally, but for demand-side initiatives, data management is needed enterprise-wide
  • B2C, such capabilities are centrally coordinated, with the emphasis on uniformity across business units
  • infrastructure investments usually must be made before investments in business applications because doing both at the same time results in infrastructure fragmentation
  • Successful enterprises get the infrastructure balance right because they make regular, systematic, modular and targeted investments in IT infrastructure on the basis of an overall strategic direction
  • critical for the enterprise’s most senior executives to understand which specific IT-infrastructure capabilities are needed for which kinds of initiatives

Building Enterprise Alignment: A Case Study, Fonstad & Subramani (2009)

  • Three components to key successful enterprise alignment: building capabilities of the shared IT services group, introducing opportunities for IT and business managers to collaborate, creating new mechanisms for business and IT to be informed about value of specific shared services
  • To build enterprise alignment, IT and business managers must learn to work together

= Teaming Up to Crack Innovation & Enterprise Integration, Cash, Earl, & Morison (2008)

  • Recommends formation of two groups: Distributed Innovation Group and Enterprise Integration Group
  • Successful innovation often depends on the ability to coordinate efforts across organizational boundaries because innovations reach sufficient scale and impact only when integrated into the larger operations
  • An EIG contributes staff to major integration efforts. They sometimes lead and always coach
  • Talent for relationship management is a rare skill that it central to this work.

Integrating the Enterprise, Ghoshal and Gratton. Sloan Management Review (2002)

  • Although there has always been a recognition of the relevance of horizontal integration mechanisms, in practice they have been seen as secondary, as reinforcement to the primary vertical processes.
  • For effective horizontal integration, managers have to connect the company’s knowledge bases, build social relationships among people and shape a shared sense of identity, all supported by a standardized technological infrastructure
  • The symbiotic co-evolution of autonomy and horizontal integration takes time to mature
  • Instead of smothering bottom-up initiatives, horizontal integration creates a reinforcing process through which both autonomy and integration can flourish.

Managing Your Mission-Critical Knowledge, Ihrig and Macmillan. Harvard Business Review (2015)

  • your future success depends on developing a new kind of expertise: the ability to leverage your proprietary knowledge strategically and to make useful connections between seemingly unrelated knowledge assets or tap fallow, undeveloped knowledge
  • Once you’ve mapped your mission- critical knowledge assets, the challenge is to be disciplined about which of them to develop and exploit, keeping future growth front and center.
  • Remember, strategy always includes deciding what not to do

Diamonds in the Data Mine, Loveman (2003)

  • Increased customer loyalty by mining customer data deeply, running marketing experiments, and using the results to develop and implement finely tuned marketing and service-delivery strategies
  • They decided to let the data suggest the specific marketing ideas to use
  • Deep data mining and decision-science marketing would be worth little in driving same-store sales growth were it not for another simultaneously applied and extremely critical ingredient—an absolute focus on customer satisfaction.
  • We maintain our competitive advantage by using our human capital and technology systems to get to know customers better
  • effective partnership is greatly facilitated by having a strong internal capacity and infrastructure

A Step by Step Guide to Smart Business Experiments. Anderson and Simester (2011)

  • Running a business experiment requires two things: a control group and a feedback mechanism
  • Two types of feedback metrics: behavioral and perceptual
  • important to set the right expectations. It’s a mistake to expect every experiment to discover a more profitable approach
  • Your goal, at least initially, is to find the golden ticket-you’re not looking for lots of small wins.
  • the best experimentation programs start with the low-hanging fruit - experiments that are easy to implement and yield quick, clear insights
  • Organizations that cultivate a culture of experimentation are often led by senior managers who have a clear understanding of the opportunities and include experimentation as a strategic goal of the firm
  • companies that truly embrace this data-driven approach will be able to delegate authority to run small-scale experiments to even low levels of management. This will encourage the out-of-the-box innovations that lead to real transformation

The Business of Artificial Intelligence (2017)

  • The most important general-purpose technology of our era is artificial intelligence, particularly machine learning
  • machine learning systems hardly ever replace the entire job, process, or business model. they compliment human activities, which can make their work ever more valuable.

How to Design Smart Business Experiments, Davenport (2009)

  • best way to support decision making on potential innovations is to: design an experiment, act on the facts, make testing the norm
  • As your managers become more comfortable with testing, they’ll discover that it paves the way for, rather than throwing up barriers to, promising new ideas
  • formal testing makes sense only if a logical hypothesis has been formulated
  • key challenges are no longer technological or analytical; they have more to do with simply making managers familiar with the concepts and the process

How to Build an Insights Engine, Van den Driest and Sthanunathan (2016)

  • The new source of competitive advantage is customer centricity: deeply understanding your customers’ needs and fulfilling them better than anyone else.
  • You need data to accomplish this. Yet having troves of data is of little value in and of itself. Value is in the ability to transform data into insights about consumers’ motivations and to turn those insights into strategy.
  • by itself, even the most advanced insights engine can’t make a firm customer-centric. That requires leadership from the top to ensure that every function maintains a singular focus on understanding and meeting consumers’ fundamental needs

Selling into Micromarkets, Goyal, Hancock, and Hatami (2012)

  • Discovering and exploiting new-growth hot spots involves three steps: Defining your micromarkets and determining their growth potential, using these findings to distribute resources and guide the sales force, incorporating the big-data mind-set into operations and organizational culture
  • The first step in pursuing a micromarket strategy is to create an “opportunity map” of potentially lucrative hot spot
  • examine what drives customers’ purchasing in each market, determine the firm’s current market share in each, and look for causes of the variance
  • The goal is to define the problem, the methods for solving it, and, crucially, how to translate the resulting insights into tools
  • Companies should identify groups of micromarkets—or “peer groups”—that share certain characteristics.
  • Finding growth with big data is more than an add-on; it affects every aspect of a business, requiring a change in mind-set from leadership down to the front lines
  • Micromarket strategies are demanding, but they consistently give sales a competitive edge

Finding the Right Role for Social Media in Innovation, Sloan Management Review, Spring 2016

  • significant opportunity that isn’t being tapped: using social media to support innovation and new product development.
  • social media provides a game-changing opportunity for companies that learn how to exploit it
  • requires more than having a Facebook presence. In order to use social media for innovation, organizations need clear strategies and objectives
  • companies should have dedicated structures and an innovation culture to capture the benefits
  • For the purpose of illustration, we describe three different “camps”: camp explore, camp cocreate, camp communicate
  • Identifying Influential and Susceptible Members of Social Networks, Sinan Aral, Dylan Walker, Science 2012
  • a variety of theoretical models suggest that susceptibility, not influence, is the key trait that drives social contagions

Pipelines, Platforms, and the New Rules of Strategy, Marshall et al. (2016)

  • With a platform, the critical asset is the community and the resources of its members. The focus of strategy shifts from controlling to orchestrating resources, from optimizing internal processes to facilitating external interactions, and from increasing customer value to maximizing ecosystem value.
  • In this new world, competition can emerge from seemingly unrelated industries or from within the platform itself. Firms must make smart choices about whom to let onto platforms and what they’re allowed to do there
  • IT makes building and scaling up platforms vastly simpler and cheaper, allows nearly frictionless participation that strengthens network effects, and enhances the ability to capture, analyze, and exchange huge amounts of data
  • platforms all have an ecosystem with the same basic structure, comprising four types of players: owners, providers, producers, consumers
  • competition is more complicated and dynamic in a platform world
  • network effects are the driving force behind every successful platform
  • The driving force behind the internet economy, conversely, is demand-side economies of scale, also known as network effects
  • the larger the network, the better the matches between supply and demand and the richer the data
  • In demand-side economies, external forces can be “accretive”—adding value to the platform business
  • the power of suppliers and customers, which is threatening in a supply-side world, may be viewed as an asset on platforms
  • platform firms must constantly encourage accretive activity within their ecosystems while monitoring participants’ activity that may prove depletive; a delicate governance challenge
  • successful platform businesses tend to move aggressively into new terrain and into what were once considered separate industries with little warning
  • a platform can abruptly transform an incumbent’s set of competitors
  • For platforms, the focus shifts to interactions—exchanges of value between producers and consumers on the platform. the number of interactions and the associated network effects are the ultimate source of competitive advantage.
  • Most successful platforms launch with a single type of interaction that generates high value even if, at first, low volume. They then move into adjacent markets or adjacent types of interactions, increasing in both value and volume
  • With platforms, the focus of strategy shifts to eliminating barriers to production and consumption in order to maximize value creation. Must make smart choices about access and governance
  • Regardless of who sets the rules, a fair reward system is key
  • Some platforms encourage producers to create high-value offerings on them by establishing a policy of “permissionless innovation” - let producers invent things for the platform without approval but guarantee the producers will share in the value created
  • unfettered access can destroy value by creating “noise”
  • successful platforms manage openness to maximize positive network effects.
  • metrics that managers need to track: Interaction failure, Engagement, Match quality, Negative network effects traditional pipeline firms must develop new core competencies—and a new mindset—to design, govern, and nimbly expand platforms on top of their existing businesses.

Finding The Platform In Your Product: Four Strategies That Can Reveal Hidden Value, Haigu and Altman (2017)

  • multisided platforms (MSPs), which facilitate interactions or transactions between parties are more valuable than companies in the same industries that provide only products or services
  • companies that weren’t born as platform businesses rarely realize that they can—at least partially—turn their products and services into an MSP
  • four ways in which regular products and services can bridge this gap and become MSPs: opening the door to third parties, connecting customers, connecting products to connect customers, supplying to a multisided platform
  • The decision whether and how to convert an offering into an MSP should be informed by who your current customers are, how you currently interact with them, and how they interact with one another.
  • most fundamental challenge associated with this endeavor is transitioning from a world in which you have 100% control over what your customers are offered to one in which you can only influence the value that is created
  • senior management teams may find it difficult to deal with multiple or hybrid strategies, adopt and track new performance metrics, and enforce some degree of technological or customer experience consistency

Creating Business Value from Analytics, Kiron and Shockley (2011)

  • trend toward the use of analytics in business is driven by the need- and the ability- to use data to create not just business value but also competitive advantage
  • three levels of reported analytics prowess: aspirationals, experienced, transformed
  • organizational factors are important predictors of whether an organization will be able to create a competitive advantage with analytics: management support, top-down mandates for analytics, openness to change, unifying focus on the customer, using analytics to identify strategic threats.
  • the most advanced users of analytics typically have a strong data-oriented culture that supports and guides analytics use, success requires strong cultural commitments
  • organizations that excel at using analytics to create a competitive advantage must also excel at two other competencies: information management and analytics expertise
  • a data-oriented culture at the enterprise level has three key characteristics: analytics used as a strategic asset, management supports analytics, insights are made widely available
  • organizations are taking one of two distinct approaches to analytics: collaborative organizations, specialized organizations
  • Collaborative organizations emphasize information management. Specialized organizations emphasize analytics expertise

Takeaways from MGNPO material

  • The design challenge is to create structures that match the demands for information processing. - discusses concept of vertical and horizontal linkages - match this up to linkage concepts in IT governance - Tschirhart and Bielefeld, Chapter 4 (2012)
  • Figuring out what the problem is and what solutions might work are actually part of the problem, and taking stakeholders into account is a crucial aspect of problem solving - Bryson - What to do When Stakeholders Matter (2004)
  • stakeholder analyses are a key to identifying problems that can and should be solved - Bryson - What to do When Stakeholders Matter (2004)
  • The decision maker who elects to choose among claims and claimants moves into an idea-imposition process. Decision makers who take steps to expand the pool of claims before selecting one begin a discovery process - Nutt, P. C. - Decision-making processes prone to success and failure (2002)
  • Process: set a direction, uncover ideas, evaluate ideas, implementa the preferred idea - Nutt, P. C. - Decision-making processes prone to success and failure (2002)
  • bias for action causes them to limit their search, consider very few ideas, and pay too little attention to people who are affected, despite the fact that decisions fail for just these reasons - Nutt, P. C. - Decision-making processes prone to success and failure (2002)
  • concept of comparative advantage recognizes that organizations with unique, useful qualities are more likely to sustain success in the ways that matter - Brown - Analyzing operating domains (2015)
  • Strategic thinkers are in constant pursuit of innovative ideas that will create a sustainable future for their organization - Clark - Introducing Strategic Thinking into a Non-profit Organization to Develop Alternative Income Streams
  • Communication builds a bridge between the strategy of an organization and its implementation - Clark - Introducing Strategic Thinking into a Non-profit Organization to Develop Alternative Income Streams
  • When everyone on a team or in an organization gets it, hundreds of daily decisions are informed and guided by that common purpose - University of Florida - Strategic Thinking
  • For nonprofits to leverage the potential of new technologies and new ideas, everyone with a stake in the sector must work to narrow the distance between what nonprofit organizations might achieve and what they are actually achieving - Filling Essential Gaps in Nonprofit Leadership, Meehan et al. (2017)
Written on May 7, 2018