Class themes were Governance and the Work of the Board in MGNPO and Information Technologies, Digital Transformation, Making Decisions about IT in IDSC

Table of contents

MGNPO

• Chapter 9, Managing Nonprofit Organizations, Tschirhart and Bielefeld (2012)
• Chapter 10, Managing Nonprofit Organizations, Tschirhart and Bielefeld (2012)
• Nonprofit Governance and the Work of the Board, Renz (2007)
• Governance as Leadership: Reframing the Work of Nonprofit Boards, Chait, Ryan, and Taylor (2005)

IDSC

• McAffee, A. Mastering the Three Worlds of Information Technology. Harvard Business Review, November 2006
• Downes, Larry and Nunes, Paul, Big Bang Disruption. Harvard Business Review, March, 2013
• Navigating a World of Digital Disruption: BCG Perspectives: Drivers of New Industrial Architectures. 2015
• How to Create a Great Digital Strategy, CISR Research Briefing, Ross et al 2016

MGNPO

Chapter 9, Managing Nonprofit Organizations, Tschirhart and Bielefeld (2012)

• Responsibilities of Nonprofit Governing Boards
  • Set the organization’s mission and purpose
  • Select the chief executive
  • Provide proper financial oversight
  • Ensure adequate resources
  • Ensure legal and ethical integrity and maintain accountability
  • Ensure effective organizational planning
  • Recruit and orient new board members and assess board performance
  • Enhance the organization’s public standing
  • Determine, monitor, and strengthen the organization’s programs
  • Support the chief executive and assess his or her performance
• Legally Required Board Duties
  • Duty of Care
  • Duty of Loyalty
  • Duty of Obedience
    • Boards also should be careful about which donations they accept. If the use of the donation is highly restricted or open to multiple interpretations, they may be better off either refusing the gift or requiring a modification of the gift contract
  • Protection from Liability
• Executive Director Roles Versus Board
  • A simple rubric is that the board focuses on the big picture and overall strategies for the organization and the executive director focuses on the day-to-day implementation
• the board sets major policies, such as the mission, code of ethics, service philosophy, and fundamental mandates, for the nonprofit along with broad strategies and goals.
• Nonprofit staff are usually deemed responsible for minor procedures, standard operating plans, and work rules that guide day-to-day operations.
• Under this division of labor, there is a blurring of responsibilities in some areas: for example, in setting marketing and financial policies.
• Carver policy governance model outlines a framework for differentiating between board and executive director tasks
• Carver’s model states that the board should:
  • Set ends policies
  • Give the executive director discretion in the methods for achieving ends, although the board should set means statement indicating boundaries
  • Explicitly delineate the responsibilities
  • State the procedures the board will follow
  • Determine to whom, ultimately, the board is accountable
• In contrast to Carver’s position, other scholars suggest that blurring the boundaries between board tasks and executive director tasks is appropriate.
• Researchers see this blurring of board and executive director roles most often in younger, volunteer-based, grassroots organizations. These organizations tend to have boards that are more involved in the daily operations of the nonprofit
• Few nonprofits ever achieve the ideal set out by Carver, and typically boards are strongly guided by the executive director
• boards tend to have more power than the executive director when the nonprofit is not heavily reliant on government resources and when a nonprofit is in crisis, small, nonbureaucratic, or young. Executive directors tend to have more power when they have professional credentials and seniority and their board members do not have high socioeconomic status.
• Boards composed mostly of women tend to have less power than boards composed mostly of men
• There is no one measure of effectiveness to apply across all nonprofit boards.
• The priorities and achievements of a board may vary depending on funding sources, program challenges, and other factors
• boards are likely to be high performing and to make positive contributions to nonprofit organizational effectiveness when they demonstrate six competencies:
  • Contextual competency
  • Educational competency
  • Interpersonal competency
  • Analytical competency
  • Political competency
  • Strategic competency
• what boards can do to help ensure that they are acting appropriately:
  • Set explicit statements of expectations and responsibilities
  • Emphasize adherence to conflict of interest policies
  • Foster effectiveness and accountability by staying focused on priorities
  • Make it a practice to have two-way communication with constituencies
  • Conduct assessments of themselves and formal evaluations by outsiders
• Each board must develop its own approach to its governance role
• To go beyond what is legally required for nonprofit boards, we suggest a structural contingency theory approach. The board should fit itself to the contingencies of the nonprofit’s situation
• Determining Board Configuration by Contingency
  • Policy Governance Configuration
    • boards that follow Carver’s model and other frameworks in which there is a clear delineation between board and staff roles and the board is focused on big-picture strategy and policy setting
    • Board committees tend to be permanent with clear mandates
  • Constituency/Representative Governance Configuration
    • tends to be more decentralized in its decision making, giving more power to committees and staff
    • more diverse membership, as board members are elected or appointed to designated seats by constituency groups
    • focus of this type of board is making sure constituent voices are heard
  • Entrepreneurial/Corporate Governance Configuration
    • less formalized and bureaucratic than the previously described boards
    • tends to use short-term task forces and project groups more than permanent committees
    • less clarity and more overlap in the roles of board and staff
    • focus is on efficient work processes and getting things done
    • Planning processes tend to informally emerge
    • Board members contribute an entrepreneurial perspective
  • Emergent Cellular Governance Configuration
    • most informal of the types
    • organic, emergent ways of operating. There is little formalization and bureaucracy
    • regularly seeks input and involvement from nonboard members
    • most likely to be present in nonprofits with alternative or nonmainstream ideologies
    • may clearly articulate the value of shared leadership and avoid giving too much power to any one individual
  • Hybrid Configuration
    • may be the result of adaptations to environmental pressures and preferences of nonprofit leaders
  • Another useful framework of board types is suited to member-serving nonprofit organizations, such as professional and trade associations
• Georg von Schnurbein identifies the following four general types of association boards:
  • Satellite Governance
    • can emerge in membership associations that have affiliates who are individuals
    • affiliates may control the national organization through their designated seats on the national board
    • board acts somewhat like a parliament, with individuals on the board voting primarily to support the interests of their home base
    • national association is weak compared to the regional affiliates
  • Delegate Governance
    • similar to satellite governance in that the board is based in a federalist structure, with strong influence by affiliates of the national association
    • members that the national organization exists to serve are organizations whereas in the satellite type the members are individuals
    • representatives are chosen for their skills in political negotiation and ability to protect their home organization’s interests
  • Executive Governance
    • has little power and defers to paid staff of the association
    • staff carry out much of the work of the organization with the assistance of advisory groups
    • Board members act more like clients of the organization than individuals with governance authority
  • Inner-Circle Governance
    • small number of members dominate the board through the power they have in their industry domain
    • Regional affiliates of the association have minimal influence compared to these powerful elite members
    • a core subgroup of the board is in control
• Research suggests that demographic heterogeneity on a board can facilitate sensitivity to stakeholders and innovativeness
• Boards that draw members from a homogeneous, tightly connected pool of individuals may be limiting the perspectives and information that can be brought to board discussions
• A variety of tools are available to help boards be more effective:
  • Bylaws
  • Officers
  • Committees
  • Orientation, Training, Self-Assessments, and Organizational Reports
  • Advisory Groups
• a board can help to ensure effective leadership by managing conflict well. Conflict occurs in stages:
  • latent conflict - conditions are ripe but people lack awareness of the conflict
  • perceived conflict - individuals are aware that conflict exists
  • felt conflict - individuals feel tense or anxious
  • manifest conflict situation goes off the rails individuals act to pursue their positions or interests, may involve acting aggressively or withdrawing from the situation
• An effective board will establish a culture in which members feel free to express opinions about issues and do not let conflicts turn personal
• once a board decision is made, the full board should support it, even those members who voted against the decision
• Broader conception of governance
  • Renz argues that when communities confront complex problems, they address them through a network of organizations. No one nonprofit provides all the leadership to address the problem
  • The boards of nonprofits that are part of these overall networks need to understand their role in the context of this system of leadership
  • Within this shared power dynamic, effective boards understand the need to cross organizational boundaries and share accountability for community impact.
  • Judy Freiwirth suggests that in this broader governance framework, nonprofit boards may contribute through four functions: planning, advocacy, evaluation, and fiduciary care

Chapter 10, Managing Nonprofit Organizations, Tschirhart and Bielefeld (2012)

• Scholars tend to place the burden of ensuring a nonprofit’s growth and survival on the executive director rather than on the board
• It is up to the director to enable the governing board to carry out its duties
• ten basic responsibilities of a nonprofit executive director
  • Commit to the mission
  • Lead the staff and manage the organization
  • Exercise responsible financial stewardship
  • Lead and manage fundraising
  • Follow the highest ethical standards, ensure accountability, and comply with the law
  • Engage the board in planning, and lead implementation
  • Develop future leadership
  • Build external relationships, and serve as an advocate
  • Ensure the quality and effectiveness of programs
  • Support the board
• It is a management task to ensure that work is performed in an effective and efficient manner. It is a leadership task to decide what the work should be and to motivate others to pursue the vision that drives the work
• leaders focus on change by setting direction and vision, aligning people to that vision, and motivating people to achieve the vision
• managers plan and budget to produce results
• it is a leadership task to develop a shared plan and a management task to coordinate its implementation
• A generic list of leadership responsibilities applicable to nonprofit executive directors, five key leadership activities:
  • challenge the process
  • inspire a shared vision
  • enable others to act
  • model the way
  • encourage the heart
• five basic principles of leadership:
  • Effective leaders are not all the same
  • Effective leaders change their style to fit the situation
  • Effective leaders are self-aware and operate out of a strong value system
  • Effective leaders integrate and balance roles and perspectives
  • Effective leaders use power and influence wisely
• individuals can be taught to be great leaders, whether or not they are born with specific traits
• Successful leaders tend to be ambitious, high energy, tenacious, trustworthy, reliable, open, intelligent, and self-confident. They have a desire to lead and are able to integrate large amounts of information. They know their industry and relevant technical matters, trust in their own abilities, take initiative, are creative, and have the ability to adapt to the needs of followers and the requirements of situations. They tend to be more cooperative, verbal, and well educated than their followers. They are admired for being honest, forward looking, inspiring, and competent.
• Effectiveness of a given leadership style depends on situational factors, need to have different styles in their repertoire
• One of the most basic leadership frameworks suggests that leaders should vary their approach depending on the situation and have in their portfolios the following three styles of behavior:
  • Task-oriented leadership
  • Relationship-oriented leadership
  • Laissez faire leadership
• Hersey and Blanchard situational leadership theory elaborates when to use task- and relationship-oriented leadership styles. It has the premise that leadership behaviors should be chosen based on the job maturity or readiness of followers to carry out tasks. Four main leadership behaviors in this model: delegating, supporting, coaching, and directing
• Another useful leadership style framework contrasts transactional and transformational leadership styles
  • Transactional leadership is well suited to organizations that do not need major changes, involves working within existing systems to ensure that the mission is appropriately pursued, promotes organizational stability and incremental improvements
  • Transformational leadership behaviors involve inspiring followers to work to achieve a new vision and implement major change. Called for when a nonprofit is first founded or faces a major crisis or environmental change
• Effective Leaders Are Self-Aware and Operate Out of a Strong Value System
  • To maintain inclusive and diverse organizations, leaders must be aware of how they perceive themselves as similar and as different from others
  • by consciously surfacing our values, we connect deeply to a nonprofit’s mission and become passionate in our work
  • Executive directors need to understand, believe in, and clearly communicate their organization’s mission. By linking it to shared values, they can inspire others to work to achieve that mission
  • Exemplary leaders embody the values that they promote
  • When leaders’ values guide them and are transparent to others, their actions become predictable and their decisions understandable
  • leaders should not be preoccupied with trying to please others. Instead, they can earn respect by making tough decisions based upon principled criteria
  • The ability to demonstrate consistent adherence to values and ethical standards may be even more important for a leader of a nonprofit organization than for one in the for-profit business sector
  • In addition to being aware of their personal values and how those fit with their nonprofit’s values, leaders should be aware of their weaknesses and strengths
  • Being self-aware is also a critical component of cultural competency
  • To have an inclusive workplace, nonprofit leaders need to be aware of their assumptions, beliefs, and biases and the ways in which these traits may affect who feels welcome and respected in their organization
• Effective Leaders Integrate and Balance Roles and Perspectives
  • Lee Bolman and Terrence Deal tell us that effective leaders use multiple frames or ways of looking at and interpreting a situation:
    • Structural: attention to goals, expectations, procedures, and policies
    • Symbolic: attention to shared beliefs, values, and norms
    • Human resources: attention to hopes, relationships, and preferences
    • Political: attention to power, conflict, and shared interests in relationships
  • in general, nonprofit executive directors tend to strongly emphasize the structural frame
  • The most effective nonprofit leaders are those that can look at a situation from multiple frames and act in ways that address the needs highlighted by each view
  • behavioral complexity, a term that captures how leaders respond to competing expectations of numerous constituencies by assuming numerous roles. Behavioral complexity theory and related empirical findings suggest that leaders need to balance roles rather than see them as either-or options
• Effective Leaders Use Power and Influence Wisely
  • Many people have negative reactions to the idea of strategizing about building and using power. Some worry that too much power held by an individual may lead to abuses
  • Research has shown that the more power an organizational leader has, the less likely he or she is to listen to others and consider their advice
  • Astute executive directors understand that politics and use of power are inevitable and that by understanding power dynamics, and being open to others’ ideas, they can better forward the interests of their organization
  • list developed by John French and Bertram Raven to look at the types of personal and positional power leaders have:
    • Legitimate power comes from having authority from followers to exert influence over them, often comes from the position one holds
    • Reward power arises from the ability to control rewards and positive outcomes for others
    • coercive power is the ability to influence others through fear of punishment
    • referent power - has influence over others because they are personally liked by them
    • expert power have technical knowledge and expertise that others rely upon
    • Individuals can obtain effort-related power through active, dependable performance
    • five forms of power that individuals can acquire through their position in an organization or network:
      • centrality-related power comes from controlling how others interact and gain information
        • executive directors typically have centrality-related power with their boards, called executive centrality
      • Criticality-related power comes from performance of tasks critical to others’ performance
      • Discretion over what one does provides flexibility-related power
      • Visibility-related power comes from being in a position where one can be known and seen by influential others
      • relevance-related power is the ability to control the tasks and outcomes of high priority to others gives power
  • three general strategies for influencing others:
    • retribution involves forcing others to do what the influencer wants
    • reciprocity encourages others to want to do what the individual desires
    • reason appeals to personal values and presents facts that stress merits and needs
• Strong Leaders and Shared Leadership
  • Charismatic leadership
    • Leaders with charisma have personal magnetism, a quality that inspires uncritical devotion
    • Followers’ enthusiasm for a charismatic leader can bring them to rally around the leader’s vision and work under the leader’s direction
    • may also result in overlooking any negative qualities of the leader and may create resistance to anyone opposing or replacing the leader
    • Although charismatic leaders can be quite effective in the short term, some scholars argue that a charismatic leader can pose a risk to the organization in the long term
    • long-term sustainability of a nonprofit can be harmed when individuals affiliate with the organization because they are drawn to its charismatic leader rather than feeling a commitment to the organization’s mission
    • Leaders do not have to be charismatic to inspire followers
    • a nonprofit can develop a high degree of social capital even when its leaders are not individuals that attract followers through the force of their own personalities. Leaders can build strong connections among their nonprofit’s core constituents and create bridges to other groups or individuals outside this core group. Strength of these connections can motivate individuals because of coherence with the organizational mission
  • Founder executive directors
    • Some of the most charismatic leaders of nonprofits also happen to be the founders
    • having a strong founder may leave a nonprofit open to founder’s syndrome, in which the founder has too much control over the organization, leaving it vulnerable
    • When a board does not have adequate power over a founding executive director, the founder may see the board as accountable to him or her rather than the other way around
    • founder may have leadership traits that are more appropriate for the founding of a nonprofit than for its long-term management
    • By proactively preparing for the departure of a founder, or any executive director, a nonprofit may be able to avoid some of the vulnerabilities that can arise from these transitions, especially if efforts are made to avoid overdependence on the director in the first place
  • Shared leadership
    • leadership creation is a collective process; it should not be left in the hands of one individual
    • Co-leadership and empowerment of others is critical for nonprofit executive directors to be effective in the short and long term
    • leadership can be found and should be fostered throughout an organization
• Leadership Transitions and Leader Development
  • Managing nonprofit executive transitions has become an industry. Numerous consulting firms and transition guides are available to assist nonprofits
  • few nonprofits have an executive succession plan
  • A key transition task is for the board to assess the organization, determine what type of director is needed at this stage of the nonprofit’s development, and define the existing and projected organizational and environmental challenges
  • According to research by Michael Allison, boards face three typical threats to successful transitions:
    • they underestimate the risks and costs of bad hires
    • they are unprepared for the hiring task
    • they fail to take advantage of the opportunities in executive director transitions
  • Hiring a new executive leader can be a time for reflection and renewal, impetus for a careful assessment of the organization and the priority roles and responsibilities for the new leader
  • the following topics were ranked as highly important to nonprofit executive directors: leadership, ethics and values, long-term planning, financial management, conducting effective meetings, creativity, public relations, interpersonal skills, short-term planning, managing change, conflict management, program evaluation, collaboration and networking, fundraising, quality management, public speaking, needs assessment, managing a diverse workforce, personal growth and stress management, volunteer management, marketing, staff compensation and evaluation, board recruitment and development, and grant writing
  • add to that list, cultural sensitivity and entrepreneurial skills
  • It is the rare executive director who has a full range of highly developed leadership skills
  • Effective directors will look for ways to develop needed skills and to empower others who have skills that they are lacking
  • can also find ways to mitigate their weaknesses through substitutes for leadership - organizational factors that reduce the need for active leadership
    • For example, a strong organizational culture
    • Nonprofit workers with high self-confidence and competence may feel less need for an emotional connection
    • Highly cohesive teams may find that they can guide and support each other without the help of someone with hierarchical authority
• Executive directors are symbols for their organizations. They need to have a repertoire of styles, perspectives, roles, and behaviors from which to draw depending on the situation
• Whether it is fair or not, our human tendency is to hold nonprofit executive directors accountable for everything about their nonprofits’ performance, whether praiseworthy or blameworthy
• All nonprofit leaders, no matter the size of their organization, can benefit from strategically involving individuals to carry out the mission

Nonprofit Governance and the Work of the Board, Renz (2007)

• average person joining the governing board of a nonprofit organization typically has rather little knowledge or understanding of the work to be done by a board
• Board member concern and uncertainty have become stronger with the increasingly strident calls for improved nonprofit accountability and effectiveness
• Governance is the process of providing strategic leadership to a nonprofit organization
• Nonprofit governance is a political and organizational process involving multiple functions and engaging multiple stakeholders
• accountability exists regardless of the size or nature of the organization and regardless of whether the organization employs staff
• Governance is essentially a decision process grounded in the assumption that organizations can cause desired results to occur by choosing appropriate courses of action
• governance and strategic leadership are about making informed organizational choices
• nonprofit board has three fundamental duties:
  • duty of care
  • duty of loyalty
  • duty of obedience
• It is the board’s responsibility to:
  1. Determine and articulate the organization’s mission, vision, and core values.
  2. Recruit and select the organization’s chief executive.
  3. Support and assess the performance of the organization’s chief executive.
  4. Ensure that the organization engages in planning for its future.
  5. Determine the set of programs that the organization will deliver to implement its strategies and accomplish its goals, and to monitor the performance of these programs to assess their value.
  6. Ensure that the organization has financial and other resources adequate to implement its plans.
  7. Ensure the effective management and use of the organization’s financial and other resources.
  8. Enhance the organization’s credibility and public image.
  9. Ensure organizational integrity and accountability.
  10. Assess and develop the board’s own effectiveness
• At its core, “fiduciary responsibility” is the responsibility to treat the resources of the organization as a trust
• In general, the appropriate exercise of fiduciary responsibility includes:
  • Adoption of a set of policies to govern the acquisition and use of financial and other resources;
  • establishment of a budget
  • Development and implementation of an ongoing system for monitoring and holding staff and volunteers accountable
  • Development and implementation of an ongoing system to monitor, assess, and report on the overall fiscal condition
  • Implementation of an independent external review process
• Typical structures and characteristics of nonprofit boards:
  • Officers
  • Committees and Task Forces
    • Executive Committee
    • Nominating Committee
    • Fundraising or Development Committee
    • Finance Committee
    • Personnel Committee
    • Program Committee
  • A common misconception is that board members cannot have conflicts of interest. The problem is not with the existence of a conflict, but with how it is handled. The board member’s obligation is to disclose this situation to the board and then avoid participating in both the deliberations and decision making associated with the conflict situation. The board member should not be present at the time the matter is discussed
  • In general, the typical governing board will expect its board members to:
    • Participate actively
    • Be knowledgeable and ensure that they understand
    • Do their homework to ensure that they are appropriately informed about
    • Provide active support for the fund raising and other resource development activities
    • Serve as an ambassador and advocate on behalf of the organization
    • Provide encouragement and active support for the work of the staff and volunteers
    • Serve with honor and integrity:
      • personal behavior reflects well on the work and reputation of the organization
      • Honor sensitive matters in confidence and with discretion
      • actively support all board decisions, once they have been made
      • Avoid actual and perceived conflicts of interest
    • Support and actively contribute to the board’s efforts to work effectively as a team:
      • Play an active and constructive role in helping the board do its work
      • Bring a sense of perspective and humor to the work
      • Provide support to fellow board members, and take time to celebrate the successes and accomplishments

Governance as Leadership: Reframing the Work of Nonprofit Boards, Chait, Ryan, and Taylor (2005)

• a new idea— generative governance —to give board members a new perspective on their role in the organization. rethinking the role of the board can enhance their experience as a board member while increasing the board’s value to the organization
• several areas where board members typically experience dissatisfaction:
  • Some official work is highly episodic
  • Some official work is intrinsically unsatisfying
  • Some important unofficial work is undemanding
  • Some unofficial work is rewarding but discouraged
• Three modes of governance
  • fiduciary mode
  • strategic mode
  • generative mode
• Building a better governance system involves a multi-modal approach to the board’s work
• generative governance requires that the board understand the values, judgments, and insights of the organization
• called “generative” because it is the genesis of the organization’s work later translated into strategies, policies, plans, and tactics
• Strategy is often developed by thinking about what is going on now—point A—and the desired future—point B. Strategy fills the gap between the two. Generative thinking leads to a reconsidering of how point A is understood.
• Engaging in generative thinking involves being aware of the routines that dominate process like planning and learning and breaking out of them once they become limiting.
• easier said than done—these routines are often so ingrained that we don’t know what it feels like to not be subject to them. Yet most people know what it feels like when their perspective shifts, and suddenly the issue seems completely different and easier to deal with
• three steps to develop a new perspective on old issues:
  • Notice cues and clues
  • Choose and use frames
  • Think retrospectively
• Generative governance relies on a collaborative relationship between the board members and executives. Instead of a collaboration based on basic division of operational functions (Type 1 governance) or based on developing strategy (Type 2 governance), it is both of those plus a new collaboration that generates new ideas and approaches.
• “the opportunity for generative thinking to influence actions and processes diminishes over time” As people get more set in their ways, the ability to question the frame through which the problem is viewed becomes more difficult
• three features of the Type 3 organization:
  • Goals are often ambiguous, if not contested
  • The future is uncertain
  • Meaning matters
• several actions board members can take to put them in a position to better assist management in their sense-making efforts:
  • Working at the internal and external boundaries (interaction with staff and constituents)
  • “the Future in the Rearview Mirror” is a process of scenario planning
  • Changing the Way Issues are Discussed - Generative discussions should have a good rapport
  • Promoting Robust Dialogue - process generates ideas and not all are good ones, participants must feel comfortable raising doubts

IDSC

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

• American companies spend as much on IT each year as they do on offices, warehouses, and factories put together
• One of the biggest problems companies face is coping with the abundance of technologies in the marketplace
• Adding to executives’ diffidence, corporate IT projects have often delivered underwhelming results or been outright failures
• survey of 782 American executives responsible for IT, 50% of the respondents admitted that “aligning business and IT strategy” was a major problem
• managers who distance themselves from IT abdicate a critical responsibility
• executives have three roles to play:
  • help select technologies
  • nurture their adoption
  • ensure their exploitation
• Different types of IT result in different kinds of organizational change
• What’s critical, though, is 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
• Research suggests that four organizational complements—better-skilled workers, higher levels of teamwork, redesigned processes, and new decision rights—allow process GPTs to deliver improved performance
• Information technologies, my research shows, don’t enjoy the same relationships with the four organizational complements that other process GPTs have.
• IT sets off several kinds of revolutions in organizations because technologies fall into three distinct categories
• Function IT
  • technologies that make the execution of stand-alone tasks more efficient
  • Word processors and spreadsheets are the most common examples
  • People can get the most value from these technologies when their complements are in place but can also use FIT without all of the complements.
  • capabilities of this IT category:
    • Enhancing experimentation capacity
    • Increasing precision
• Network IT
  • provides a means by which people can communicate with one another
  • technologies include e-mail, instant messaging, blogs, and groupware
  • allows people to interact, but it doesn’t define how they should interact.
  • gives people freedom to experiment instead of telling them what they must do
  • brings complements with it but allows users to implement and modify them
  • principal capabilities include:
    • Facilitating collaboration
    • Allowing expressions of judgment
    • Fostering emergence
• Enterprise IT
  • the type of IT application that companies adopt to restructure interactions among groups of employees or with business partners, such as CRM or SCM
  • Unlike network technologies, which percolate from the bottom, enterprise technologies are very much top-down
  • Companies can’t adopt EIT without introducing new interdependencies, processes, and decision rights.
  • changes become necessary as soon as the new systems go live.
  • EIT’s primary capabilities include:
    • Redesigning business processes
    • Standardizing work flows
    • Monitoring activities and events efficiently
• Across the three IT categories, executives have three tasks:
  • IT selection
    • sensible question for executives to ask is “What do we need IT to do for us?”
    • An inside-out approach puts the spotlight squarely on the business before evaluating the technology landscape
    • Once the company’s business needs are clear, the technologies it requires will come into focus
    • Typically, FIT delivers productivity and optimization, NIT increases collaboration, and EIT helps standardize and monitor work
  • IT adoption
    • At this stage, managers’ main responsibility is to help create the complements that will maximize IT’s value.
    • Once network technologies are properly established, their use takes off, and the challenge for managers is to refrain from intervening too often or with too heavy a hand.
    • In stark contrast to FIT and NIT, enterprise IT is hard for companies to adopt.
    • benefits look great to people at the top, but employees usually dislike EIT technologies.
    • they don’t just enable new ways of working; they dictate them
    • 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
    • successful EIT adoptions decide at the outset how key issues about configuration and other aspects of the adoption will be raised and how they will be settled
    • most important participants are business leaders from the areas affected by the new technology
  • IT exploitation
    • Companies can best exploit FIT by fine-tuning organizational complements
    • Employees exploit older NITs such as e-mail and instant messaging on their own, but business leaders have a role to play in exploiting newer technologies
    • EIT’s exploitation is often easier than its adoption, since the work of imposing new processes is done by this stage
    • Exploiting EIT sometimes requires adding a new FIT on top of it.
• The IT Dialogue
  • Business and IT leaders should meet periodically to discuss the state of the company’s IT-based capabilities
  • discussions should cover organizational footprints: the geographic, functional, and divisional range over which the company will deploy new technologies
  • The expense, difficulty, and time involved in deploying IT—especially enterprise IT—increases as the footprint grows
  • Functional IT
    • Will any of the new software on the market enable our staff to do their jobs more efficiently?
    • Are our function technologies outdated?
  • Network IT
    • How do our people collaborate?
    • Do we have ways of letting qualitative information flow horizontally and vertically?
    • If we wanted to get broad feedback on an important topic, how would we do it?
    • How do we know what our people are working on?
  • Enterprise IT
    • In what ways are our current processes not supporting the needs of the business?
    • Are there best practices that should be embedded in our enterprise IT endeavors?
    • Are there important business activities, events, or trends that we should monitor?
    • What’s the most recent period that we could easily analyze?
  • In reality, IT is never a sure bet because of the complex interplay between technologies, capabilities, and complements
• 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.
• IT meets all four criteria when a company succeeds in applying a technology and, consequently, gains valuable capabilities.

Downes, Larry and Nunes, Paul, Big Bang Disruption. Harvard Business Review, March, 2013

• The strategic model of disruptive innovation we’ve all become comfortable with has a blind spot.
• assumes that disrupters start with a lower-priced, inferior alternative that chips away at the least profitable segments, giving an incumbent business time to respond
• That advice hasn’t been much help to navigation-product makers who were decimated by Smartphones running Google Maps
• That kind of innovation changes the rules.
• now entire product lines—whole markets—are being created or destroyed overnight.
• We call these game changers “big-bang disrupters.” They don’t create dilemmas for innovators; they trigger disasters.
• big-bang disruptions are unplanned and unintentional.
• do not follow conventional strategic paths or normal patterns of market adoption.
• while there’s not a lot of evidence yet on how incumbents can survive them, we offer some strategic principles
• perhaps the biggest challenge to incumbents is that big-bang innovations come out of left field, combining existing technologies that don’t even seem related to your offerings to achieve a dramatically better value proposition
• Three devastating features
  • Unencumbered development
    • innovators are not even trying to disrupt your business. You’re just collateral damage.
    • They are often born of rapid-fire, low-cost experiments on fast-maturing, ubiquitous technology platforms
    • They don’t need budget approval and aren’t vetted before development begins.
    • When cost is low and expectations are modest, entrepreneurs can just launch their idea and see what happens
    • In the future the most successful innovators may be those who simply happen upon the right combination of other people’s technologies.
    • In the bizarro world of big-bang disrupters, it is perfectly rational to churn out dozens of new products and see which ones take hold.
  • Unconstrained growth
    • Big-bang disruptions collapse the product life cycle we know
    • Now there are only two segments: trial users, who often participate in product development, and everyone else
    • This change obviates the need for the carefully timed shifts in marketing strategy
    • big-bang disruptions can be marketed to every segment simultaneously
    • The new product cycle can be simplified into three basic stages: development, deployment, and replacement
    • in today’s hyperinformed world, each epic failure feeds consumer expectations for the potential of something dramatically better.
    • Waiting for the market to take off and hoping to be a fast follower is now a recipe for irrelevance.
  • Undisciplined strategy
    • Big-bang disrupters contradict everything you know about competitive strategy
    • According to Michael Treacy and Fred Wiersema’s classic The Discipline of Market Leaders (1995), businesses should align strategic goals along one—and only one—of three value disciplines:
      • low cost (“operational excellence”)
      • constant innovation (“product leadership”)
      • customized offerings (“customer intimacy”)
• Customers are so accustomed to this effect that they are coming to expect every product or service to get cheaper and better with each passing day.
• Under these conditions you can’t win simply by becoming more disciplined with your current strategy.
• Big-bang disrupters are rewriting the rules of industry after industry—and the new rules hold only until the next wave of disruption comes along. There’s almost no time to adapt. Bold strategies are the only way to cope.
• Big-bang disruptions usually feature not a vertically integrated supply chain but a virtually integrated one: They are manufactured and deployed via the infrastructure of the cloud.
• Here are four strategies that incumbents have used to survive and even thrive in the face of big-bang disruption:
  • See it coming
    • You need new tools to recognize sooner than your competitors do that radical change is on the way
    • In every industry there are a handful of these visionaries, whose talents are based on equal parts genius and complete immersion in the industry’s inner workings. We call such seers “truth tellers,”
    • finding a truth teller is hard, learning when to listen is even harder.
    • Truth tellers are often eccentric, and their lucidity can easily be mistaken for arrogance and stubbornness
  • Slow the disruptive innovation long enough to better it
    • ensure that disrupters can’t make money from their inventions until you’re ready to acquire them or you can win with a product of your own
    • delay their profitability by lowering prices, locking in customers with long-term contracts, or forming strategic alliances with advertisers and other companies
  • Get closer to the exits, and be ready for a fast escape
    • even long-successful strategies may be suddenly upended, requiring a radical re-creation of the business
    • you have to prepare for immediate evacuation of current markets and be ready to get rid of once-valuable assets.
    • Traditional accounting still has little to say about the value of expertise, brands, patents, and other intangibles
    • For all other kinds of assets, a big-bang disruption can set off a rapid decline in value, making it important not only to shed those technologies but to do so before they become worthless
    • Facing the imminent arrival of a big-bang disrupter, companies must ruthlessly reassess their M&A strategies
    • Once customers shift to the new technology, it’s too late for a graceful exit—at best, it’s time for a fire sale.
  • Try a new kind of diversification
    • As industry change becomes less cyclical and more volatile, having a diverse set of businesses is vital.

Navigating a World of Digital Disruption: BCG Perspectives: Drivers of New Industrial Architectures. 2015

• digital disruption is not a new phenomenon. But the opportunities and risks it presents shift over time. Competitive advantage flows to the businesses that see and act on those shifts first
• We are entering the third, and most consequential, wave of digital disruption
• In the first wave of the commercial internet, the dot-com era, falling transaction costs altered the traditional trade-off between richness and reach
• In the second wave, Web 2.0, the important strategic insight was that economies of mass evaporated for many activities. Small became beautiful. It was the era of the “long tail” and of collaborative production on a massive scale.
• Now we are on the cusp of the third wave: hyperscaling. Big—really big—is becoming beautiful. At the extreme—where competitive mass is beyond the reach of the individual business unit or company—hyperscaling demands a bold, new architecture for businesses.
• Unlike many of his rivals, Bezos saw business architecture as a strategic variable, not a given. He did not harness technology to the imperatives of his business model; he adapted his business model to the possibilities—and the imperatives—of technology.
• Since larger data sets yield better insights, big is beautiful. Data wants to be big, and businesses struggle to keep up
• The minimum efficient scale for data systems and facilities is rising beyond the reach of individual business units within a company, and ultimately beyond that of many companies
• Polarizing economics of mass are pushing the advantage simultaneously to the very big and the very small, and a new architecture is emerging for businesses of all sizes
• Building a shared data infrastructure will be one of the strategic challenges of the next decade for the health care industry and for policy makers.
• The health care industry is not an anomaly. Economies of “mass”—of scale, scope, and experience—are intensifying across the economy, driving new models of collaboration
• technologies can be extended infinitely and are all converging on the instantaneous
• Modularity and layering, granularity and extensibility, the symbiosis of the very large with very small: these are the recurrent themes of the transformative technologies of our era
• businesses in most industries have a classic oligopolistic structure, with a small number of companies competing on similar vertical value chains. In many cases, this will evolve into a much more diverse architecture of horizontal layers: infrastructure on the bottom, communities on the top, and traditional oligopolists in the middle.
• Stacks are a compelling model when the benefits of innovation at the top and higher utilization at the bottom exceed the additional transaction costs incurred by breaking up value chains.
• In the right circumstances, a stacked ecosystem blows up the classic trade-off between efficiency and innovation.
• what cannot be emphasized too much are the differences among these four types of activity. They require different skills and motives, present different financial profiles to investors, and need to be managed on different time horizons
• disruption takes very specific forms, and these forms are shifting
• leaders must adapt their strategies to the possibility of infrastructure that extends beyond the bounds of the business, to data that wants to be big
• Conventional business models may be simultaneously too big and too small.
• How should executives respond? Here are the four major drivers of the new industrial architecture and the key strategic imperatives for companies:
  • Big data
    • Test your current analytics against the state of the art. The field is moving so quickly that even the most well-versed companies can fall behind
    • Organizations capable of all this will be ones in which business managers, programmers, and mathematicians talk each other’s languages, where small teams iterate in fast cycles, where empirical validation counts for more than judgments of hierarchies or senior executives
    • Consolidate databases across the company.
    • Form partnerships to gain scale.
    • Manage data as a trustee
  • Deconstruction
    • Reorganize your business along its economic fault lines
    • Look for opportunities to be the lateral aggressor
    • Identify where your value chain is most susceptible to lateral attack
  • Polarization of Economies of Mass
    • “Up-source” activities to a community.
    • “Down-source” activities to shared infrastructure
  • Holistic, Stacked Architectures
    • Curate a new industrial stack.
    • Where you can’t curate your own stack, seek advantaged roles in stacks curated by others
    • Reshape regulation. Companies have a huge stake in how this thinking evolves, can and should influence policy in directions that favor efficiency at the bottom of the stack and open innovation at the top

How to Create a Great Digital Strategy, CISR Research Briefing, Ross et al 2016

• SMACIT (social, mobile, analytics, cloud, and Internet of Things)
• A digital strategy is a business strategy inspired by the capabilities of powerful, readily accessible technologies (like SMACIT), 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
• one of two digital strategies:
  • customer engagement
    • transforms a company’s go-to-market approach
    • strategic focus is on creating loyalty and trust
    • superior, innovative, personalized customer experiences
    • the goal is customer loyalty, so you’ll need to constantly raise your game as you identify new opportunities to connect
  • digitized solutions
    • transforms a company’s business model by reformulating what the company is selling
    • enhance products and services with information or expertise to help solve customer problems. The strategic focus of a digitized solutions strategy is adding value to customers
    • digitized solutions often change a business model by moving the revenue stream from the sale of an asset to recurring revenue from the sale of a sophisticated service.
• Digitized solutions strategies and customer engagement strategies address two different types of digital disruption, product development vs. go-to-market
• research suggests that companies must focus on one of these strategies to drive their transformation
• both customer engagement and digitized solution strategies require business integration
• A great digital strategy adopts a kind of start-up mentality about business success
• addresses a perceived customer need as a starting point
• adapt the strategy based on market response, seizing additional opportunities that present themselves. Because market response cannot be predicted, your digital strategy must be directional rather than targeting a given end state
• The success of digital strategies depends on your ability to execute flawlessly
• An operational backbone is essential to delivering this kind of consistency
• in most industries, operational excellence is table stakes for competing in the digital economy
• Defining a digital strategy is an essential first step
• starts with clear thinking about both the opportunities and risks that new digital technologies pose
• Then it requires constant adaptation as new opportunities emerge
• The toughest challenge in achieving digital business success, however, is not defining a strategy. It’s executing the strategy
• the operational backbone will not provide the agility you need
• Start designing a digital services backbone to enable a constant flow of digital innovations and connections with partners