slides for chapter 3 portals - corporate information strategy management

AIM

TO ACQUAINT THE BUSINESS STUDENTS ABOUT BUILDING NETWORKED BUSINESSES

GROUP MEMBERS

MAJ TAVEER AHMED MBA-5TH

MAJ FAWAD HUSSAIN MBA-5TH

Ms AMMARAH ISHAQUE MBA-5TH

MS GULNAZ AFZAL MSBA 1ST

MS RABIA KHAN MSBA 1ST

MS SEHRISH ZAMAN MSBA 1ST

M.QAISER MBA-5TH

CAPT AZEEM HAFEEZ MBA-5TH

• (MAJ TAVEER )

INTRODUCTION / NEED FOR NEW CAPABILITIES / HISTORY REPEATING ITSELF

• (RABIA KHAN )

BLUE PRINT FOR A NETWORKED ORGANIZATION

• (GULLNAZ AFZAL)

MANAGING AND LEARNING

• (AMARAH ISHAQUE)

LEADING AND ENGAGING

• (M.QAISER)

BUILING VALUE NETWORKS

• (SHERISH ZAMAN)

HOW SHOULD WE RELATE TO MARKET PERTICIPANTS

• (MAJ FAWAD HUSSAIN)

EVOLVING MARKET STRUCTURE AND RELATIONSHIPS

• (CAPT AZEEM HAFEEZ)

MODELS / EXAMPLES / CONCLUSION

• (ALL)

QUESTION / ANSWER SESSION

SEQUENCE

INTRODUCTION

• “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

INTRODUCTION

• Dilemma of todays executives.• Being big act small.• Concept of hybrid business organization.• Emergence of entrepreneur and executives.• Role of entrepreneur, executives and networked

organization, its capabilities and requirement.

DIAGRAMATIC LAYOUT

Introduction Is history repeating itself

Need for new cap

Blue print for networked organization

Operatingand innovation

Mng and learningLeading and Engaging

Building value Networked

Where should activities performed

How we relate these activities

Evolving mkt structure

TANVEER

RABIA

GULNAZ

AMMARAQAISAR

SEHRISH /FAWAD

AZEEM

1. The Need for New Capabilities

• 20th century industrial economy designs.• Industrial economy era. (1980 to 1990).• Networked economy era. 1990+• Challenges faced by executives in industrial era:

THE NEED FOR NEW CAPABILITIES• “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.» Quote from page 228 of Applegate.

NEED FOR NEW CAPABILITIESBUILDING NETWORKED BUSINESSES

• “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)

• Sweden / Switzerland based power company.

• Assets over $50 bns.• 850 subsidiary company.• 140 countries over 1,80k employees.

Building the Networked Business

Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/I rwin, 2002.

Org

an

iza

tio

n

Simple &Local

Stable & Certain

Dynamic & UncertainEnvironment

Complex &Global

Entrepreneurial Organization

Hierarchy

??

Chapter 3 Figure 3-1

The Organization Design Challenge

Is History Repeating Itself?

• 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

Flattening the Organizational Structure

Matrix Organizational Structure

But, hybrid designs bred conflict, confusion, information overload, and costly duplication of resources


Info

rma

tio

n R

eq

uir

em

en

ts

Simple &Local

Stable & Certain

Dynamic & UncertainBusiness Decision Making Environment

Complex &Global

Local Intelligence

Centralized intelligence Shared intelligence

Hierarchical Organization &Mainframe Technology

Networked Organization &Networked Technology

Entrepreneurial Organization &PC & LAN Technology

+

+ +

Networked Organizational Models are Enabled by Networked Technologies


Is History Repeating Itself?

– 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

RABIA KHAN

BLUEPRINT FOR A NETWORKED ORGANIZATION

• Challenges– 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


Sample Organizational Components

Sample Technology Components

• Human Resources Management• Strategic Alliances• Customer Loyalty• Supplier Loyalty• Partnerships

• Planning and Budgeting• Performance Monitoring• Organization Structure and Reporting• Organization Decision Making and

Learning

• Operating Process • New Product Development• Business Venturing

• HR Systems• Customer Relationship Management (CRM)• Personalization• Communication Infrastructure• User Access Devices

• 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

Leading & Engaging

Managing & Learning

Operating & Innovating


Blueprint for a “Big-Small” Business


• 1. 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.


• 1. Operating 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

OPERATING AND INNOVATING CAPABILITIES

Precision

Execution

Fast - Cycled

Innovation

Entrepreneurial

Hierarchy

Networked

Precision

Execution

Fast - Cycled

Innovation

Entrepreneurial

Hierarchy

Networked

BUSINESS DESIGN REQUIREMENTS

-

Capabilities Business Design Requirements

Precision execution · Streamlined, integrated, and efficient operations seamlessly link activities performed inside the firm with those performed by customers, partners, and suppliers

· Cost, cycle time and quality levels are benchmarks within the industry andexceed customer/stakeholder requirements.

Fast-cycled innovation · Flexible, modular designs enable customization, personalization, and continuous improvement.

· Change processes are embedded within the company’s day-to-day operations- -

· Employees are rewarded for devising new, innovative ways to serve customers

· Resources for change are available.

· There is a standardized and widely accepted process used to develop and present the “business case” and implementation plan for a potential idea.

Customer and community connected

(Note: All key stakeholders,

including suppliers and partners are

considered “customers” of an e-business.)

· Executives and employees in all parts of the organization have the information required to understand th e lifetime value of customers, suppliers and partners and have the ability and authority to make decisions and take actions to improve satisfaction and loyalty.

· Incentive systems reward success in attracting and retaining profitable customers, suppliers, a nd partners and in increasing the frequency and level of engagement.

GULNAZ AFZAL

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

TRADITIONAL MANAGEMENT PROCESS

Driven from top down, incremental goals andallocation 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

NETWORKED MANAGEMENT PROCESS

Improved access to information enablesemployees, customers, and partners to inventnew ways of working and to respond quickly.

MANAGING AND LEARNING CAPABILITIES

Networked

Efficiency &Integration

Learning byDoing

Entrepreneurial

Hierarchy

Networked

Efficiency &Integration

Learning byDoing

Entrepreneurial

Hierarchy

MANAGING AND LEARNING CAPABILITIES

Capabilities

Control and

Integration

Learning byDoing

Flexible and well-managedboundaries

Business design requirements

• Coordination and control of routine operations is embedded within the digital operating infrastructure.

• Early warning systems enable close monitoring and immediate response to threats and opportunities

• Critical failure factors” have been identified and “disaster recovery” procedures are in place.

• Real-time information and interactive management systems – a mix of face-to-face decision making supplemented by high bandwidth communication systems – enable large dispersed teams of people to make informed decisions, take actions, and receive immediate feedback

• Key operating metrics are directly linked to financial and market results to provide real time feedback.

• Shared, actionable goals provide direction and the framework within which decisions can be made and evaluated.

• Employees and partners have a clear understanding of the role they play and how to work with others to get things done. But, these clearly defined roles must not limit people’s ability to work across boundaries - inside the firm and with suppliers, partners and customers.

• In a networked organization, companies are highly skilled at forming and successfully managing strategic alliances and partnerships.

• If a company is growing by acquisition, companies must be highly skilled at identifying and effectively integrating people, processes, and systems that unite acquired companies.

MANAGING AND LEARNING CAPABILITIES (CONT.)

Business design requirements

• Formal and informal communication systems support frequent two way interactions inside and outside the firm.

• Coordinating mechanism (for example, advisory councils, governing boards, liaison roles, and information systems) enable effective coordination and control of activities that cross internal and external boundaries.

• The information needed to make decisions and take actions is relevant, timely, and readily available to those who need it. It is presented in a form that is immediately actionable.

• People are information literate and have the skills and incentives needed to turn information into action that is consistent with the best interests of the organization and its stakeholders.

• Information and best practices are openly shared.• Politics, bureaucracy, and poorly aligned incentives do not get in the way of

sharing and learning from information.• Processes are in place to ensure that information is accurate and reliable, and

that employees, partners, customers, and suppliers trust the information they receive.

• Privacy and confidentiality are safeguarded and security procedures are strictly enforced.

Capabilities

Flexible and well-managed boundaries

Accessible knowledge assets

-

AMMARA ISHAQ


While management is all about coping with complexity,leadership

is all about attracting and mobilizing the resources for change

1: Leadership involves defining a clear, compelling vision and ensuring that is translated into a set of actionable strategies and

initiatives.

2: Attracting, motivating, energizing, and retaining top talent inside an organization and within partner, supplier, and customer networks

3: Creates a culture and ensures that values, beliefs and behaviors are deeply ingrained and reflected in the decisions made and actions taken

HIERARCHAL LEADERSHIP

Emphasis managing complexity and minimizingit.Management process overshadowed leadershipRisk were minimized by centralizing decisionmaking, segregating activities and structuringwork rigidly.

ENTREPRENEURIAL LEADERSHIP

“Create or seize an opportunity and pursue itregardless of the resources currently controlled”

Attract, motivate and engage people, partnersand investors in the task of working together tocreate a clear and compelling vision that excites and deeply engaged all involved.

NETWORKED LEADERSHIP

1 :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

2: When aligned with incentives and motivations that foster commitment rather than simply compliance.

3: 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.


Strategic Focus& Resource Allocation

Shared Culture& Commitment

Entrepreneurial

Hierarchy

Networked

Strategic Focus& Resource Allocation

Shared Culture& Commitment

Entrepreneurial

Hierarchy

Networked

LEADING AND ENGAGING CAPABILITIESCapabilities

Visionary yet pragmaticLeadership

Energized participation

Skilled in conflict resolution, negotiation and consensus

Business Design Requirements

• Credible leaders at all levels of the organization are able to articulate clear direction.• Leadership is trusted and well respected and, as a result, is able to attract and retain

high quality partners and talented employees.• “Visions” are translated into actionable strategies that can be executed and deliver

results while the window of opportunity is still open.• Leaders are able set tangible goals and make focused decisions.• Executives are directly involved in the business; they ensure that barriers are removed,

resources are available, and employees have the skills and motivation to accomplish growth.

• Culture and incentives foster innovation while also ensuring a strong commitment to delivering results. This requires that large projects be broken into smaller, more focused deliverables, and that senior management break down barriers and realign goals.

• Employees, customers, suppliers, and partners believe that managers and other leaders possess the knowledge, skills, and experience needed to run the business.

• “Stretch targets” energize action and motivate everyone to work at peak performance.• Leaders display a strong commitment to career development and learning for all.

• Processes are in place to ensure that conflicting opinions are openly discussed without becoming destructive.

• Employees and partners are skilled at negotiating “win-win” agreements• Despite conflicting opinions, consensus decisions can be quickly reached and

implemented.

QAISER

BUILDING VALUE NETWORKS

• Building the value chain network

– Where Should Activities Be Performed?

– How Should We Relate to Market Participants?

BUILDING VALUE NETWORKS

Options Description Vertical Integration Locate all but the most routine, transaction-oriented activities inside the

firm. Selective Sourcing Source selected activities from the outside. Traditionally, sourced activities

were controlled through short-term contracts. Virtual Integration Become part of a network of highly specialized, independent parties that

work together to perform, coordinate, and control value chain activities.

SEHRISH ZAMAN

BUILDING VALUE NETWORKS• Building the value chain network

– How Should We Relate to Market Participants? Transaction Contract Partnership

Basis of Interaction

Discrete exchange of goods, services, and payments (simple buyer/seller exchange)

Prior agreement governs exchange (e.g., service contract, lease, purchase agreement)

Shared goals and processes for achieving them (e.g., collaborative product development)

Duration of Interaction

Immediate Usually short-term and defined by the contract

Usually long term and defined by the relationship

Level of Business Integration

Low Low to Moderate High

Coordination and Control

Supply and demand (market)

Terms of contract define procedures, monitoring, and reporting

Interorganizational structures, processes, and systems; Mutual adjustment

Information Flow

Primarily one way; Limited in scope and amount; Low level of customization

One or two way; Scope & amount are usually defined in the contract

Two-way (interactive); Extensive exchange of rich, detailed information; Dynamically changing; Customizable

HOW SHOULD WE RELATE TO MARKET PARTICIPANTS

• All firms make choices about the nature of the relationships that they develop with customers, suppliers, and other external industry participants.

• .

• Transactions involve the simple exchange of goods, services, and payments, usually during a specific time period and with limited interaction or information sharing between the parties involved.


• In the contractual relationships, the products or services to be provided by each party and the length of the relationship are well defined


Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/Irwin, 2002.

Impact of Information Technology on Market Evolution


MAJ FAWAD

EVOLVING MARKET STRUCTURE & RELATIONSHIP

In industrial economy organizations were built on

proprietary capabilities & infrastructure

Difficult to integrate operations, share information,

coordinate and control activities

Creation of walls that isolated groups within

organizations and market participants

Firms grew complex, harder to coordinate and control

EVOLVING MARKET STRUCTURES & RELATIONSHIPS

Proprietary Capabilities and Infrastructure Create Walls Inside an Organization and Among Members of a Value Chain Network

Large firms vertically integrated

Specialized infrastructures & capabilities further isolated

functional units

In mid 1900s more staff

Hierarchical reporting structures also expanded

In late 70s industrial economy became multinational and

turned sluggish


Evolving Market Structure & Relationship

• 80s saw leveraged buyouts ,increased productivity and improved

competencies and selective sourcing

• ERP (enterprise resource planning) systems and enterprise integration

software packages for control, opening of windows within walls

• Impact of IT in 80s and 90s was limited and applied only to most critical

processes and strategic relationships.

• IT systems were costly ,difficult to operate, maintain and change and

reuse



• In 21st century networked technologies provide densely

connected, flexible and robust

• Storing and sharing voice, video and data and shift to

mobile technology

• This has reduced cost and time ,increasing range of

business activities and transactions with ease



• Use of advanced IT helped in establishing virtually

integrated market connecting sellers and buyers in

virtually integrated C2C internet markets.

• After dot-com demise Business-to-business

activities.

• With increased use of IT new business ways have

been evolved


AOL -TIME WARNER’S VIRTUAL INTEGRATION IN VERTICALLY INTEGRATED INDUSTRY

In 2000, AOL purchased Time Warner for US$164 billion

Merger in January 2001 to become vertically integrated mega

corporation

Owned content, packaging, distribution, publishing , films , sports ,

music, cable , internet and TV

Each AOL – Time Warner business was able to focus resources and

energy towards building best in class products and services

AOL -TIME WARNER’S VIRTUAL INTEGRATION IN VERTICALLY INTEGRATED INDUSTRY

• Each unit continued to distribute via traditional

channels and gained synergies from them

• Company developed new unit AOL – Time Warner

Interactive for integrating content and media channel

• Independent channel facilitators role by providing

services in Vertically integrated market

Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/I rwin, 2002. Chapter 3 Figure 3-10

AOL Time Warner’s Virtually-Integrated Organization within a Vertically-Integrated Market

CAPT AZEEM HAFEEZ

Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/I rwin, 2002. Chapter 3 Figure 3-11

Four Networked Market Models

Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/Irwin, 2002.

Impact of Information Technology on Market Evolution


FOUR NETWORKED MARKET MODELS

Evolution of four networked market models took place in 2002 Virtual peer-to-peer networks

Composed of individual teams & small businesses related through market driven transactions on publicly owned networks operated by neutral third party channels (eg : e-Bay and Yahoo)

Virtual Coalition networks Composed of businesses of varying size related through

combination of market driven transactions, contracts & partnerships on public and privately owned networks operated by joint equity coalitions (eg : GHX)


Virtually integrated organizations within vertically integrated markets Composed of independent , focused businesses and units

within an organization related through combination of internal market driven transactions, contracts and partnerships across privately owned networks operated by corporate headquarters or one of its unit (eg ; AOL)

Selective Sourcing Networks Composed of company’s key suppliers, customers or

partners related through combination of internal and external market driven transactions, contracts and partnerships across privately owned networks often maintained by one of the parties

(eg : Wal Mart)


All four network models develop shared infrastructures and capabilities

These network models unite the three levels of a business blueprint Operating and innovating Managing and learning Leading and engaging

Done across a network of entrepreneurial units inside and outside a firm

A STEP BY STEP APPROACH TO ANALYZING MARKETS & CAPABILITIES

Define the stream of value creating activities required to execute strategy. Determine which activities will be performed inside organization and which can be performed outside

Determine the nature of relationship with customers, suppliers, partners and others

Define network market model most appropriate for the business and industry

Conduct a high level audit of the capabilities required at the three levels of business:- Asses ability to operate with precision while innovating and personalizing to

ensure best experience for customers, suppliers and partners Asses ability to manage routine operations with control and efficiency Asses ability to develop visionary yet pragmatic leaders

Review findings and identify strength and weaknesses, findings should be discussed with employees, customers , suppliers and partners

Develop a set of initiatives and prioritize, define an agenda for change

A Step by Step Approach to Analyzing Markets & Capabilities

CONCLUSION

CONCLUSION

INTRODUCTION IS HISTORY REPEATING ITSELF

NEED FOR NEW CAP

BLUE PRINT FOR NETWORKED

ORGANIZATION

OPERATINGAND INNOVATION

MNG AND LEARNING LEADING

AND ENGAGING

BUILDING VALUE

NETWORKED

WHERE SHOULD ACTIVITIES BE PERFORMED

HOW WE RELATE THESE ACTIVITIES

EVOLVING MKT

STRUCTUREMARKET MODELS

?QUESTIONS IF ANY

THANKS

slides for chapter 3 portals - corporate information strategy management

Education

new organization capabilities

new organization structures

hybrid organization

networked infrastructure

new capabilities history

networked economy era

building networked businesses

networked businesses