Information Technology and the Corporation of the 1990s: Research Studies

545 Pages·1994·35.03 MB·English

by  Thomas J. Allen

Information Technology and the
Corporation of the 1990s
This page intentionally left blank
INFORMATION TECHNOLOGY
AND THE CORPORATION
OF THE 1990s
Research Studies
Edited by
THOMAS J. ALLEN
MICHAEL S. SCOTT MORTON
New York Oxford
OXFORD UNIVERSITY PRESS
1994
Oxford University Press
Oxford New York Toronto
Delhi Bombay Calcutta Madras Karachi
Kuala Lumpur Singapore Hong Kong Tokyo
Nairobi Dar es Salaam Cape Town
Melbourne Auckland Madrid
and associated companies in
Berlin Ibadan
Copyright 1994 by the Sloan School of Management
Published by Oxford University Press, Inc.,
200 Madison Avenue, New York, New York 10016
Oxford is a registered trademark of Oxford University Press
All rights reserved. No part of this publication may be reproduced,
stored in a retrieval system, or transmitted, in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise,
without the prior permission of Oxford University Press.
Library of Congress Cataloging-in-Publication Data
Information technology and the corporation of the 1990s :
research studies / Thomas J. Allen and Michael S. Scott Morton, editors,
p. cm. "Intended to accompany and support its companion,
The corporation of the 1990s"—Pref.
Includes bibliographical references and index.
ISBN 0-19-506806-8
1. Management—Data processing. 2. Information technology—Management.
3. Organizational change. I. Allen, Thomas J. (Thomas John), 1931-
II. Scott Morton, Michael S.
HD30.2.I528 1993
658.4'038—<ic20 91-46832
246897531
Printed in the United States of America
on acid-free paper
Preface
This volume is a report on research, the chapters produced as part of the five-year
Management in the 1990s research program. The program was funded by a group of
12 industrial and governmental sponsors from the United States and Britain, and this
book is intended to accompany and support its companion, The Corporation of the
1990s.
The research reports in themselves tell only a very small part of the story, how-
ever. To cope with the dynamic environment of the 1990s, management will have to
be innovative and develop new products and services for rapidly changing markets in
order to remain competitive. This process of innovation is a response to two sets of
forces on the enterprise.
Innovation is a process that mediates between two streams of human activity
(Figure P.I). Market and technology develop in parallel and independently, save for
a linkage through innovation. Innovation, therefore, is a response to changes in one
or both of these streams. As the market changes, firms are driven to innovate with
new products and services, frequently having to seek out new technology in order to
accomplish this. On the other side, rapidly changing technology creates new oppor-
tunities and sometimes even creates changes in market structure. As a consequence,
Figure P.1. Innovation as a response to changes in market and technology.
vi PREFACE
the more rapidly that either stream changes, the greater the pressure will be for firms
to be innovative.
In the decade of the 1990s, it is generally agreed that both of these streams are
accelerating. Markets are changing at a rate rarely before experienced. Needs and
tastes are changing, and entirely new markets are opening in both established geo-
graphic areas and entirely new ones. In regard to technology, the rate of change in
information technology has been estimated to be 20 to 30 percent per year. These di-
verse technologies, which we label information technology, are crucial to the organi-
zation. We are no longer talking about data processing, in which responsibility and
impact were confined to a usually small and identifiable segment of the business.
Rather, today, information technology is ubiquitous. It is integral to processes inter-
nal to the firm, to product design, to delivery of services, and to interorganizational
relations. It is the lifeblood of the organization, shrinking the effects of time and dis-
tance and altering the very nature of work.
The Management in the 1990s Program, as the research program was called, was
in many ways an experiment in collaboration among the university, industry, and
government. We who were involved in it like to think of this program as a very suc-
cessful experiment. One measure of this is the fact that several of the sponsors have
decided to continue the relationship (in a somewhat different form), even though the
program was designed and intended to be of limited and well-defined (five years) du-
ration. The ultimate determinant of success will be the degree to which the ideas that
were generated are found to be useful in helping organizations manage the impact of
information technology. This book is intended to help in this process by directly dis-
seminating some of these ideas, making them available to organizations for imple-
mentation but, in a more important sense, by raising issues and stimulating further
thought by both academics and managers.
When we say that this was an experimental program, we mean that we tried to
learn from it how to better manage collaboration and technology transfer between a
university group and a set of external sponsors. Such relationships have traditionally
been marked by failure and frustration. On the university side, the complaint is that
the sponsors are too shortsighted and want short-term consulting rather than the
longer-term, more fundamental research that the university is better able to supply.
On the industry side, the complaint is that the academics are too separated from real-
ity in their "ivory towers" and are not concerned with the real issues of implementing
ideas. One of our major goals in this experiment was to address and resolve both of
these issues by creating a strong joint team of researchers and sponsors to promote
communication, to direct the program toward relevant, long-range issues, and to cre-
ate a structure that would enable more effective implementation in at least the spon-
soring organizations and, we hope, other organizations as well.
In all honesty, we must admit that at the outset we had only a very vague idea of
how to do this. In fact, university-sponsor relations in the first year or two of the
program were anything but smooth. Both sides needed to learn more about the
other's perspective. The faculty researchers, through their direct contact with the
staff of the sponsoring organizations, better understood the needs and concerns of
those organizations and were able to direct their research toward addressing those
needs. The sponsors (particularly the sponsor representatives) learned the ways in
Preface vii
which universities function, in particular that universities are organized and struc-
tured in a way that is very different from the structure to which they are accustomed.
The hierarchical structure of the sponsor organizations does not exist in universities.
Faculty cannot be "directed." No one can order a professor to do research on a par-
ticular topic. However, a faculty member can be influenced, and to do this, one must
be aware of how the academic reward system functions and the importance of exter-
nal peer evaluations.
When both sides of our team recognized these issues, relationships improved
substantially and an effective working team emerged. The sponsor representatives
produced a major guiding document for the program, labeled the "vision document"
(Alexander et al., 1985). It addressed the sponsors' concerns in both written form
and by means of a two-day conference, attended by both faculty and sponsor repre-
sentatives. This was followed with a more specific "request for proposals" based on
the vision document. The request for proposals was sent to all interested faculty and
described the research areas that the program would be interested in funding. The
proposals listed the hypotheses to be tested, the research method to be used and an
estimate of the required budget.
The proposals were reviewed by the sponsors and a faculty steering committee
for the program. All sponsor representatives received copies of the proposals with-
out the proposed budget. The sponsor representatives then evaluated each proposal
and achieved consensus ratings by communicating through electronic mail. The fac-
ulty steering committee did the same, with the additional step of adjusting the bud-
gets to make the total fit the amount available for the time period.
The sponsor representatives elected three of their number to meet with the faculty
steering committee in what became known as the "joint steering committee." In this
meeting, differences in the two sets of evaluations were discussed and usually were
easily resolved. The research director for the program then matched the budget to the
projects in order of their jointly ranked priority and indicated how many the budget
would allow. Through mutual agreement, the director and the research director for
the program were authorized to spend up to 30 percent of the budget on projects in
which the sponsors did not believe but that the two directors believed would be to the
sponsors' benefit. In fact, this option had to be exercised only once for a single pro-
ject (much less than the 30 percent limit) during the five years of the program.
The process of joint proposal review was repeated each year during the duration
of the program. But this was not the only point of contact between sponsors and re-
searchers! Perhaps the most important contact occurred through the research and
data gathering by faculty and research assistants in the sponsor organizations. In ad-
dition, there was a weekly seminar, open to the public but attended primarily by re-
searchers and employees of the sponsor organizations, and periodic meetings
organized around either a research topic or an issue of interest to one or more of the
sponsors. The latter gathering was closed to the public, with the exception of invited
speakers and guests from other organizations, who might provide information or
knowledge bearing on the topic. Finally, there was a two-day annual meeting to re-
view progress and make plans for the following year.
After the initial growing pains, the system worked very well. The sponsor rep-
resentatives, who were from a diverse set of organizations—some industry, some
viii PREFACE
government, some British, and some American—became a cohesive team and
formed a strong relationship with the researchers and program managers at MIT.
One indication of this was evident at the final working meeting. Before the sched-
uled two-day meeting with the MIT faculty, the sponsor representatives had their
own meeting at which they assessed what they had gotten for their investment, what
they were going to do with the research results, and how they could manage the im-
plementation process within their respective organizations. They decided that this
trading of ideas, particularly on implementation, had been an extremely valuable ex-
perience. They then presented the results of their meeting to the MIT faculty and
spent the following two days discussing their strategies for implementation.
The response to the original request for proposals turned out to be far broader
and more diverse than anyone had expected. Information technology is a broad set
of individual technologies, and there are many ways in which these technologies af-
fect management and organizations. Accordingly, the resulting research projects are,
as we shall see, extremely diverse, in at least three ways.
First are the many subtechnologies of information technology and the many
facets of management and organizational life that these technologies affect. Togeth-
er these spell out a variety of research problems. Multiply this by the diversity of
disciplinary backgrounds and methodological approaches to be found in a manage-
ment school, and you will have a multitude of possibilities.
Our attempt, therefore, to organize the results has been difficult. Nevertheless,
there has been one redeeming feature: The quality of the research is so high and the
results are so interesting that they should quickly capture the attention of the con-
cerned reader.
In accordance with the organization of the accompanying volume (Scott Morton,
1990), we grouped papers (now chapters) into three parts: Part I: The Information
Technology Revolution, Part II: Strategic Options, and Part III: The Organization
and Management Response. Part I deals less with the nature of the revolution in in-
formation technology and more with the real and projected implications of that revo-
lution. Part II explores different strategies for gaining advantage through information
technology, and Part III examines its impact on people and organizations and the
ways in which organizations have responded to that impact.
No research program of the magnitude of the Management in the 1990s Program
is possible without the combined efforts of many people. We cannot name them all,
but there are a few whose special efforts must be acknowledged. First is Jack
Rockart, who with Michael Scott Morton conceived of such a program and con-
tributed to it through its five years. Then there are the sponsors, particularly those
who represented their sponsor organizations. They kept us in touch with reality and
steered the research toward appropriate goals. Then there is Alvin J. Silk, who as
deputy dean of the Sloan School encouraged, protected, and nurtured the program in
its formative period. Al deserves special mention for his patience and help. Roger
Samuel and Patricia White managed the program's operation and served in that most
difficult position of mediating between the sponsors and the researchers, always
seeming to be able to keep both sides coordinated and reasonably happy. They also
were able to stay within the budget. Roger, in particular, provided an effective coun-
terbalance to the erratic personality of the first editor. Finally, this volume could
Preface ix
never have come into existence without the extraordinary efforts of Pamela Spencer.
She not only tolerated and covered up for the absent-minded editors, but she also put
in many long hours outsmarting the information technology of the many word-pro-
cessing systems in which the papers were originally embedded. To her must go a
very special thank you!
Cambridge, Mass. TJ.A.
Cambridge, Mass. M.S.S.M.
March 1993
REFERENCES
Alexander, J., T. Condon, J. A. Hernon, K. H. Macdonald, J. Martens, & J. G. Sifonis
(1985). Sponsors' future vision, MIT Management in the 1990s working paper no. 85-002.
Scott Morton, M. S. (Ed.) (1990). The corporation of the 1990s: Information technology
and organizational transformation. New York: Oxford University Press.