Business innovation and transformation with IT

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As a cure for the poor results of business innovation in which IT plays an important role, this article presents IBAFrame. IBAFrame stands for the IT Benefits Accelerator Framework. IBAFrame ensures, if applied properly, that innovations in which IT plays an important role, will have better results and an improved use of the IT possibilities. IBAFrame combines knowledge and insights from the professional fields project management, change management and IT auditing.

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Business innovation and transformation with IT

  1. 1. Business Innovation with Information Technology Corporate Change Power as driver for organisational change Leon Dohmen June 2011 From prey to hunterAs a cure for the poor results of business innovation in which IT plays an important role, this article presents IBAFrame. IBAFrame stands for the IT Benefits Accelerator Framework.IBAFrame ensures, if applied properly, that innovations in which IT plays an important role, will have better results and an improved use of the IT possibilities. IBAFrame combines knowledge and insights from the professional fields project management, change management and IT auditing.
  2. 2. Business Innovation and Transformation with ITIntroductionExtended research of Jagdish Sheth and Rajendra Sisodia, 1 illustrates that the success ofcompanies is purely a matter of luck. Most companies are occasionally at the right moment,with the right product in the right market. It is like winning the lottery and then stating it wasplanned this way. As soon as the environment of the company changes, many companies failin their transformation.Today’s business environment is changing so fast that companies are being forced as neverbefore to rethink their core marketing strategies. One of the important current mainsprings ofbusiness innovation is information technology. According to Carlota Perez informationtechnology (IT) is called the fifth technological revolution. Moreover, according to TomForrester (1989): ‘Our high-tech society is the most definitive account available of thetechnology revolution that is transforming society and dramatically changing the way we liveand work and maybe even think’. 2 Previously we have faced the following technologicalrevolutions started from 1770:- The industrial revolution;- The era of steam machines and rail ways;- The era of steel, electricity and machine construction;- The era of motorcar and mass production.Business Innovation, information technology and organisational change (businesstransformation) are travelling hand in hand in the fifth technology revolution. Successfulorganisational change where IT plays an important role is a necessity to survive. Successfultransformation is, however no tip or trick. Choosing the correct steering is only possible if thecontext and consistency of technology, organisation and people (figure 1) is understood intheir relation to the fast changing environment. The correct merge of technologicalpossibilities, flexibility in processes and structure within organisations and the proper attitude,knowledge and skills of involved management and employees will lead to corporate changepower that gives direction and helps to choose the proper approach for a successfulimplementation of organisational change where IT plays an important role. Technology • Applications • Middleware • Infrastructure People Organisation • Attitude • Processes • Knowledge • Structure • Skills • LocationFigure 1: Context and consistency of technology, organisation and people1 Sheth, J. (2009). Chair of Marketing Strategy in the Goizueta Business School at Emory University. RajendraS. Sisodia is professor of marketing and founding director of the Center for Marketing Technology at BentleyCollege.2 Forester, T. (1989). The Story of the Information Technology Revolution, MIT Press. 2
  3. 3. Business Innovation and Transformation with ITMany organisations struggle with IT related innovation, meaning innovations due to IT, inwhich an organisation feels like a victim. This article introduces organisational change bymeans of IT. According to the dictionary the words by means of refers to as ‘based on’. Thisimplies that not IT, but the organisation itself is steering and selects the IT solutions which areimportant for the corporate objectives. Organisational change by means of IT involves:- changes of the IT solution itself; this could be a change of the existing IT solution or the implementation of a new IT solution (IT project);- changes in the work domain of users of IT solutions (user organisation or demand side of IT);- changes in the work domain of IT support (IT organisation or supply side of IT).Organisational change by means of IT refers to changes in all three subsections and theirmutual influencing and dependency therein. Continuous alignment and connection arerequired to have the subsections mutually join each other perfectly well, in order to ensurethat innovation in which IT plays an important role becomes successful. IBAFrame (ITBenefits Accelerator Framework) is the indispensable link between the three subsections ofchanges by means of IT (figure 2).Figure 2: Alignment and connection between the subsections involving changes by means of ITThe corporate power to change is one of the most important pillars of the organisation’ssuccess in the current fifth technology revolution.3 The power to change determines thechange result of organisational change - and thus business innovation - in which IT plays animportant role. IBAFrame helps to detect and improve the weak spots of the corporate powerto change within the own organisation. IBAFrame can also compare the own corporate powerto change with other organisations within or outside the industry (figure 3). This articleoutlines the main terms related to IBAFrame. These terms are:- power to change;3 Perez, C. (2009). Technological revolutions and techno-economic paradigms, TOC/TUT working paper no. 20. 3
  4. 4. Business Innovation and Transformation with IT- change result;- change instruments;- work forms.Food for thought: The total is more than...Perhaps you as a reader, might think: I have heard this before: ‘The total is more than the sumof the parts. But then, make it measurable’. To make this clear, we use an example fromathletics from the Dutch relay team on the 4×100 metres sprint. On July 1, 2007 the Dutchrecord for the one hundred metres was held by Churandy Martina with 10.10 seconds.Churandy Martina is one of Antilles best known sportsman. He won the gold medal in the 100m during the Pan American Games (Rio de Janeiro, 2007) He also ranked 5th in the 100metres and 200 meters sprint world championships (Osaka 2007, Japan). In the theoreticalcase Churandy Martina runs 4 times, simple math illustrates that as such the fastest possibletime to reach for the 4×100 metres could be 40.40 seconds. However, until first of June 2009,the fastest time of a Dutch relay team on the 4×100 metres is 38.63 seconds. This is what ismeant with the total is more than the sum of the parts.Corporate power to change and change resultThe corporate power to change is the organisation’s competence level to handle severalchange instruments. IBAFrame works with the following instruments:- roadmap;- change approach;- programme and project management;- knowledge management;- personal effectiveness.Figure 3: IBAFrame for measuring, benchmarking and developing the corporate power to change 4
  5. 5. Business Innovation and Transformation with ITThe change instruments used by IBAFrame are on the one hand focused on solving the intable 1 referred to causes of poor results of the organisational changes due to IT. On the otherhand the IBAFrame instruments consist of knowledge, experience and insights from differentprofessional fields which have proven themselves in the everyday practice. Involvedprofessional fields are project management, management of change and IT-auditing. Table 1illustrates which change instrument is primarily focused on solving which cause of the poorresults of the organisational change due to IT. Cause Change instruments to use Lacking mutual sense of direction and Roadmap and personal effectiveness commitment (lack of leadership) Incorrect change approach (incorrect Roadmap and change approach assessment of the complexity, conflicting project management style in relation to the development and building method) No or a lack of steering of the learning Change approach and knowledge process management Too little attention for changes in the users’ Roadmap and programme and and IT support work domains project management Inadequate objectives (specifications) Roadmap and programme and project management No instrument for measuring and IBAFrame in its entirety developing the corporate power to changeTable 1:Causes and change instruments to useIBAFrame distinguishes five levels of corporate power to change (A up to and including E).Score A means the organisation has no knowledge and experience in using IBAFrame changeinstruments. Score E is the highest score. This score indicates that change is a second natureto the organisation. Management and employees have expert knowledge in handling changeinstruments. The change result is expressed on a scale of 1 to 10 and measures amongst otherswhether the change:- is an improvement;- fits the objective;- coincides with the expectation;- is properly absorped.The stronger the power to change, the better the change results. This is translated from lowbenefits to high benefits and from high failure costs to low failure costs, via the two linesrepresenting the change results as expressed in figure 3.Change instrumentsBusiness innovation with IT and thus organisational change is a dynamic process and involvesa certain degree of unpredictability. The IBAFrame change instruments are instruments whichprovide a guideline to handle the dynamics and unpredictability, and as such to exert apositive influence on the changes in which IT plays an important role. The change instrumentsare focusing on the use on different levels of organisation, group and individual. The changeinstruments ensure alignment and connection between the changes in the IT solution and thechanges in the work domains of users and IT support employees. It links ‘hard’ and ‘soft’objectives for the changes. The change instruments assist to determine the ‘hard’ corporate 5
  6. 6. Business Innovation and Transformation with ITobjectives and link derived (measurable) group and individual objectives to this. This ‘hard’management side is amongst other things focused on measuring, handling instruments andapplying structure. This is how IBAFrame helps to build the management infrastructure.Change instruments also involve determining the ‘soft’ objectives. This refers to creating amutual sense of direction, encouraging commitment, cooperation, learning processes and givemeaning. According to several literature this ‘soft’ side is closely related to leadership. At this‘soft’ side creativity, participation and taking away resistance are involved amongst others.This stimulates building a social infrastructure. These IBAFrame change instruments bringthe disciplines management and leadership together. Table 2 is a listing and brief descriptionof the change instruments.Applying the five instruments according table 2 is not such as a tip or trick. Applying thesefive instruments is supported by a sixth change instrument: the transformational competencymodel. Corporate change power is embedded in the competences of involved managementand employees. Steering organisational change by means of IT is realised within aneconomical, social and political environment. Managers must be able to adjust to a turbulentenvironment and be able to function in a complex and changing organisational structure. 4They must use ever increasingly advanced information systems. Next, they are confrontedwith different and changing standards, values and expectations. The central question is: Whatis a successful manager now (and what will he be like in the future)? The modern managerhas the following characteristics: 5- knowledge and information on a basic level; this refers to basic facts, relevant professional experience and constantly being open to evolving events.- specific skills and characteristics; this includes analytical, problem solving, and social skills, emotional resilience and proactive indication.- meta qualities; such as creativity, mental skills and a balanced learning style. Change IBAFrame ‘hard’ Management IBAFrame ‘soft’ Objective and work form instrument objectives Leadership objectives focussed on Roadmap •Determine the point of departure, • Creation of common view Organisation/Group destination (corporate objective) and and sense of direction the change route •Linking the change in the IT solution and the change in the work domains of IT support and users of the IT solution •Obtain insight into the complexity of changes by means of IT Change approach •Tune the change approach to the • Ensuring the proper Organisation/Group complexity level atmosphere during •Translate the change approach to organisational changes by fitting work forms means of IT: increase the speed if required or possible, offers exploration space and a learning environment if necessary4 Collins, D. (1998). Organizational Change: Sociological perspectives.5 Broek, C. van den (2002). Learning competences for the facilitation of management. 6
  7. 7. Business Innovation and Transformation with IT Programme and •Translate the corporate objective to •Encourage commitment Group/Individual project derived objectives and make it and cooperation management SMART •Ensure the dialogue •Provide the change route with change characteristics (specifications) and a (time) path •Set the proper priorities (which programmes and projects have to be executed first) •Ensure a controlled (fitting) execution Knowledge • Increase the speed of and improve •Creating an optimal Group/Individual management the adoption of the new IT solution learning environment •Stimulating the (collective) learning process Personal •Tune the personal objective to the • Give meaning and offering Individual effectiveness corporate objective (through the space within the collective programme and project objective) boundaries which have been •Improve the personal (individual) put in place with the other productivity change instrumentsTable 2: Listing and brief description of the change instrumentsFood for thought: Appearances of a groupAppearances of a group can be either a team or network. Teams focus on unity where asnetworks require diversity. Some characteristics that express the differences between teamsand networks are: 6– Teams require coherence, networks autonomy;– Teams desire privacy and seclusion, networks openness;– Teams need a clear focus, networks need interaction;– Teams search for similarity, networks choose expertise for different aspects;– Teams require coordination, networks need connection.Work formsBusiness innovation and organisational change is set in motion by making use of changeinstruments. This motion is created when people meet one another (virtually) and worktogether in work forms. Work forms involve interaction and communication between people.Some change instruments mainly focus on (large) groups. Other change instruments focusmore on the individuals and ensure a true embedding of the organisational (corporate)objectives in the employees by actively involving employees and allowing them to learn(embedded change). Work forms serve a certain interaction objective. This objective couldhave a passive interaction objective with the intention to allow people to see and to allowthem to listen. With an active work form the emphasis is on participation, for example byholding discussions or organising a workshop. Examples of work forms for use in a largergroup or team:- presentation (passive);- demonstration (passive);- workshop (active);- large scale intervention (active);- meeting (active);- brainstorm (active);- test session (active).Work forms focused on the use in smaller groups or on individual basis are:6 Herbert, M. (2009). Working the Network, white paper, Logica. 7
  8. 8. Business Innovation and Transformation with IT- discussion (active);- work group (active);- coaching (active);- reading an article (passive);- dialogue (active);- teacher/pupil construction (active);- learning by doing (active);- review (active).The meaning of some of these work forms appears to be self-explanatory. For theunambiguous understanding a definition related to all work forms is listed below, part ofwhich have been copied from the dictionary website van Dale (table 3). Term (work form) Definition Presentation A type of show (performance) Demonstration Illustrating the possibilities Workshop An event in which persons are collectively acting in a creative manner Large scale A large target group who in one or several sessions intervention discuss, share insights into and arrive at a mutual view Meeting An organised meeting in order to discuss, debate or consultation Brainstorm Offer spontaneous ideas or suggestions in order to solve one or several problems Test session Testing, putting it to test Discussion Discussion in which participants try to find a solution of the problem by argumentation Work group Group of persons who collectively execute a task Coaching To give guidance to Reading an article Examining the content of the written item Dialogue Discussion between two persons Teacher/pupil Work construction in which one (teacher) teaches construction the other (pupil) Learning by doing Familiarise oneself with the topic by means of acting (practical) Review Provide commentary on an elaborated piece (of a document)Table 3: Work forms and their definitionA work form must fit the objective. For example, a workshop often serves as a work form toretrieve information on the bottlenecks related to the functioning of a department. Themanagement and employees of the corresponding department both participate in the sameworkshop. The risk is high that not all persons will be actively involved or dare to speakfreely, which is why the workshop will only retrieve information on half the existingbottlenecks. The final solution is now only half a solution. It is better to gather information onthe bottlenecks during dialogues, and to present this information anonymously.By outsourcing the development, maintenance and support of IT solutions to low-wagecountries, cooperating over long distances in different time zones is increasingly becomingmore common. Often, it is not feasible to meet in physical work forms, moreover it is 8
  9. 9. Business Innovation and Transformation with ITextremely inefficient. However, work forms supported by Internet applications enable virtualmeetings. Web conferencing is an example of such a work form. Solutions such as MSN alsomake it possible to meet and cooperate virtually. It is expected that the use of virtual workforms will strongly intensify in the coming years. Books and literature concerning this subject,provide an interesting view on this different (less physical) manner of working. Apart fromthe virtual aspect, the intercultural aspects play an important role in international cooperation 7as well. Cooperation will then – among other things – depend on knowing and being able tohandle the differences in habits and working styles.Food for thought: Failed IT projectsThe failure of IT projects is often determined on the basis of exceeding the delivery dateand/or the available IT project budget. However, if budget and time exceeds 10% and theresult contributes to more efficient working business processes, higher turnover or highermargins, will we then refer to the project as a failed project? This classic approach on whetheror not a project was successful leads to a high level of narrow-mindedness in which theprojects appear to be the objective on itself instead of the means to contribute to the corporateobjective. IBAFrame uses a different approach. The term change result is the exponent withwhich the result of the change by means of IT is expressed, instead of the budget and time.SummaryThis articles concerns a view on business innovation and organisational change whereinformation technology plays an important role. Analyses and research from differentprofessional fields lead to insights that offers opportunities to improve implementation andresults of organisational changes where IT plays an important role. This article is one of thechapters of ‘Changing IT in six’.8 The principles of this article and the book have beenfollowed-up by a new study. The results of this study are available via:http://www.slideshare.net/ldohmen/iba-frame-study-results-20100416----------------------------------------------------------------------------------------------------------------- Leon Dohmen is principal management consultant at Logica. Also he teaches Management of Technology at the Rotterdam Business School for Master- en MBA-programmes. He is (co-)writer of the books ‘Regie voeren over organisatieverandering met ICT’ (2008 – Sdu), ‘Changing IT in six’ (2010 – Koninklijke van Gorcum) and ‘Kampioen organisatieverandering’ (2011 - Unibook). - http://www.linkedin.com/pub/leon-dohmen/0/b24/92 -http://www.vangorcum.nl/EN_toonBoek.asp?PublID=45527 Journal of International Management, Volume 11, Issue 1, March 2005, Pages 111-113.8 Broek, C. v.d., L. Dohmen & B. van der Hooft (2011). Changing IT in six, Koninlijke van Gorcum publishers 9

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