The document discusses the importance of information systems (IS) in aligning with business strategy to achieve competitive advantage, as illustrated by the information systems strategy triangle, which highlights the interplay between business, organizational, and IS strategies. It emphasizes that competitive advantage is derived from cost leadership, differentiation, or focus strategies, and acknowledges the impact of hypercompetition on sustaining these advantages. Additionally, it outlines frameworks for understanding organizational and IS strategies, encouraging general managers to actively engage in strategic planning and decision-making related to IS.

1. Chapter 1
The Information Systems Strategy Triangle
Managing and Using Information Systems: A Strategic
Approach
by Keri Pearlson & Carol Saunders
Copyright 2006 John Wiley & Sons, Inc.
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IntroductionHow knowledgeable must a general manager be
about IS?What are the ramifications of an improperly
implemented IS?Can IS be examined in isolation? Why or why
not?What function does IS play in the business strategy of an
organization?
Copyright 2006 John Wiley & Sons, Inc.
Copyright 2006 John Wiley & Sons, Inc.
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Real World ExampleNational Linen Service was facing poor
earnings due to increased competition and a weak
economy.They created a strategic systems department to
increase competitiveness.A new system was implemented,
BOSS, that deleted expired customer contracts hurting their
bottom line.The unintended consequences of the system were
not taken into account.

2. Copyright 2006 John Wiley & Sons, Inc.
Copyright 2006 John Wiley & Sons, Inc.
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The Impact of ISThe Information Systems Strategy Triangle is a
simple framework for understanding the impact of IS on
organizations.Successful firms have an overriding business
strategy.This business strategy drives both Organizational and
Information strategy.All decisions are driven by the firm’s
business objectives.
Copyright 2006 John Wiley & Sons, Inc.
Copyright 2006 John Wiley & Sons, Inc.
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Figure 1.1 The Information Systems Strategy Triangle
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Copyright 2006 John Wiley & Sons, Inc.
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IS Strategy TriangleBusiness Strategy drives all other
strategies.Organizational and Information Strategy are then
dependent upon the Business Strategy.Changes in any strategy
requires changes in the others to maintain balance. IS Strategy
is affected by the other strategies a firm uses. IS strategy
always involves consequences.
Copyright 2006 John Wiley & Sons, Inc.
BRIEF OVERVIEW OF BUSINESS STRATEGY

3. FRAMEWORKS
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Think About ITWhat is a business strategy?Which factors
influences a business strategy?How does a business change its
strategy without losing balance within its organization and IS
structure?Are there specific events that induce a business to
change its strategies and what are they?
Copyright 2006 John Wiley & Sons, Inc.
Copyright 2006 John Wiley & Sons, Inc.
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Generic Strategies FrameworkMichael Porter describes how
businesses can build a sustainable competitive advantage.He
identified three primary strategies for achieving competitive
advantage:Cost leadership – lowest-cost
producer.Differentiation – product is unique.Focus – limited
scope.
Copyright 2006 John Wiley & Sons, Inc.
Copyright 2006 John Wiley & Sons, Inc.
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Figure 1.2 Three strategies for achieving competitive
advantage.
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Copyright 2006 John Wiley & Sons, Inc.

4. *
Porter’s Competitive AdvantageRemember that a companies
overall business strategy will drive all other strategies. Porter
defined these competitive advantages to represent various
business strategies found in the marketplace.Cost leadership
strategy firms include Walmart, Suzuki, Overstock.com,
etc.Differentiation strategy firms include Coca Cola,
Progressive Insurance, Publix, etc.Focus strategy firms include
the Ritz Carlton, Marriott, etc.
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Copyright 2006 John Wiley & Sons, Inc.
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Differentiation Strategy Variants Shareholder value model:
create advantage through the use of knowledge and timing
(Fruhan)Unlimited resources model: companies with a large
resource can sustain losses more easily than ones with fewer
resources (Chain Store vs Mom & Pop).The problem with Porter
and these variants are that the rate of change is no longer easily
managed and sustained.
Copyright 2006 John Wiley & Sons, Inc.
Copyright 2006 John Wiley & Sons, Inc.
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HypercompetitionD’Aveni developed a model that stated that
sustainable competitive advantage could NOT be
sustained.Called the “Hypercompetition and the New 7 Ss
Framework”.Competitive advantage is rapidly erased by
competition and the market.
Copyright 2006 John Wiley & Sons, Inc.

5. Copyright 2006 John Wiley & Sons, Inc.
*Assumptions of D’Avenis Hypercompetition and the New 7 Ss
Framework model:Every advantage is eroded.Sustaining an
advantage can be a deadly distraction.Goal of advantage should
be disruption, not sustainabilityInitiatives are achieved through
series of small steps.
Copyright 2006 John Wiley & Sons, Inc.
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Figure 1.3 Disruption and the new 7 Ss
Copyright 2006 John Wiley & Sons, Inc.
Copyright 2006 John Wiley & Sons, Inc.
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D’Aveni’s new 7 SsThe 7 Ss are useful for determining
different aspects of a business strategy and aligning them to
make the organization competitive in the hypercompetitive
arena.The 7 Ss are (see Figure 1.4):
1. Superior stakeholder satisfaction: maximize customer
satisfaction by adding value strategically
2. Strategic soothsaying: use new knowledge to predict new
windows of opportunity
3. Positioning for speed: prepare the org. to react as fast as
possible
4. Positioning for surprise: surprise competitors
5. Shifting the rules of competition: serve customers in novel
ways
6. Signaling strategic intent: communicate intensions in order to
stall competitors
7. Simultaneous and sequential strategic thrusts: take steps to

6. stun and confuse competitors in order to disrupt or block their
efforts
Copyright 2006 John Wiley & Sons, Inc.
Copyright 2006 John Wiley & Sons, Inc.
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Application of HypercompetitionGeneral Electric applied the
Hypercompetition Model to its business units in the Destroy
Your Business (DYB) project.GE recognized that if they didn’t
understand and recognize their own weaknesses they could not
remain competitive.Employees were tasked to determine ways
to “destroy their business unit”. Once they have identified
these areas of weakness they apply the Grow Your Business
(GYB) strategy to find fresh ways to reach new customers and
better serve existing customers.
Copyright 2006 John Wiley & Sons, Inc.
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IS Planning and Strategic Advantage ModelsGeneral Managers
cannot afford to rely solely on IS personnel to make IS
decisions.Business strategy drives IS decision making.Changes
in IS potential should trigger business reassessments (i.e. the
Internet).Information Systems Strategy Triangle shows the
proper balance of strategies.The models are helpful in
discussing the role of IS in building and sustaining competitive
advantage.
Copyright 2006 John Wiley & Sons, Inc.
Copyright 2006 John Wiley & Sons, Inc.

7. *
Figure 1.5 Summary of key strategy
frameworks.FrameworkKey IdeaApplication to Information
SystemsPorter’s generic strategies frameworkFirms achieve
competitive advantage through cost leadership, differentiation,
or focus.Understanding which strategy is chosen by a firm is
critical to choosing IS to complement that strategy.D’Aveni’s
hyper-competition modelSpeed and aggressive moves and
countermoves by a firm create competitive advantageThe 7 Ss
give the manager suggestions on what moves and countermoves
to make. IS are critical to achieve the speed needed for these
moves.
Copyright 2006 John Wiley & Sons, Inc.
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BRIEF OVERVIEW OF ORGANIZATIONAL STRATEGIES
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Organizational StrategyOrganizational strategy includes the
organization’s design as well as the choices it makes in its work
processes.How will the company organize in order to achieve its
goals and implement its business strategy?Business Diamond –
simple framework for identifying crucial components of an
organization’s plan (Figure 1.6)Managerial Levers – another
framework for organizational design, states that successful
execution of the firm’s organizational strategy is the best
combination of organizational, control, and cultural variables
(Figure 1.7).
Copyright 2006 John Wiley & Sons, Inc.

8. Copyright 2006 John Wiley & Sons, Inc.
*Figure 1.6 The Business Diamond
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Figure 1.7 Managerial Levers
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Copyright 2006 John Wiley & Sons, Inc.
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Understanding Organization Strategy
To understand organizational strategy we must answer the
following questions:
1. What are the important structures and reporting relationships
within the organization?
2. What are the characteristics, experiences, and skill levels of
the people within the organization?
3. What are the key business processes?
4. What control systems are in place?
5. What is the culture of the organization?
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Figure 1.8 Summary of organizational strategy
frameworksFrameworkKey IdeaUsefulness in IS

9. DiscussionsBusiness DiamondThere are 4 key components of an
organization: business processes, values and beliefs,
management control systems, and tasks and structures.Using IS
in an organization will affect each of these components. Use
this framework to identify where these impacts are likely to
occur
Managerial levers
Organizational variables, control variables, and cultural
variables are the levers managers can use to affect change in
their organizationsThis is a more detailed model than the
Business diamond and gives specific areas where IS can be used
to manage the organization and to change it
Copyright 2006 John Wiley & Sons, Inc.
BRIEF OVERVIEW OF INFORMATION SYSTEMS
STRATEGY
Copyright 2006 John Wiley & Sons, Inc.
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IS StrategyThe plan an organization uses in providing
information services.IS allows business to implement its
business strategy.IS helps determine the company’s
capabilities.Four key IS infrastructure components are key to IS
strategy (Figure 1.9)These key components are sufficient to
allow the general manager to assess critical IS issues.
Copyright 2006 John Wiley & Sons, Inc.
Copyright 2006 John Wiley & Sons, Inc.
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10. Figure 1.9 Information systems strategy
matrix.WhatWhoWhereHardwareList of physical components of
the systemIndividuals who use it
Individuals who manage itPhysical locationSoftwareList of
programs, applications, and utilitiesIndividuals who use it
Individuals who manage itWhat hardware it resides upon and
where that hardware is locatedNetworkingDiagram of how
hardware and software components are connectedIndividuals
who use it/ Individuals who manage it/
Company service obtained fromWhere the nodes are located,
where the wires and other transport media are locatedDataBits
of information stored in the systemIndividuals who use it
Individuals who manage itWhere the information resides
Copyright 2006 John Wiley & Sons, Inc.
FOOD FOR THOUGHT: ECONOMICS OF INFORMATION VS.
ECONOMICS OF THINGS
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Information vs ThingsEvery business is in the information
business (Evans and Wurster).All forms of industry rely heavily
on IS.Mercedes cars computing power.Marketing research,
logistics, advertising, inventory management all rely on
IS.Things wear out.Information never wears out.Figure 1.10
compares things with information.
Copyright 2006 John Wiley & Sons, Inc.
Copyright 2006 John Wiley & Sons, Inc.
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11. Figure 1.10 Comparison of the economics of things with the
economics of informationThingsInformationWear out
Doesn’t wear out, but can become obsolete or untrueAre
replicated at the expense of the manufacturerIs replicated at
almost zero cost without limitExist in a tangible formMay exist
in the etherWhen sold, seller ceases to ownWhen sold, seller
may still possess and sell againPrice based on production
costsPrice based on value to consumer
Copyright 2006 John Wiley & Sons, Inc.
Copyright 2006 John Wiley & Sons, Inc.
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SUMMARY
Copyright 2006 John Wiley & Sons, Inc.
Copyright 2006 John Wiley & Sons, Inc.
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SummaryCompetitive advantage is gained through cost
leadership, differentiation, or focus.The Information Systems
Strategy Triangle shows that business strategy always drives
organizational and information strategies.Hypercompetition
defines competitive advantage as temporary.Understanding the
influence of IS in organizational strategy is paramount.
Copyright 2006 John Wiley & Sons, Inc.
Copyright 2006 John Wiley & Sons, Inc.
*Copyright 2006 John Wiley & Sons, Inc.
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Chalyne Arvie
CPSS410
May 20, 2019
George Shreiner
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