1. Organizational Innovation

2. Boundary Fallacy Large-Scale Innovative Technology
BMGT RAD & Prototyping
Boundary Fallacy Large-Scale Innovative Technology
Production code is generated by a number of sources
CASE tools
hard-coding
prototypes of sub-systems
System builders have to assemble the parts and hope they all fit perfectly
Don’t forget, everyone followed the methodology exactly, right? There should be no problem, right?
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3. BMGT 725 - RAD & Prototyping
Apollo 1
- May 25, 1961
...I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the Moon and returning him safely to the Earth. ...We propose to accelerate the development of the appropriate lunar space craft. We propose to develop alternate liquid and solid fuel boosters, much larger than any now being developed, until certain which is superior.
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4. BMGT 725 - RAD & Prototyping
Apollo 1
Kennedy’s mandate required a massive effort from NASA if it was to have a chance of succeeding.
Structured development (read, problem identification and solving) techniques were immediately decided upon and made formal.
The only way to accomplish the goal was to adopt a sub- system parallel development approach.
define bounded sub-systems within the defined system boundary
develop simultaneously using a formal methodology
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5. Apollo 1 Parallel Development
BMGT RAD & Prototyping
Apollo 1 Parallel Development
Primary Methodology: SDLC
Primary Methodology: SDLC
Primary Methodology: SDLC
Enviromental
Bio-Medical
Electrical/
CapComm
Escape
Systems
Minimum
90 second
procedure
Pure O2
Atmosphere
in Capsule
Hi-efficiency
Gold Contacts
Hi-tensile
plastic
insulators
Manually
actuated
ratchet-type
release for
latches
Sealed
Biomedical
Atmosphere
in Spacesuit
Assumed
NO2
Atmosphere
January 27, 1967
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6. BMGT 725 - RAD & Prototyping
January 27, :00pm
- Grissom, Chaffee, & White enter the capsule.
- Grissom reports a “strange odor” in his spacesuit O2 loop.
- High O2 indicator triggers master alarm;
- Environmental Control determines the high
indication was a result of astronaut movement.
- Intermittent communications became regular between
Grissom and the control room at 5:40pm.
- At 6:31pm both Chaffee and White announce
“Fire in the cockpit.”
What caused this system failure to occur?
- Autopsy showed death by CO asphyxia
- 27 others were treated for smoke inhalation
- Investigation revealed that fire started in a wire bundle
- White had been able to make part of one full turn of the
ratchet-style latch release system before being overcome.
9/18/2018

7. BMGT 725 - RAD & Prototyping
Boundary Fallacy
Assumed system boundaries
Actual system boundary
Enviromental
Bio-Medical
Primary Methodology: SDLC
Pure O2
Atmosphere
in Capsule
Sealed
Biomedical
in Spacesuit
Electrical/
CapComm
Hi-efficiency
Gold Contacts
Hi-tensile
plastic
insulators
Assumed
NO2
Escape
Systems
Minimum
90 second
procedure
Manually
actuated
ratchet-type
release for
latches
9/18/2018

8. Models of Organizational Comparison and Analysis

9. Have-Can-Do Model
Thinking or a firm in a theoretical rather than physical sense can allow us to make comparisons between firms of dissimilar structure or marketplace.
One way of doing this is to break the firm down into three elements:
HAVE: the resources possessed by the firm including physical assets, human assets, patents, business models, etc.
CAN: the various capabilities of the firm created by the various combinations of their resources
DO: that which the firm has chosen to execute from their portfolio of capabilities

10. Have-Can-Do Model
HAVE
CAN DO

11. Leavitt’s Model of Organizational Change
Structure
Technology
Strategy
Products
Culture/People
SOURCE: Based on Harold J. Leavitt, “Applied Organizational Change in Industry: Structural, Technical, and Human Approaches,” In New Perspectives in Organization Research, ed.W.W. Cooper, H.J. Leavitt, and Shelly II (New York: Wiley, 1964),

12. Important to Note that the models suggests equilibrium will ALWAYS be reached…
Hopeful Strategy
Proactive Strategy

13. Key Governance Decisions
IT Governance
Key Governance Decisions
Adapted from
Weill & Ross, (2004) IT Governance, HBS Press.

14. Characteristics of Top-Performing Enterprises
MIT/CISR research has shown returns up to 40% greater than competitors by firms who…
Clarify business strategies and the role of IT in achieving them
Measure and manage the amount spent on, and the value received from, IT
Assign accountability for the organizational changes required to benefit from new IT capabilities
Learn from each implementation, becoming more adept at sharing and reusing IT assets.

15. What shall we call this behavior?
IT Governance
Specifying the decision rights and accountability framework to encourage desirable behaviour in using IT

16. What it is…and is not IT Governance is not…
About making specific IT decisions – management does that
IT Governance is…
About determining who systematically makes and contributes to those decisions
About encouraging and leveraging the ingenuity of the enterprise’s people in IT usage and ensuring compliance with the enterprise’s overall vision and values

17. The Haves and Have Nots All organizations have IT governance
Only some have effective IT governance
Effective IT governance means…
An actively designed set of IT governance mechanisms that encourage behaviors consistent with the organization’s mission, strategy, values, norms, and culture.
Effective IT governance does not mean…
IT governance by default (tactical governance)

18. News Flash… Strategy does not create value!
Behaviors create value
Good governance design allows enterprises to deliver superior results on their IT investments
Conclusion from research: effective IT governance is the single most important predictor of the value an organization generates from IT

19. Effective IT Governance
Must address three questions:
What decisions must be made to ensure effective management and use of IT?
Who should make these decisions?
How will these decisions be made and monitored?

20. Governance Arrangements Matrix
Evidence to date shows that there are typical IT governance input and decision rights patterns. The federal style dominates, with IT making infrastructure and architecture decisions
Governance Arrangements Matrix
IT Principles
IT Architecture
IT Infra- structure
Strategies
Business
Application Needs
IT Investment
Domain
Source: MIT Sloan CISR
Figure 2-7 Which Governance Style for each Key IT Decision
What are the components of top level IT governance?
A matrix can be used to depict governance arrangements by listing the six governance styles on the vertical and map them to the five IT domains on the horizontal.
The MIT Sloan CIST and Gartner EXP study identified how 250 enterprises made major decisions - who had decision rights and who had input about each of the five IT domains.
© MIT Sloan CISR – used with permission.

21. Five IT Decision Types IT Principles IT Architecture IT Infrastructure
Clarifying the business role of IT
IT Architecture
Defining integration and standardization requirements
IT Infrastructure
Determining shared and enabling services
Business Application Needs
Specifying the business need for IT applications (either purchased or internally developed)
IT Investment and Prioritization
Choosing which initiatives to fund and how much to spend

22. Who Should Make the Decisions?
Often this question is answered with an organizational chart.
A better approach may be to consider “patterns” of decision making and rationale.

23. Decision Archtypes Business Monarchy IT Monarchy Feudal Federal
Top management
IT Monarchy
IT specialists
Feudal
Each business unit makes independent choices
Federal
Combination of the corporate center and the business units with or without IT people involved
IT Duopoly
IT group and one other group (i.e. top management or business unit leaders)
Anarchy
Isolated individual or small group decision making

24. Business Monarchy A group of business executives (CxO)
Includes committees of senior executives (may include CIO).
Excludes IT executives acting independently
Input typically from
C-level execs
Business unit IT leaders
Enterprisewide IT budget process
SLAs and chargeback agreements
IT resource activity-tracking systems

25. IT Monarchy Individuals or groups of IT executives
Examples can range from
IT Governance Committee (UPS)
Senior IT Managers
Office of IT Architecture (State Street)
IT Managers/Specialists
Enterprise Architecture Group (DuPont)
Representatives from all regions, strategic business units, all competency centers
Proposes architecture rules to senior IT and CIO

26. Feudal Based on the traditions of “merrie olde England”
Typically the feudal entity is the business unit, region, or function.
Business unit leaders, key process owners or their delegates
This decision system does not facilitate enterprisewide decision making

27. Federal C-level execs and business units
Equivalent of federal and state governments working together
Attempts to balance the responsibilities and accountabilities of multiple governing bodies

28. Federal Considered the most difficult archetype for decision making
Enterprise leaders and business unit leaders often have differing concerns
Incentive systems often focus managers on the business unit results rather than enterprise results

29. Federal
The impact of shared resources on business unit performance – specifically the transfer prices charged for the resources – typically raises concerns about fairness
The biggest, most powerful business units often get the most attention and have the most influence on decisions

30. IT Duopoly IT Executives and one other group
2-party arrangement where decisions represent a bilateral agreement
Differs from a federal model in that federal always has both corporate and local business representation
Duopoly has one or the other – but not both – and always includes IT professionals
Duopolies can take one of two forms
Bicycle wheel or t-shaped

31. Bicycle Wheel IT DuopolyBU BU RM RM IT RM RM BU BU

32. T-Shaped IT Duopoly X = business manager Y = IT manager
Executive Committee
X X X X X X Y X X X X X X Y
IT Committee
X = business manager
Y = IT manager

33. Duopoly
Over one-third of the 256 enterprises in the MIT/CISR study used a duopoly in the three less technical IT decision domains
IT principles
Business application needs
IT investment
Also frequently used to provide input into architecture and infrastructure decisions

34. Anarchy Decisions made by each individual user
Very expensive to support and secure
Formally sanctioned anarchies are rare but are supported where very rapid responsiveness to local or individual customer needs are required

35. Making IT a Strategic Asset
What decisions must be made?
Who should make these decisions?
How will we make and monitor these decisions?

36. Domain Style IT Principles IT Architecture IT Infra- structure
Strategies
Business
Application Needs
IT Investment
Monarchy IT
Feudal
Federal
Duopoly
Anarchy
Don’t Know
Domain
Style
Evidence to date shows that there are typical IT governance input and decision rights patterns. The federal style dominates, with IT making infrastructure and architecture decisions
Source: MIT Sloan CISR
Figure 2-7 Which Governance Style for each Key IT Decision
What are the components of top level IT governance?
A matrix can be used to depict governance arrangements by listing the six governance styles on the vertical and map them to the five IT domains on the horizontal.
The MIT Sloan CIST and Gartner EXP study identified how 250 enterprises made major decisions - who had decision rights and who had input about each of the five IT domains.
© MIT Sloan CISR

37. Domain Style IT Principles IT Architecture IT Infra- structure
Strategies
Business
Application Needs
IT Investment
Evidence to date shows that there are typical IT governance input and decision rights patterns. The federal style dominates, with IT making infrastructure and architecture decisions
Source: MIT Sloan CISR
Figure 2-7 Which Governance Style for each Key IT Decision
What are the components of top level IT governance?
A matrix can be used to depict governance arrangements by listing the six governance styles on the vertical and map them to the five IT domains on the horizontal.
The MIT Sloan CIST and Gartner EXP study identified how 250 enterprises made major decisions - who had decision rights and who had input about each of the five IT domains.
© MIT Sloan CISR

38. Decision 1: IT Principles
A related set of high-level statements about how IT is used in the business.
IT principles become part of the enterprise’s lexicon
They can be used as a tool for educating executives about technology strategy and investment decisions
The hallmark of an effective set is a clear trail of evidence from the business to the IT management principles

39. Decision 1: IT Principles
Detailed IT principles should clarify at least three expectations for IT in the enterprise:
What is the enterprise’s desired operating model?
How will IT support the desired operation model?
How will IT be funded?

40. Domain IT Principles IT Architecture IT Infra- structure Strategies
Business
Application Needs
IT Investment
Evidence to date shows that there are typical IT governance input and decision rights patterns. The federal style dominates, with IT making infrastructure and architecture decisions
Source: MIT Sloan CISR
Figure 2-7 Which Governance Style for each Key IT Decision
What are the components of top level IT governance?
A matrix can be used to depict governance arrangements by listing the six governance styles on the vertical and map them to the five IT domains on the horizontal.
The MIT Sloan CIST and Gartner EXP study identified how 250 enterprises made major decisions - who had decision rights and who had input about each of the five IT domains.
© MIT Sloan CISR

41. Decision 2: IT Architecture
The organizing logic for data, applications, and infrastructure, captured in a set of policies, relationships, and technical choices to achieve desired business and technical standardization and integration.

42. Decision 2: IT Architecture
Process and data standardization are the defining characteristics of enterprise architecture.
Enterprise architecture defines data and infrastructure as a stable platform supporting faster-changing (flexible/agile) applications.

43. Domain IT Principles IT Architecture IT Infra- structure Strategies
Business
Application Needs
IT Investment
Evidence to date shows that there are typical IT governance input and decision rights patterns. The federal style dominates, with IT making infrastructure and architecture decisions
Source: MIT Sloan CISR
Figure 2-7 Which Governance Style for each Key IT Decision
What are the components of top level IT governance?
A matrix can be used to depict governance arrangements by listing the six governance styles on the vertical and map them to the five IT domains on the horizontal.
The MIT Sloan CIST and Gartner EXP study identified how 250 enterprises made major decisions - who had decision rights and who had input about each of the five IT domains.
© MIT Sloan CISR

44. Decision 3: IT Infrastructure
The foundation of planned IT capability (both technical and human) available throughout the business as shared and reliable services and used by multiple applications.
In the typical enterprise, infrastructure accounts for about 55% of the total IT investment.

45. IT Infrastructure as a Set of Shared and Reliable Services Centrally Coordinated
Local
Applications
Fast changing local business applications
Shared and Standard
IT Applications
Shared and standard applications that change less rapidly
Services that are stable over time
IT Infrastructure
Human infrastructure of knowledge, skills, policies,
Information Technology Components
Human Information Technology Infrastructure
Shared information technology services
Commodities – Computers, printers, networks, databases…
Information Technology Components
Source: P. Weill & M. Broadbent Leveraging the New Infrastructure: How Market Leaders Capitalize on IT, Harvard
Business School Press, June 1998.

46. Domain IT Principles IT Architecture IT Infra- structure Strategies
Business
Application Needs
IT Investment
Evidence to date shows that there are typical IT governance input and decision rights patterns. The federal style dominates, with IT making infrastructure and architecture decisions
Source: MIT Sloan CISR
Figure 2-7 Which Governance Style for each Key IT Decision
What are the components of top level IT governance?
A matrix can be used to depict governance arrangements by listing the six governance styles on the vertical and map them to the five IT domains on the horizontal.
The MIT Sloan CIST and Gartner EXP study identified how 250 enterprises made major decisions - who had decision rights and who had input about each of the five IT domains.
© MIT Sloan CISR

47. Decision 4: Business Application Needs
Defining and delivering value through business applications remains a significant organizational challenge.
Identification of business needs for IT applications often has two conflicting objectives – creativity and discipline.

48. Domain IT Principles IT Architecture IT Infra- structure Strategies
Business
Application Needs
IT Investment
Evidence to date shows that there are typical IT governance input and decision rights patterns. The federal style dominates, with IT making infrastructure and architecture decisions
Source: MIT Sloan CISR
Figure 2-7 Which Governance Style for each Key IT Decision
What are the components of top level IT governance?
A matrix can be used to depict governance arrangements by listing the six governance styles on the vertical and map them to the five IT domains on the horizontal.
The MIT Sloan CIST and Gartner EXP study identified how 250 enterprises made major decisions - who had decision rights and who had input about each of the five IT domains.
© MIT Sloan CISR

49. Decision 5: IT Investment and Prioritization
IT investments are like any other investment.
You must make a decent return or you go bust.
It just happens faster with IT!
Three basic dilemmas exist:
How much to spend?
What to spend it on?
How to reconcile the needs of different constituencies?

50. How Much to Spend Industry benchmarks are only a starting point
The key is to match the spending levels to that portion of the organizational strategy being served.

51. What to Spend it On
This must be determined via monitoring of appropriate indicators of success.
The portfolio approach applies equally well to IT investments.
Groupings can be thought of in terms of categories reflecting various business objectives
Strategic, informational, transactional, infrastructure

52. Reconciling Differing Needs
Business leaders must articulate the enterprise-wide objectives of shared infrastructure and provide appropriate incentives for business unit leaders to sacrifice local needs in favor of enterprise- wide needs.
If senior management has not clarified or communicated enterprise strategy or if strategy changes so frequently that it isn’t worth investing in today’s strategy, the IT investment process will break down.

53. Key IT Governance Decisions
IT Principles Decisions
High-level statements about how IT is used in the business
IT Architecture Decisions
Organizing logic for data, applications, and infrastructure captured in a set of policies, relationships, and technical choices to achieve desired business and technical standardization and integration
IT Infrastructure Decisions
Centrally coordinated, shared IT services that provide the foundation for the enterprise’s IT capability
IT Investment and Prioritization
Decisions about how much and where to invest in IT, including project approvals and justification techniques
Business Applications Needs
Specifying the business need for purchased or internally developed IT applications

54. How Enterprises Govern
Evidence to date shows that there are typical IT governance input and decision rights patterns. The federal style dominates, with IT making infrastructure and architecture decisions
IT Principles
IT Architecture
IT Infra- structure
Strategies
Business
Application Needs
IT Investment
Monarchy IT
Feudal
Federal
Duopoly
Anarchy
Don’t Know
Domain
Style
Input
Decision
Input
Decision
Input
Decision
Input
Decision
Input
Decision 27 6 7 1 12 1 30 1 18 20 73 10 59 8 9 3 1 2 1 18 3 83 14 46 4 59 6 81 30 93 27 15 36 34 15 30 23 17 27 6 30
Source: MIT Sloan CISR
Figure 2-7 Which Governance Style for each Key IT Decision
What are the components of top level IT governance?
A matrix can be used to depict governance arrangements by listing the six governance styles on the vertical and map them to the five IT domains on the horizontal.
The MIT Sloan CIST and Gartner EXP study identified how 250 enterprises made major decisions - who had decision rights and who had input about each of the five IT domains. 1 1 3 1 1 2 1 2 2
© MIT Sloan CISR

55. Governance Arrangements Matrix
Evidence to date shows that there are typical IT governance input and decision rights patterns. The federal style dominates, with IT making infrastructure and architecture decisions
IT Principles
IT Architecture
IT Infra- structure
Strategies
Business
Application Needs
IT Investment
Monarchy IT
Feudal
Federal
Duopoly
Anarchy
Don’t Know
Domain
Style 3 3 3 2 3 1 1 2 2 1 3 1 2 2 1
Source: MIT Sloan CISR
Figure 2-7 Which Governance Style for each Key IT Decision
What are the components of top level IT governance?
A matrix can be used to depict governance arrangements by listing the six governance styles on the vertical and map them to the five IT domains on the horizontal.
The MIT Sloan CIST and Gartner EXP study identified how 250 enterprises made major decisions - who had decision rights and who had input about each of the five IT domains.
© MIT Sloan CISR