Competing in the Information Age:

The term "vision" is widely used in the IS literature; it is a useful code word for a new style of thinking and ambition, but visions are not contagious and easily become foggy or only so much fantasy. At its weakest, vision is "We have a dream" or "Wouldn't it be wonderful if...." Many of us have a vision for ending the federal deficit or improving education; the impasse in our political and social system here seems more one of strategic intent. In this chapter, vision and strategic intent are linked together to indicate a combination of ambitious thinking and commitment to ambitious action.

The map presented here is not a reality but a guide. Just as a road map abstracts from the details of houses, shops, traffic lights, bends, and signs that mark physical reality, behind the map are many complex details of activity and operations. The map puts them into a context that can help firms move from compartmentalization (the design and management of complex processes through separate functions and discrete stages) to integration (the coupling and streamlining of stages and crosslinking of functions) through to fusion.

The map has two dimensions, one of structural elements and one of temporal steps. At each step, the three elements of structure-business processes, culture, and technology-need to be fused. In parallel, so too must the temporal elements link to each other: knowledge anchors, business vision, and strategic intent; management imperatives and policy; strategy, design, delivery, operation, and benefit harvesting. The latter are temporal in the sense that they involve discrete stages in which the output from one is the needed input to the next. The sequence is bi-directional, however. Strategy may lead to a fresh look at the knowledge anchors and business vision on which it is based; that is inherent in the constant fresh thinking as well as rethinking that today's environment now constantly demands. Tomorrow is not a simple extension and extrapolation from yesterday. Any assumption taken as a given is a likely pitfall.

Eight Key Issues in Applying the Fusion Map

1. Include technology as part of the knowledge anchors. Most of the problems senior business executives and IS managers report in building an effective dialogue come from technology not being included at the start. Aligning the IT strategy with the business strategy is then too late.
   
   Lack of attention to knowledge anchors is so often why the 50% of firms that disappear when business networking changes the basics of competition includes several of the previous leaders. It is very hard for any firm to challenge the assumptions and principles that made it successful.
   
   For example, many retailers, including the industry power player Sears, did not spot how POS and telecommunications provided an entirely new base for merchandising and backward integration of the entire distribution chain. Toys "R" Us, Wal-Mart, Dillard, and others that were minnows when Sears was the leviathan did spot it.
   
   When a firm is successful without IT playing a central role in that success, it is reasonable for business managers to delegate it to a support role, not part of leading business change. When IT meant mainly computers, that was in general a safe approach. Business networking, however, may relatively suddenly redefine an industry core logistic, and such delegation can be myopic and mean loss of business freedom. If IT is not fused with business at the stage where basic assumptions are created and basic strategic commitments defined, IT-fueled change will generally be an enemy, not an ally.
   
   Given that IT often allows companies to use their delivery bases to intrude on other industries' traditional territories, the comfortably successful firm may not recognize early enough that its real competition will be from outside, not inside, the sector it understands and monitors. This may be why such an outstanding hotel company as Marriott was preempted by British Airways (BA).
   
   BA spotted that travelers who make international plane reservations by phone do so before they make hotel reservations, so BA decided to add hotels to its existing IT platform at a very small cost. When it did so, none of the major American hotel firms had any on-line international reservation capability, relying on telex and telephones. Marriott, Hilton, and others had to spend well over $100 million over five years to try to match BA, using American Airlines as its technical partner. The project was a fiasco, leaving Marriott with no practical strategy for countering BA.
   
   Marriott is first-rate in terms of service and quality. It recognized in the mid-1980s that it would soon face a demographic nightmare, where service firms would have only two qualified applicants for every three jobs. It used this knowledge anchor to establish new incentives and programs, such as rewarding promising staff who had dropped out of high school by sending them back to get their diplomas. Here, Marriott fused business and culture along the entire chain from knowledge to action. In the mid-1980s, however, there was not the same link between its international business strategy and IT. After all, Marriott was in the hotel industry and none of its main competitors had a computerized reservation system capability, so there was no stimulus to move. BA saw itself as part of the travel-related industry and took an opportunity that historically had "belonged" to the hotel business.
   
   The above example highlights the fact that it is not incompetent or failing firms that neglect IT as a knowledge anchor or fail to include it in establishing imperatives. Indeed, it appears to be the leading firms that are often the most frustrated by the management process. Perhaps the explanation is that they may be handling the pieces well individually but not fitting them together. The business strategy is clear. Human resources (HR) understands its role in facilitating change. The IS strategy is sound and supports the business, and IS delivers on its promises. Yet the critical fusion is missing. Success and failure in competing in the electronic marketplace occur well before strategy is set.
   
   
2. Identify business imperatives (concrete targets for action) that implicitly or explicitly begin "Regardless of how we do it, it is absolutely vital that we...."These imperatives are closely linked to the firm's vision and strategic intent.
   
   
3. Link these business imperatives to technological imperatives: "If these are our 'must dos' for the business, then to achieve them it is absolutely vital that our IT resource...."
   
   
4. Review the technological imperatives; if they have common dimensions of reach and range (Fig. 6.2), they establish the business requirements for the firm's IT platform. This process defines architecture, integration, infrastructure, and standards inductively from business-first principles in business language. The logic here is: "These are our business imperatives. Here are the corresponding technical imperatives. We see the link and also see that they share the common requirement of reach-who can we connect our own processes to-and range-what information can we directly and automatically share across processes? Obviously, then, we must have a coordinated IT platform as a business priority." It is the inductive process that leads business executives to add the "obviously."
   
   
5. Define the organizational policies needed to ensure appropriate coordination and appropriate Revolution. The lever here is to establish a small set of big rules, each of which must have a sound business reason. These provide the basis for selecting technical standards that have the force of organization allow. For instance, a big rule for one electrical utility is "All departmental systems must be able to connect to the firm's corporate telecommunications network." The business reason is the economies of cost, expertise, and capacity this ensures.
   
   The big rule here requires several technical standards and recommended products, including token-ring, Systems Network Architecture, Transmission Control Protocol/lnternet Protocol, and X.25. The standard is not the rule, however. There is a substantial difference in terms of political and organizational legitimacy, business logic, and quality of dialogue between saying "Our standard is X.25 and all local area networks must adopt token-ring" and "The big rule is that departmental systems must...." Given that choice of technical standards is absolutely central to building the platform, this shift to an inductive sequence of steps that are all in true business language but that directly lead to identifying standards is, in the author's experience, a genuinely empowering and liberating force for dialogue that is welcomed by both business managers and IS managers and planners.
   
   
6. Make the business case for the platform and key applications that use it in terms of quality profit engineering. The quality profit engineering framework provides a convincing economic framework that senior managers will recognize and appreciate.
   
   "Convincing" means just what it says, not "clever," "analytical," or "original." The simple need of executives for something they can understand, calibrate, monitor, and trust will not be met by a consultant's two by two boxes; complex formulae "proving" IS payoffs; IS methodologies with their own business-flavored language of "gray cells," "iron cross," or "benefit/beneficiary matrix;" or elegant equations based on theoretical assumptions. All of these have a role within the old tradition of IS as "special" but not in the new context; IT is half of capital investment and just another way of spending money, so IS has to show it will pay its way and justify diverting scarce money from other business opportunities.
   
   
7. Establish oversight mechanisms for managing IT and get out of the way. This removes any need for computer literacy among managers; they need instead to be fluent in setting the criteria for IT investments. The strategy process can then be left to professionals. Increasingly, strategy for IT mainly addresses multisourcing (of which outsourcing is a suboption) and alliances.
   
   
8. Make sure there is a constant rechecking of knowledge anchors. That change is now the norm is a cliché of business life. It means that today's assumptions that have led to success may be invalid for tomorrow.

Practical Uses of the Fusion Map

Too often, there is a separation between business and IT thinking and action. The circles and triangles in Figure 6.3 indicate either "We are in good shape here "or "This is a problem area," respectively. The lines that connect the circles and triangles show if the relevant processes are well connected. Each example in Figure 6.3 is a real company.

Firm 1 in the diagram is very typical. Its business leaders spend time and imagination scanning the business environment (knowledge anchors). The vision is clear and the intent firm. Management is clear in its business imperatives. It links business issues to issues of culture-HR planning, recruitment, management development, and incentives. However, there are no corresponding imperatives for IT, even though the IS group understands the likely impacts of IT on business and updates its own knowledge anchors about technology and competition. The technology anchors are not connected to those for business and culture. This company is a pharmaceutical firm. Its business managers do not know what they do not know; technology is not part of their focus. The company is overlooking the importance to itself of EDI for linking to major health care authorities worldwide and of image processing as a key element in faster time to market. The importance has been explained by the CIO but in terms that do not resonate for the business leaders. The language is wrong, not the content.

Firm 2 is also typical. It is a manufacturing company, whose business planning and implementation are aggressive and tightly coupled along the full sequence of leading to managing, from what and why to how. Its IT planning and implementation are similarly well coupled but disconnected from business and culture. The firm has a strong CIO, with a clear technical vision and commitment to providing a competitive edge through IT. He is likely soon to join the many ClOs being fired at twice the rate of other senior executives, according to a number of surveys. 4 The CIO has made many efforts to communicate, but the CEO remains, as are many, an "agnostic" about IT. The business units are going their own way and see the ClO's corporate vision as just a disguised form of the old MIS monopoly.

Firm 3 is also typical. Here, there is a tight linkage across business, technology, and culture from strategy on. The firm is Mutual Benefit, introduced in Chapter 3, the insurance company that was an early leader in business process reengineering and whose success in cutting the time to issue a life insurance policy from twenty-four days to four hours is one of the most widely publicized success stories in reengineering. It fused business, culture, and technology imaginatively and effectively.

It also filed for Chapter 11 bankruptcy soon after it reengineered the policy process. The head of IS has moved on and the IS group has been broken up and reduced in size. Mutual Benefit's problems were ones of knowledge anchors. It misread the implications of the depression in real estate prices and the corresponding impact on public confidence in Mutual Benefit's financial position.

Strategy in general does not compensate for errors and omissions of knowledge anchors, ambiguity, incompleteness of vision and intent, or inappropriate or mispositioned imperatives. This is not an attack on strategy since ineffective strategy and implementation make knowledge, vision, and intent irrelevant. The issue is fusion, attention to what precedes strategy, and above all, recognition that IT is part of business basics now and must be included in the basics of the management process right from the start.