Anatomy of Agile Enterprise

Janne J. Korhonen

Fly Your IT Higher to Avoid Turbulence

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Information Technology is dead, long live Information Technology! Traditional IT departments are said to be dying. However, the amount and importance of information is not decreasing. Quite in contrary. New digital business poses new requirements as to how to lead and how to organize IT. Information technology plays an increasingly pivotal role in business change, yet IT is too often an obstacle or an impediment for change. Two out of three IT projects fail, every sixth catastrophically!

With respect to Angyal's (1941) three dimensions of the "structure of dynamic wholes," the lack of IT capability in an organization can be seen as boiling down to the following three interrelated basic reasons:

  1. IT is too shallow (the vertical dimension). It passively reacts to business requirements that are implemented in a straightforward manner with little or no consideration of the effect on the depth structure - the more enduring and permanent aspects of IT. As a result of "quick and dirty" solutions, "IT debt" ensues and eventually erodes the core.

  2. IT is too slow (the dimension of progression). It is geared to reliable business support, but consequently tends to cement status quo. It has high static friction, as dense and tight interrelations render the system insular, inattentive to signals for change, and inert in the face of forces of change. It also has high kinetic friction: once the change is eventually triggered, it transpires slowly, as through a cascade waterfall.

  3. IT is too narrow (the transversal dimension). It is managed and governed apart from the rest of the organization. This leads to suboptimal use of assets. It is difficult to implement enterprise-wide solutions and to embed IT in organizational competences.

Each organization will require a specific level of IT capability. If that capability is not enough, the environment is experienced as turbulent (McCann and Selsky, 1984). If the organization experiences turbulence (relatively higher external complexity than its internal adaptive capacity) for a prolonged period of time and fails to develop active adaptive strategies, its members will produce maladaptive responses (Babüroðlu, 1988).

First order maladaptive responses aim to reduce the complexity of the social field. The passive ones include:

  • Superficiality refers to "indifference to what needs or demands are taken as a starting point for one's behavioral responses." In the context of IT, the delivered systems may fully fulfill the specified business needs, but with the lack of technology standards and enterprise-wide IT architecture, the proliferation of legacy systems and idiosyncratic point-to-point integrations renders the application landscape inert, expensive, and risky in the face of change.

  • Segmentation pertains to separation of means and ends, wherein the social field is transformed into segments, each of which is integrated within itself but poorly with other segments. IT may be driven by its own agenda, disconnected from strategic business priorities. The all-too-common idea that the rest of the organization is the client for IT perpetuates and exacerbates this disconnect.

  • Dissociation is manifested by a lack of coordination between the parts in the whole. Each function, including IT, constitutes a closure, relatively isolated from others.

Each of these three passive responses also has a respective, active correlate aimed at reducing the uncertainty and complexity of the turbulent environment (Crombie, 1972, cited in Babüroðlu, 1988):

  • Synoptic idealism: an attempt to comprehensively cover all relevant information to control and to reduce the causal texture of the environment (sensu Emery and Trist, 1965) to a lower level. Cases in point of this type of active maladaptive response would include "analysis to paralysis," attempts to model enterprise architecture to a high level of detail, or measures to monitor all imaginable events, all of which would go against the grain of Pareto dynamics.

  • Authoritarianism: an attempt to impose a very rigid structure to prevent the means-ends or part-whole relationships from breaking down. This response is prevalent in IT. Variance is eliminated through cascaded goals, metrics and internal controls. Human error is removed from the production process through disciplinary and punitive measures that regulate discretion.

  • Evangelism: an attempt to coordinate the field through notions such as "all pulling together." Espoused pronouncements such as these are hollow, as actual systems and structures should be set up to enable integration, coordination, and negotiation of and between stakeholders and resources.

Continued denial of turbulence and resort to quick fixes in terms of passive or active maladaptive strategies is likely to beget second order maladaptive responses. While first order maladaptive responses attempt to reduce the causal texture, the second order responses crystallize it. Whereas the first order disintegrative disturbance of segregation would lead to fragmentation, the second order disintegrative disturbance implodes the whole into parts that can no longer be reintegrated (Babüroðlu, 1988). The first order passive and active maladaptive responses will convert to the following second order maladaptive responses, respectively:

  • Monothematic dogmatism: Dogma replaces the relevant uncertainty by "crystal clear truth." It becomes the normative base of the monothematic society, which is committed to the same theme and cannot transcend it. The notion of "IT follows business," for instance, may have become so ingrained in the ethos and practice of the organization that it continues to go unchallenged despite the changes in the strategic context that would call for a reappraisal.

  • Stalemate: The means and ends are separated to the extent of nearly rendering the social system purposeless. The parts of the whole, in pursuit of their own agenda, do not contribute toward the common goal and may even oppose each other. As a result, the whole system is unable to pursue its ends. Pathologically, business will increasingly bypass the sluggish IT in developmental endeavors, and IT will endogenously invent new ways of justifying and reinforcing its existence without regard to strategic relevance.

  • Polarization: The parts of the social field are polarized to cohesive and well-integrated social enclaves and sub-optimally functioning and declining social vortices (McCann and Selsky, 1984), resulting in destructive in-group-out-group dynamic. Self-contained, insular domains compound cross-functional differences. For instance, if all IT competence resides in a centralized, specialized IT unit, or better yet, is outsourced to an external party altogether, the enterprise is divided to an IT enclave, with all the know-how of the technical possibilities of IT and little insight into its commercial and organization-transforming potential, and to a non-IT vortice with no clue about the organizations latent IT capability.

IT capability that used to work well in relatively stable environments may be inadequate in the face of today's complex and dynamic strategic context. As a result, the environment is experienced as turbulent (cf. McCann and Selsky, 1984). The organization will seek new environmental fit through knee-jerk responses that turn out to be maladaptive (cf. Babüroðlu, 1988). IT is often aligned with business alright, but it is rarely genuinely involved in building it. As a straightforward implementer of business requirements, IT is managed as a separate entity, which brings about sub-optimization and poor utilization of assets. IT is too shallow, too slow, and too narrow.

The maturity of IT in the organization should match the complexity of the organization's strategic context and the adaptive capacity required. The development of requisite IT capability is essential to counter the emergence of maladaptive responses to turbulence that tend towards increased internal dogma, stalemates, and polarization.

In the face of increasing importance of digital data and services, IT should not be seen as a separate function, service, and cost, but as an essential and integral part of the organizational system as a whole. Whereas the role of IT has traditionally been that of providing business with support services, digital information and information systems are increasingly leveraged to enable new products and services, or IT is harnessed to drive entirely new digital business models. Not only does IT reliably support the organization's core processes, but it must nimbly lend itself to a number of strategic options and enable rapid changes to the business model or the service portfolio.

Strategic IT capability builds on an optimized and digitized core of data and processes that enables continuous reconfiguration of "unbundled" and "liquefied" (Normann, 2001) resources to new products and services, through which the organization can shift its value proposition vis-à-vis its ecosystem (Vargo and Akaka, 2009) in alignment with semi-coherent strategies. Modular architecture (cf. Ross, 2003; Ross et al., 2006) enables strategic agility through reusable modules built upon the optimized core or by allowing locally customized modules connect to core data and core processes. While not reducing the need for standardization, the modular architecture allows for local customization and provides a platform for innovation.

Agile development and provision of services onto the digitized core calls for co-operation between IT, human resource management, and business: systemic capability to combine technical strengths with other organizational assets. This requires adequate authority of IT, seamless collaboration with business, and holistic coordination through strategic systems. A well-designed organizational and governance structure will be of great help in "upshifting" IT to a higher flying altitude. Once in place, the structure provides a scaffolding that caters to strategy, addresses adequate accountabilities and authorities, helps cross-functional coordination, informs development of necessary systems and practices, and focuses efforts to desired outputs and outcomes.

(This blog post is largely adapted from Korhonen, J.J., 2015, "IT in Enterprise Transformation" in J. Collin, K. Hiekkanen, J.J. Korhonen, M. Halén, T. Itälä, and M. Helenius (Eds.): IT Leadership in Transition: The Impact of Digitalization on Finnish Organizations, Aalto University, Science + Technology Research Report.)

References

  • Angyal, A. (1941). Foundations for a Science of Personality. New York, NY: The Commonwealth Fund.
  • Babüroðlu, O. (1988). The vortical environment: The fifth in the Emery-Trist levels of organizational environments. Human Relations, 41(3), 181-210.
  • Crombie, D. (1972). Planning for Turbulent Social Fields. Unpublished doctoral dissertation, A.N.U. Canberra.
  • Emery, F.E., & Trist, E.L. (1965). The causal texture of organizational environments. Human Relations, 18, 21-31.
  • Lusch, R.F., Vargo, S.L., & Tanniru, M. (2010). Service, value networks and learning. Journal of the Academy of Marketing Science, 38(1), 19-31.
  • McCann, J.E., & Selsky, J. (1984). Hyperturbulence and the emergence of type 5 environments. The Academy of Management Review, 9(3), 460-470.
  • Normann, R. (2001). Reframing Business: When the Map Changes the Landscape. Chichester, UK: Wiley.
  • Ross, J.W. (2003). Creating a strategic architecture competency: Learning in stages. WP #335. Center for Information Systems Research, Sloan School of Management.
  • Ross, J.W., Weill, P., & Robertson, D.C. (2006). Enterprise Architecture as Strategy: Creating a Foundation for Business Execution. Boston, MA: Harvard Business School Press.
  • Vargo, S.L., & Akaka, M.A. (2009). Service-dominant logic as a foundation for service science: Clarifications. Service Science, 1(1), 32-41.

Janne J. Korhonen provides insights into how information technology can be applied strategically to catalyze organizational change and responsiveness. Drawing from both theory and practice, he discusses agile enterprise and its governance.

Janne J. Korhonen

Janne J. Korhonen is an independent business and IT consultant,specializing in enterprise architecture, business process management,service-oriented architecture and pertinent governance models. He has over ten years of experience as an architect and consultant in a variety of extensive and mission-critical IT projects. With strong theoretical underpinnings, his consulting encompasses systemic co-development of business, organization and information technology.

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