Real Strategies for Virtual Organizing by N. Venkatraman and John C. Henderson - Essay Example

Supervisor A Review/ Critique of the paper "Real strategies for virtual organizing" by "N. Venkatraman and John C. Henderson" ~ (Sloan Management Review Paper). February,2009 TABLE OF CONTENTS 0.0Executive Summary of Articles 1.1 Introduction/Background 1.2 Motivation of Work 1.3 Advantages and Disadvantages 1.4 Suggested Improvement to the Paper 1.5 Comparism 1.6 Conclusion 0.00Summary of Article The paper centers on harmony among three vectors: Customer interaction, asset sourcing, and knowledge leverage and a strong Information Technology (IT) platform laying their arguments on the premise that, the current model of strategy and structure are woefully inadequate to meet the imminent challenges of the information age. The researchers rejected the virtual organization as a distinct structure and instead treat virtualness as a strategic characteristics common to every organization. With focus on century old and new entrants organization in a fast changing high technology market place. Their view is based on three distinct yet interdependent vectors. The customer’s interaction vector, the asset configuration vector and the knowledge leverage vector. According to the researchers, the interdependence creates the new business model the enables the researchers to place IT at the centre. To the researchers, existing models on organisational strategy and structure fail to meet the challenges of the information age. Through the research, a conceptualization of an architecture for virtual organizing addressing knowledge and intellect as value drivers. The authors further use information technology as a spring board for the model. In addition, each vector used in the model has three distinct stages with stage one on tasks units, stage two organisational levels on how to coordinate while the last stage focuses on organisational network. Using a number of important case study and examples ranging from Intel Pentium Chip, Citibank the paper addresses three important questions to managers centering on different mechanism to reach customers. The paper cautions with nine implications for a transition organization and makes some important contributions by postulating that, while virtual organizing is a powerful concept, a virtual organization is an unfortunate term. 1.1Introduction/ Background Following the current wave of information technology, companies are trying all available methods at their disposal to break through markets. In this write of Ventatraman &Henderson (1998) I have chosen the following structure for the review of the paper. First I will review the articles in its general parts and point out it strong and weak sides. There after I will look on specific details in the paper that I oppose to, while giving my opinion. Finally I will point out some formal changes that should be made such as, analysis, methodology, and reformulation of key concept like research purpose and research problem. The paper covers business strategy in the context of growing technology by proposing a best fit model for all. 1.2Motivation of Work Previous studies on Virtual organization created a knowledge gap that the researchers seek to address in their paper. Using the work of Quinn who focused on a service based economy, Womack & Jones who focused on lean organization and Hammel and Prahalad who laid emphasis on core competencies. The three studies referred to above referred to a virtual organization as a distinct structure like functional divisional matrix. This created the need to provide an alternate view which Ventatraman &Henderson (1998) addressed in their paper. Thus, the need to treat virtualness as a strategic characteristic applicable to every organization became evident as their primary motivating factor. 1.3 Advantages and Disadvantages The work of Ventatraman &Henderson (1998) is unique in the field of change management with respect to information technology. The authors succeeded to break pass their information using three vectors each of them addressing pertinent issues while IT serves as a unique platform. Because, the was historically no common unifying platform to pull the different activities (vectors), Ventatraman &Henderson (1998) should be applauded as their view of virtual organizing integrates these three hitherto separate threads into an interoperable IT platform that supports and shape the new business model. This according to the researchers ensures internal consistency across the three vectors and benchmarks a profile of virtualness relative to competitors and referent companies in the market place. The researchers should be applauded further for the cases and examples used to passed their message through e.g., BP, Xerox etc. The researchers further caution that, creating a resource coalition and navigating under fast-changing market conditions is not simple, but however, knowledge and information are important value drivers to help a company sail through. However, despite the good propositions and findings made by the researchers certain points remain an issue that needs further clarification. The purpose and objective of the paper are poorly defined and tested, likewise the methodology used are not properly motivated. The authors motivate the choice of this area of research based on the existing knowledge gap created by previous research. Three vectors are studied here because of the increase attention to the possible behavioral consequences of the different types of measures used in contemporary organisation settings. A hypothesis is developed based on the background information within which the theoretical framework is extrapolated. This forces one to believe that, it is a one size fit all proposition. Is the three vector matrix build on an IT platform feasible to all organizations? The researchers failed to mention what criteria were used to select the companies that served as illustration. If they were randomly selected or chosen based on other criteria how the result of the research affected was. In addition, many of the practical questions addressed to managers are rhetorical. The paper draws from other disciplines as they caution organisation that today’s managers should move away from static myopic metrics like market shares but these metrics should be changed as the market changes. The result of the research will proof quite useful to organisation as it relative weight attached the three vectors developed on an IT platform is a springboard for strategy development. Thus the choice between financial and non financial measures to be linked with the changing time may be quite important as previously thought. The authors received another credit as their result is consistent with goal setting theory. One thing worth appreciating in this paper are the cases used, the way it was carried out and done, the number of cases and position, market size give some good footing for a tangible conclusion though, considering the fact that only multinational companies served as case studies the problem of generalization into other sector becomes questionable. The Three Vectors The researchers developed an architecture for virtual organizing that focuses on the importance of knowledge and intellect in creating value. The researchers further echo that information technology is the spring board of this model. The first vector is on customer’s interaction. This vector has three stages and raises three distinctive questions for managers. These are customer’s service, purchasing, or new product development Customer’s interaction with the business occurs through a multi stage distribution-efficient distribution, linear fashion. That is here emphasis is on getting to know customers reaction to a product before launch. The second stage then focuses on the opportunities and challenges in customizing product and services while the third stage focuses on customer’s community. The first Vector posts some important questions to managers. These questions centers on, strategy to virtually connect with customers, mechanism to serve customers on 24hrs, extensiveness of capabilities, make to sell position of the organization etc. The second vector, focuses on the organisational level on how to coordinate activities to create suppliers economic value, modularity, intelligence and organization. Here emphasis is on the need to acquire critical assets and resources, reliance on components obtained from external market. The second vector also involves three stages, sourcing modules, process interdependence and resource coalition. Here at the first stage of the second vector emphasis is on the interdependence across organisational boundaries, such as the specialist accounting, auditing, inventory, call centre firm etc. The third stage lay emphasis on the resource network in which the firm is part of it. The vector also addresses some important question, logic for sourcing strategy, modules for external partners, process outsourcing and sourcing and makes partner decision. The third vector centers on leveraging of knowledge and expertise as a corporate assets. This involves knowledge leverage, harnessing work unit expertise, recognizing knowledge as corporate assets while gaining access to a broad professional community expertise. The three vectors are supported by a strong IT base. 1.4 Suggested Improvement The paper raises questions about existing literature on virtual organizing. The researchers in this article augmented the notion of virtual organisation through a three vectors system build on a common IT platform. The work first of all examined the limitation of previous research that was fraught with weaknesses. However, despite the contribution made by the paper certain issues remain a puzzle. The purpose of the paper should be redefined, stating the methods used in selecting the cases with the limitations. Also Work of previous researchers within the same context was highlighted and a stable suite of metrics were identified relating to various performance measures. However, I think if the contribution made by these experts were highlighted rather than the issue raised by them just being highlighted that would have been better. 1.5 Comparism While the paper Virtual organizing is centers on the premise that previous models of organizational strategy and structure fail to meet the challenges of the information age, and from a field study, an architecture is conceptualize, the work focuses on the importance of knowledge and intellect in creating value. Information technology serves as the foundation of the business model. Quinn (1992), echoes that successful companies of today whether in manufacturing or services will derive their competitive edge not from ephemerally superior products but from a deep understanding of a few highly developed knowledge and service based. Physical resources as competitive advantage will come to pass as they are easily cloned. Quinn (1992) like Ventatraman &Henderson (1998) draws examples from major multinational companies such as Merck, Honda, Apple, Boeing, and Wal-Mart, Quinn describes how forward-looking companies can best perform needed analyses and implement strategies around selected core competencies in order to break through market hurdles. As compared to Hammel &Prahalad Core Competencies, core competencies are those resources and capabilities that are critical to a business achieving competitive advantage. While in Hammel and Prahalad, emphasis is on those resources that enable a company achieved an edge over the others, just like the previous two articles, the goal of the core competencies is for management to focus attention on competencies that really affect competitive advantage. To them, overtime companies might develop key areas of expertise distinctive to the company and critical to its growth. Nobelius& Sundgren (2002) argued that, sharing parts across a set of products has long been considered good design practice but now, it is also considered as a strategic weapon in many industries. Here, parts sharing as an important means of shortening the product development lead-time, reduce cost and increase product quality. Moreover, companies are striving towards reaching efficient parts sharing. 1.6Conclusion In all, the authors succeeded to give a clear structure for the entire research to follow. All sections and parts are well defined, well allocated, the limitations of the study are well defined and, concepts with regards to strategies and information platform, the three vectors change, financial and non financial performance measures, are well structured and defined. It is quite an interesting area of research. The study aimed to improve understanding of how three vectors build on an IT platform can assist organisation enhances their strategic competitiveness. By recognizing the limitation of previous researcher on this same area (Existing empirical research has tended to examine. References Quinn, J.B., (1992). Intelligent Enterprise (New York: Free Press,1992); Hamel, G., and Prahalad, C.K., (1994) Competing for the Future(Boston: Harvard Business School Press, 1994). Womack and Jones coined the term "lean organization" to extend the original concept of lean production. Womack, J.P., Jones, D.T, J & O. Roos, The Machine That Changed the World (New York: Rawson Associates,1990). Nobelius, D., & Sundgren N., (2002). Managerial issues in parts sharing among product development projects: a case study Journal of Engineering and Technology ManagementVolume 19, Issue 1, March 2002, Pages 59-73 References and further reading may be available for this article. To view references and further reading you must purchase this article. Read More