Mapping Relationships

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There are two things we must consider when mapping relationships. Primary consideration

must be given to the fact that organizations grow and develop, and that existing

relationships among and between elements will change over time. Secondary consideration,

although of no less importance, are the cause and effect relationships of elements

in the firm’s internal and external environments and the effect those changes have on

strategy formulation and implementation. It is in these areas that the organization evolves

in response to competitive conditions, both externally and internally. This evolution is

sometimes spearheaded by the type of information system used and the level of its

involvement and importance.

When maps are constructed, they are based on a person’s perception of a given situation

and the factors or areas that will have an impact, positively or negatively, in the situation.

As more information surrounding the situation and its factors becomes known and the

more we add to or refine a map as it relates to the situation or issue, the greater the sense

we will acquire of the whole picture. This is assuming that we have developed an

understanding of the relationships that underlie those factors.

While the use of concept/cognitive mapping can give us a general idea of the relationships

that exist, and hence the general design of its underlying information system, it is

causal mapping that helps us identify the cause and effect relationships of various

elements on one another and how they affect the strategic management process. The

benefit we gain through defining and illustrating these relationships through mapping,

the better the degree of information symmetry and balance that can exist within the

organization’s structure due to better sharing of information.

Knowing the relative strength of the relationship and the degree of organizational and

information dependency can lead to better knowledge management within the firm which

in turn, can lead to both improved strategy formulation and implementation. In addition,

as we can better understand the structure of the organization, from an IT perspective as

well as a competitive perspective, and the cause and effect relationships that exist within

that structure, the better will we be able to design information systems to support that

structure and those relationships.

Foundations of Symmetry and

Dependence

Symmetry

The initial concepts of information symmetry and asymmetry stem from the concept of

the universe and its origin as described in Pagel’s, “Perfect Symmetry.” In his book, he

states “the universe begins in a very hot state of utmost simplicity and symmetry and

as it expands and cools its perfect symmetry is broken, giving rise to the complexity we

see today.” We extend this thought into a business context when we consider the various

aspects of an organization through the evolution of its strategy and structure. Just as

when the universe was first formed, when an organization is created out of nothing, it

is in a state of perfect symmetry. Its structure is simple and a degree of balance exists

among the elements of the firm, when all things are equal, facilitated by the situational

context and information system which is in place. An example of simple structure is shown

in Figure 1. In an organizational context, firms that have a high degree of information

symmetry (relatively low complexity) are those where the value of information is

recognized and easily shared with those areas that require it, and where information is

evenly distributed throughout the organization (Frasman, 1990).

A situation of low complexity would exist where there is a high degree of connectivity

(i.e., systems “talking” to each other) between systems at a particular level. The

importance of information on the decision-making process across lines is easily recognizable

to the organization.

As a firm expands through merger and acquisition and contracts through downsizing and

consolidation, subsequently changing its structure as it evolves, it goes through various

degrees of complexity (Figure 2). As firms move from a simple structure to a more

advanced structure, there is a greater chance for departmentalization to exist based on

either a functional or a business unit. It is in these instances where we have a greater

possibility in moving from degrees of symmetry to asymmetry. This is analogous to the

expansion and cooling of the universe.

Operations within the firm can therefore run relatively smoothly and, by the virtue of this

balance and distribution of information within the organization, can maintain not only

a degree of competitiveness, but also weather the variations that exist in its environment.

Where gaps occur or where symmetry is broken, (e.g., in the knowledge base), an effort

is made by all areas concerned to gather data and construct information/knowledge to

fill those gaps and bring about a degree of symmetry. We can therefore define symmetry

as that state of existence where there is a degree of information sharing that exists

between elements of the firm to allow the firm to operate competitively with the fewest

Simple Structure

Owner Owner

Administrative

Assistant

Simple structure can appear in either one of these two forms. In either case authority

is centralized in a single person, flat hierarchy, few rules, and low work specialization

(complexity).

Figure 1. Examples of organizational structure

amount of disruptions to strategy. The importance of symmetry in strategy formulation

and implementation is found in the cohesiveness and harmony which a firm must use to

exist in its environment.

As already stated, as the organization grows and evolves (mergers and acquisitions, new

product development, geographic expansion/contraction, downsizing, etc.) it becomes

more complex relative to its initial state. The degrees of complexity that arise are caused

by the effects, either singularly or in tandem with other elements (states) affecting the

firm. These states can be in the form of products, product lines, functional departments,

strategic business units (SBU) and the like.

The degree of complexity stems from the relationships that evolve over time as the

organization grows and evolves. Complexity can exist in several forms: 1) by virtue of

growth in various industries and product lines with information being shared and

systems being integrated, 2) growth in industries and product lines with information not

being shared and systems not being integrated, and 3) growth in industries and product

lines with information being shared but systems not being integrated. These result in

emphasizing the effects of asymmetry. Symmetry then moves toward asymmetry by

virtue of the changing relationships among and between these elements. These relationships

show up as changes in the firm’s structure as a result of the implementation of

strategy.

Asymmetry does have some benefits to an organization in that it may be required.

Because of the degree to which a firm is well-diversified, asymmetry becomes too much

of a problem when these resultant changes are not integrated fully into the processes

operating within the organization. These changes, again, result in both the structure of

the organization and the information systems that underlie it. This can lead to information

being asymmetric in the organization. We can define asymmetry as that state of existence

where a greater degree of complexity results from information being recognized as having

Figure 2. Examples of organizational structure

Functional Structure Strategic Business Unit Structure

Manager

Acct Fin Mkt Prod.

President, CEO

SBU 1 SBU 2

Business

Unit 1

Business

Unit 2

Business

Unit 1

Business

Unit 2

intrinsic value, but not being recognized as having value for the organization as a whole,

and therefore not shared. Those areas that require this sharing suffer problems, and as

a result, the organization suffers as a whole. Information asymmetry has also been

defined as the state of existence where information is unevenly distributed among agents

(Fransman, 1998). This uneven distribution can lead to opportunism, which also can

present some problems (Williamson, 1990).

Those firms that are highly asymmetric are those where the strategic and operational

value of information is not recognized for the firm overall, but just relegated to a particular

business unit or area. The asymmetry which results also occurs when the degree of

complexity is such that there is a disjointedness or separateness that occurs within the

organization. This disjointedness, if not monitored, can result in the formation of

“information silos” in the organization, which can affect its functioning and existence.

The concept of information silos is an extension of the line of thought from a functional

structure to one associated with a traditional corporate structure. In this way, functional

areas are largely autonomous and there is limited communication among functions or

areas. Sometimes enterprises are described as being organized into functional “silos”

(Martin, 1996). Information silos can be defined as systems that are designed and used

to support business units and their functional areas rather than corporate and crossfunctional

systems.

The outward structure of the organization (e.g., composition of business units, mechanistic

vs. organic structure), can appear to be very sound and be in line with corporate

growth strategy. However, the existence of information silos, or even when information

is dead-ended, can hinder an organization’s effectiveness. Information silos exist within

structural silos of organizations and can impede not only the strategy formulation

process, but also the implementation of strategy.

The greater the degree of asymmetry that exists, the greater the extent to which

information silos can exist within the organization. In addition, they further tend to hinder

the effectiveness of an organization’s decision-making efficiency and the overall

competitiveness of the organization. By mapping these areas and functions and understanding

their relationships to the organization’s strategy and structure, this would lead

to an associated reduction of the existence of these unwanted silos. The key is to be able

to keep the organization from becoming too asymmetric by recognizing the existing and

future relationships and designing systems to facilitate symmetry.

Dependency

Related to issues of symmetry and information silos is the topic of information dependence.

In general, the degree of information dependence forms the basis of the relationships

which exist among various functional areas or business units of an organization.

Dependence forms the basis for interaction through exchange relations, and, as such

provides specific structure to the problem of organizational interaction and process

coordination (Tillquist, 2002). There are several forms of organizational dependency.

Organizational units may operate independently, but may be ultimately dependent upon

the pooled efforts of all. They may also be sequentially dependent, where the output of

one directly supports another as an input resource. Finally, they may represent a

reciprocal dependency where both mutually depend upon the other for needed resources.

These differing forms of dependency suggest differing forms of coordination

(Thompson, 1967).

Business units and functional departments of a firm which are highly dependent have

a large degree of use of common information and information sharing. Hence, there is a

greater need for a degree of cooperation and coordination of activities. This is especially

important if these relationships exist within a firm’s critical value activities that are

important for competition and growth. At the functional level, for example, consider the

relationship that exists between the marketing, production and human resource departments

of an organization. The greater the sales a firm realizes, the greater the need for

adjustments to production. This may necessitate an increase in the number of personnel

in production or may be caused by an increase in sales by virtue of an increase in the sales

force. Likewise an increase in production personnel would signal an increase in production

as a precursor to an anticipated increase in sales. An increase in production

personnel could signal that a first-strike initiative was being undertaken. In essence,

reciprocal dependency occurs when information is not considered as having a one-way

path through the organization

Those businesses and departments of the firm that are not as dependent have very little

information that is common or needs to be shared. The link to strategy and implementation

may also not be strong. For example, at the business level of an organization, the

existence of strategic business units is largely independent in a well-diversified firm. The

information generated as to each unit’s financial posture is largely independent from one

to one another, but the information used at the corporate level to assess the overall

strategic position of the firm is highly dependent. These areas of a firm would be

considered sequentially dependent. This can occur through the data/information aggregation

that exists in a firm as it is passed from lower levels to upper levels. Such is the

case where the output of a firm’s functional units, (accounting) across business units

is aggregated as it moves up the hierarchy so as to give not only a picture of the firm’s

profitability, but also as a control and monitoring mechanism of the implementation of

a firm’s strategy. Information systems can be designed explicitly for control and

coordination of organizational activities by capturing and conveying features of dependency

relations (Tillquist, 2002).

Relationships of Symmetry and Dependency

Through using the mapping technique we can determine the type of relationship and

nature of that relationship that is perceived to exist among various components/areas of

a business with consideration being given to both external and internal relationships.

Based on the type and nature of these relationships that exist, we can then develop/

design/acquire an information system using appropriate information technology to

facilitate that relationship.

As the firm evolves and competitive conditions evolve, initiated by both the external and

internal environments, we can show how relationships can change over time, such as

changes that occur through activities like mergers and acquisitions. These changes and

their effects can be represented simultaneously on map iterations. Additionally, subsequent

maps can reveal how we move from various stages of information asymmetry/

symmetry and independency/dependency as the firm evolves. Whether we are dealing

with external or internal relationships, we must be concerned with the smooth flow of data

and/or information.

When the concern is with external relationships (inter-organizational), the question

arises as to which relationships/issues were at one time not strategically important that

now have become as important. An example is when Sabre Holding Corp., in 2001, sold

its IT outsourcing business and internal technology to EDS. This caused American

Airlines to bring back in-house some applications development activities because they

were now deemed to be strategically important to American’s competitiveness

(Computerworld, 2001). Other issues are: which businesses/issues contribute to growth

and competitiveness, and which have lost or minimized their contribution; for example,

the supplier firms to Walmart. Those firms that have good alignment of strategy and IT

(compatible systems) with Walmart, who are able to supply what is needed, when and

at what level of quality, will have a competitive advantage over those firms that do not.

Walmart’s recent embracing of Radio Frequency Identification (RFID) technology is

such an example (Computerworld, 2003). This represents a change in dependency from

independent to dependent and to a greater degree of symmetry.

When the concern is with internal relationships (intra-organizational) such as those that

exist between SBUs and functional areas and that are required to support activities/

strategies in these areas, we also consider the issue of competitiveness. The systems that

connect the various areas of the firm’s internal value chain components will impact areas

of a firm differently as the type of information required/delivered and the timeliness of

such deliveries differs among areas. This is a representation of a change in dependency

from independent to reciprocal. The degree of information dependency that exists

between areas is determined in part by the significance of each area in relation to its

position in the value chain.

Through the “Case in Point: WorldCom, Inc.”, at the end of the chapter, we will illustrate

how causal mapping can help in determining (showing) how these relationships evolve

and the effects they have on a strategy’s outcome. They will also help identify, in general,

the type of system that needs to be developed.

The ability to map the relationships and issues that exist in firms is not as straightforward

as one might be led to believe. As stated earlier, issues of independency/dependency,

asymmetry/symmetry, design, construction and implementation of the strategy and

systems as well as issues of personal behavior become of increasing importance.

Through the mapping technique we can gain a better understanding in determining the

type and nature of the relationship that is perceived to exist among various components/

areas of a business. These relationships are many times formed from the aggregation of

relationships from individuals within the organization. The constructs from which these

maps are drawn reflect the frequency that causal linkages appear. Domain-specific

constructs are identified and a picture of how these constructs are linked also emerges.

Based on this information, we can then be able to develop/design/acquire an information

system using appropriate information technology to facilitate that relationship.

The main purpose of using a behavioral simulation is to also take into consideration

relationships that develop outside of relationships that tend to form between functional

areas and types (i.e., marketing to production), which affect both the formulation and

implementation of strategy within the organization. This is done to increase the qualitative

aspects of describing an organization’s relationships and how those aspects affect

the organization, especially in the area of strategy formulation and implementation. The

ability to go beyond the predetermined relationships of a computer-based simulation in

identifying and understanding how such factors as motivation, hierarchical relationships,

identification of information requirements and needs, and the development of

systems that facilitate linkages among/between areas is important.

Equally important is the perception of the importance of these relationships as well as

any cause and effect impacts these have on a firm’s strategy. The more information that

can be gathered, aggregated, known and shared about an issue, the better the decisions

an organization will hopefully tend to make. This is especially true when you consider

the evolution of firms over time as they address issues of both a strategic and operational

nature. Through the use of various mapping techniques and their relationships, the

better we are able to determine the type and nature of the relationship that is perceived

to exist by both individuals and groups among various components/areas of a business.

Based on this information, we are then able to develop/design/acquire an information

system using appropriate information technology to facilitate that relationship and

promote organizational learning at every level.

Behavioral Simulation

Humans have capabilities that are associated with intelligence. They can perceive and

comprehend a visual scene, understand language, learn new concepts and tasks, and

reason and draw useful conclusions about the world around them (Peterson, 1990). When

we combine human capabilities of this nature and business processes with information

technology where learning can result, we have created a type of artificial neural network

(Marakus, 1999) leading to what can be defined as a type of artificial intelligence in a

behavioral setting.

A simulation has been designed to illustrate these concepts and has components of both

computer simulations and behavioral components and case analysis in its network.

Computer simulation components are found through tools such as scenario analysis

using spreadsheets. The behavioral components are found through various human

capabilities, such as: judgment, emotion, motivational ability, and behavior, as well as

relationships between business units and organizational levels. Case analysis components

provide both a historical perspective as well as real-time tracking of the organization.

Using the skills of analysis and synthesis, along with various information technology

tools, we are able to draw conclusions about those relationships that exist within and

among the levels of strategy. We can then create those causal maps to help us in

illustrating and understanding the cause-and-effect relationships that exist.

The subject of this simulation is the capstone management course, Organizational

Strategy. Where this type of simulation differs from others is that the class is divided into

three levels of strategy: corporate, business, and functional. In this simulation the class

assumes a firm’s identity, determines a major issue and tracks the firm and its events for

a period of 14 weeks, developing a strategic plan that will address that issue. If during

the semester the chosen issue is no longer one of priority, then a new issue must be

determined. Figures 5–7 illustrate the combined knowledge and understanding of the

relationships that exist and the cause and effect of strategy formulation and implementation.

Through these time periods various components of strategy are encountered such as:

formulation at the corporate level of the firm’s mission and vision statements, diversification

strategy for directional growth, competitive strategy and tactics at the business

level, and operational strategy at the functional level. This plan goes through a series

of formulation and implementation stages from the corporate through the operational

level and is illustrated in Figure 3.

Figure 3. Strategic interaction among the levels of srategy

Board of Directors

(Directional Strategy)

Strategy

Implementation

Executive Level

Strategy Formulation

(Diversification

Strategy)

Strategy

Implementation

Business Level

Strategy Formulation

(Competitive Strategy)

Strategy

Implementation

Functional Level

Strategy Formulation

(Resource Productivity)

Strategy

Implementation

Strategy Formulation

Strategy Implementation

Evaluation and Control

Adapted from Wheelen and Hunger, Strategic Management and Business Policy, 4th Edition,

Addison — Wesley Publishing Company Inc., 1992

The corporate level is comprised of a Board of Directors and Executive Management. This

level is responsible for defining the mission, scope and issues for the company. The

Business level can function in one of two ways: 1) as CEO’s of Strategic Business Units,

in the case of some type of diversification strategy, or 2) as a Competitive Positioning

group when the firm is of a single product focus. The functional level is comprised of

Management Information Systems, Accounting, Finance, Marketing, Production/Operations,

and Human Resources.

This firm must then track the events in the business world of that company for the course

of the semester and develop a strategy that addresses that issue(s). The class is fully

aware that issues defined at the beginning of the semester may or may not be the same

toward the end of the semester. In addition, internal and external relationships may

change as well as the structure of the organization. The mapping technique is used as

a tool for helping understand the cause–and–effect relationships imbedded in and as a

part of a particular strategy.

Figure 4. Benefits of an executive information system

Strategy Formulation

Orients the company to stakeholder needs and critical

success factors.

Clarifies success of strategic thrusts.

Tactical/Business Plan Development

Provides information for tactical changes.

Compares performance with business plan goals.

Actions/Initiatives

Alerts managements to process problems and

improvements.

Gives management the information to participate in

operational decisions and calculate tradeoffs.

Results

Communicates the results of the total effort.

Let us begin by listing the objectives of the simulation as they relate to strategy:

• Gain an overall understanding of how various areas of the firm relate to each other.

• Gain an understanding of how areas of a firm relate to each other in a given situation.

• Determine, in general, the information requirements that exist between those areas,

i.e., the information required for a particular area of operation as well as that required

by other areas.

• Determine the cause and effect of information, i.e., the existence or non-existence

of it in the execution of strategy.

• Begin to define, in general, what type of systems would need to exist and its

functioning at each level of the organization.

The underlying framework for the mapping is one suggested by Crockett (1992). Crockett

suggested a framework showing the benefits of an Executive Information System (EIS).

In this framework (Figure 4), the performance benefits of such a system result in feedback

that influences: 1) strategy formulation, by focusing executives on stakeholders needs

and critical success factors, 2) business plan development, by providing information on

changes and monitoring progress, and 3) operational activities, by alerting executives

to problem areas and improvements. There are three primary problems that retard the flow

of quality information into the EIS. These problems are: 1) systems still do not provide

(or provide too late) the data that senior managers consider crucial, even after installation,

2) collected data are not linked across functions or strategic areas, and 3) the data

that are available help diagnose problems but do not help find solutions (Crockett, 1992).

Implicit within the framework of the EIS are the components of strategy discussed earlier.

In general these components can be found in each part of the information system relative

to its level in the organization. For example, critical success factors found at the corporate

level are used in defining what is necessary for proper organizational growth and value

creation. At the business level, the issue is what is required for successful competitive

strategies, and at the functional level, what is the maximum resource productivity.

Synthesis and analysis would be required in order to make the successful transition from

formulation to implementation at each level as well as monitoring the results of those

actions and for monitoring the organization as a whole. Failure to give due consideration

to these components at any level and the relationships represented, can lead to either

ineffective formulation and/or implementation. By using causal mapping, we will be able

to address these issues and help provide a path toward gaining a better understanding

and assistance in developing a solution to the situation.

Illustrating the Mapping Technique

The information concerning WorldCom, Inc., contained in this case originated from

various sources including company press releases, Associated Press articles, USA

Today, and CNN’s special, “The Rise and Fraud of WorldCom, Inc.” The relationships

illustrated are those maps representing an aggregation of both student and instructor

maps.

When constructing the maps we use various types of arrows to denote the relationships

that exist between various areas of the firm. These maps are used to illustrate several

facets of any given situation: 1) the factors or players in the situation are illustrated, 2)

the strength of the relationship that exists between these factors is shown by arrows

(Table 2), with the type of arrow determining the strength of the relationship, and 3) the

cause and effect of actions or inactions of strategy are shown. These cause and effect

relationships are given by a plus (+) sign designating a positive effect or a minus sign

(-), designating a negative effect. The absence of either sign would denote “no effect,”

but rarely is there “no” effect. These are also shown in the context of information

dependency and symmetry and the net effect on other levels of the organization. It should

also be noted that the strength of the relationship can range from very strong to very weak

regardless of the direction of cause and effect.