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.