Overview Essays

Overview Essays Overview Essay Overview Essay Organizations which adopt technological innovations in order to capitalize on their core competencies are called high-technology organizations (cited in Laudon Traver, 2007). Strategic management of high-technology organizations involves a constant process of managing change because the need is one of implementing a continuous improvement program by automating existing business processes. As a result high-technology organizations go through a constant process of business process reengineering. Existing business processes are reengineered to capitalize on technological innovations. Embedding technological innovations into existing business processes is not an easy task because the need is one of ensuring strategic alignment between business strategies and technology strategies. There is no doubt that technological innovations can save costs by streamlining the different business processes. However there are challenges to implementing these technological innovations and that is why, w hen it comes to managing high technology organizations, there is a critical need for the management to create an organizational culture which values strategic change.Case briefThe issue of the case is GE’s migration to the technological innovation of conducting business operations online. The case highlights Welch’s leadership as the critical factor in GE’s transformation as a high-technology organization. When Welch became CEO, he immediately set out to change the organizational culture of the company by streamlining and redefining its processes, by developing the people and by renewing its strategies. Nearing retirement, he was still a stranger to the business potential of the Internet until he saw the light while on vacation. Upon returning he immediately launched the e-business initiative. GE Plastics had already started an e-business initiative on its own. However Welch’s initiative speeded up the transition. GE Plastics served as an example for the other business units. Dissemination of information in the company was facilitated by a regular series of meetings and discussion forums round the year. Transferable best practices were researched and applied and through this process GE evolved from selling online to buying online to conducting its internal operations online. GE Plastics was the success story as it targeted conducting 90% of its transactions online. However, given the massive size of GE at the time it was implementing the e-business initiative, managing change was a complex task. The case illustrates the organizational culture that was GE’s number one enabling capability in managing the structural change of migrating to Internet-age competitiveness.GE’s capabilitiesCapabilities are the basis on which an organization builds its competitive advantage and in this respect one of the most important capabilities at GE was its environment which promoted a continuous process of strategic change. Capabilities lo se their value if they are reproducible by competitors. Therefore business organizations strive to develop core competencies which make its operations unique in terms of efficient and effective resource allocation. The challenge for the management in this respect is to develop the kind of core competencies which competitors cannot copy. This was the area in which GE had one of its most important capabilities: the area of organizational culture. One of the most important cultural characteristics at GE was the spirit of innovation. The management and the employees at GE were always collecting information on the existing business processes and disseminating it throughout the organization so that best practices could be identified and embedded in all business processes. The competitive advantage that resulted from this process of structural transformation was sustainable because competitors could not possibly replicate the cultural mindset that made the continuous improvement process wo rk at GE. If GE’s capabilities had included a collection of automated business functions, then the resultant competitive advantage would not be sustainable because competitors would soon automate their business functions as well. But since GE’s capabilities were based upon software, people and their intellectual capital which took years to develop, and not hardware, its competitive advantage was sustainable. The spirit of learning and growth that characterized the organizational culture at GE was the bedrock on which was built its other capabilities, such as customer-oriented business processes and the forward-looking performance measurement system. These capabilities built a sustainable competitive advantage by capitalizing on an organizational culture of boundaryless information transfer which in turn facilitated transfer of best practices from one business unit to another. As a result of this continuous process of benchmarking in terms of resource allocation, capabi lities such as customer focus or performance management constantly evolved to build a sustainable competitive advantage.Welch emphasized building a social architecture which could capitalize on the capabilities that GE possessed. In this he focused on developing the people, redefining the processes and revising the strategies. Even though Welch started out as CEO by eliminating nearly 100,000 positions, his focus was always on bringing the best of out his people. In this he invested a considerable level of resources in the Crotonville education center so that managers and their subordinates received training of strategic value. Welch also redefined processes by eliminating bureaucracy and in the process he created the sort of organizational culture which was intolerant of bureaucracy. He encouraged discussions between representations from different business units of the company. Implementation of the six sigma program and diversification into product services were some of the strate gies that GE implemented under Welch’s leadership. Welch used these revised strategies and processes to build and reinforce GE’s capabilities.Competitive advantage in internet-based businessOne of the strategies that Welch followed in revitalizing the culture was to transform GE into a boundaryless company. This enabled the Best Practices program which benchmarked GE both externally and internally. External benchmarking enabled the company to catch up and develop a competitive edge in the internet-based business. Because the organizational culture emphasized the need to incorporate best practices found in other industries, the GE staff was instantly able to find a parallel for its e-business initiative in the e-commerce sector by studying how Amazon took away market share from Barnes and Noble. So at the outset of executing the e-business initiative, the assumption was that competitors who were already using the internet to conduct their businesses would have the same kind of competitive advantage over GE that Amazon did over Barnes and Noble. Proceeding under that assumption, the GE team began to assess its own vulnerability against high-technology competitors by forming the dyb.com. In manning the dyb.com team, Gary Reiner emphasized that the people who worked in the team had to have three attributes. They needed to have strong marketing background, they needed to have project management skills and they were also required to have a passion for the internet. Skills and interests from all these three areas had to be coordinated in creating a technological solution that had to be mission critical. The dyb.com team began by analyzing how a hypothetical internet company could take market share away from GE and the analytical template they used was the case of Amazon.com vs. Barnes and Noble. Dyb.com was also given the task of developing preemptive measures and countermeasures for possible scenarios. In performing these tasks, the team was given cons iderable flexibility and was encouraged in out-of-the-box thinking as long as it did not break established company values.The formation of dyb.com was the critical first step which enabled GE to make a smooth migration to the new technological platform even though it was late in the game. However the efforts that the dyb.com people put in would not have the same level of energy if Welch had not constantly kept in touch with them and impressed upon them the importance of what they were doing. Top management support is critical when it comes to managing change because employees are not in a position to assess the strategic importance of managing change. Welch’s continuing support for dyb.com serves to illustrate the need for management support when it comes to business process reengineering with technological innovation as GE was doing at the time by migrating into the Internet based business. Given GE’s late arrival on the scene, it is doubtful whether the company would have made a successful transition, even with the help of first-mover GE Plastics, if Welch had not made it totally clear that successful implementation of the internet-based business was the only item on his agenda.Diffusing innovations through trustThe Chief Information Officer Gary Reiner emphasized the importance of company-wide communication as a means of diffusing innovations through all of GE’s business units. This was facilitated by the operating system calendar which scheduled a regular series of meetings between delegates from different business units where there were exchanges of ideas on best practices. The operating system calendar ensured that when Reiner started out in promoting the e-business cause, there was already a culture of trust pre-existing. This was a cumulative effect because the meetings under the operating system calendar were not standalone incidents. Each meeting in the calendar built upon the previous in terms of scope and each served to acceler ate the momentum with which initiatives were put into operation. According to this operating system, each initiative went through cycles of improvement. For example, the globalization initiative had been enriched through more than a dozen cycles. Other initiatives such as six sigma, services and e-business were in the fifth, the sixth and the third cycle respectively. These initiatives were put in operation in all business units and performance results were compared across business units during the meetings. The sharing of information that facilitated these comparisons built trust among employees from different sub-units.In diffusing the e-business innovation throughout GE, Reiner went beyond the operating system calendar to schedule additional meetings and to develop additional measurements that were more targeted towards the e-business initiative. In this respect he emphasized identification of transferable best practices which facilitated the development of peer-to-peer relations hips. Because CEOs from different business units discussed with each other the progress they were making in implementing the e-business initiatives in their own departments, all departments benefited from the shared information. It was the cross-functional interaction throughout the operating system calendar that Rainer built upon that enabled GE to diffuse all three technological innovations of e-sell, e-buy and e-make throughout the organization even though the strategic impact of all three innovations was still not clear.System Complexity and couplingGE managed system complexity and coupling well because it managed to diffuse technological innovations successfully through all twenty business units. Technological innovations are particularly difficult to integrate into existing business processes because they have to be customized towards serving the strategic focus of the company. Therefore it is well for the company incorporating technological innovations by stages as GE was doi ng to be able to tap into past experience. The management at GE made this possible by means of the operating system calendar according to which managers and employees from different business units exchanged ideas in meetings and discussion forums. The operating system calendar is an example of using coupling to manage system complexity. The coupling in this case was taking place between different business units in the form of transferable best practices. Therefore even though the information system that GE was developing was steadily growing in system complexity as it evolved from selling online to buying online to automating internal business processes online, the conversion process was efficient because lessons learned from applications in one department were periodically disseminated to the rest of the organization under the operating system calendar. In this way all the different business units were interconnected and diffusion of innovations occurred without losing their effect iveness in system complexity.As stated in the case, managers and employees at GE were not sure whether the internet was making a difference to the extent that Welch had promised them. However this was not an indication of how well the company was managing system complexity. It was simply an indication of industry trends according to which the market was not ready yet to conduct transaction online. For example, one of the conclusions from dyb.com’s studies was that an Amazon-style threat did not exist. Therefore GE clearly implemented technological innovations successfully. If they did not reach the desired targets, it was only because the company was moving ahead of the industry. That is evidence enough of the success with which GE managed system complexity in it’s ever evolving information systems.