American Airlines. Amazon.com. Federal Express. Bank of America. These organizations and others are often cited as examples of exceptional effectiveness in applying information technology (IT) to improve organizational performance and, at times, achieving a significant competitive advantage.
These organizations are more than one-hit wonders. They have been exceptional over very long periods of time. They seem to have one IT success after another.
What is it that these organizations have done to achieve such IT excellence? What makes them different?
Several researchers have pursued answers to these questions. The have identified a series of factors that lead to organizational IT excellence.
Leadership was critical
The leadership in these organizations was smart, honest, seasoned, committed, and valued the healthy exchange of ideas. They were individually excellent and a great team. This leadership understood the strategy, communicated the vision, was able to recruit and motivate a team, and had the staying power to see the organization’s strategies through several years of hard work.
Strong, sustained and clear themes provided the basis for IT strategy decisions
Organizations often develop themes or strategic imperatives such as “we must continuously improve the care we deliver” or “we must relentlessly focus on efficiency.” If there is sustained commitment to pursuing these themes, organizations become increasingly competent at addressing them. This competency extends to IT. In effect, organizations, year in and year out, get better and better at improving care and get better and better at applying IT to improve care.
The evaluation of IT opportunities was thoughtful and rigorous
IT initiatives that involve major commitments of resources and significant organizational change must be analyzed and studied thoroughly. However, these organizations also understood that a large element of vision, management instinct, and “feel” often guided the decision to initiate investment and continue investment. These organizations were careful to ensure that IT initiatives were strongly linked to key organizational strategies and plans.
Extracting value from IT required innovation in business practices
If an organization “merely” computerizes existing processes without rectifying (or at times eliminating) process problems, it may have merely made process problems occur faster. In addition, those processes are now more expensive since there is a computer system to support. All IT initiatives must be accompanied by efforts to re-engineer the processes that the system is designed to improve.
These organizations often focused on continuous incremental innovations rather than “big bang” initiatives
Organizations will often introduce very expensive application systems and process change “all at once.” Big bang implementations are very tricky and highly risky. It is exceptionally difficult to understand the ramifications of such change during the analysis and design stages that precede implementation. As a result, organizations risk significant operational degradation and non-trivial project overruns.
On the other hand, IT implementations (and related process changes) that are more incremental and iterative reduce the risk of organizational damage and permit the organization to learn before they make the next change. Incremental change helps the organization’s members to understand that change and performance improvement are never-ending aspects of organizational life rather than something to be endured every couple of years.
The strategic impact of IT investments came from the cumulative effect of sustained near term initiatives to innovate business practices
The incremental steps in aggregate led to a competitive advantage. Organizations often took five to seven years for major initiatives to fully mature and the results to be seen. Persistent improvements by a talented team, over the course of years and across many initiatives, resulted in significant strategic gains. Exceptional effectiveness is a marathon. It is a long race that is run and won one mile at a time.
Innovation was encouraged
These organizations were comfortable and competent at innovation. This innovation was not confined to IT. They knew that innovation had to be practical and goal directed. Innovation had to focus on a real business problem, crisis, or opportunity and the project needed budgets, political protection, and deliverables.
Well-architected technology was the great enabler
Information systems that are difficult to change, unreliable, overly costly, functionally weak, and impossible to integrate can severely hinder an organization’s strategies. The organizations studied had taken the time to develop approaches and policies needed to ensure that desired levels of integration and reliability, for example, were achieved. Their CIO had, and shared with the leadership team, a strategic understanding of information technology architecture.
Achieving organizational excellence in IT requires much more than great information systems and a great IT staff (although these are important). Excellence requires talented people, great working relationships, organizational thoughtfulness, and dogged, year-in and year-out pursuit of performance improvements. These factors are probably not materially different from the factors that determine organizational excellence in general.
It is more important for an organization to focus on addressing these factors than it is to work on any specific IT application.
John Glaser is vice president and CIO at Partners HealthCare System. He describes himself as an "irregular regular contributor" to HIStalk.