key determinants in strategic realignment within a …

KEY DETERMINANTS IN STRATEGIC REALIGNMENT WITHIN A DIGITAL GLOBAL BUSINESS ENVIRONMENT

Thesis by

RICHARD VERNON WEEKS [87/3575/9]

[MCom (cum laude), DCom (Strategic Management) RAU]

submitted in fulfillment of the requirements for the degree of

DOCTOR OF PHILOSOPHY

in

BUSINESS MANAGEMENT

in the

Faculty of Economic and Management Sciences

at the

RAND AFRIKAANS UNIVERSITY

JOHANNESBURG Promoter: Professor N. Lessing MAY 2002

RV Weeks Key determinants in strategic realignment 2002 within a digital global business environment

Chapter 1: Orientation −1

TABLE OF CONTENTS

CHAPTER 1: ORIENTATION 1.1 BACKGROUND 1-3

1.1.1 Traditional strategic management theory and practice: alternative perspectives 1-3

1.1.2 Emerging technologies and globalisation: a strategic perspective 1-4 1.2 STATEMENT OF PROBLEM 1-7

1.2.1 The relevance of the traditional strategic management process in dealing with the intricacies of strategically positioning modern day business institutions within a digital global business environment. 1-8

1.2.2 The strategic impact of emergent technologies on the business activities of institutions, with specific reference to the culture of the institutions concerned. 1-12

1.2.3 The need to obtain strategic synergy between emerging technologies and institutional business systems. 1-15

1.2.4 Change management implications in strategically positioning institutions within a digital global business environment. 1-18

1.3 OBJECTIVES OF THE STUDY 1-20

1.3.1 Gaining understanding of the concept “globalisation”, the characteristics of the business environment that has emerged as a result of the concept, and the strategic management implications thereof. 1-21

1.3.2 Acquiring insight and understanding as to the impact of technology in shaping the business environment of public and private sector business institutions, from a strategic management perspective. 1-22

1.3.3 Exploring the relationship and interdependencies that exist between business systems and information and communication technology, from a strategic management perspective. 1-23

1.3.4 Attaining greater clarity and understanding as regards the management of change in the strategic realignment of business institutions within a global business environment. 1-25

1.3.5 Attaining insight and understanding of contemporary strategic ma



nagement practice within a global business environment. 1-26

1.4 RESEARCH METHODOLOGY AND CONSTRAINTS 1-27

1.4.1 Literature study 1-28 1.4.2 Personal interviews 1-29 1.4.3 Constraints to the study 1-31

1.5 CLOSURE 1-32



CHAPTER 1: ORIENTATION

“The accelerating pace of emergent technologies is shrinking the window

in which any given strategy, however well thought out remains viable. For

this reason, any elaborate but mechanical attempt to plan a three-day

retreat in the woods may no longer qualify as strategy making”

Szulanski & Amin 2000:189

1.1 BACKGROUND

1.1.1 Traditional strategic management theory and practice: alternative

perspectives

The introductory statement challenges the traditional wisdom of the so called

“bosberaad” or strategic retreat that has almost become an annual tradition in many

South African institutions. At the core of the problem is the extreme volatility of the

business environment confronting most enterprises as they enter the information era of

the 21st century. Various researchers hold strong views as to the effectivity of strategy

within a turbulent business environment. Martin (1995:294) argues that the “key to

successful strategy is insight. Insight is creative and intuitive and challenges popular

wisdom”. Peters (1992:289) ostensibly contends that visions, a key element in the

formulation of strategy, become straitjackets that are even more constraining than

elaborate strategies. Pitt (2000:20) questions the effectivity of traditional strategic

planning models within a context where technology “breakthroughs” give rise to

discontinuous change. The emerging paradigm of strategic management is essentially

one where executives and managers not only need to question the wisdom of traditional

strategic management processes, but the very need for strategy formulation in a highly

competitive and swiftly changing global business environment. This reality is certainly

endorsed by Gould (1996:278) who argues that “markets are moving too fast, are too

unpredictable and too uncertain to rely on conventional management approaches”.

RV Weeks Key determinants in strategic realignment

2002 within a digital global business environment


A review of the management literature soon reveals that not all researchers and

management practitioners would be willing to agree that strategic management is an

outdated concept with little or no value within a turbulent business environment. While

acknowledging that there are researchers who believe that formal strategic planning

may be dysfunctional, Glaister & Falshaw (1999:107,115) provide empirical evidence

that strategic planning is “still going strong”. If immense volumes of current strategic

management literature are consigned to the dustbin, Liedtka (1998:120) questions,

“what have we got to take its place?”. Having posed the question Liedtka (1998:128)

goes on to argue that strategic management still has significant implications for modern

day business institutions. Notably, Wilson (1998:508) argues that “the convergent

forces of globalisation, technology, deregulation and economic restructuring combine to

make strategy and strategic thinking an essential weapon in the corporate armory”.

The image that emerges is one where traditional strategic management processes are

making way for a new strategic methodology that is more in line with contemporary

management practice. It is imperative that researchers, executives and managers not

only recognise the change taking place, but respond to it in a proactive manner. This

implies a need to gain clarity as to the nature of the shift that has taken place in

contemporary strategic management practice, as not only does theory inform practice,

but contemporary practice must in turn inform theory when significant shifts in traditional

thinking have taken place.

1.1.2 Emerging technologies and globalisation: a strategic perspective

It is deemed essential that the concept “emerging technologies” as applied within the

context of this study be defined from the start to avoid any confusion that may arise.

Seen within the context of the related concepts of “globalisation”, the “new economy”,

the “information era” and the “digital economy”, emerging technologies essentially relate

to information and communication technology (ICT) and technologies associated

therewith. While not restricted thereto the primary focus will be on two distinct fields of




technology, namely information and communication technology.

Emerging information and communication technologies have given rise to a context

where time and distance no longer serve as constraints in conducting business

transactions. Parker (1998:6) describes globalisation as “the absence of borders and

barriers to trade between nations”. Competition assumes new meaning within such a

global business environment, where discontinuous, innovative change becomes the

order of the day. Within such a context it is the creative potential of the institution’s

employees that makes the difference in meeting the challenges presented by the limited

time frames of windows of opportunity. “Internet time, like dog years, passes far more

rapidly than standard time” (Day & Schoemaker 2000:6) and gives true meaning to the

adage that time waits for no man. As enterprises cross the traditional boundaries of

business activities and become global in scope, the problem of capitalising on restricted

time frames of windows of opportunity become all that more complex and difficult to

achieve from a strategic management perspective. The following comment by Parker

(1998:31) assumes relevance in this regard, “as businesses increasingly go global,

managers of all kinds of businesses similarly are forced to rethink theory previously

applied to a world where business was more international and between nations rather

than global and across nations”.

Emerging technologies are transforming the national business context and have given

birth to the digital e-economy (electronic economy). E-commerce (electronic commerce)

appears set to drive economic growth in the years ahead. The strategies and rules of the

game to gain a competitive advantage within the digital economy are in many respects

different from that of the past. There for instance, appears to be a shift in strategic

thinking from products or service centricity to customer centricity. In the digital economy

the client and the changing needs of the client will increasingly be at the center of the

strategy formulation paradigm. Of equal significance with the birth of the digital economy,

is the recognition that intellectual capital will in future gain in prominence as a strategic

determinant, and this in turn places renewed emphasis on the human dimension as a



factor of consideration in formulating and implementing strategy. A further strategic

consideration linking emerging technologies and human resources, within the context of

the global economy, is the need for a change in the traditional skills base required for

managing both private and public sector institutions. Trilling & Hood (1999:8) support this

contention by suggesting that “everyone in the Knowledge Age will have to be able to go

beyond basic computer literacy to a higher level of digital fluency”. In a similar sense Klor

de Alva (2000:34) in reviewing the challenges to higher education in the information age,

maintains that employees will need to be reskilled numerous times if they wish to remain

employed.

The link between innovative technology changes and the impact thereof on business

institutions and the employees of these enterprises is receiving increasing prominence

within the literature. Martin (1995:29) identified six key themes in the redesign of

corporate institutions to align people, technology and strategy. These are:

fundamental uncertainty

radical changes in how people work

explosive changes in technology

a renewed focus on humanity

extreme rate of change and

constant learning.

The human element is clearly visible in these themes and encapsulated within the

researcher’s contention that “the learning-laboratory corporation is the culmination of the

twentieth century journey from treating employees as dumb slaves who must obey to

encouraging employees to use their intelligence to increase their value” (Martin 1995:29-

30). Evidently, indicated by inference, is the importance of employee intellectual capital

in strategically positioning modern day businesses to survive within a highly competitive

global business environment.

The tendency to search for instant solutions for complex business problems remains a

rather common phenomenon. Many an attempt has been made to implement state of the



art computer systems to address complex business problems impacting on the day-to-

day business operations of an institution. The implementation of these systems in many

cases turned out to be a nightmare as the business systems were not designed to

ensure compatibility with the computer systems. Of even greater concern is that in some

instances the business requirements were not even correlated with the underlying

business rationale on which the selected computer system was based, with the result

that the client’s expectations could not be realised to the full extent envisioned by the

client. The gulf that exists between business management and the information

technology organisation is vividly described by Martin (1995:54-55) as follows:

“In many corporations the business executives regard the IT organization

as an alien culture. The professionals tend to live in their own world,

preoccupied with technology issues and largely uninterested in the

business matters. Business executives refer to IT people using words

such as propellerheads.”

In reality, business imperatives need to inform the information technology (IT) solution.

This translates into a need for both business and IT executives to be working from the

same agenda with clearly defined understandings of what is required and what will be

delivered by the selected IT systems.

From the preceding introductory discussion it may be concluded that emergent

technologies, business systems and human resources are key determinants in the

strategic realignment of any institution. South African organisations are no exception to

the rule in this regard and these determinants need to be taken into consideration in

formulating and implementing an appropriate strategy to ensure the future viability of

these institutions within an extremely competitive global business environment.

1.2 STATEMENT OF PROBLEM

The primary problem addressed in this study is the relevance of traditional



strategic management theory and practice within a context of instability,

uncertainty and discontinuous change emanating from globalisation and

emerging technology as key strategic determinants.

In researching key strategic determinants impacting on the strategic realignment of

contemporary South African business institutions the following problem areas are

identified:

South African business institutions are increasingly confronted with the realities of

having to compete in global markets, where traditional barriers to trade have largely

become insignificant and these institutions as a consequence are in many instances

subjected to “future shock”. It needs to be questioned why traditional strategic

management processes in many instances are no longer effective in positioning

these institutions within a changing global business environment. Of equal relevance

are the characteristics of this environment and how it differs from the traditional

context in which the concept “strategic management” evolved

Emergent technologies are not only impacting on the business environment of

modern day public and private sector business institutions, but are in effect

changing the very way that things are done within the organisation, and therefore it

has a significant effect on the strategy and culture of the institution concerned

The dynamic relationship that exists between emergent technology and business

systems is both complex and difficult to manage in practice. Clarity as to the

dynamics of strategically integrating the two into a synergistic entity is required in

view of the strategic importance thereof in meeting the challenges presented by a

highly competitive global business environment

The human resources implications of strategically positioning institutions within a

digital global business environment are multifaceted and clarity as to the importance

thereof from an organisational and strategic management perspective is required.

Each of the above identified problem areas are addressed in the ensuing sections.

1.2.1 The relevance of the traditional strategic management process in dealing



with the intricacies of strategically positioning modern day business

institutions within a digital global business environment

Significant characteristics of the digital global business environment are their highly

competitive nature, unprecedented brisk information transfer, ability to conduct business

transactions of all kinds across traditional boundaries with relative ease, and their

inherent trait of discontinuous rapid change. It is a context over which the majority of

South African business institutions have little or no real influence in radically influencing,

reshaping or transforming the global political, business, technological, or social

environment in which they function. Of particular significance is the reality that within this

context, windows of opportunities are continually opening and closing. Similarly, new

risks and threats to the business and its operations are constantly emerging. In support

of this contention Ireland & Hitt (1999: Internet) argue that the global economy has given

birth to a new competitive landscape, one where change essentially takes place on a

revolutionary (as opposed to an evolutionary) basis. They further stress that it is a

context where knowledge workers are the primary source of economic growth (Ireland &

Hitt 1999: Internet). In similar vein, Bryan et al. (1998:Internet) warn that many

strategies are still built on closed national economies, which represent a rapidly fading

business reality.

At its very core the strategic management process is based on contextual analytical

thinking and the recognition that in many instances organisational activities are to a

lesser or greater degree impacted on by the changing nature of its external or macro

environment. Within a highly volatile electronically networked global business

environment, where any form of long term stability is the exception to the rule, it needs to

be questioned whether traditional strategic management processes are still of relevance

in engendering a sustainable competitive advantage. There are researchers who

question traditional strategic management practice, concepts and processes, in relation

to a highly unstable environmental context, many of whom accentuate the failures

encountered in practice (Coyne & Subramaniam 1996:61-62; Gould 1996:278;

Heracleous 1998:481-482; Mintzberg 1994:4,25; Pitt 2000:20; Robert 1998:14; Simpson



1998:476-477).

In formulating strategy, executives and managers do not necessarily respond to actual

environmental realities, but their interpretation or perception of these realities. Schwartz

(1991:53) acknowledges that people as a rule do not realise that their decision agendas

are usually unconscious by stating that “each of us responds not to the world, but our

image of the world”. The business realities of a global business environment may well in

many respects no longer reflect the underlying rationale on which traditional approaches

to strategy development and implementation were based. Coyne & Subramaniam

(1996:61-62) for instance, in support of their contention that managers are reaching out

to find new theories because the traditional model of strategy is inadequate, cite the

following examples of this new business environment:

“A telco executive must make a $1 billion “yes” or “no” decision on whether to invest

in a new network technology to provide new services to customers. One best-

practice market research survey predicts a return on investment of 25 percent; a

second, equally valid, forecasts minus 25 percent. What should the executive do?

How should executives at a software firm deal with a large customer that is also the

firm’s chief competitor - and one of its biggest suppliers?

How should the chief executive officer of a credit card company think strategically

about positioning when segments and value propositions come and go every six

months?

A large regional bank recognises that to succeed on the retail level, the bank must

take the lead by discovering huge but as yet unrecognised customer needs. How

can it embark on such a strategy?”

It may be inferred from the strategic questions posed that the contemporary business

environment is complex, extremely volatile and difficult to predict with any degree of

certainty. Add to this the subjective nature of management’s interpretation of this

environment and it will not be difficult to see why both researchers and managers

question the validity of the assumptions on which many strategic management processes

are based.



Conventional strategic management practice is based on the fundamental assumption

that the organisation’s executive management remains ultimately responsible for the

formulation of strategy and ensuring its successful implementation. This by implication

denotes a centralisation of strategic decision making within the executive structures of

the institution concerned. The conventional strategic management paradigm essentially

stems from its military origins of centralised control and command structures. It is a

paradigm further shaped by scientific management thinking. Taptiklis (1994:Internet)

argues that current reality may well be quite different and that the scientific ethos

underlying management theory may no longer be appropriate within the volatile context

of a global business environment. He goes on to argue that a new paradigm may be

required, one that “brings others into the process in a way that energises it” Taptiklis

(1994:Internet). In questioning the role of strategists in today’s real world Taptiklis

(1994:Internet) concludes that “management as an art form: the art of observing and

understanding people, and drawing them in to a common cause” is central to the

successful implementation of strategy. The underlying logic of this argument may be an

emphasis on having to draw on the total expertise that exists within an organisation to

meet the challenges presented within a business environment of unprecedented

alternative possibilities. Wood (2000:Internet) refers to this as the end of the age of

reason and the birth of the age of possibility, which engenders a crisis in what he terms

the “old strategy”. At the heart of the “new strategy” is the “blur” in which the global

economy and technology co-evolves (Wood 2000:Internet).

Seen within the context of the preceding discussion the organisation’s external context is

one of possibilities or windows of opportunities over which it has little control, while its

internal environment provides the capabilities to meet the challenges presented by the

external context. It is argued that this translates into a need to nurture a culture within the

organisation that values the collective expertise of all its employees in turning the

possibilities into profitable strategic realities. Strategic centralism, a core assumption of

traditional strategic management thinking would as a consequence need to make way for

a more inclusive synergistic strategic process.



As may be seen from the preceding discussion, conventional strategic management

theory needs to be validated in terms of contemporary management practice. While

theory informs practice it also needs to be acknowledged that in times of significant

discontinuous change it is necessary to revisit practice and if the theoretical

assumptions that have been made are found to no longer reflect business reality,

practice needs to inform theory. It is argued that the complex realities of a volatile global

business environment place in question traditional strategic management theory and a

critical evaluation of theory and contemporary practice are thus required.

1.2.2 The strategic impact of emergent technologies on the business activities of

institutions, with specific reference to the culture of the institutions

concerned

Inherently inferred within the concept of “emergent technologies” is a sense of

exploration of new possibilities, which in turn implies an element of learning. Yet, Senge

(1990:18) asserts that “it is no accident that most organisations learn poorly. The way

they are designed and managed, the way people’s jobs are defined, and most important,

the way we have been taught to think and interact ... create fundamental learning

disabilities”. At the very core of the dichotomy that exists is the notion of the need for a

“culture of learning”. The creative capacity associated with the convergence of emergent

technologies and business process redesign in effect necessitates a need to learn new

ways of doing things within the organisation and thus by implication a change in the

culture of the organisation. It is a sentiment captured in the contention of Dvork et al.

(1997:164) that it is not the technological wizardry, but the way they do things that

distinguishes modern day business institutions. In question therefore is the culture

required for surfing the waves of change associated with the strategic integration of

emergent technologies and redefined business systems.

In discussing the crafting of solutions for dealing with the pitfalls associated with

emerging technologies Day & Schoemaker (2000:37) identify four management related



factors, namely “widening peripheral vision, creating a culture of learning, staying flexible

in strategic ways, and providing organisational autonomy”. Organisational culture is

therefore seen as an important management consideration, in a range of interrelated

management interventions, that are of relevance in dealing with the strategic impact of

emerging technologies. Martin (1995:4,455) supports the notion of having to attribute

careful attention to the corporate culture in strategically realigning the organisation within

a knowledge-based management era. The linkage that exists between knowledge and

organisational learning is also accentuated by Martin (1995:5) in his contention that

learning, which creates new knowledge, provides organisations with a primary strategic

competitive advantage within a tidal wave of technologically driven change. It could well

be argued that a mental connotation exists between the concepts “emergent

technologies” and “organisational learning”, which largely emanates from the notion or a

sense of change and having to do things differently, implying a need for a change in

culture.

The sense of change previously referred to, in reality is multifaceted and not restricted to

the culture of the organisation. In formulating strategy, attention needs to be attributed to

the potential application domains of the technology concerned. The business impact

thereof could, from a strategic management perspective, provide an institution with a

competitive advantage, emanating from economies engendered, enhanced service

delivery to clients, the development of new innovative products, and the opening up of

new market segments. On the other hand, applying the technologies to realise the

strategic advantage will have an impact on the emerging technologies identified, namely

in terms of potential business opportunities, and the impact thereof on the business

operations of the institution concerned. The former relates to the external and the latter

the internal context of the situation.

From an external perspective, emerging technologies give rise to windows of opportunity

that in many instances challenge conventional thinking as to what is possible. It in a

sense entails an element of vision and moving beyond current reality to embrace

alternative future potential realities that will necessitate a strategic realignment of the



organisation and its activities. A case in point being the birth of the Internet and the

associated network technologies that have unleashed a new order in business thinking

that is largely visionary in nature. Nonotechnology similarly stands on the edge of

extending traditional thinking as to what is possible with an ability to design and construct

devices atom by atom. The ability to manipulate molecular structures will have profound

implications for most traditional industries of human endeavour. Within the sphere of

medicine it holds the promise of “monitoring, repair, construction and control of human

biological systems at the molecular level, using engineered nonodevices and

nonostructures” (Freitas 1998:Internet).

In order to deal with the complexity of emerging technologies, Wood (2000:Internet)

argues that new strategic building blocks are required, namely:

a strategic conversation between a community of stakeholders about the future

a future navigation process within the enterprise which ensures that it has a robust

strategic direction capable of learning from uncertainty

an approach to business design enabling the enterprise and its management to

explore and find profit zones in its value network and

a way of developing the coherence between business design and an organisation’s

capability to deliver, together with the capacity for self-renewal.

The first mentioned strategic building block is of specific relevance in terms of public

sector institutions. The traditional model of governance within the South African context

is rapidly making way for greater community involvement and information and

communication technology will without doubt play a significant role in supporting the

processes involved. Emergent technologies have in effect made electronic governance a

distinct possibility with extensive possibilities that may be explored to ensure the

participation of communities in key governance issues that will impact on their lives. The

transformation process that has been embarked on in most South African public sector

institutions is specifically directed at ensuring improved service delivery to all sectors of

the community, and without doubt the role of technology in support of the business

processes concerned will be quite significant. The issue of technology, in support of



public sector governance, has raised the question of the digital divide that exists between

technology literate and illiterate sectors of the population. Access to the appropriate

technology concerned has also become an issue of concern in this regard, that will need

to be taken into consideration from a strategic perspective.

The picture that emerges is one where emergent technologies are engendering a context

of significant opportunities within a global business environment. Within public sector

institutions emergent technologies also have a significant potential for improving service

delivery and enhancing community involvement in governance issues. It appears that

electronic governance will in future become an issue of strategic significance that will

impact not only on the lives of members of the community, but also on activities of

business institutions.

Clearly, both public and private sector business institutions are confronted with emergent

technologies that are impacting on their day-to-day business activities and operations. It

is questioned whether the traditional concept of strategic management is still of

relevance within a business environment shaped by immense technological driven

changes within relatively short time frames. It is contended that the impact and nature of

the influence of emergent technologies on modern day business institutions’ operations,

and consequently their strategy, needs to be researched in order to gain greater clarity

as to how businesses are currently dealing therewith from a strategic change

management perspective.

1.2.3 The need to obtain strategic synergy between emerging technologies and

institutional business systems

The divide that separates business and technical management in most business

institutions is largely one of mental constructs that have evolved within a specific sphere

or discipline of management. Ideally information and related technologies need to

support the day-to-day business processes and activities of the enterprise in order to

improve service delivery and meet the challenges presented by changing client needs



and expectations. Emergent technology has provided management with new highly

sophisticated means to not only manage the enterprise, but also to improve customer

satisfaction. A key strategic consideration within a global business environment is that of

attracting and retaining the organisation’s most profitable client base. It may therefore be

argued that technology is playing a vital role in improving the competitive position of the

enterprise. The problem that essentially exists is one of integrating technology and

business processes to achieve enhanced synergies in managing the day-to-day

operations of the organisation. Many business institutions are as a consequence

spending a significant share of the organisation’s capital resources on state of the art

technology to respond to the business challenges of the information age, yet the return

on the investment in many cases is nowhere near in realising the potential financial

returns envisaged (Battles et al. 1996:116; Dempsey et al. 1997:80).

Technocrats are in essence accused of wanting to unroll state of the art technologies

without consideration of the business and financial consequences involved. In contrast

business executives stand accused of not understanding the significant opportunities

presented by technology in managing the institution’s business operations. Technology

and business systems appear to be two sides of the same coin and the divide that exists

seems to largely relate to the understanding and insight of executives, as to how

technology and business systems interrelate. A fundamental question that if answered

will go a long way in bringing a sense of logic back to the situation that exists, is namely

how will the technology proposal assist the organisation in cost effectively achieving its

business objective?

It needs to be questioned whether many business executives in practice do have the

technical insight and understanding, as to the potential role that information and

communication technology can play in supporting the business operations of their

institutions. Of equal concern is their understanding of how emergent technologies are

reshaping the future business context within which their institutions will function. Martin

(1995:54) contends that in many corporations business executives regard the information

technology organisation as an “alien culture”. In contrast it is argued that information



technology executives are frequently unable to interpret the business imperatives that

seem to motivate the business case for the use of technology in support of business

operations. They also often fail to understand the business process implications involved

in implementing a new information technology system and in particular the associated

human resources issues. In reality it is deemed essential that synergies be attained in

integrating information and communication technology, business systems and the

inherent human aspects involved. Metaphorically they may be seen as three strands of a

rope that are intertwined, their integrated strength being far greater than that of the

individual strands.

Gould (1996:278), in researching contemporary strategic management processes for

change, concludes that previous paradigms of management are too sluggish to respond

to the present day competitive environment of speed, ceaseless innovation and

uncertainty. The global economy has in effect created a competitive landscape of

unpredictability (Ireland & Hitt 1999:Internet). And technology driven business

intelligence systems are increasingly assuming increasing importance in strategic and

operational decision making processes. The underlying rationale of electronic intelligence

systems is one of supporting business analysis in order to more effectively understand

the institution’s operations within a rapidly changing business environment.

Organisational flexibility and adaptability are deemed to be key attributes within such a

business environment and by implication the business systems and processes, including

that of strategic change management, need to facilitate and not inhibit change. Gould

(1996:278), however, argues that most management paradigms have essentially evolved

within a context of reasonable stability. It therefore needs to be questioned whether

information technology and business systems are appropriately aligned, so as to

navigate contemporary business institutions through the storms of unpredictable

contextual change.

Emergent information and communication technology is changing many of the traditional

rules of management and as a consequence the underlying business processes

involved. Hale et al. (1999:16) contend that while functional personnel express business



rules in terms of business processes, information systems professionals view business

rules in terms of constraints that the rules place on manipulating the organisation’s data

resources. Independent of each other these two perspectives fail to acknowledge the

interreliance of business processes and the information systems that support them (Hale

et al. 1999:16). Without doubt a basis for common understanding is thus required, in

order to facilitate communication between the two in problem solving. The accent should

be on finding an appropriate technology-based solution for the business problem

presented, taking both technology and business implications into consideration.

Venkatraman (1991:126) leaves little doubt as to the importance of the linkage that exists

between business strategy and information technology by asserting that “our

fundamental premise is that it is no longer a question of whether IT has a strategic role

but how to exploit IT in strategic management or, more precisely, how to develop

strategy-IT alignment”. From a strategic management perspective it is generally

contended that the information technology strategy must support the business strategy. It

is a contention supported by Boar’s (1994:xi) logical argument that “the I/T organisation

must take actions to align itself perfectly with the needs of the business” and his further

assertion that “the I/T organisation just adapts to accommodate and serve the business,

not the converse, which is the traditional perspective of the I/T technologist” (Boar

1994:2). The latter quotation clearly brings into question the controversy that often exists

between the perspectives held by business and information technology executives. Earl

& Feeny (1995:145-146) believe that it is a controversy giving rise to a crisis of

confidence in the information technology function and the executives thereof. The former

brings into question the nature of the strategic alignment and the means used to bring

the IT function into alignment with the corporate strategy adopted by the institution

concerned.

In practice any business process redesign will in effect flow from the corporate strategy

while the information technology alignment process will be dictated by the information

technology strategy which in turn is aligned to the corporate strategy. The business and

information technology systems are therefore clearly linked in terms of the corporate and



information technology strategy linkages that exist. The question that arises relates to the

complex nature of these linkages and the practical significance thereof within a global

business environment, that is extensively influenced by emerging technological

innovations.

1.2.4 Change management implications in strategically positioning institutions

within a digital global business environment

The introduction of technology-based business solutions for dealing with the

complexities of evolving business realities within a global economy does not come

without unintended consequences. These consequences are often reflected in

resistance to change as people need to move from well-entrenched methods to adopted

new procedures, processes and practices. Business process redesign may well embody

drastic changes in a work flow process, an automation of activities, or even a redesign

of established organisational structures, all of which spells change and more often than

not people feel uncomfortable with change. The only truth that does not change, as the

future unfolds, is that change is rapidly becoming a way of life. This truth is often

encountered within the literature, yet in reality the human complexities involved in

managing change remain as valid today, as ever before. From a strategic management

perspective it needs to be questioned how the human aspects of strategic change

management ought to be dealt with as strategy and the management of change have

become synonymous with the volatile business environment confronting most business

entities.

The relevance of the preceding statement is endorsed by Davenport’s (1999b:1)

contentions that information technologists often assume that “technology will serve as a

catalyst for change”, yet it is a “promise that goes unfulfilled” as “IT managers put too

much emphasis on hardware, and not enough emphasis on the soft science” of how

people deal with change.

It is argued that globalisation, emergent technologies, the new economy and various




related concepts are having a profound effect on the work environment. Boyett & Snyder

(1998:Internet) for instance suggest that “thanks to new technology and the changing

nature of work itself, fully 60 % of the workforce today perform jobs for which physical

location is no longer critical” and the “social contract that promised job security in

exchange for employment loyalty has been broken”. They further accentuate the

emergence of “cross functional, multidisciplinary teams with globally and ethnically

diverse memberships” (Boyett & Snyder 1998:Internet) as constituting a new reality

within a global business environment. The importance attributed to teamwork is

accentuated by various researchers (Block 1991:75; McLagan & Nel 1995:76; Parker

1998:219). Senge (1990:24), however, observes that “all too often, teams in business

tend to spend their time fighting for turf, avoiding anything that will make them look bad

personally and pretending that everyone is behind the team’s collective strategy”. In a

similar vein Martin (1995:26) concludes that “many corporations still have fiefdoms and

compartmentalisation of the past. The corporate barons enjoy their power and try to

preserve it”. The strategic implications of these contentions need to be considered in

reviewing the relevance of the traditional concept of strategic management within a

global business environmental context.

It may be concluded from this brief analysis that in managing the strategic realignment of

business institutions, the people related aspects thereof can no longer be ignored in

managing the associated changes in business processes and technological

infrastructure.

1.3 OBJECTIVES OF THE STUDY

This study has been undertaken with the express purpose of researching and

gaining clarity as to the practice of strategic management within a highly

competitive and volatile global business environment. Specific attention is

attributed to the influence of emerging technologies, business systems and

change management as key aspects of consideration in formulating and



implementing strategy.

To achieve the primary objective, as stated above, the following objectives are

formulated for this study:

Objective 1: To gain conceptual clarity as to the concept “globalisation”, the

characteristic of the business environment that has emerged as a result of the concept,

and the strategic management implications thereof.

Objective 2: To acquire a business directed understanding, as to the scope and nature

of emerging technologies and the influence thereof, as an environmental determinant

impacting on the formulation and implementation of strategy within both public and

private sector institutions.

Objective 3: To explore the linkage that exists between business systems and

information and communication technology from a strategic management perspective.

Objective 4: To achieve greater clarity and understanding as to the change

management implications involved in the strategic realignment of business institutions

within a global business environment.

Objective 5: With reference to the insights gained in realising the preceding objectives,

to acquire an insight and understanding of contemporary strategic management practice

within a global business environment.

The defined objectives are discussed in the ensuing sections.

1.3.1 Objective 1: Gaining understanding of the concept “globalisation”, the

characteristics of the business environment that has emerged

as a result of the concept, and the strategic management

implications thereof (chapter 2)

A tidal wave of innovative information and communication technology developments

have engulfed most business enterprises. One of the most significant developments in

this regard has been the emergence of the world wide web (WWW), or as it has also

become known, the Internet. The world has suddenly become just that much smaller as



a result thereof and distance is no longer a barrier in conducting business transactions or

in transferring information across international boundaries. This has given rise to what

Parker (1998:x) refers to as the global marketplace within the global village. It is a reality

that increasingly will have a significant impact on most business enterprises operating

within a free economy and a democratic business dispensation. Various associated

concepts, such as "e-commerce", the "new economy", the "information age", the "digital

economy", and similar terminology have found their way into management literature and

it is deemed essential that as a point of departure conceptual clarity be attained as to

what is meant by globalisation and the nature of the business environment that it has

engendered. The latter will serve as a frame of reference in analysing the validity of

conventional strategic management practice within a global context.

In order to realise the above stated objective the following issues are addressed in

chapter 2:

Globalisation and the impact thereof on contemporary strategic and business

management practice

A critical analysis of the concept "globalisation" and the perspectives that are held in

relation to the impact thereof on international and South African business institutions

The relationship that exists between globalisation and emergent technologies in

shaping the business or external environment in which organisations function

The characteristics of this environment, from a strategic management perspective.

1.3.2 Objective 2: Acquiring insight and understanding as to the impact of

technology in shaping the business environment of public

and private sector business institutions, from a strategic

management perspective (Chapter 3)

As stated in the introduction to this chapter the accent of the study will be on information

and communication related technologies and the impact thereof on the operations and

activities of public and private sector institutions. These technologies not only support

the business operations of institutions, but are rapidly transforming the business

environment in which the organisations function. It is generally acknowledged that from a



strategic management perspective, both the internal and external environments of any

institution, are key aspects of consideration. With this in mind a fundamental objective of

this study will be to gain clarity as to the influence, scope and nature of the impact of

information and communication technologies on the institutions concerned. In gaining

such an understanding, a strategic business perspective is adopted. An in-depth highly

technological evaluation is, however, deemed to be outside the scope of this study.

South Africa embodies both a first and third world business environment and in

researching the influence of emergent technologies both will need to be taken into

consideration.

An attempt will also be made to gain insight into the strategic, social and financial

implications of emergent technologies. These can indirectly have a significant strategic

impact on South African public and private sector institutions. A case in point being the

future skills that will be required by members of the community in order to be able to be

employed and the influence of technology on the means used for acquiring these skills.

The very nature of the work environment could in future change and this would without

doubt have significant social implications. The social and financial environment has long

been recognised as constituting an important consideration in formulating and

implementing strategy. The indirect social and financial linkages or spin offs of

technology changes need to be taken into consideration in gaining an understanding of

the strategic implications thereof on business institutions.

With the stated objective in mind the following issues are addressed in chapter 3:

The role played by emerging technologies in shaping the external and internal

business environments of contemporary business institutions, from a strategic

management perspective

The impact that emergent information and communication technologies have had

in reshaping the global or external business environment in which organisations

function. While the focus essentially will be on information and communication

technologies, this will not act as a constraint on analysing related or significantly

important other technologies that may arise in the course of the study

The impact of technology on the way business is conducted, from a strategic



management perspective.

The ultimate objective in this chapter may therefore be summarised as one of acquiring a

business directed understanding, as to the scope and nature of emerging technologies

and the influence thereof as an environmental determinant in the formulation and

implementation of strategy within both public and private sector institutions.

1.3.3 Objective 3: Exploring the relationship and interdependencies that exist

between business systems and information and

communication technology, from a strategic management

perspective (Chapter 4)

It is argued that one of the major challenges confronting South Africa executives is that of

strategically integrating business and technology systems into a synergistic entity. In this

regard it is significant to note that Henderson & Venkatraman (1999:472) argue that the

inability to realise value from information technology investments can be directly

attributed to a lack of alignment between business and IT strategy. Boar (1993:xiv)

believes that most information technology professionals are ill-equipped for this

challenge, as they lack the business related skills required. According to Martin

(1995:54) many business executives have equally failed to gain an understanding of the

strategic role of information technology. Findings emanating from research undertaken

by Hill (2000:12) also seems to suggest that in many institutions functional strategies are

compiled without consideration to the essential quality of integration. MacDonald

(1991:310) in similar vein acknowledges that while considerable efforts have been

directed at linking business and information technology strategies, in practice the realities

involved have proved to be rather complex in nature. The importance of exploring the

relationship and interdependencies that exist between business systems and information

and communication technology is underscored by these realities and in this study an

objective will be to gain greater clarity and understanding of the issues involved. An

endeavour is therefore made to find an appropriate model or framework that may be

used for understanding the relationship that exists between corporate and information



and communication technology strategy.

With the above stated objective serving as a frame of reference the following aspects are

addressed in chapter 4:

The strategic alignment of information and communication technology strategy with

the corporate strategy of an enterprise

The need to ensure that synergy is attained in aligning business systems with an

appropriate information and communication technology infrastructure

Business system redesign with reference to underpinning technology determinants

is researched and the human issues relating thereto are analysed from a change

management perspective

Research and either develop or find an appropriate model or framework for

understanding the relationship that exists between corporate and information and

communication technology strategy, with specific reference to the need to gain a

competitive advantage within a highly competitive global business environment.

Clarity is attained as to concept of “value chain management”

Innovation in a technological sense and its influence on business is explored.

1.3.4 Objective 4: Attaining greater clarity and understanding as regards the

management of change in the strategic realignment of

business institutions within a global business environment

(Chapter 5)

A frequent refrain within management literature and at conferences and seminars is the

importance attributed to people as a key strategic resource in the implementation of

strategy. Within a global context, issues of tradition, customs, political, religious,

language and cultural diversity assume increasing importance and need to be taken into

consideration in strategy formulation and implementation. The culture that exists within



the institution itself will also have an impact on strategy and will need to be managed.

The skills required by managers and staff in dealing with the complexities associated with

a global business environment need to be identified and considered from a strategic

management perspective. In dealing with strategic change the question of leadership

assumes particular significance and clarity with regard to the role of leadership in dealing

with contextual uncertainty, from a strategic management perspective, needs to be

revisited.

The human related issues associated with the strategic deployment of new technologies

and business system redesign are quite extensive. A fundamental issue being the need

to manage change, which embodies many human issues that need to be taken into

consideration. Teamwork, knowledge management, and organisational learning have

become synonymous with technology driven business transformation and all require an

understanding of how people interact in adding value to the business operations.

Organisations are in effect webs of human interaction and organisational politics plays a

significant role in such a situation. These are all key issues that will need to be

researched in order to gain an understanding of the human issues involved in the

strategic realignment of an institution within a global business environment. A thorough

analysis of the relevant human resources related issues therefore form a fundamental

objective of this study.

The following issues are addressed in chapter 5 in order to realise the above objective:

Change management implications in the strategic realignment of South African

organisations in response to globalisation

Human resources implications in managing strategic change within a global

business environment

Teamwork across international boundaries, involving people with diverse cultures,

languages and traditions

Knowledge management and the human resources implications thereof

Human resources implications and their interdependencies in meeting the

challenges presented by technology driven globalisation.



1.3.5 Objective 5: Attaining insight and understanding of contemporary strategic

management practice within a global business environment

(Chapter 6)

From the background discussion in this chapter it will have become clear that the

relevance of traditional strategic management practice is questioned within a global

business environment, characterised by extensive competition and contextual

uncertainty. Information and communication technology have played a significant role in

shaping the global business environment and the impact thereof on the strategic

management process is also questioned. The need to align business and information

technology strategies to achieve a synergy that will provide the institution with a

competitive advantage has raised the question of how this is to be achieved in practice, if

business and technology executives live in different worlds of their own. South African

business institutions are increasingly being drawn into the global business environment

and it is deemed essential that a clear understanding be attained as to strategic

management practice within the context of the digital global economy. An important

outcome of the study would therefore be to determine how contemporary strategic

management practice relates to the theory as presented within the literature. Should any

inconsistency between theory and practice be identified an endeavour will be made to

inform theory by means of insight slides.

In realising the referenced objective the following issues are addressed in chapter 6:

Contemporary strategic management practice within a global business

environment

Strategic management theory and practice, as it relates to a global business

environment. The insights and understandings gained during the preceding

chapters are taken into consideration in conducting this analysis

The implication of increasing environmental uncertainty, as a result of

globalisation and the impact thereof on strategy formulation and implementation.

Use is made of insight slides in presenting the findings emanating from the study, with

specific reference to strategic management.



1.4 RESEARCH METHODOLOGY AND CONSTRAINTS

The primary focus of the study is centred on the strategic alignment of technology,

business systems and change management in meeting the challenges of a global

business environment from a contemporary strategic management perspective. The

study being an insight study is essentially analytic-descriptive in nature, the accent being

on acquiring an insight into contemporary strategic management practice within South

African public and private sector institutions confronted with the business realities

associated with globalisation. A key aspect of the study is that it links strategic, business,

change, and information technology management as key domains of analysis.

In the first instance a multi-disciplinary literature study is undertaken to gain a sound

theoretical understanding of the concepts, issues and management practices involved.

Theory formation is followed by a critical analysis of contemporary strategic management

practice. The theoretical foundation established during the literature research forms a

frame of reference for the empirical study. A down-to-earth pragmatic strategic

management perspective is achieved by means of open-ended interviews with senior

South African executives and managers, the objective being to learn from the personal

insights they have acquired, from hands-on experience, in dealing with the strategic

issues on a day-to-day basis. Where possible appropriate case studies are used to gain

an insight into management practice. It is intended that the information gained from the

case studies will complement the insights gained from practitioners.

1.4.1 Literature study

The literature study is based on the most recent literature available in the fields of study.

It includes inter alia books, journals, academic dissertations, and literature available in an

electronic format, obtained via the Internet from reputable academic, government,

business and various research institutions. The literature relating to the impact of

information and communication technology on globalisation is restricted to the 1990's

and period subsequent thereto and the associated literature in this regard is therefore



essentially limited from a time period perspective. The strategic management literature

is far more extensive in nature, as it evolved in response to a changing business

environment over a number of decades and due cognition therefore needs to be

attributed to the context in which the literature evolved.

The scope of the literature study cannot be restricted or contained within a specific

discipline, in view of the nature of the research problem which extends across diverse

disciplines ranging from strategic management, to information and communication

technology, organisational culture, futures research, business process redesign, total

quality management, organisation development and human resources management. The

literature study is therefore multi-disciplinary in nature in order to gain an in-depth

understanding of the research issues, as defined within the problem statement.

Internet based electronic information sources needed to be restricted to acknowledged

academic, professional, government and business institutions of repute. Typical

institutions being the World Bank, International Monetary Fund, International Labour

Organisation, university research facilities, and business and information technology

consultancy firms such as Forester, Gartner and IBM.

The literature search was conducted with the aid of information obtained from the

following sources:

Internet search engines such as ananzi.co.za, goto.com, google.com,

webcrawler.com, and yahoo.com

The "Akbar" periodical index

Literature lists compiled by the subject librarian at the Rand Afrikaans University

Literature lists included in the various publications consulted

Internet links and references provided for accessing related information at websites

accessed in conducting the literature study

The computer-based library subjects catalogue of the Rand Afrikaans University,

Pretoria University, and the University of South Africa.



1.4.2 Personnel interviews

Information and communication technology has without doubt played a significant role in

shaping the business environment of both public and private sector institutions. A key

characteristic of this environment is the difficulty experienced in predicting the future with

any degree of certainty. Globalisation has further increased the competitive forces to

which many of these institutions have been subjected. Strategic management practice

tends to have evolved within a context of reasonable stability and it is questioned if

traditional theoretical strategic management models are still of relevance in dealing with

the complexities of the modern day business environment. The study being an insight

study is directed at gaining a practical understanding of contemporary strategic

management practice by learning from first hand experiences of South African

executives and managers. Personal interviews are therefore conducted with senior

executives and managers from public and private sector institutions within South Africa.

It is maintained that these managers are increasingly being confronted with the realities of

globalisation and the associated increase in competitive forces. The challenges they face

in a volatile business context requires a new strategic approach. The information obtained

provides an ideal basis for conducting a comparative analysis between theory and

contemporary management practice.

The interviews with the executives and senior management of the selected institutions

were conducted on a semi-structured basis, utilising the insights gained from the literature

study as a frame of reference for conducting the interview. It needs to be stressed,

however, that the insights acquired from the literature study merely serve as a source of

reference and it cannot be allowed to act as a constraint in learning from the personal

experiences of the people concerned. The respondents were therefore free to

concentrate on the aspects they deem to be critical in dealing with the relevant strategic

issues they are confronted with in reality. With this in mind the interviews were essentially

conducted on an informal, but semi-structured basis with an accent on flexibility. The

interviews were therefore for all practical purposes open ended and not rigidly structured

in accordance with a predetermined questionnaire that could act as a constraint in



learning from the personal experience of the respondents.

The respondents interviewed were essentially selected on the basis of the institutions

where they were employed. The private sector institutions were functioning on a global

basis or their business operations were subjected to the competitive realities associated

with globalisation. The public sector institutions were similarly selected on the basis of

the impact that emerging information technology and the global business environment

had on their operations.

Strategy is deemed to be a sensitive issue in many organisations and the respondents in

effect receive little benefit from granting an interview. The researcher is therefore

dependent on their goodwill. In instances where respondents for personal or business

reasons indicate that they would prefer to remain anonymous, they are referred to as

respondent A or B so as to identify the respondents without divulging their names or the

identity of their institutions. To ensure that their anonymity does not influence the

academic integrity of the study the respondents names will be divulged to the promoter

and will be available on request to the examiners of the study on a confidential basis. In

addition, the information obtained from these respondents will be cross referenced and

cross verified with information obtained from the other respondents interviewed and the

literature study. The accent in analysing the information obtained during the interviews

will be on identifying commonalities and trends that either confirm or contradict the

conclusions derived from the literature study.

So as to gain maximum benefit from the practical day-to-day experiences of people

dealing with real life issues of strategy implementation, use will also be made of case

studies, as recorded within the literature to further enhance the practical relevance of this

study.

1.4.3 Constraints to the study

The concept globalisation is a relatively new phenomenon and the research literature

relating thereto is therefore still in the process of coming into being, this study being an

example thereof. The available literature also covers a wide spectrum of disciplines



typically ranging from global economics, to international politics, strategic management

and the social sciences. In order to conduct the study it is therefore necessary to view the

strategic issues from alternative perspectives within various disciplines. While enriching

the understanding attained of the concept it, however, adds to the complexity and

confusion that exist in relation thereto. It needs to be noted that this study in adopting a

multi-disciplinary approach that embodies globalisation and information technology as a

key aspects of research, is venturing into a sphere of exploration that is relatively unique

from a strategic management perspective.

Information and communication technology is essentially analysed within the literature

from a technical and not from a business perspective. Literature integrating the two

appears to be restricted in scope and extent. The latter in particular acts as a constraint

to this study. Business and information technology executives also tend to focus on their

discipline related perspective of information and communication technology, thereby

adding to the complexity of gaining an insight and understanding of the strategic business

and technology alignment. This will need to be taken into consideration in conducting the

interviews and selecting the appropriate respondents able to shed light on the true

situation that exists in practice.

While noting the restriction that the above places on this study, both the issues

concerned are not deemed to be so pervasive as to significantly influence the findings of

this study. Being aware of the difficulties that may arise, will allow the researcher to place

greater emphasis on overcoming and addressing the difficulties concerned. Of particular

note in this regard, is the use made of interviews with South African executives to gain an

understanding of contemporary strategic management issues within the context of

information and communication technology.

The value of this research study to a large extent emanates from addressing globalisation

and emergent technology, within a strategic management context where the concepts

are relatively new. The very factors that act as a constraint on the study therefore add to

the contribution it makes within the field of strategic management. The objectives

formulated for this study all culminate in providing insights into how strategic



management practice has been impacted on by globalisation, emerging information and

communication technology, change management issues and business process redesign.

1.6 CLOSURE

The volatility of the global context in which South African business institutions function is

clearly articulated in the socio-political and economic developments that were evolving as

this study was being undertaken. The September the 11th 2001 terrorist attack on the

twin towers building in New York and the ramifications thereof on the world economy

being a clear example of the volatile nature of the global context, in which business

enterprises function. At the time of concluding this study these ramifications and the

effects thereof on the world economy are still being experienced. The following chapter

therefore needs to be seen in the context of the time that the research study was

undertaken, namely from the year 2000 to the early part of 2002.

key determinants in strategic realignment within a …

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