AIM Research Working Paper Series USING STRATEGY TOOLS IN ...

AIM Research Working Paper Series

USING STRATEGY TOOLS IN PRACTICE – HOW TOOLS MEDIATE STRATEGIZING AND ORGANIZING

Sarah Kaplan Paula Jarzabkowski

047-August-2006 ISSN: 1744-0009 1 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

Sarah Kaplan University of Pennsylvania, Wharton School 3620 Locust Walk, Suite 2019 Philadelphia, PA 19104, USA +1-215-898-6377 [email protected]

Paula Jarzabkowski Aston Business School, Aston University Aston Triangle, SW1010 Birmingham B4 7ET, UK +44(0)121-204-3139 [email protected]

August 2006

2 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

USING STRATEGY TOOLS IN PRACTICE – HOW TOOLS MEDIATE STRATEGIZING AND ORGANIZING ABSTRACT Recently there has been much debate about the usefulness of strategic management education and implicitly about strategy tools and frameworks. Yet, this debate is taking place in the absence of detailed knowledge about how, or indeed, whether, managers use the theoretical tools that they learn. This paper addresses this gap by taking a practice perspective to look at how strategy tools are engaged by different actors in mediating strategizing and organizing processes. Based on an ethnography of strategy making inside one firm, we explore how an actor’s search for rationality and objectivity through the use of tools is actually a political, symbolic and socially interactive process. Drawing on the boundary object literature, we provide a conceptual framework for analyzing strategy tools as key mediators of these contextual and political interests.


INTRODUCTION In business schools, when we teach strategy we introduce students to a number of strategy tools – such as five forces (Porter, 1980), the seven S’s (D'Aveni & Gunther, 1994), strategic group maps (McGee & Thomas, 1986), or the BCG growth-share matrix (Henderson, 1979). Recently there has been much debate about the usefulness of this kind of education and implicitly about these kinds of tools (Baldridge, Floyd, & Markoczy, 2004; Mintzberg, 2004; Pfeffer, 2004; Shepherd, Chia, Pfeffer, Wensley, & Donaldson, 2004). Yet, this debate is taking place in the absence of detailed knowledge about how, or indeed, whether, managers use the theoretical tools that they learn. This paper addresses this gap by taking a practice perspective (Orlikowski, 2000; Schatzki, Knorr-Cetina, & von Savigny, 2000) to look at how strategy tools are engaged by different actors in mediating strategizing and organizing processes. Consistent with Weick’s (1979) call to conceptualize organization through the use of verbs and gerunds, strategy making is increasingly seen as ‘strategizing,’ a dynamic process that is socially accomplished by multiple actors, rather than as discrete phases of strategy formulation followed by implementation (Jarzabkowski, 2005; Johnson, Melin, & Whittington, 2003; Mintzberg, 1978, 1990). From this perspective, strategizing is interwoven with organizing, as the organizing processes through which strategy is coordinated and implemented are also part of its unfolding evolution (Pettigrew & Fenton, 2000; Sanchez-Runde & Pettigrew, 2003; Whittington & Melin, 2003). At the same time, dynamic views of organization have illustrated how organizing capabilities are intrinsically associated with strategic capabilities (Brown & Eisenhardt, 1997; Rindova & Kotha, 2001). However, little is still known about 4 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

the micro practices and processes through which organizational members interact within the strategizing process and what implications this interaction has for understanding how strategic choices get made in organizations. Our paper explores one aspect of this problem: the use of tools in making strategy. The research was based on an ethnography of strategy-making in CommCorp, a multidivisional telecommunications equipment manufacturer.1 The study was conducted during the crash in the telecommunications market in the early 2000’s. Setting the research within this high velocity environment (Bourgeois & Eisenhardt, 1988) should expose dynamics that would be buried beneath the surface during more stable periods (Meyer, Gaba, & Colwell, 2005) in particular by making more visible actors' efforts to make strategy, and to mobilize strategy tools for this process. In this context, we found that managers used various tools to help them resolve uncertainties, understand the market and technology, map out the existing project portfolio, and ultimately inform strategic choices about investment. While some of these tools were standard ones taught in MBA programs (such as the aggregate project plan, a tool originally proposed by Wheelwright and Clark (1992) and called the “bubble charts” by CommCorp actors), interestingly others were ones that the managers developed on their own (such as a new project analysis tool they called the “business evaluation and screening tool” or “BEST”). In this paper, we will examine in-depth and compare two episodes of strategy tools-in-use – the episode of the “bubble charts” and the episode of the introduction of the “BEST” tool. Our interest is not primarily in the tools

1

The names of the company, of the informants and of specific technologies and tools have all been disguised. 5 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

themselves but in analyzing how they get mobilized by actors and mediate interactions between actors within the strategy making process. Tools are artifacts around which activity and organizing takes place (Bechky, 2003; Beunza & Stark, 2004; Orlikowski, 1992; Vaughan, 1999). In this paper, tools are conceptualized as boundary objects that mediate the initiation and implementation of strategic initiatives across boundaries within organizations. The paper makes two contributions to the literature on strategizing and organizing. First, empirically it interprets the interdependence between strategizing and organizing as a socially situated practice, in which context and vested political interests play an important role in defining what is strategic, how strategy should be operationalized, and whose views count. We explore how an actor’s search for rationality and objectivity through the use of tools is actually a political, symbolic and socially interactive process. Second, by drawing on the boundary object literature, it provides a conceptual framework for analyzing strategy tools, which have been largely ignored in the literature, as key mediators of these contextual and political interests. The paper also makes two contributions to the literature on boundary objects, which has largely dealt with the role of boundary objects such as blueprints, drawings and design prototypes in workplace jurisdiction, particularly in the area of new product development (Bechky, 2003; Black, Carlile, & Repenning, 2004; Boland & Tenkasi, 1995; Carlile, 2002). First, our study shows that boundary objects may be more contested and more politicized than these studies illustrate. Our study thus emphasizes the language games in which boundary objects are engaged (Astley & Zammuto, 1992), elaborating and extending their pragmatic dimensions (Carlile, 2002). Second, we show that 6 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

the boundary objects used in strategizing tend to have greater interpretative flexibility (Orlikowski, 1992) than those previously analyzed. We suggest that this flexibility is an important feature of boundary objects employed in strategic contexts and that it may be associated with the uncertainty of the strategy making task. These findings suggest that for those of us who teach strategy or develop strategic tools or frameworks, we may want to rethink our task. Rather than tools being the answer to strategic problems, they may more usefully be conceptualized as spaces for debate and dialogue and a means to bring actors with very different viewpoints and interests together in a way that strategic choices can be made. For managers making strategy, tools should not be regarded as a means to eliminate politics or emotions from decision making by introducing something objective or rational, but rather as one means for surfacing assumptions, asking the tough questions and achieving alignment of different interests within the organization. This view is consistent with the idea that strategy is not a thing in and of itself but rather an emergent process (Kaplan & Beinhocker, 2003; Mintzberg & Waters, 1985).

LITERATURE REVIEW: STRATEGY-MAKING, TOOLS AND BOUNDARY OBJECTS What We Know about Tools and Why They are Useful/Used

Strategy-making is a challenge for managers because it is always done under conditions of (greater or lesser) uncertainty. The environment never presents itself as a clear and unambiguous signal. Indeed, much of the information needed for making strategy may be unclear or conflicting. As strategy is about the future, there will always be an aspect that cannot be known, so that setting 7 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

a strategy means deciphering existing information and deriving a point of view about what to do. Such uncertainty can result in myriad interpretations about what is going on and what should be done (Louis, 1980). This heterogeneity of views emerges when people from multiple social worlds – different functions, different career histories, or different roles – within the organization engage in interpretation about the uncertain environment (Kaplan, 2005). Strategy tools have been developed to help managers deal with the uncertainties they face when making strategy. Astley and Zammuto (1992) suggest that managers draw upon management tools, theories and terminology precisely because of this ambiguity. Such tools provide actors with a means of categorizing activities, structuring context and providing a framework for action (see also, Fiol, 1989), especially under conditions of uncertainty and ambiguity. While an important component of any MBA education, we know little about how these tools are deployed inside organizations in the day-to-day practices of managers making strategy (Whittington, 2006). Existing research suggests that managers do use tools in their strategy making processes (Clark, 1997; Frost, 2003; Grant, 2003; Orndoff, 2002; Rigby, 2001; Tapinos, Dyson, & Meadows, 2005). Such research shows that tools are used during situation analysis and evaluation of strategic choices, indicating that managers draw upon tools to support ostensibly rational processes of strategic decision-making. However, this research also shows that strategy tools are used to encourage the generation and communication of ideas and to facilitate dialogue (Chesley & Wenger, 1999; Grant, 2003). The findings indicate that managers draw upon and continue to use tools beyond their specific application to the strategic 8 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

evaluation and decision process. Furthermore, managers do not always select the most appropriate tool for each situation, but tend to rely upon simple, familiar tools (Clark, 1997; Rigby, 2001; Worren, Moore, & Elliott, 2002). The use of tools in organizations may thus not simply be for rational, informationseeking and analytic purposes. Rather, social processes may be at play in their selection and use. However, the existing research is primarily at the aggregate survey level, providing little fine-grained understanding of how or why managers use strategy tools in their day-to-day strategizing activities. This paper aims to address this lack of knowledge on how and why people use strategy tools as part of the social practice of strategy-making. Tools as a means for formal analysis

While not specifically devoted to understanding the use of strategy tools in practice, research on the use of formal analysis and accounting procedures within organizations suggests that in practice these techniques are not just used for informational purposes, but for communication, direction, control, and legitimization of activities (Denis, Langley, & Rouleau, 2005; Feldman, 2004; Gephart, 1997; Langley, 1989; Nahapiet, 1988). The use of formal analysis is conceptualized as a search by actors for rationality in a culture (and here we are talking about a Western culture) that values rationality as the basis of thought and action, conduct formal analysis (Feldman & March, 1981). From this perspective, rationality is contrasted with politics, the former being a positive and useful feature of decision-making and the latter being seen as counter-productive (Dean & Sharfman, 1993; Dean & Sharfman, 1996; Eisenhardt, 1989). Objectivity is seen as a way to take politics out of


decisions; the decision-maker can distance herself from the decision by attributing it to the tool (Power, 2004; Power, 2003). However, this search for rationality or objectivity has complex, social manifestations and outcomes in which the search for rationality cannot be separated from politics. These techniques are not neutral but rather the outcome of the interests and viewpoints of multiple actors within the organization (Feldman, 2004; Gephart, 1997; Nahapiet, 1988). Using formal analysis helps actors convey an appearance of rationality to the external world and thus provides legitimacy for the choices advocated (Feldman & March, 1981). It also provides its users with a feeling of rationality (Pondy, 1983), enabling them to act, particularly when faced with ambiguous or uncertain conditions (Astley & Zammuto, 1992). Actors use formal analysis in their search for rationality, providing them with the confidence to act, giving them symbolic tools to influence others’ actions, and, particularly, providing a basis for actors to collectively manage their diverse interests in a particular decision or action. Formal analysis is portrayed as a symbolic, political and socially interactive process for establishing common ground between diverse actors (Blackler, 1993). Indeed such techniques can be organizationally useful because they provide a space for discourse (Nahapiet, 1988), offer a means for making assumptions explicit (Denis et al., 2005) and make action possible where there is a plurality of views or high ambiguity (Porter, 1995). Such research on formal analysis in organizations provides us with an initial lens through which to examine the use of strategy tools in practice.


Tools as boundary objects in use

The perspective on formal analysis and accounting techniques portrayed above resonates quite closely with theories on the role of boundary objects within organizations. In conditions of heterogeneous social worlds and uncertainty, boundary objects are the “common coin” that actors adopt or devise to “translate, negotiate, debate, triangulate and simplify in order to work together” (Star & Griesemer, 1989: 389). Boundary objects are “flexible epistemic artefacts [sic] that inhabit several intersecting social worlds and satisfy the information requirements of each of them” (Star & Griesemer, 1989). Existing research has identified various artifacts as boundary objects in different contexts, such as engineering drawings (Bechky, 2003), machines (Bechky, 2003; Carlile, 2002), technologies (Black et al., 2004; Carlile, 2002) and charts (Sapsed & Salter, 2004). The situated conditions of a community are thus pertinent to understanding what constitutes a boundary object and how it is used to articulate and share that community’s situation-specific knowledge. Star and Griesemer (1989) propose that organizations may have both designated boundary objects and boundary objects-in-use. Designated boundary objects are those artifacts that are designated as valuable for knowledge articulation and sharing because of their design and properties, whereas boundary objects-in-use are those that, with or without designation, are used because they have some local relevance and may be used to establish a common identity between communities. Levina and Vaast (2005) extend this notion by suggesting that designated boundary objects may be less useful for actors to share knowledge than boundary objects-in-use. Their 11 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

study showed that organizationally designated boundary objects such as strategic plans were of less value for actors than the scenarios that they developed as boundary objects for generating and sharing a common identity. What constitutes a boundary object-in-use is thus situated within the practice of a community, rather than reified within the boundary object itself. Carlile (2002; 2004) proposes that these differences in use are occasioned by the different nature of the boundaries at which objects are used. At syntactic boundaries, a boundary object that is capable of sharing a common language across communities will suffice. For example, software systems integration requires a common syntactical language across boundaries. Semantic boundaries occur when the different interpretative frameworks of different parties necessitate a boundary object that can adequately represent and translate different meanings into a shared framework. At pragmatic boundaries, parties have different interests that must be represented and transformed into shared interests through collaboration in constructing a boundary object. These different types of boundary suggest possible reasons for the perceived value of designated boundary objects or the generation of situated boundary objects-in-use. For example, designated boundary objects are likely to be suitable where the conditions of knowledge sharing are stable and known, such as at syntactic boundaries. However, under semantic and particularly pragmatic boundary conditions, stable objects with given properties are less likely to be valued. Rather actors will seek to modify the object according to the situated interests of different participants, developing boundary objects-in-use that are actively under construction. Semantic and pragmatic boundaries that require the active construction of boundary objects 12 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

are more likely to occur under conditions of novelty, such as that present in new product design (Carlile, 2004; Levina & Vaast, 2005). During their construction, boundary objects-in-use embed the knowledge of their creators within an artifact that is external to any one actor, constructing some common representation of different actors knowledge and interests that enables collective action (Levina & Vaast, 2005). This growing body of research indicates that the use of boundary objects is situated and derives value according to the practices and interests of different communities, being particularly prone to construction under novel conditions. However, little is still known of how and why a community selects a particular boundary object and how the object itself is transformed during use in order to enable a community to act collectively. Rather, the literature has focused primarily upon designated boundary objects in the transfer, translation and transformation of organizational knowledge between communities. Such research notes the tensions that occur in using designated boundary objects but also presents a somewhat reified view of boundary objects as pre-existing artifacts through which knowledge can be shaped rather than providing insight into how the objects themselves are constructed in use, even as the participants construct their knowledge. We suggest that a more micro investigation of how actors select a boundary object as a means of constructing their knowledge and how they iteratively construct both the object and their knowledge through use will provide a deeper insight into the nature of boundary objects-in-use and their association with knowledge generation. In this paper, based upon our analysis of the data, we propose that the concept of boundary objects-in-use provides insights into how and why 13 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

strategy-making teams use strategic analysis tools under conditions of uncertainty. Drawing together our concept of strategic analysis tools as boundary objects-in-use and the literature on formal analysis as a means of seeking rationality, we propose to examine the everyday social practices through which actors select and use such tools to generate meaning about strategic actions when faced with uncertainty, how they define the boundaries of their own actions, and how they construct their expectations about the input of other actors.

EMPIRICAL LENS Research setting

Our research was based on observations of strategy-making in the Advanced Technologies

Group

(ATG)

of

CommCorp,

a

multidivisional

telecommunications equipment manufacturer and prominent player in the communications technology industry. Studying specific practices within one organization is appropriate for these purposes because of the interest in examining

the

micro

mechanisms

associated

with

making

strategy

(Dougherty, 2002; Pettigrew, 1987; Tsoukas, 1989). At the time of the research, the company was experiencing a crisis associated with the crash in the Internet and telecommunications markets. Despite the economic downturn, technologies continued to change rapidly, generating a great deal of uncertainty, ambiguity, and confusion about such strategic issues as technology investments, product design, market segmentation, and business models. This “high velocity environment” (Bourgeois & Eisenhardt, 1988) was particularly suited to an analysis of strategy-making because so much was in flux. Setting the research during the turbulent time of intense uncertainty 14 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

exposed dynamics that would be buried beneath the surface during more stable conditions (Meyer et al., 2005), in particular by making more visible the tensions in actors’ day-to-day practices. For the purposes of this analysis, we focused on the use of strategy tools in actors’ strategy-making activities. Given our framing of strategy tools as boundary objects, this uncertainty furnished the conditions for tools to be constructed as boundary objects-in-use for actors to surface their different interests and interpretations of strategy. ATG was charged not just with developing technologies but making sure that these technologies had direct relevance to the market and to internal customers (the business units). As a result, while the organization was mainly composed of technical personnel, it also included two groups of economic analysis and marketing staff to help shape the business cases for each project. All investment decisions in the ATG organization were subject to a fairly democratic decision-making process in which projects passed through a Steering Committee made up of technical personnel that reviewed and shaped projects until they were ready to advance to senior management for a decision, and an investment Review Board made up of the group’s senior management team that had the formal responsibility of approving and monitoring projects. (See Figure 1 for an organization chart with memberships in each of these groups indicated.) These decision-making groups felt challenged by the major disruption in the market and often expressed their feelings of being at a loss about what to invest in for the future given the tremendous uncertainties they faced. As such, many were actively seeking tools that might help sort through the confusion and give guidance on


investment decisions. In this paper, we examine their attempts to use two different tools to resolve these tensions. -- Insert Figure 1 about here -Data collection

The approach to data collection on practices was ethnographic (Agar, 1980; Van Maanen, 1988). We wanted to examine how strategy was made from multiple angles and through multiple methods. We relied heavily on observations of everyday activities, using interview and documentary sources of data to examine and amplify the insights generated. The goal in our research was to get close to the activities of participants (Emerson, Fretz, & Shaw, 1995) in order to understand the practices of strategy-making in the ATG organization within CommCorp. The data were collected over eight months from April to December 2002 and included over 80 formal, unstructured interviews, observation of more than 30 formal and informal team meetings (from two hours to two days long), and collection of related documentation (in addition to PowerPoint presentations, we also collected spreadsheets, e-mail exchanges, agendas, and minutes of meetings). The goal of this approach was to surface multiple overlapping sources of data which allows us to develop a grounded theory strategy tools in use in the practice of making strategy (Glaser & Strauss, 1967). This field work covered a large range of scheduled meetings related to various strategy projects as well as all of the meetings of key decision-making groups. In addition, the onsite field work captured many informal meetings that took place by chance (e.g., as people passed each other in the hallway). Interviews were conducted with participants across several strategy projects as well as other members of 16 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

the senior team within ATG. Nearly all interviews were recorded and transcribed.2 In addition, detailed notes made during interviews and meetings were written up within a day. Analytical approach and representation of findings

The analysis followed the principles of inductive, grounded theory (Dougherty, 2002; Eisenhardt, 1989; Glaser & Strauss, 1967). The focus of the data collection was on the strategy making process overall. While the use of strategy tools was not identified prior to the research as a focal area of inquiry, the obvious interaction and struggles participants had over tools in their daily strategy-making efforts made it an important subject for analysis. Thus, following Engestrom’s (2003) exhortation to “follow the object,” we used the mobilization of strategy tools by CommCorp actors as a lens through which to view the ethnographic data. This first round of coding suggested an initial list of themes and codes for a more in-depth analysis of the data – an approach to content analysis where the themes are suggested from the data rather than being imposed from the outside (Agar, 1980). We iterated between data, emerging codes, and the related literature to settle on themes and relationships. In this paper, we represent our observations by providing detailed evidence from two important episodes in CommCorp strategy making. These episodes are representative of the larger set of observations and provide the reader with a set of comparisons regarding the mobilization of strategy tools within the organization. As Carlile (2002) points out, using episodes or “vignettes” to represent a larger collection of findings is a valid means for offering a 2

Two interviewees were not comfortable being recorded, and for these interviews, detailed notes were taken. 17 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

representative sample of the larger study while being fully descriptive of the practices observed. We chose these two episodes because they are representative of different ways of selecting and using tools that are faithful to the wider data set. By presenting detailed accounts of representative episodes, we are able to show the different ways that tools are used in practice (Golden-Biddle & Locke, 1997). The first episode involved the introduction of a standard tool in strategic management, the “aggregate project plan” originally proposed by Wheelwright and Clark (1992). This is a tool common in the management of technology that plots projects or products in a matrix with two dimensions, the extent of product and process changes required. Those projects with low change on both dimensions were line extensions, with moderate change were “next generation” or “platform” projects, and high change were considered “radical breakthroughs.” It was introduced to the organization through an executive education program at a top business school which several of the senior managers had attended and became known within the organization as the “bubble charts” because it involved locating different projects in a two-by-two matrix using round circles or bubbles for each project. The second episode involved a tool that one manager developed internally to simplify the return on investment analysis procedure. It was called the Business Evaluation and Screening Tool, or “BEST,” and evaluated projects by providing ratings on a 0-3 scale of various business and technical criteria. By analyzing and comparing these two episodes, we can usefully explore the day-to-day practices of tools-in-use in one organization.


EPISODES OF USING STRATEGY TOOLS IN PRACTICE In 2002, the time period of observations in the ATG organization of CommCorp, the company was faced with tremendous strategy-making challenges. The telecommunications market was in crisis, the company’s financial performance was dismal, and the future of optical communications was in question. All of these problems called into question the technology strategy for CommCorp, a strategy which was the responsibility of the ATG organization. When Brad Copeland took over as head of the Advanced Technologies Group in 2001, his first order of business was to realign the portfolio

and

cut

costs

to

reflect

the

dramatic

downturn

in

the

telecommunications equipment business. By mid 2002, he was beginning to think beyond the short term demands of the environment to rebalance his portfolio again. The challenge that Brad Collins and his senior team faced was to develop a strategy for ATG and therefore a technology strategy for CommCorp that was both sensitive to emerging technology developments as well as responsive to market and economic realities. Max Kagan, the head of Administration for ATG, argued that “One of the biggest problems we have, in my view (and a lot of others), is that we lack a strategic vision.” As the strategy was manifested in resource allocation decisions about which technology development projects to fund and with what level of resources, shaping the portfolio was the means by which they set strategy. But, this effort was made more complex by a lack of knowledge about which analytical tools might help reach answers. As Terrence Smith, the head of marketing within ATG said:


We are making a lot of program decisions. We are going to create a team of people that are going to look at the business dimensions, at what the return is. We are going to have marketing people and economists and business planners. We are going to put a business planner in with the technology Steering Committee because we would not want to make a technology decision that did not have some wellfounded reason and rationale on business. Those are all ramifications of doing this [change]. When we got into this racket a couple years ago, the philosophy was that we wanted to be more like a VC [venture capital firm]. We wanted to look at this from an investment prospective. So one of the things the VCs do is look at the return. Well, we do not have any mechanisms for looking at returns. It has been this hugely cumbersome model ROI [return on investment] analyses.

The approach Terrence describes also meant that people from multiple different social worlds within the organization (marketing, economists, business planners, technologists, etc.) would have to interact in the process of making strategic choices about the programs and portfolio. Because of this heterogeneity, the actors were searching for tools (ideally less cumbersome than the ROI analysis Terrence described) that might facilitate cooperation and analysis. While many of the actors were not well-versed with strategy tools, they were attracted to the idea of using them to help make strategic choices about the portfolio. As one senior scientist within ATG noted, the company “is an engineering organization with engineering values and engineering analysis. You have to persuade people analytically.” Tools would 20 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

thus provide a means, in their view, of objective analysis that would reveal the “right” answer. The two episodes described below represent different attempts by members of the organization to introduce tools to help make choices about the portfolio of projects. Table 1 summarizes the intended purpose, actual benefits perceived by actors and challenges faced in the use of each tool.

-- Insert Table 1 about here -Episode I: The “bubble charts”

As part of his effort to change the ATG organization, Brad had embarked on an effort to upgrade the business and strategic skills of a number of the key players in his organization. This primarily took the form of sending them to a two-day course on technology strategy at a leading U.S. business school. Chris Chang, who had recently been promoted from a more technical position to a director level role in “economic analysis,” attended the course in the spring of 2002 where he was introduced to Wheelwright and Clark’s (1992) aggregate project plan matrix (which he called the “bubble charts”). This tool, shown in Figure 2, was a means to map out the balance of innovation efforts in an organization’s project portfolio according to the degree of product and process innovation. In the fall of 2002, Brad announced that he would bring together his entire senior management team at the end of October to discuss the strategy for the Advanced Technologies Group and to think about realigning the project portfolio. Chris proposed to Brad that he would use the bubble charts to analyze the current portfolio. -- Insert Figure 2 about here -His first step was to adapt the matrix according to his perceptions of the analytical needs of ATG. He selected “product reach” and “market reach” for 21 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

the axes and decided the size of each bubble should represent the level of investment in the project. To plot the size of each of the bubbles, he used the budget for the project for the previous two quarters. While he felt that this was not a perfect measure of size, it was the only data that he was able to obtain. After some intense days of work, he sent the charts along to Theresa, who in her role as the head of the Steering Committee process had a perspective on each of the projects. When she saw the charts, she strongly disagreed with the placement of the projects and the measures used to size the bubbles. But, she did not see the materials until shortly before Brad’s senior management meeting and was not able to invest in “correcting” the charts according to her views. At beginning of the senior management team meeting on strategy (where the bubble charts are introduced), Brad outlined the purposes of ATG and of the current meeting. ATG’s role within CommCorp was to “expedite product line development” and “develop disruptive technologies to replace existing businesses.” He recognized that CommCorp (and ATG) pulled back over the prior 18 months because of the crisis in the market, but now he felt they need to expand their horizon. In reviewing the agenda, he suggests that the specific outcome of the meeting would be: “an agreement as to how the weighting of technology investment is going to be moderated. The status quo is not an option. We need to take more risk. It will be an ATG rebirth.” Chris then presented the aggregate project plans to the rest of the management team. Brad was dissatisfied because Chris’ version showed too many projects in the upper right quadrant (more radical innovation). He stated that the Advanced Technologies Group had no “Hail Mary’s” (meaning major new technology 22 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

projects that would take CommCorp in a radically new direction by changing the basis of competition) and should have some. He wanted the chart to prove his point, and to the extent it didn’t, he wanted the bubbles moved so that the point was clear. Others in the meeting debated the placement of certain projects, moving them from more incremental to more radical positions or the reverse. These conflicts about the placement came in two forms: either people felt that the dimensions on the axes of the chart were wrong and therefore did not capture the ways in which a particular project would have impact, or they felt that the projects were placed incorrectly given the dimensions that existed. A long discussion ensued in which they debated about which were the right dimensions. Were product reach and market reach the right dimensions? Or should they consider other important factors such as technical reach, CommCorp internal change requirements, competitive edge established, cost reduction impact, risk, or return? Chris proposed that they redraw the bubble charts using multiple different dimensions and then compare different charts to see the different messages that would emerge. Vince Weston got up at the whiteboard and argued that the ultimate measures should simply be risk and return and these would encapsulate all of the other factors. Many felt that it could be a waste of time or a lot of work to do several versions of the charts. The second debate was about how the size of project should be measured: current budget would capture the current balance of investment, total budget would be better for an overall risk/return picture; potential impact would capture the benefits. They also weren’t sure whether the evaluation should take place at the project or the “thrust” level (groups of several projects in one activity area). There was lots of confusion about the tool itself, questions 23 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

which Chris wasn’t prepared to answer as he was not deeply familiar with it (having only been exposed to it in the course). Quite a few people questioned how these tools would help them manage the portfolio. They weren’t sure that it made sense just to look at having an even mix of projects in the various quadrants without considering how that might match with an overarching strategy. Frustrated with the discussion, Brad finally said that he wanted to revisit it in a conference call in November in which they would all get together and just place the bubbles in the right positions. Theresa was tasked with preparing for this call (despite the fact that Chris had initiated the analysis). After the meeting, Theresa noted that developing the “correct” charts would not be as simple as Brad wanted it to be. They couldn’t just do it over the phone without detailed preparation beforehand. Theresa had wanted to take over the analysis because she felt that she knew more about the projects and would be better equipped that Chris to get the charts “right.” But, she recognized that it would be a lot of work and that she would have to spend a lot of time getting people on board with the conclusions. After the meeting, Theresa recounted her experience with the tool this way: “Like any exercise, if you have not thought about it for more than five minutes, you are going to have to do work on it. [Brad] says an hour and a half, but that is an hour and a half after I think about the terms, define them, put together a matrix and examples within it and actually test it with the [Steering Committee]. I keep saying that – and it drives me insane – that this thing is a tool, and it will not be the answer, the easy answer for all of our problems. It gives you a big aggregate 24 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

picture of the way the things sit, and then you can say, ‘I am uncomfortable that there is not enough stuff here.’ …If I am looking for return on investment, I need to see return on investment. If I am looking to see whether I am investing enough in a certain area, enough radical stuff, then the size of the bubble matters. If you have 50 one-dollar projects, you say, ‘oh 50 is enough,’ but what if you really want $2 million being spent on one project? How would you know this if you did not include investments? And so this is why, pending the question, different information is necessary. Okay, now I am going to choose these axes to answer this question, which I think is very appropriate. If you are to say, ‘well, they want to answer another question,’ then maybe we use other axes.” After the discussion, people in the ATG organization questioned the use of the bubble charts, either for practical or more philosophical reasons. In reflecting on discussions of the bubble charts after the senior management meeting, George Arden remarked, “I got so frustrated when Theresa was going through her, you know, ‘this axis could be this and this axis could be that’ discussion. I said, ‘screw the bubble charts,’ because I could see nothing that worked…I could come up with six really good criteria for the axes and then you do the combinations and permutations of six. You could have thirty variations of the bubble charts and then do them all!” More broadly, Erik Helgesen felt that Brad’s desire to use the bubble charts to make decisions was problematic. “This is not the only tool to forecast the future. So, you are getting into the subjective area. And then, it gets tricky. Then, if you are in the subjective area, whose crystal ball is the best? There is no magic tool.” But, Vince Weston, 25 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

one of Brad’s personal advisors remarked that Brad was seeking a “magic bag of tricks” that would help resolve uncertainties so decisions about strategy could be made. Episode II: The “BEST” tool

The episode of the “bubble charts” examines an ad hoc means by which Brad Copeland and his team attempted to shape the portfolio of projects at ATG. The more systematic approach in the organization was the Steering Committee and Review Board process that Brad (with the help of his Administrative Head, Max Kagan) had put in place and which Theresa Veneto was in charge of running. This process required that each project champion submit to a review process that evaluated the technical and business merits of each proposal. With the new market realities and severe financial constraints placed on CommCorp and to a certain extent on ATG specifically, Brad demanded that each project demonstrate a “return on investment” or “bang for the buck.” As a result, members of Terrence Smith’s marketing team were assigned to each project or did direct staff work for Theresa Veneto to evaluate the business case for each project. This effort was complicated by many internal factors such as the fact that many of the technical staff in the organization did not have any skills in market analysis and, more importantly, often did not understand the value that such an analysis could bring. It was also complicated by the fact that it was very difficult to obtain information about many of the emergent markets for these new technologies. The burden of building these business cases fell increasingly on the shoulders of George Arden, as many of the other marketing staff were laid off over time (more than 50 percent of the entire CommCorp staff were laid off, though ATG 26 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

was slightly less affected because of the perceived strategic importance of the technology strategy efforts of the group). George complained that it might take weeks to evaluate even one project if he were to develop a full return on investment analysis based on a pro forma income statement. Because the future for many of these technology ideas was so uncertain, it was nearly impossible for George to come up with numbers for the ROI analysis that he could feel confident in, so he developed a tool which he felt would help the organization make strategic choices about technology investments, a tool he called BEST or “Business Evaluation Screening Tool.” As he stated, We had a methodology with a massive spreadsheet from hell. Going through all this stuff and calculating both the revenue impact and then also the difference that ATG is making…so it came to doing an analysis on the value of the Lightwave project. I looked at it and realized to do this properly, it is going to take me two more weeks to get through all this and check with the business units. I said, ‘Forget it. It is not worth it. I am not doing this thing anymore. It is just BS.’ So I dreamt up the BEST… If there are decisions on how we allocate resources, how do we do it?...We use BEST to come to grips with ranking projects, as crude as it is.” The templates for the BEST tool are shown in Figures 3a and 3b. George developed two different templates, one for more incremental or revenue enhancement projects and one for “disruptive technologies.” They were embedded in Excel spreadsheets. Each one included some combination of “must have” criteria and other important criteria which came in three different “buckets”: top line impact (revenues), bottom line impact (costs) and “other” 27 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

which included risk factors and external technology links. George noted that he “tried to come up with weights for the criteria, recognizing some criteria are more important than others, and then scoring. Now we have got a scoring range of zero to three…and there are rules on how you score it and the rules are right here [on the spreadsheet].” According to Vince Weston, the origins of the BEST tool came from some prior work with a university where “they had done some Excel spreadsheet with which was basically a big series of questions. You know, here are all marketing questions; here are all the finance questions…And they had weightings for each criterion and how important do you think each one is and then how confident are you in your weighting on the importance or something like that.” So, while the tool was developed internally, it was adapted from tools used by CommCorp in another setting. But, Vince was quite skeptical about the BEST tool based on his prior experience: I have the scars on my back from what happened in that group. We stood up and we said, “What are you doing?” And there was a leader of that team, and she said, “Well, putting the system in place for answering these questions, so we can take any idea that comes in and we can match against the criteria and say if is it good or not.” And you know… you cannot really do it that way. It is just a tool. So it was pretty dangerous, and it failed miserably. But, we got in trouble because we refused to use the tool…Everybody was crunching numbers on a spreadsheet, and they had huge, fricking meetings on debating whether the number was a one or a four, or why do you think it’s a four. And it’s like, “What are we talking about here?” and they’d be so far 28 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

down in this eighty criteria matrix, and each with three categories. There were two hundred and forty cells to fill out for each little business thing… It was like, “Holy crap, what cell are on now?”

It was a

nightmare. Indeed, many of the people in technology functions in ATG resisted the use of the tool. In particular, they were concerned that such a tool might have serious implications for their own projects and eventually, given the extent of the layoffs in the organization, for their own jobs. As George indicated in the early stages if its introduction, “We tried BEST out on a few project. This thing was seen as so explosive that we agreed that we would not broadcast this around ATG. The people would look at it and say, ‘Oh my God, my program only scored a 10. I am going to get fired.’” While Theresa recognized the value of the tool as a way to “talk intelligently” about the projects and “discuss around” the issues within her Steering Committee, she saw many risks in its use. “I don’t want to use metrics too loosely. What does a one-out-of-three mean? Give me an example of something so that at least we can build consistency. It’s all about interpretation. When I say, ‘Put a number two,’ you are going, ‘Ok, what do you mean by a two?’ The value of a tool is that you need to see [the portfolio] in aggregate, you get a picture. A picture is worth a thousand words. But, getting to that picture requires building consistency…But, thinking that the BEST would choose my next project for me is a little funny. There is no answer like that. It’s not that easy.”


And, George agreed, that “it’s not the only tool… The intent of this is to put the project in three or four buckets…you know, ‘crappy,’ ‘excellent,’ ‘somewhere in between.’” Because the tool was developed internally and had not been used by the ATG organization previously, George felt that it would need to be “socialized” in ATG: “It needs to get framed, presented and understood.” For Brad, the value was both to aid his personal decision making – it allowed him to “shrink the number of data feeds I have” – and in reinforcing change in the organization. “We have been flying on gut instinct for a long time. I’m trying to elevate the level of discussion.” Further, The reason why I am forcing people to go through this is that I want them to understand the business dimensions associated with the technology. [By using the tool], each project is ranked. The ranking is predicated on the business dimension and the potential ROI. So again I am forcing people to understand how the company derives ultimate revenue…At the end of the day, you give everybody the opportunity that they need to hit the curve, but you can only lead the horse to that water. And the people that are unable to cross the bridge will be marginalized to very specific functions and will have less input and emphasizes on the new technology and that is technology portfolio going forward.

DISCUSSION – STRATEGY TOOLS IN USE The two episodes described above show that strategy tools were not used unproblematically by the ATG organization at CommCorp. Their introduction into the strategy-making processes was searches for rationality or objectivity 30 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

in their efforts to realign their portfolio of projects and establish an overarching technology strategy. Yet, in their implementation, the tools proved to be much more subject to interpretation and political negotiations about their legitimacy than the proponents of their use had hoped. Rather than providing clear answers to the strategy questions the ATG organization faced, the tools instead became a means for communicating or negotiating meaning, constructing organizational boundaries and realigning authority flows and jurisdiction over resources. In this section, we discuss each of these themes, which are summarized in Table 2. -- Insert Table 2 about here --

In both cases – of the “bubble charts” and the BEST analysis – the desire was to use the tools to create “quantitative,” “objective,” and “consistent” measures that would allow them to “withdraw the emotional content” of the decisionmaking process (point 1 in Table 2). Managers in ATG were all struggling under

the

uncertainties

created

by

the

massive

disruption

in

the

communication technologies market. These changes severed the moorings of their prior strategic direction and forced them to rethink their portfolio of projects. Yet, there was little agreement within the organization about what should be done. And, the information from the market was ambiguous and often conflicting. Their search for tools was a search for a logic by which they could make choices about resource allocation. Given their strong engineering culture, they were particularly attracted to quantitative approaches. Numbers in particular had the aura of transforming the subjective into the objective (Denis et al., 2005).


Yet, they discovered that the numbers and the tools posed unanticipated challenges. The tools turned out to be subject to a great deal of interpretive flexibility and to disputes over their legitimacy (points 2 and 3 in Table 2). For example, the “bubble charts” were derived from a pre-established strategy tool, the Aggregate Project Plan. Yet, while the original dimensions of the matrix proposed by Wheelwright and Clark (1992) were the extent of product and process change, already at the point of introduction of the tool, Chris Chang had changed the dimensions to depict product reach and market reach, dimensions which he felt would be more useful in analyzing the ATG project portfolio. But, in the discussions in the initial senior management meeting, these dimensions were heatedly debated and many other alternatives were proposed, including technology reach, risk and return. The BEST tool was also intended to introduce some standardized metrics that would provide a consistent means for deciding which projects merited investment and which did not. This approach was particularly appealing to Brad Copeland because he could then attribute tough decisions to the outcome of the tool rather than to his own choices. This would make it easier to make some of the tough choices that had to be made, such as shutting down entire programs (especially in the optical arena which was particularly hard hit by the market crash). While objectivity was the goal of the use of the tools, actors learned that it was only a myth that such tools could be objective representations of external realities that take the emotions and politics out of the decision-making process (Mitroff, 1972). Consistent with research on accounting techniques, we find that the use of the tools was not neutral or “objective” and that each proposed metric was in some way a representation 32 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

of the interpretations and interests of each actor (Feldman, 2004; Gephart, 1997; Nahapiet, 1988; Power, 2004; Power, 2003). The interpretive flexibility of the tools was both a product of and made possible challenges to the legitimacy of the tools themselves. Both of the tools studied here were introduced into the organization after the crash in the market when actors were seeking out means to resolve a new set of uncertainties. Neither of the tools had a priori legitimacy in ATG, though the “bubble charts” had the imprimatur of the executive education course that many of the managers had attended. Especially when the tool provided an outcome that disadvantaged a project’s proponents, “the attack is on the tool.” This was particularly the case for the BEST analysis because it had little external validity. It was easy to dismiss the tool because its initial legitimacy was only attached to George Arden who developed it. Some people (such as Theresa) recognized that that senior management team would need to agree on how to interpret the tool before it could be usefully deployed in the organization, and that, because of the challenges to the legitimacy of the tools, establishing such legitimacy would take time (and even more time for BEST than for the “bubble charts”). What we see in the actual experiences of managers at ATG using these strategy tools is that the actors both invest in the tool as a rationality-seeking mechanism and deride its ability to develop objective answers. They are simultaneously attracted by its boxing up mechanisms and aware of the limitations of those mechanisms because any interpretation can be put on the boxes. The tools thus have interpretative flexibility that is important to but also a source of unease for the actors. They would like the tools to deliver answers 33 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

that are unarguable at the same time as they challenged its legitimacy if those answers did not agree with their interests or intuitions. Tools become political. When actors see an answer that does not meet their personal needs, they deride the tool. This is important for their personal security – the tool can be an object of derision that means their own work is not wrong. Thus, the very ambiguity they feel about the tool – that it has no objective answers – is also an attraction when they need to argue for a different interest or viewpoint. They can divest the object of its value, which they could not do if the tool was not ambiguous. Thus, there was a tension between efforts to seek rationality and the day-to-day experiences which centered more on coping with the interpretive flexibility of the tools and establishing (or challenging) their legitimacy. In practice, the tools functioned in three ways: negotiating and communicating meaning, constructing and navigating boundaries and realigning jurisdiction over resources (points 4, 5 and 6 in Table 2). While the tools did not provide the “objective” answers that the actors were looking for, they did put many concepts on the table and foment a great deal of discussion within the organization (point 4 in Table 2). In both episodes, Brad attempted to use the tools for his own objectives. In the case of the “bubble charts,” it was to communicate to the organization that ATG and CommCorp did not have enough “Hail Mary” (radical innovation) projects. In the case of the BEST analysis, it was to show to the organization that business and economic factors were crucial criteria in deciding on resource allocation. BEST was a template for the thought processes that they should use in making strategy. The tools provided a mechanism for moving towards his objectives for the 34 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

organization. More broadly, the tools became a space for dialogue where there had been none. Because the various managers within ATG came from very different functional and disciplinary backgrounds, they did not share a common language with which they could discuss strategy. The tools provided this language. After the “bubble charts” were introduced, the group could talk about the “upper left quadrant” and know that this referred to more radical innovation. The BEST tool required a rating of each project according to a set of criteria. Because these ratings were perceived by many as subjective or open to dispute, the use of the tool created a forum for discussion and arguments about the answers to the questions posed by the template. Thus, the tools served as sites for social interaction, in which people could surface and externalize their different personal views, biases and assumptions within a public forum. The “bubble charts” gave them a tangible means for discussing strategic issues in the form of the artifact – “these indicators are wrong” or “the size of that bubble is wrong,” or “that bubble is in the wrong place.” It was easier for them to have these debates around an artifact than it would have been to generate a conversation from scratch about what issues the strategy should involve. Additionally, it was less personal to say the chart or spreadsheet’s dimensions were wrong than to say that a particular person (especially the boss) was wrong. These discussions often served to construct and navigate the organizational boundaries (point 5 in Table 2). Because of the heterogeneity of strategy work, there was a need to coordinate and translate across social worlds – as Star and Griesemer (1989) argue is also the case in scientific work where uncertainties are also very high. Such different social worlds, which in the 35 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

case of ATG included technical vs. business functions, people trained in electronics vs. those trained in optics, senior executives vs. middle managers, each attempted to stake out a territory (Star & Griesemer, 1989: 411) which often led to conflict. Strategy tools were a way to delineate the boundaries, interests and viewpoints of each social world. Such boundary work often made the collisions between social worlds even more stark. Bringing these differences into focus had the potential to enable a common perspective to emerge. As the tools were developed and refined collectively, they had the potential to satisfy these conflicting concerns. Similarly, the organizational entrepreneurs who introduced or promoted the use of these tools were attempting to use the tools as a means for translating between social worlds in such a way as to support their interests and views. The “bubble charts” and BEST analysis were attempts at creating boundary objects. Unlike the boundary objects studied in much of the literature in the field, these tools were not well-established tools of the trade such as engineering drawings, models or machines (Bechky, 2003; Black et al., 2004; Carlile, 2002). Strategy work is in many ways much less certain and less ingrained in a set of occupational practices. Strategy work, like science work (Knorr-Cetina, 1999), is more fluid and more uncertain than engineering or technical work. While there are many strategy tools that are developed by management scholars and taught in business schools, these are not often embedded in a shared set of occupational practices. Thus, it is not surprising that the managers in the ATG group at CommCorp sought out or developed new tools when they were faced with a market disruption that destroyed existing routines and understandings.

As a result, the tools that were


introduced served as much to delineate boundaries as they did to translate across them. Neither tool analyzed here was completely successful in helping the organization to reach a distinct strategy. To the extent that they failed, it was due to the fact that actors attempted to use them to impose their own viewpoints and interests on others. To the extent they succeeded, it was because they served as “anchors or bridges” (Star & Griesemer, 1989: 414) between the various social worlds. Finally, the tools were a means to realign authority flows and the jurisdiction over resources (point 6 in Table 2). Actors introduced tools in order to gain some power over the criteria being used to make choices about the strategy direction of ATG and the technology strategy for CommCorp. Chris Chang wanted to prove his worth in his new economic analysis position. George Arden wanted to validate the role of the business analysis function. As suggested in the context of analyzing the micro-practices of auditing and accounting (Nahapiet, 1988; Pentland, 1993), the tools were a means to transform the uncertain into the legitimate and enhance the position of experts. The tools were also used to realign resources and sources of power in the organization. By using the “bubble charts” to make the point that there were no “Hail Mary” projects, Brad was implicitly reducing the power of Erik Helgesen who ran the existing development organization and enhancing the power of others, such as Vince Weston, who were exploring radical new technical directions. And, many people worried that the BEST analysis would reduce the importance of existing projects and make them more vulnerable to the ongoing layoffs at CommCorp. The tools were more powerful to the extent they mapped on to the existing interests and viewpoints of the dominant 37 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

actors in the organization (Denis et al., 2005) or if they were successful in realigning those interests and views. Thus, while the actors in CommCorp hoped that the tools would provide them with a source of rationality and objectivity for their strategy making, they found that the tools functioned in a much more complex system of social interactions within the organization. Because the tools were subject to substantial interpretive flexibility, their legitimacy was often challenged. As a result, the tools often served a more symbolic than analytical role (Feldman & March, 1981), one which delineated boundaries, facilitated communication and dialogue and ultimately shaped the jurisdiction over resources.

CONCLUSION In this paper, we explore how strategy tools are used in practice as actors struggle with the uncertainties presented by the environment and attempt to make strategy. We take a practice perspective (Orlikowski, 2000; Schatzki et al., 2000) to look at how strategy tools are engaged by different actors in mediating strategizing and organizing processes. We draw on the research on formal analysis as well as boundary objects to understand the organizational dynamics associated with strategy tools in use. Our study shows that boundary objects may be more contested and more politicized than has been portrayed in prior studies of boundary objects in organizations (Bechky, 2003; Carlile, 2002). We elaborate the understanding of boundary objects by emphasizing the language games in which boundary objects are engaged (Astley & Zammuto, 1992). We show that the boundary objects used in strategizing tend to have greater interpretative flexibility (Orlikowski, 1992) 38 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

than those previously analyzed. We suggest that this flexibility is an important feature of boundary objects employed in strategic contexts and that it may be associated with the uncertainty of the strategy making task. Actors adapt or create the tools to the context in an improvisational, “bricolage” approach (Campbell, 1997; Weick, 1998). The tools are much more ambiguous than the designers must have intended, but this ambiguity is likely essential when making change in highly uncertain settings (Stark, 2003). This study has important limitations. The two episodes examined both relate to the introduction of new tools to the organization, and therefore cannot shed light on the routinized use of tools over long periods of time (Grant, 2003). The ATG group at CommCorp had its origins as a research lab and therefore was unaccustomed to using strategy tools at all. It was only with Brad Copeland’s arrival as the new head of the group and his mandate to introduce more business and economic logic to the strategy making that the search for tools was instigated. In addition, because this is a study of one firm, we cannot comment on the degree to which the adoption of these tools were simply a product of management fads (Abrahamson, 1991; Rigby, 2001). Yet, these findings from the two episodes examined in this study provide some insight into the actual (and often unintended) practices of using strategy tools in an organization. They suggest that for those of us who teach strategy or develop strategic tools or frameworks, we may want to rethink our task. Rather than tools being the answer to strategic problems, they may more usefully be conceptualized as spaces for debate and dialogue and a means to bring actors with very different viewpoints and interests together in a way that strategic choices can be made (Chesley & Wenger, 1999). As Astley and 39 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

Zammuto (1992: 453) point out, management scholars most typically conceive of our task in the “instrumental mode,” as contributing tools and techniques to managers. The analysis presented in this paper reinforces the notion that we are in reality operating more in the “conceptual or symbolic mode” in which we are offering ways of thinking and means for discussion. Strategy work is more like science than engineering. In particular under conditions of discontinuity, the process is more like a “search for clues” than a search for a causal model.3 And, much as scholars have found in studying the practices of scientists (Latour, 1987; Mitroff, 1972; Mitroff, 1974), the idea that tools can offer “objective” answers is a myth. Tools may be better understood as a way that managers can organize what is known and what is unknown, and, more importantly, as a tangible artifact around which boundaries can be delineated and meaning negotiated. Consistent with a view of the organization as an interpretive system (Daft & Weick, 1984), tools then can be most usefully conceptualized as a mechanism through which interpretations occur. This has important implications for how we think about how to teach strategy tools in the classroom: we should not just be conveying the underlying principles of the tools and frameworks but also emphasizing how they are used in practice: for individual advancement, for delineating territories, for structuring conversation, for communicating ideas, etc. For managers making strategy, tools should not be regarded as a means to eliminate politics or emotions from decision making by introducing something objective or rational, but rather as one means for surfacing assumptions, 3

This idea was suggested by Deborah Dougherty in her keynote speech at the OLKC conference, University of Warwick, March 2006. 40 AIM Working Paper Series: 047-August-2006 Copyright © Sarah Kaplan and Paula Jarzabkowski, 2006

asking the tough questions and achieving alignment of different interests and viewpoints within the organization. Strategy making is therefore not something that can be engineered, streamlined or simplified. This view is consistent with the idea that strategy is not a thing in and of itself but rather an emergent process (Kaplan & Beinhocker, 2003; Mintzberg & Waters, 1985). Strategy is not something an organization has but rather something that it does (Whittington, 2006). Tools are more like starting points and facilitators of a process than they are the “answer.”


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APPENDIX Figure 1: CommCorp’s Advanced Technology Group (ATG) Organization Chart

ATG ATG Brad BradCopeland Copeland††

Individual Individual contributors contributors Hugh HughCollins Collins†* †* Vince VinceWeston Weston

Economic Economic analysis analysis Chris ChrisChang Chang††

Administration, Administration, external external research research Max MaxKagan Kagan††

Marketing Marketing Terrence TerrenceSmith Smith††

Susannah SusannahWatts Watts

Additional Additional small smallstaff staff

Tom TomRentham Rentham

Architecture Architecture (head (headof ofSteering Steering Committee) Committee) Theresa TheresaVeneto Veneto†* †*

Development Development Erik ErikHelgesen Helgesen†* †*


Jack JackStafford* Stafford*

Additional Additional staff staff

George GeorgeArden* Arden*

Donald DonaldNarra Narra

Albert AlbertLee Lee

Pierre PierreCatenas Catenas


Hermann HermannMeier Meier

Edward EdwardFischer Fischer

Josh JoshZemlinsky* Zemlinsky* Vijay VijayKumar* Kumar* Steve Gallagher* Steve Gallagher*

† *

Member of Review Board Member of Steering Committee

Large Largestaff staff

Figure 2: Aggregate Project Plan, from Wheelwright and Clark

Source: Wheelwright, S. C., & Clark, K. B. 1992. Revolutionizing product development: quantum leaps in speed, efficiency, and quality. New York, Toronto: Free Press. Table 4-3 page ???.

Figure 3a: BEST analysis template for revenue enhancement projects (disguised) ATG BOSS Template Project ID=

BEST: BUSINESS EVALUATION SCREENING TOOL For revenue enhancement projects

MATHEMATICAL VERSION Weighted Score Scoring Rules (=)/Notes:

Criteria Wgt(M/1/2)

Score Y/N OR 0-3

Fit with ATG mission

MUST

Yes/No/?

na

Eg, advanced projects within our approved program areas

Fit with ATG competencies

MUST

na

(not inventory of ATG skills)

Critical Mass ATG resources

MUST

na

To achieve important milestones each quarter

Fit with CommCorp business strategy

MUST

na

CommCorp Strategy forthcoming? Pre development, we must align

Fit with host BU's direction

MUST

na

Source from business unit

Enthusiastic BU pull

MUST

na

Senior manager level or higher

1. Business Assessment Criteria

Score Rationale/Notes (explain partials)

1.1 MUST HAVES

1.2 Criteria Directly Related to the Income Statement (focus on the change vs absolute #s): 1

0

With market meltdown, lower the limits as follows: $9B=3

Revenue Impact Classification (Diff/Tablestks)

1

0

Low/Medium Differentiator=0, HighDiff=1, Tablestakes=3

ATG revenue contribution > BU: ttkmt gain

1

0

12mths=3

ATG rev contribution > BU: Superior Capability

1

0

Equivalent=0, Moderate>=1, Significant>=2, Vastly>=3

External Tech Licensing Opportunities

1

0

None identified=0, Suspected Opp=1, Qualified Opp=3

Cost reduction: Direct Product Cost-03-06 Cum $

1

0

$50M=3

Host product Gross Margins %

2

0

50%=3

Cost reduction: R+D Avoidance-03-06 Cum $M

1

0

$50M=3

Cost reduction: Other/Lifecycle-03-06 Cum $M

1

0

$50M=3

Host Product 03-06 Cum Addressable Mkt $B

1.3 Other Important Criteria: CommCorp Market Share 03-06 Host Products %

1

0

30%=3

Level of risk-technology dev+integration

2

0

HR=0, MR=2, LR=3

Level of risk-business-downside potential

2

0

HR=0, MR=2, LR=3

2. Results: Achieved all the MUSTs? Total Score "Income/Other Criteria" (1.2+1.3) ATG budget request to meet deliverables $M Total Score/Resource Ranking Metric 3. 1. 2. 3. 4.

Conclusions+Recommendations: Proceed As Presented Proceed With Modifications Bring Forward at later date for consideration Do not proceed

If no/partial, document closure plan + timeline to meet MUSTs 0 Aggregate headcount, services + expensed portion of capital #DIV/0! Rationale for Recommendation:

Note: BU = business unit, ATG=Advanced Technologies Group

Income Statement Reference Model driving 1.2 criteria 1. Revenue 2. Direct Product Cost 3. Gross Margin $ 4. R+D Expense 5. Sales Expense 6. Marketing Expense 7. G+A Expense 8. Net Earnings

Figure 3b: BEST analysis template for “disruptive” projects (disguised) ATG BEST Template-Disruptives Project ID=

BEST=BUSINESS OPPORTUNITY SCREENING SYSTEM For Disruptive Architectures and Solutions Score= Yes/ No/ Partial

1. Business Assessment Criteria

Rationale

Scoring Rules (=)/Notes:

1.1 MUST HAVES Fit with ATG mission

Eg, advanced projects within our 6 program areas

Fit with ATG competencies

(not inventory of ATG skills)

Critical Mass ATG resources

To achieve important milestones each quarter

Fit with CommCorp business strategy 1.2 Important Criteria:

Criteria Criteria Weighted Weight(1-3) Score(0-3) Score

Cum Addressable Mkt $03-06 that we are disru

2

$15B=3

BALLPARK Cum Addressable Mkt for 03-06 $

2

A Q+D VERY BALLPARK estimate. Eg under/over $10B

Is market leadership up for grabs?

3

Is there a credible vendor clearly ahead of us with this approach?

Level of risk-technology dev+integration

2

0

HR=0, MR=2, LR=3

Level of risk-business-downside potential

2

0

HR=0, MR=2, LR=3

External Tech Licensing Opportunities

1

0

None identified=0, Suspected Opp=1, Qualified Opp=3

2. Results: Achieved all the MUSTs? Total Score on "Important Criteria" ATG budget request to meet deliverables $M Total Score/Resource Ranking Metric 3. 1. 2. 3. 4.

Conclusions+Recommendations: Proceed As Presented Proceed With Modifications Bring Forward at later date for consideration Do not proceed

If no/partial, document closure plan + timeline to meet MUSTs 0 Aggregate headcount, services + expensed portion of capital #DIV/0! Rationale:

Not decision criteria but very useful information to get a handle on early: 1. CommCorp existing products threatened+degree-for info only, doesn’t drive the decision, if we don’t do it, someone else will! 2. CommCorp existing products boosted+degree-this is for information, the full bus case (later) will show the effect!

Note: BU = business unit, ATG=Advanced Technologies Group


Table 1: Summary of two episodes

Common themes across the episodes

Pre-established (designated) tool Stated purpose of tool

Experience in use

Acknowledged benefits

•

To derive rational evaluation of strategic alternatives

•

To justify those alternatives (perception of rationality is strongly linked to justification)

•

Tool seen as subjective. What was in the axes or indicators and how different people rank any aspect of a tool was subjective.

•

Tools were highly flexible – different categories could be substituted according to what is prioritized for analysis

•

Tool was contestable

•

Use of tool highlighted or even amplified differences in views (by making them concrete)

•

A discussion ensued which launched off the back of the tool

•

The tool had procedural rationality – a means of structuring information and conversation

•

Tool was contestable – attractive if the tool derives an answer you do not like

•

Tool used to support interests of individual actors or groups

Unique features of each episode Episode I:

Episode II:

The “bubble charts”

The “BEST” analysis

•

Yes

•

No, developed internally

•

Develop management skills by using tools learned in executive education courses

•

Simplify and reduce the workload for business analysts

•

Pre-established tool was adapted according to the perceived needs of the organization

•

Not readily accepted by other members of the organization, in particular those not in a business analysis function

•

External validity did not automatically establish internal legitimacy

•

Attempts to quantify were still seen as too subjective

•

Provided Brad a forum to communicate this viewpoint that there are not enough radical projects

•

Provided a common template of questions to be discussed in decision-making meetings

•

•

Gave managers a common language for talking about strategy (e.g., “upper left quadrant”)

Served as a mechanism for reinforcing organizational change and skill development

Table 2: Representative quotes about strategy tools in use

USES OF TOOLS IN PRACTICE

CHALLENGES

OBJECTIVE

1. Seeking rationality

Episode I:

Episode II:



•

“There was some kind of quantitative effort to sort of say what kind of measures you would apply to this from very bad to very good. At least if you apply that consistently across your analysis then you actually have something which you can measure.” [Terrence Smith]

•

“The whole rationale behind this BEST was to do something that had some business assessment merit behind it. It had to be simple. It had to be done really quickly. It had to be understandable by the audience in ATG.” [George Arden]

•

“[BEST] is a consistent index by which we measure all projects. So, one project doesn’t have specific relevance that’s greater than another because I happen to be having a good day. The emotional content is withdrawn from the evaluation process. It is objective decision making and math. It is all about the math… We are looking for some quantifiable index by which we can apply the thought process to get to that metric.” [Brad Copeland]

•

“We need a quantitative effort to find measures: we need to make it consistent without making it a science.” [Terrence Smith]

2. Interpretive flexibility

•

Long debate in senior management meeting about which were the right dimensions for the matrix. Admit that different messages will emerge depending on which axes are chosen.

•

“But the tool itself is still too subjective. I want George to push it to that next step to see how objective we can get…I don’t want to have to question the impact potential of BEST and right now I do.” [Brad Copeland]

3. Establishing legitimacy (constructing rationalized objects)

•

“If we interpret things very differently, these maps won’t mean anything, right? So, we have to agree on the definition, agree on the relative ranking and what they mean, and that takes time.” [Theresa Veneto]

•

“Basically, a few people in ATG see this whole exercise as something that shouldn’t exist: ‘You are getting in the way of what I want to do. Why do we even need any of this stuff? Can’t you see my project is a great idea?’ Especially if you challenge projects that are coming forward, then the attack is on the tool. It is like the tool is no good.” [George Arden]

4. Negotiating, communicating meaning (providing a common language to discuss strategic issues)

•

Brad Copeland encourages the use of the tool because he though it would illustrate his view that ATG did not have enough “Hail Mary” (radical innovation) projects.

•

“BEST actually provides a template of thought processes to go through to achieve your end objective. Is there a market? Are people going to buy it?” [Brad Copeland]

•

•

After the introduction of the tool, managers could talk about the lack of projects “in the upper left quadrant.” [Erik Helgesen]

“We need to have a discussion of this tool…I am concerned that BEST would rank disruptive ideas low.” [Hugh Collins]

•

Implications of categorizing the projects. Reinforces “Brad’s message to the team was that we have to become more innovative.” [Terrence Smith]

•

Discussion of relevant axes raises other key concerns in strategy making, such as risk, return, ATG’s competitive edge, and change implications and enables these concerns to be discussed

•

“It will be interesting to go through the discussion [of the bubble charts] because it is very clear that Brad would rank the projects very differently than Erik would rank the projects. Guaranteed.” [Theresa Veneto]

•

•

“There are different views about the definitions of the axes and the ranking of projects, and these need to be clarified and aligned as a group.” [Theresa Veneto]

“No matter how much work you put into actually trying to define [the market] and trying to think about the trends, [the technical staff] will automatically discount it if they do not like the answer, because, you know, it is not a science. It is qualitative rather than quantitative. They say, ‘Well we do not believe it, because you have not done your job.’” [Theresa Veneto]

•

“I’d say the majority of people are either neutral to this stuff or even positive, but there is a small group which is saying, ‘Kill the BEST tool.’ There is a big issue of credibility, of maybe myself and any business analyst within ATG. ‘You guys are business-oriented. You are not the masters of technology. So you can’t even understand the projects in sufficient depth to come up with a fair assessment.’” [George Arden]

•

“[People are worried that] if there is another round of layoffs, guess who is going to get it. You know, the person [whose project] only scored a 72.” [George Arden]

5. Constructing, navigating boundaries

6. Realigning authority flows, jurisdiction over resources

•

Chris Chang introduces the tool to demonstrate his business knowledge and take “a leadership role” in strategy development for ATG.

•

Theresa Veneto takes over as “prime” because of her role as the head of the Steering Committee. “I could not

Episode I:

Episode II:



understand why, if Chris Chang brought the technique [to ATG], that Theresa was tasked for solving the problems. She is the busiest person in ATG. That didn’t make sense.” [George Arden]
