2nd International Critical Management Studies Conference: UMIST, Manchester, England, July 11-13, 2001. MAKING STRATEGY IN THE DIGITAL PHENOMENOLOGICAL NOW? David O’Donnell & Joachim Maier Intellectual Capital Research Institute Imagination Lab Foundation 7 Clonee Road, Ballyagran, Rue Marterey 5 Limerick County, Ireland. 1005 Lausanne - Switzerland Tel: +353 (0)876821032 Tel: +41 (0)213215551 Email:
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[email protected] Conference Stream - Strategy: Track Chair, Glenn Morgan, University of Warwick ABSTRACT Dear reader, welcome to strategy in the desert of the real! This is essentially an online interactive piece of exploratory work in which we attempt to address the question – How do we make strategy in the digital phenomenological now? We try to communicate the flavour in two dimensions as a conference presentation and interested participants are more than welcome to join us at www.nic-las.com/matrix to comment. Traditional business strategy can be neatly summed up in two words: “formulate” and “implement”. Two facets of the emerging e-business landscape, however, appear to strongly conflict with this model (Bontis & De Castro, 2000). Firstly, the speed at which e-business changes, morphs or develops allows neither senior management nor front level employees the luxury of traditional strategic planning exercises - action and decisions are often needed NOW. Secondly, the loosely coupled nature of network relationships suggests that virtual organisational structures no longer conform to traditional configurations. Strategy is a construction, reproduced by a variety of texts and practices that assist us in making some sense (or nonsense) of the world – in this sense, strategic discourse does not simply mirror social reality – strategic discourses create social realities (Hardy, Palmer & Phillips, 2000) and sometimes even social orientations. Create your own realities – your first assignment is to view the movie, The Matrix. Drawing mainly on Luhmann, complex adaptive systems theory and Habermas we frame our discourse here with reference to the metaphor of the Matrix - we can choose the red pill or the blue pill! Within our digital real time experiences of ambiguity, fundamental uncertainty and sometimes sheer terror or fear, we can accept the code that puts our observations and actions into form; complain about it; change it; or write some completely new code. How do we operate in digital real-time? How do we address this question? Making Strategy in the Digital Phenomenological Now? “You take the blue pill, the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill, you stay in Wonderland, and I show you how deep the rabbit hole goes.……” The Matrix Introduction: Dear reader, welcome to strategy making in the desert of the real! Henry Mintzberg (1990) classifies the strategy literature into ten schools of thought; if
you know of any or all of them - let's bracket them for the moment as we do not intend to go into any of them in any great detail here. This does not mean that they are not potentially useful, but we choose not to utilise such discourses here. 'Strategy', like the 'environment' or 'organisation', is a construction, reproduced by a variety of texts and practices that help us to make some sense [or nonsense] of the world – in this sense, strategic discourse does not simply mirror social reality – strategic discourses create social realities (Hardy, Palmer & Phillips, 2000) and sometimes even social orientations. We want you to create your own realities – your first assignment is to view the movie, The matrix". Drawing mainly on Luhmann’s (1990,2000) social systems theory, but also including insights from complex adaptive systems (cas) theory (Holland, 1995; Kauffman, 1995), Habermasian (1987) communicative action theory and others, we frame our discourse here with reference to the metaphor of the Matrix - we can choose the red pill or the blue pill! Within our digital real time experiences of ambiguity, fundamental uncertainty and sometimes sheer terror or fear; we can accept the code that puts our observations and actions into form; or complain about it; change it; or write some completely new code. How do we do this? How do we operate in digital real-time? How do we make strategy in the 'digital phenomenological now'? How do we make strategy in the context of that element that matters most to (post)modern consciousness – an element that Habermas (1987: 53) refers to as 'the transitory aspect of the moment, pregnant with meaning, in which the problems of an onrushing future are tangled in knots'? Where are the new boundaries between system and lifeworld? What does strategy mean anymore? Strategy: Traditional business strategy can be neatly summed up in two words: “formulate” and “implement”. Two facets of the emerging e-business landscape, however, appear to strongly conflict with this model (Bontis & De Castro, 2000). Firstly, the speed at which e-business changes, morphs or develops allows neither senior management nor front level employees the luxury of traditional strategic planning exercises. Action and decisions are often needed NOW. Secondly, the loosely coupled nature of network relationships suggests that virtual organisational structures no longer conform to traditional configurations. In contrast to the traditional notion of strategy as something that is formulated by high level strategists and implemented by others, power, control, ownership and influence are increasingly distributed in a complex "probability wave" and strategy somehow emerges from the web of interactions with customers, among the people within particular communities of practice, and between diverse entities. Are we beyond control? Has Jeremy Bentham’s Panopticon of direct control and observation (Foucault, 1975) finally passed its nadir? Or is it re-emerging in a more powerful if intangible form as represented here by the metaphor of the Matrix? If we move from the predictive and controlling paradigm of the Newtonian industrial era to a greater acceptance of uncertainty and unpredictability in the digital now, what are the implications for strategic management? Is the word “management”, let alone “strategy”, any longer relevant in such complex, unpredictable yet somehow adaptive contexts? Similar to the classic problem of Schrödinger's cat, a cat that is simultaneously both alive and dead within a quantum probability wave until somebody can open the unopenable box to ascertain whether or which, business strategy must now adapt to situations which, borrowing from Habermas, simultaneously manifest aspects of both instrumental-system and communicative-lifeworld rationalities. Accepting the fact that we have far less control over the (e)business world(s) than we thought we had in the era of hierarchical Foucauldian control, creating intellectual capital and leveraging
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it at ever increasing velocities into economic and social value in an era of "increasing returns" to resource utilisation (Arthur, 1994) necessitates an acceptance of more complex business logics in the shape of "value constellations" (Edvinsson, 2000) with temporary role participants, leading experts, and meshworks or loosely-coupled networks of simultaneously cooperating, competing and self-regenerating entities in real-time (O’Donnell and colleagues, 2001). This shift from the reasonably predictable systemic logic of “formulate and implement” to the real-time complex Matrix type logic is delineated in even more startling form by a recent business projection for 2005 by the Gartner Group (Murphy, 2000). First, the following business functions will be increasingly outsourced: backoffice processing; customer service; IT infrastructure; logistics; public relations; and sub-assembly operations. Second, revenue streams from outsourced sales channels are projected to break down as follows: digital TV, 5 per cent; e-marketplaces, 67 per cent; own portal, 6 per cent; physical 20 per cent; and voice, 2 per cent. Third, the core of the business will consist of the key management group, high value-added sales, research and development (R&D) and limited production. Fourth, staff reductions at the core of up to 75 per cent and cost reductions up to 50 per cent may be expected. Finally, Murphy suggests that the following highly demanding business attributes will become standard: produce/service to order, 95 per cent; customer enquiry resolution, one minute; internal and external paper handling, 2 per cent; process speed, real-time with zero latency; acquisition and/or disposal average, 25 days; and management decision time, thirty minutes! Questions : As Edward Said puts it: “ Who writes? For whom is the writing being done? In what circumstances? These it seems to me are the questions whose answers provide us with the ingredients making for a politics of interpretation" (Rice & Waugh, 1992: 248). The key question remains: how do we make strategy in “realtime with zero latency” in the digital phenomenological now?….. or in the space of half an hour! How do we make strategy in the space of half an hour? Do we take the blue pill or the red pill? Do we adopt a system perspective, a complex adaptive system perspective, or a lifeworld perspective? Do we adopt a discourse analysis approach (Oswick, Keenoy & Grant, 2000), or a postmodernist subjectivist perspective (Knights & Morgan, 1991). Do we go with the dominant flow, adopt a comforting denial and follow the early modernist objectivist and linear approach to enhance our bureaucratic careers, or do we take the radical humanist route and follow Habermas in exploring a late critical modernist inter-subjectivist approach? Do we follow Derrida and Lacan and attempt to interpret the e-commerce world as a text? Do we follow Foucault into the Matrix and attempt to interpret the nature of the internet as a network of power/knowledge relations? Do we give priority to financial capital or to intellectual capital? Do we study money, power, texts or people? Or must we try to adopt and interpret all these perspectives simultaneously? How are we going to cope with the incommensurable nature of various perspectives? As authors [Maier (mainly luhmannian), O’Donnell (mainly habermasian)] we too have to try to somehow first acknowledge and then transcend these differences in order to initiate and then build some constructive and reflexive dialogue. Invitation au voyage: We extend to you all a cordial invitation to join us in this exploratory journey and to converse with us on the way. To do this you need to join in the conversation online at -- www.nic-las.com/matrix ... By definition, we do not
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know where we are going - but our primary focus is on identifying some simple principles to guide strategy making in the digital, phenomenological now that may or may not emerge in the learning process of dialogic exploration. We provide no premature conclusions here, but present some initial fragments of activity to assist us all in our trials and tribulations and we hope that the resulting connectivity will, somehow, prove useful. In this sense, and similar to the emerging two-way nature of the customer relationship (Sveiby, 1997), your involvement and feedback in this learning process is central. This is definitively not a one-way presentation. Welcome to the desert of the real! On-line we talk about interactivity, processes of actualization, distributed intelligence, responsiveness and the digital media revolution. Different times need different tools, or software intelligence in our context. This is [will be, should be, could be, can be] an "interactive" word-document: the text, pictures and so on are represented as in an ordinary document; however, from the moment you're online [red pill] you inter-act, respond and are responsible. There is a software operating underneath this word document that allows you to modify and/or comment on every object within it -- this is visible to everybody. Furthermore, the software automatically creates a hyper-text that allows for non-linear paths through the document. For further interaction, you are also offered a homepage with additional [search][news][structure] and [index] functionalities. Within this kind of digital media environment you can interact with the text, with each other, and with us as the originary authors. If you're off-line this document will behave just like any non-interactive piece of paper. View the movie, go 'virtually' [for the moment] on-line, enjoy the learning process, and have fun! Remember the Matrix? Imagine for a moment that as strategic decision makers we operate under matrix-like conditions. The human relationship to the environment, or the fuzzy boundary between lifeworld and system, is controlled and interfaced by a software called the matrix. The matrix is a universal digital media inter-acting with all our senses. However, it is possible to hack into the matrix. Towards the end of the movie, the protagonists even learn how to re-write and thus actualise the matrix-code in real time. Rapidly adjusting, adapting and re-writing the code – this is precisely what simple guiding principles could be useful for – and what strategy making in real time in the digital era is probably all about. Let's think about transferring matrix-like conditions into the realm of strategic operations? Indeed, this is not so absurd if you consider that, in earlier eras, some people [economists] tried to establish the mechanisms of “perfect” market conditions to construct reference contexts for management, to say nothing of human rationality and Habermas’ massive output! We are living in the era of the digital media revolution – its scope is exploding and time is imploding - this is commonly accepted as fact – why continue with instruments, institutions and contexts developed to manage and control the industrial revolution? To do so, we believe, would be myopic in the extreme, especially in red pill situations.... Neo: I know you're out there. I can feel you now. I know that you're afraid. You're afraid of us. You're afraid of change. I don't know the future. I didn't come here to tell you how this is going to end. I came here to tell you how it's going to begin. I'm going to hang up this phone and then I'm going to show these people what you don't want them to see. I'm going to show them a world without you, a world without rules and controls, without borders
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or boundaries, a world where anything is possible. Where we go from there is a choice I leave to you.... Suppose the world you face was just made of [socially constructed] software code? neo: Right now we're inside a computer program? Morpheus: ... your appearance now is what we call residual self image. It is the mental projection of your digital self. Neo: This...this isn't real? Morpheus: What is real. How do you define real? If you’re talking about what you can feel, what you can smell, what you can taste and see, then real is simply electrical signals interpreted by your brain. Morpheus: a prison for your mind. Unfortunately, no one can be told what the matrix is. You have to see it for yourself. This is your last chance. After this there is no turning back. You take the blue pill, the story ends, you wake up in your bed [in Manchester] and believe whatever you want to believe. You take the red pill, you stay in wonderland, and I show you how deep the rabbit hole goes.... .. Imagine: kevin kelly ……..life-as-it-could-be is a territory we can only study by first creating it. References: Arthur, W. B. 1994. Increasing returns and path dependence in the economy, Ann Arbor: University of Michigan Press. Bontis, N. & A. De Castro, 2000. The first world congress on the management of electronic commerce: review and commentary; Internet Research, Vol. 10, 5, pp. 365373. Edvinsson, L. 2000. Some perspectives on intangibles and intellectual capital; Journal of Intellectual Capital, Vol. 1, 1, pp. 12-16. Habermas, J. 1987. The philosophical discourse of modernity, Cambridge, Polity. Hardy, C., I. Palmer & N. Phillips, 2000. Discourse as a strategic resource; Human Relations, Vol. 53, 9, pp. 1227-1248. Holland, J. H. 1995. Hidden order, Reading, MA: Addison-Wesley. Kauffmann, S. A. 1995. At home in the universe: The search for laws of selforganization and complexity, New York: Oxford University Press. Kelly, K. 1994. Out of control, Reading, MA: Addison-Wesley. Knights, D. & G. Morgan, 1991. Strategic discourse and subjectivity: Towards a critical analysis of corporate strategy in organisations; Organization Studies, Vol. 12, 3, pp. 251-273. Luhmann, N. 1990. Essays on self-reference, New York: Columbia University Press.
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Luhmann, N. 2000. The reality of the mass media, Stanford, CA: Stanford University Press. Mintzberg, H. 1990. Strategy formation schools of thought, In J. W. Fredrickson Edn. Perspectives on strategic management, Greenwich, CT: JAI Press, pp. 1-67. Murphy, T. 2000. “Information technology: The competitive edge”, In M. Geary and H. Walsh (Ed.), Proceedings of the Millenium Conference of the Cork Chamber of Commerce, Cork, Ireland, October 12. O’Donnell, D., P. O’Regan, B. Coates, T. Kennedy, B. Keary & G. Berkery, 2001. Human interaction: The critical souce of value in the intellectual age, In N. Bontis Ed. Proceeding of 4th World Congress on Intellectual Capital, Hamilton, Canada. Oswick, C., T. W. Keenoy & D. Grant Edn., 2000. Organisational discourse. Special Issue, Human Relations, Vol. 53, 9. Rice, P. & P. Waugh, 1992. Modern literary theory, 2nd Ed., London: Routledge. Sveiby, K.-E. 1997. The new organisational wealth, San Francisco, CA: BerrettKoehler.
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