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The Information Systems
Strategy Triangle
Modified by
Dr. Mary Agoyi

Learning Objectives
? Determine the role general managers must take
in decisions about IS.
? Define and explain the Information Systems
Strategy Triangle.
? Identify and define the various business strategy
frameworks.
? Explain the information system strategy matrix.
? Understand and apply these models to different
organizations.
2

Real World Example
? During an ice storm in 2007 many airlines were
cancelling flights.
? Jet Blue waited to cancel flights and paid a
heavy price.
? Had to cancel 1,000 flights over 5 days.
? Up to 9 planes full of passengers were stranded
for up to 6 hours on the tarmac.
? An inadequate reservation system and
shoestring communication system was blamed
for the problems by Neelman.
? Changes had to be made.
3

The Impact of IS
? Companies are out of alignment when their
business strategy is not supported by their IS.
? The Information Systems Strategy Triangle is a
simple framework for understanding the impact of
IS on organizations and proper alignment.
? Successful firms have an overriding business
strategy.
? This business strategy drives both Organizational
and Information strategy.
? All decisions are driven by the firm’s business
objectives.
4

Figure 1.1 The Information Systems Strategy Triangle
5

IS Strategy Triangle
? Business Strategy drives all other strategies.
? Organizational and Information Strategy are then
dependent upon the Business Strategy.
? Changes in any strategy requires changes in the
others to maintain balance.
? IS Strategy is affected by the other strategies a
firm uses.
? IS strategy always involves consequences.
6

BRIEF OVERVIEW OF
BUSINESS STRATEGY
FRAMEWORKS

Think About IT
? What is a business strategy?
? Which factors influences a business
strategy?
? How does a business change its strategy
without losing balance or becoming out of
alignment?
? Are there specific events that induce a
business to change its strategies? What
are they?
8

Strategy
? A strategy is a coordinated set of actions to
fulfill objectives, purposes and goals.
? Strategy starts with a mission.
? Figure 1.2 shows some example mission
statements.
? A business strategy is a plan articulating where
a business seeks to go and how it expects to get
there.
? There are several “strategies” worth examining.
9

Company Statement
IBM
At IBM, we strive to lead in the creation, development and manufacture of the
industry's most advanced information technologies, including computer systems,
software, networking systems, storage devices and microelectronics. We translate
these advanced technologies into value for our customers through our professional
solutions and services businesses worldwide.
Dell
Dell's mission is to be the most successful computer company in the world at delivering
the best customer experience in markets we serve.
Apple
Apple ignited the personal computer revolution in the 1970s with the Apple II and
reinvented the personal computer in the 1980s with the Macintosh. Apple is committed
to bringing the best personal computing experience to students, educators, creative
professionals and consumers around the world through its innovative hardware,
software and Internet offerings.
Figure 1.2 – Mission statements of computer companies
10

Generic Strategies Framework
? Michael Porter describes how businesses
can build a sustainable competitive
advantage.
? He identified three primary strategies for
achieving competitive advantage:
? Cost leadership – lowest-cost producer.
? Differentiation – product is unique.
? Focus – limited scope.
11

Figure 1.3 Three strategies for achieving competitive advantage.
12

Porter’s Competitive Advantage
? Remember that a companies overall business
strategy will drive all other strategies.
? Porter defined these competitive advantages to
represent various business strategies found in
the marketplace.
? Cost leadership strategy firms include Walmart,
Suzuki, Overstock.com, etc.
? Differentiation strategy firms include Coca Cola,
Progressive Insurance, Publix, etc.
? Focus strategy firms include the Ritz Carlton,
Marriott, etc.
13

Differentiation Strategy Variants
? Shareholder value model: create advantage
through the use of knowledge and timing
(Fruhan)
? Unlimited resources model: companies with a
large resource can sustain losses more easily
than ones with fewer resources (Chain Store vs
Mom & Pop).
? The problem with Porter and these variants are
that the rate of change is no longer easily
managed and sustained.
14

Hypercompetition
? D’Aveni developed a model that stated
that sustainable competitive advantage
could NOT be sustained.
? Called the “Hypercompetition and the New
7 Ss Framework”.
? Competitive advantage is rapidly erased
by competition and the market.
15

? Assumptions of D’Aveni’s Hypercompetition
and the New 7 Ss Framework model:
? Every advantage is eroded. Advantages only last until competitors have
duplicated or outmaneuvered them. Once an advantage is no longer an advantage, it becomes a
cost of doing business.
? Sustaining an advantage can be a deadly
distraction. Some companies can extend their advantages and continue to enjoy the
benefits, but sustaining an advantage can take attention away from developing new ones.
? The goal of advantage should be disruption, not
sustainability. A company seeks to stay one step ahead through a series of temporary
advantages that erode competitors’ positions, rather than by creating a sustainable position
? Initiatives are achieved through series of small
steps. Competitive cycles are shorter now, and new advantages must be achieved quickly.
Companies focus on creating the next advantage before the benefits of the current advantage
erode.
16

Figure 1.4 Disruption and the new 7 Ss
17

D’Aveni’s new 7 Ss
? The 7 Ss are useful for determining different
aspects of a business strategy and aligning them to
make the organization competitive in the
hypercompetitive arena.
? The 7 Ss are
? 1. Superior stakeholder satisfaction
2. Strategic soothsaying
3. Positioning for speed
4. Positioning for surprise
5. Shifting the rules of competition
6. Signaling strategic intent
7. Simultaneous and sequential strategic thrusts
18

Approach Definition
Superior stakeholder satisfaction Understanding how to maximize customer satisfaction
by adding value strategically.
Strategic soothsaying Seeking out new knowledge that can predict or create
new windows of opportunity.
Positioning for speed Preparing the organization to react as quickly as
possible.
Positioning for surprise Preparing the organization to respond to the
marketplace in a manner that will surprise competitors.
Shifting the rules of competition Finding new ways to serve customers which transform
the industry.
Signaling strategic intent Communicating the intended actions of a company, in
order to stall responses by competitors.
Simultaneous and sequential thrusts Taking a series of steps designed to stun and confuse
competitors in order to disrupt or block their efforts.
19

Application of Hypercompetition
? General Electric applied the Hypercompetition
Model to its business units in the Destroy Your
Business (DYB) project.
? GE recognized that if they didn’t understand and
recognize their own weaknesses they could not
remain competitive.
? Employees were tasked to determine ways to
“destroy their business unit”. Once they have
identified these areas of weakness they apply
the Grow Your Business (GYB) strategy to find
fresh ways to reach new customers and better
serve existing customers.
20

IS Planning and Strategic
Advantage Models
? General Managers cannot afford to rely solely
on IS personnel to make IS decisions.
? Business strategy drives IS decision making.
? Changes in IS potential should trigger business
reassessments (i.e. the Internet).
? Information Systems Strategy Triangle shows
the proper balance of strategies.
? The models are helpful in discussing the role of
IS in building and sustaining competitive
advantage.
21

Understanding business strategy
To understand business strategy we must
answer the following questions:
1.What is the business goal or objective?
2.What is the plan for achieving it? What is
the role of IS in this plan?
3.Who are the crucial competitors and
partners, and what is required of a
successful player in this value net?
22

Framework Key Idea Application to Information
Systems
Porter’s generic
strategies
Framework
Firms achieve competitive
advantage through cost
leadership, differentiation, or
focus
Understanding which strategy is chosen
by a firm is critical to choosing IS to
complement the strategy
D’Aveni’s
Hypercompetitio
n Model
Speed and aggressive moves
and countermoves by a firm
create competitive advantage
IS are critical to achieving the speed
needed for moves and countermoves. IS
are in a constant state of flux or
development.
23

BRIEF OVERVIEW OF
ORGANIZATIONAL
STRATEGIES
24

Organizational strategy
? Organizational strategy includes the
organization’s design as well as the
choices it makes to define, set up,
coordinate, and control its work processes.
? The organizational strategy is a plan that
answers the question: ‘‘How will the
company organize to achieve its goals and
implement its business strategy?’’
25

Organizational Strategy
? A simple framework for understanding the design
of an organization is the business diamond
? the business diamond identifies the crucial
components of an organization’s plan as its
business processes, its values and beliefs, its
management control systems, and its tasks and
structures.
? This simple framework is useful for designing new
organizations and for diagnosing organizational
troubles.For example, organizations that try to change their cultures but fail to change the
way they manage and control cannot be effective.
26

JETBLUE used to demonstrate the Business
Diamond
? Processes are obviously very important at JetBlue. Every morning
CEO Barger reviews details about the previous day’s flights with the
operations team, and each process is carefully inspected to see if it
can be made more efficient. Based on a list of ‘‘focus flights’’ the
operations teams also deconstruct the ten worst delays to find ways
to improve problematic processes.
? Values and beliefs are also very important to JetBlue’s senior
executives, who are actively attempting to infuse the values and
beliefs throughout the organization. In particular, Chairman
Neeleman uses a visible, ‘‘one-on-one’’ leadership style that allows
him to interact freely with the employees. The company is guided by
five primary principles:
‘‘Treat your people right,’’ ‘‘Communicate with your team,’’ ‘‘Inspire greatness in others,’’
‘‘Encourage initiative and innovation,’’ and ‘‘Do the right thing.’’
27

JETBLUE used to demonstrate
the Business Diamond …..
? When it looked as if growth was negatively
affecting the company’s management, a new
training program, Principles of Leadership
(POL), was initiated to teach the five primary
principles to managers at every level.
? measurement and management system is a
detailed set of metrics for a variety of operations.
For example, the time it takes to deliver bags to the passengers is measured with a goal of
delivering them no later than 20 minutes after the plane has reached the gate.
28

JETBLUE used to demonstrate
the Business Diamond ….
? tasks are defined such that everyone
pitches in and helps. When a plane lands,
every employee on the plane from the
stewardess, to the pilot, to staff who are
deadheading, to the chairman, will pitch in
to clean the plane and get it ready for the
next set of passengers.
29

Business Diamond
? Simple framework for identifying crucial
components of an organization’s plan (its business
processes
? its values and beliefs
? its management control systems
? its tasks and structures.
? Useful for designing new organizations and for
diagnosing organizational troubles.
30

Organizational strategy
? Managerial Levers – another framework
for organizational design, states that
successful execution of the firm’s
organizational strategy is the best
combination of organizational, control, and
cultural variables
32

Managerial Levers
? This framework suggests that the successful execution of
a business’s organizational strategy comprises the best
combination of organizational, control, and cultural
variables.
? Organizational variables include:
? decision rights, business processes, formal reporting
relationships, and informal networks.
? Control variables include:
? availability of data, nature and quality of planning,
effectiveness of performance measurement and
evaluation systems, and incentives to do good work.
? Cultural variables comprise the values of the organization.
33

Figure 1.8 Managerial Levers
34

Understanding Organization Strategy
To understand organizational strategy we must
answer the following questions:
1. What are the important structures and reporting
relationships within the organization?
2. What are the characteristics, experiences, and
skill levels of the people within the organization?
3. What are the key business processes?
4. What control systems are in place?
5. What is the culture of the organization?
35

Framework Key Idea Usefulness in IS Discussions
Business
Diamond
There are 4 key
components of an
organization: business
processes, values and
beliefs, management
control systems, and
tasks and structures.
Using IS in an organization will affect
each of these components. Use this
framework to identify where these
impacts are likely to occur
Managerial
levers
Organizational
variables, control
variables, and cultural
variables are the levers
managers can use to
affect change in their
organizations
This is a more detailed model than
the Business diamond and gives
specific areas where IS can be used
to manage the organization and to
change it
36

BRIEF OVERVIEW OF
INFORMATION SYSTEMS
STRATEGY

IS Strategy
? IS strategy is the plan an organization uses to
provide information services. IS allow a
company to implement its business strategy.
JetBlue’s vice president for people explains it nicely: ‘‘We define what the business needs and
then go find the technology to support that.’’.
? IS help determine the company’s capabilities. IS
allows business to implement its business
strategy. While Business strategy is a function of competition (What does the customer
want and what does the competition do?), positioning (In what way does the firm want to
compete?), and capabilities (What can the firm do?).
? Four key IS infrastructure components are key to
IS strategy (Figure on next page) - These key components are
sufficient to allow the general manager to assess critical IS issues.
38

What Who Where
Hardware List of physical
components of the
system
Individuals who use it
Individuals who
manage it
Physical location
Software List of programs,
applications, and
utilities
Individuals who
manage it
What hardware it
resides upon and
where that hardware
is located
Networking Diagram of how
hardware and
software
components are
connected
Individuals who use
it/ Individuals who
manage it/
Company service
obtained from
Where the nodes are
located, where the
wires and other
transport media are
located
Data Bits of information
stored in the system
Individuals who
manage it
Where the
information resides
39

Summary
? The Information Systems Strategy Triangle
shows that business strategy always drives
organizational and information strategies.
? Business strategy drives organizational and IS
strategy.
? Includes models from Porter and D’Aveni.
? Organizational strategy must complement
business strategy.
? Models are the business diamond and managerial
levers.
40

Summary
? IS strategy must complement business strategy.
? When IS supports business goals the business the
business appears to be working well.
? Strategic Relationships.
? Organizational strategy and information strategy must
complement each other.
? They must support, not hinder each other.
? If change is made to one area the others must be
examined to ensure balance.
41

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