Coordination in Distributed Organizations
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Transcript of Coordination in Distributed Organizations
Coordination in Distributed OrganizationsKannan Srikanth
PhD Student
Strategic and International Management Dept.
ICT at the Firm Level of Analysis
How does ICT enable disaggregation of a firm’s activities?
Disaggregation of activities along two dimensions– Geography – Activities performed across several
geographic locations
– Ownership – Activities performed across several firms
Null Hypotheses
Disaggregation across geographies– Digitization of information leading to easy
transfer across locations– Increased bandwidth and ICT tools leading to
cheap communication across locations
Unbundling across firm boundaries– Standardization of information and
simplification of coordination are primary drivers
Research Study
Business Process Outsourcing – Variation in activities spread both across geographies
as well as across firm boundaries– Innovative, hard to standardize, coordination intensive
processes are both offshored and outsourced
Qualitative study of coordination in offshore software services delivery – Main emphasis of study is on geographic dispersion– Interviews with managers for 40 projects
Joint Work with Phanish Puranam
Distributed Vs. Co-located Projects
Size, Complexity: – Distributed projects > Co-located projects
Performance: – Distributed projects = Co-located projects
Project disasters as likely to occur in co-located projects as in distributed projects
How do firms leverage ICT to coordinate complex non-standardized and highly interdependent activities across geographies?
Coordination by ICT
Complex patterns of interdependence likely to need frequent and rich interactions – Typically achieved by face-to-face communication
Use of Rich ICT in distributed projects– “Boeing has set up a 24-hour work day where they just
pass their designs back and forth from Moscow to America …There are video-conferencing facilities on every floor of Boeing’s Moscow office, so engineers don’t have to rely on email when they have a problem to solve with their American counterparts. They can have a face-to-face conversation” (Friedman, 2005; p 195). [our emphasis]
Communication by Rich ICT is unimportant
Software projects do not seem to use anything more than Email, telephone– Only 6 of 27 projects used rich media – NET
Meeting or Live Meeting– No Project used video conferencing (VC)
New technologies are both familiar and available – Software professionals are likely to be expert
users in these technologies– Technologies readily available
What ICT is actually used?
Configuration Management Tools– Version control managers (e.g. PVCS)
Common Development Environment– Shared repositories for documents, code (e.g. shared
drives)– Common Development tool kits (e.g. Mercury)
Communication Tools– Email, Telephone
ICT tools are more important to provide a shared view of what is happening in all locations rather than for communication between locations
How does ICT achieve coordination of geographically dispersed
activities?
Not by allowing frequent communication among the employees in different locations
But by allowing employees in each location a window to view and observe the actions taken by those in other locations
ICT is important to generate cross-contextual common ground
ICT and Firm boundaries
Between firm coordination is very different from within firm coordination: – Firms rely to a large extent on face-to-face
communication to coordinate between firms– Frequently firms co-locate to coordinate low levels of
interdependence across firm boundaries when they routinely coordinate much higher levels of interdependence within firm boundaries but across locations with little need for rich communication
Why is ICT ineffective across firm boundaries though highly effective within?
Effect of Firm Boundaries
Coordination in distributed software projects occurs mainly by common ground
Firms are able to leverage pre-existing common ground within their boundaries but not across
ICT generates common ground in real-time– But is not enough on its own– Needs common ground generated by authority
and socialization that is available only within firms
Implications - I
ICT vital to disaggregate activities across distance– But not the kind we thought was important– Shared context is more important than ability to
communicate– Supports research by Billinger and Jacobides (2005)
Firms should pay attention to context building ICT– E.g. investing in video-conferencing alone will not make
offshoring work
Policy holders should be aware of technological and regulatory issues that prevent such cross-contextual knowledge from forming
Implications - II
ICT alone is not enough to unbundle across firms– When standardization of information is not
possible coordination becomes very tedious For non-standard or innovative work, co-located
supplier relationships needed for Face-to-Face communication– Cannot rely on a “faceless” market– Supports research by Jacobides (2005)
Firms and policy makers should be aware that some types of work inescapably require face-to-face contact
Thanks
Look forward to your feedback
MGJ INTRO SLIDES
How does ICT enable disaggregation of a firm’s
activities?
Disaggregation is along two dimensions– Across geographic locations and across firm boundaries
How do firms leverage ICT along these two dimensions?– Are the drivers along both dimensions the same (or at least
similar?)
BPO - Wonderful natural experiment– Offers variation across both for a wide range of processes– Allows a micro level of analysis by looking at discrete
activities
ICT and Geographic Dispersion
Qualitative research study on offshore software services delivery– Involves complex, non-standardized and
coordination intensive work that s done across both geographies and firm boundaries
ICT vital to geographic dispersion of activities– Coordination enabled by IT tools that create
cross-contextual common ground– Communication tools much less important
than previously thought
ICT and Firm Boundaries
IT much less effective in coordinating activities across firm boundaries as it is across locations
Firms frequently co-locate because of the need for face-to-face communication – Even when much higher levels of interdependence are
coordinated within the firm, but across geographic distance
Coordination occurs by common ground– ICT generates one type of common ground– That is insufficient to coordinate across firms without
other types of common ground that are generated primarily within firms
Back-UP Slides
Offshoring - 2000
Working on a software project in 2000– Distributed between Hawaii and California– Coordination was a disaster– We had to hire developers in Hawaii
My firm tried to use developers from India in another project in Wisconsin– The consensus among us was this will never work
Coordination
Coordination is the alignment of expectations (reciprocal predictability of actions) among interdependent actors
Cooperation is the alignment of interests(Heath and Satudenmayer, 2000; Camerer, 2003; GLP, 2005)
Coordination Vs. Cooperation Failure
Interdependencies are well managed
(software developed with minimum rework)
Cooperation failureSoftware has errors because employees are not working hard enough
Example: Coordination did not occur if defects in software are because a developer coded one module without realizing its impact on other modules
Coordination failureSoftware has bugs because employees do not account for others actions
Two firms studied
INTEGRATOR (31 projects)
PROCESS MASTER(31 Projects)
HQ Location USA India
Employees 117000 59000
Revenue USD 20.1 Billion USD 2.4 Billion
EBITDA USD 1.71Billion USD 0.83 Billion
Global Presence
60 countries 47 countries
Process Maturity
Variable (CMM level 1-5 in different offices)
Mature (CMMi Level 5 enterprise-wide)
Sampling Strategy
All key personnel are Co-located and are employed by the vendor
Both client and vendoremployees play key project roles, but they are all co-located
All key personnel areemployed by the vendorbut they work from both onshore and offshore locations
Both client and vendor employees play key project roles, and work from onshore and offshore locations
Yes No
Yes
No
All Personnel Co-located?
Personnel belong to same firm?
(7) (14)
(6) (13)
22 more projects to be used as replication sample
Architecture – Modularity Strategy
Pre-Planned Modular code architectures are unimportant
24 of 27 distributed projects have high interdependence between locations
Managers are unable design low interdependence between locations because of: – Legacy considerations– System landscape considerations– Client dictates architecture
New York City
Bangalore, India
Coders in both New York and India work on the same code modules
Expected Use of Rich ICT
Face–to-Face communication
Instant Messenger
Telephone Conversation
NET Meeting
Live Meeting
Web-Cam
Video Conference
Voice Mail
BANDWIDTHLow
SYNCHRONY
Low
High
High
(Web-Cam + IM)
Communication is meagre
Even communication using poor media between locations seems to be quite low– People do not pick up the phone and talk to their
counterparts as often as one expects
Communication in many instances is scripted– The approximate time of communications, the
participants, the agenda, etc. is mainly scripted– “The developers [across locations] just did not communicate
whenever they have doubts or problems – at certain pre-specified milestones, they have to share certain documents and communicate. The communication at this meeting is not ad-hoc, they have to talk about certain things.”
Study 1 – How Coordination by Common Ground Occurs
TOOLS TO CREATE COMMON GROUND
ANTICIPATION INTERPRETATIONCOMMON GROUND EFFECTS
Coordinated Action across locations
Procedural Cross-contextual InterpersonalTYPES OFCOMMON GROUND
Prior Experience
Real time
Technological Tools
Rotation between locations
CompensatorDesigned
Uniform Processes
Study 1 – We Find Coordination by Common Ground
Rich ICT tools
FEEDBACK
Distributed Software Projects
Modularity used:Locations are Not interdependent
Coordinated Action
Locations are interdependent
Poor ICT tools
Interpretation Effect
CommonGround
Anticipation Effect
PLAN
CommunicationICT Tools help generate cross-contextual common ground
Conclusions
Coordination in distributed software services may depend less on modularity or communication based strategies….
But more on common ground across locations– These include common approaches (rather than solutions) to
problems, knowledge about the context faced by personnel in other locations and each others idiosyncrasies
The relevant ICT in such situations are tools that allow for building cross-contextual common ground across locations– Not those that allow for communication across locations– An emphasis on providing rich media might be misplaced