From: AAAI Technical Report WS-97-02. Compilation copyright © 1997, AAAI (www.aaai.org). All rights reserved.

The Agile Organization: &

Robert~ Plant Stephen2 Murrell

1Department of ComputerInformation Systems 2Departmentof Electrical and ComputerEngineering University of Miami, Coral gables, FL 33124

Tel: (305) 284-1963 Fax: (305) 284-5161 [email protected]

Abstract 2. Background to the Agile Organization Concept In this paper we consider the role of information technology and innovation within An Agile Organization when considered the context of an agile organisation performing from a systems perspective can be defined as electronic commerce. The paper will utilise follows: Schein’s sociotechnical model of innovation to consider the relationships between structure, An agile organization is one that competes with process, innovation, technology and a multi-dimensional strategy based in organisational culture, and focuses upon competitive flexibility. The agility of the innovation and technology, examining six of organization comes from the organization’s Schein’s sociotechnical hypotheses with respect ability to create custom-quality products in short to how artificial intelligence impacts the production runs, on-demand, interspliced with organisations ability to be agile, connected and production of other products on the same innovative. productionline, at low cost, with high reliability, and low cycle time. The production may be 1. Introduction located at any global location internal or external to the knowledge-source of the Recent works on electronic commerce organization. The knowledge-source is the (Kalakota, 96, 97a, 97b) have focused upon the functional management group that performs emergence of the internet as a mechanismthat command, control and communication of the facilitates inter-organisational commerce.This organization through its systems and paper examines how technology influences connectivity with the environment, internal and oganisational change such that enterprises can be external to the organization. The systems not competitive in the electronic arena. The basis of only act as the support for the organization but competition is anticipated to be that of low cycle also as the nervous system of the organization time, mass customisation markets and hence the allowing it to react to any external stimuli or need for organisations to becomeincreasingly competitive forces. In addition to the flexible connected and agile. The paper examines the positioning of the production, the sourcing of relationship between structure, process, supply is also flexible, connected and controlled innovation, organisational culture and through computer networks and systems. This technology. The paper primarily builds upon the concept of systems flexibility, support and work of O’Leary, Kukka and Plant (O’Leary.97) control are integrated into all aspects of the in examiningthe role of artificial intelligence as organizations value chain, in all of the support an enabling technologyfor agile organisations. and primary activites. Thus allowing the organization to continually re-invent itself and thus continually compete in a global marketplace.

26 Fromthis it can be seen that the ability of an ¯ The achievementof flexibility in all aspects organization to be considered agile is complex of the organizations value chain and multidimensional. ¯ That information systems are the primary drivers of that flexibility. 3. Technology Innovation and Organizations ¯ Inter-corporate relationship managementis vital to the organizations ability to position The transformation of an organization itself within electronic communities of from one state to another requires vision and commerce leadership from senior management,but further ¯ Humanresources are based upon knowledge it requires that the organization possess the workers property of organizational innovation. The area ¯ Creative interaction between knowledge of organizational innovation has been described workers, systems and extra-corporate by Schein in relation to traditional organizations entities facilitates the competitivenessof the and the transformational processes that they organization experience (Schein,1994). Wewill utilize his sociotechnical model (see Figure 1) Having created a set of cultural assumptions, organizational innovation to consider the context their impact upon the other sociotechnical in whichan agile organization exists. processes can nowbe assessed.

Underlying cultural Assumptions State of Information Technology 1 Organizational Structure Organizational Process

Organizational Innovation

Figure 1. A Soeioteehnieal Modelof Organizational Innovation [Sehein.94]

3.1 Underlying Cultural Assumptions 3.2. Information Technology It has been determined (Schein,1985) that a primary issue in competitiveness and The organizational culture will carry organizational adaptability is that of over and directly affect the information organizational culture. The culture of an organization manifests itself ultimately in its technologythat is present within an organization. mission and vision, which is an embodimentof The technology utilized appears in response to, the collective of the organization. In and in support of, that culture. The cultural an agile organization the cultural assumptions characteristics outlined above, all point to the are based upon factors such as: need for a flexible and open systems culture. These systems will be increasingly interconnected both intra- and inter-

27 organizationally, following and creating technology of an organization to create an standards and protocols. Further the use of innovative enterprise. systems to reduce cycle time requires an increased operational dependence and hence Adaptation of Schein’s assumptions operational risk upon critical systems. The allows the underlying nature of the agile support systems can be easily managedand even environmentto be seen moreclearly. outsourced to third parties, the developmentof new strategic systems being an aspect of the 1. The marketplace is in continious state of and development arm of the flux but that the organization can be organization. These new strategic systems continually repositioned to be effective in evolving quickly into the operational usage, both that market. to maintain competitiveness and to increase 2. The knowledge workers of an agile flexibility. The vital componentthat holds all enterprise are themselves in a continious these technological aspects together is the human state of skill enhancement to match the factor, the knowledge workers at both the needs of the market. systems level and the strategic level. The 3. The agile organization positions itself to organization being based upon the use of both be successful in a short term sophisticated requires its workforce relationship and a brief life-span market to be equally skilled and flexible. place. It also capitalizes upon its experiences to be successfully positioned for long-term 3.3. Organizational Structure organizational success. 4. The organization can work in several The organizational culture also directly markets at the same time each of which have affects the organizational structure. The nature differing competitive time planning and configuration of work practices and horizons. processes. The socio-technology model assumes 5. Markets involve inter-corporate that the structure can not be separated from the communitiesof interest. culture of the organization. This can be applied 6. The form of the market place is in part or to the agile environment where the culture of totally electronic. change through information technology is 7. Subcultures exist within the marketplace. accepted and that this acceptance leads to the flexibility of working practices by the Fromthis we can identify what Schein defines as employees, and flexibility of processes within characteristics of an information technology for the organization. innovation, and adapt those characteristics for an agile organization. These characteristics are 3.4. Organizational Processes defined through a series of hypothesis (Schein,1994), six of which will be examined The culture adopted by the organization light of the agile competitive philosophy in is also reflected in the nature of the section four. organizational processes and the communicationsthat surrounds these processes. The transformation of the value chain processes through technology impacts both the support and primary activities. The focus of these changes 4. Information Technologyfor Innovation being the move towards flexibility of the processes, both in terms of function and speed of In this section we will examinethe agile operation: the fundamental basis of the agile organisation through six of Schein’s hypothesis organization. in relation to information technology, with special emphasis placed upon the role of 3.5. Organizational Innovation artificial intelligence to each.

The sociotechnology model of Schein identified the relationships that occur between the culture, structure, processes and information

28 4.1 Networking Capacity: networked capacity, both internally and externally, the intra and inter-nets, confirming Hypothesis ITI: The capacity of an organization Hypothesis IT1. Wecan extrapolate the third era to innovate to the extent that it has total and consider the evolution of the technologies in networking capacity(Schein, 1994) this era. This is illustrated in Figure 3 and shows that the organisation progresses through a series The agile organization can be defined as the of levels of technological competence and complete networked organization. The understanding. The progression starts with progression of the organization from a support, developmentof intra nets with basic client server unconnected organization to this agile state technologies, followed by inter-connectivity via follows the three stages of Nolan and Seger’s standard protocols. A phase of web construction model in which three, S-shaped curves that follows and the creation of secure transaction "reflect organisational learning on major facilities through the Secure HyperText Transfer informational technologies" (Nolan and Seger, Protocol (S-HTTP). The highest phases 1993), these curves representing three eras: the organisational connectivity are centered around data processing era; the micro era; and the the use and manipulation of knowledge, both networkera (See Figure 2). internal knowledgeand external knowledge. The

Organisational Learning about Network Era Information Technology I

1960 1980 1995 2010 Year Industrial Information Virtual Economy Economy Economy

Transitional Economy "Period of "Period of Virtualization " "Period of Transformed Creative Enterprises" Destruction"

Figure 2: Stages Theory Re-examined

In considering the agile organisation knowledgeis used operationally, tactically and and the networked era we identify the strategically by the agile organisation in its organisation as moving towards a total relations with external entities. The use of

29 knowledge and the creation of a highly The ability to route and filter connected organisation is achieved through the information adequately as the volume of utilisation of artificial intelligence. The basis of information continues to grow is an area where which is the use of intelligent agents, artificial intelligence is both applicable and knowledge-based systems and virtual reality indispensable. The combination of the two models, through standards and applications built hypothesis indicates the need for organisationsto around those standards. perform wider environmental scanning with the

Ontologies KQML KIF

Organisational VRML Learning about Java Information HTML Technology S-HTTP I TCP/IP I Client Server Netware

Time

Figure 3: The ExpanedNetwork era

4.2 Routing and Filtering Capacity ability to access morechannels than ever before. Hypothesis IT2A; The capacity of an These activities can be performed in part or organization to innovate increases to the extent entirely by autonomousintelligent agents. The that it can open and close channels as needed leading area in whichthis is occurring is that of (Schein, 1994). smart procurement, in which product Hypothesis IT2B; The capacity of an information can be obtained autonomously and organization to innovate increases to the extent remotely by agents over a network such as the that it can filter informationinto the channelsas needed (Schein, 1994). internet., e.g., part.net, commerce.net. The The agile organization is based upon procurement process can occur autonomously the ability to innovate but also to respond to through arbitrage performed by neural nets or market demandsfaster and more profitably than knowledge-based systems which analyse and any other type of organization. This is grounded filter the quotes from vendors against in the ability to open and close channels to meet organisational requirements, previous specific and often novel market conditions and and profiles of the vendor. that the organizations self-understanding of its processes, through its virtual value chain allows Filtering can also take place through the superior informationfiltering to occur. organisations connectivity with the external world and external networks through intelligent search engines such as SemioMap

3O (www.semio.com/) which organises search distributed setting as a part of the Shared results by concept and aims to uncover Dependency (SHADE) project relationships between internet and intranet within which manyagents that adhere to those documents. protocols have been built and are available e.g., contents-based router, matchmaker, control 4.3 Connectivity to environment, "openness" of agent, ParMan (http://www- the system ksl.stanford.edu/knowledge- Hypothesis ITS; The capacity of an organization sharing/agents.html). As the connectivity of to innovate increases to the extent that it has organisations increases so does the necessity to several open channels to and from its interact not only through data but visually. This environments (Schein, 1994). can be achieved through virtual reality modeling and is supported by VRML.The supplier-buyer The connectivity of the agile relationship of manyorganisations is becoming organization is key to its ability to competeand increasingly dependent upon low cycle-times innovate. The organization is connected to and high quality work, a circumstance that membersof it’s communitythrough its inter- increasingly requires connectivity through VR organizational systems and then connectedto it’s modeling. The connectivity theme is a extended communities through the value systems continuing one in research, as is that of shared of its electronic community members. This information, as can be seen with the ARPA allows it to create adaptive, innovative and novel program in knowledge sharing that aims to solutions to new market forces and demands. facilitate the reuse of knowledge bases and knowledge-based systems. The ability to link The value of artificial intelligence is these standards protocols and formats with clear here, the internet and its standards are the projects such as CYC(which uses its own key to allowing universal access to customers language CycL) and suppliers. The standardisation also lowers (www.cs.umbc.edu/-narayan/proj/doc.html) will entry barriers and therefore opens new markets enable significant progress to be made with with low a cost of access to those markets. respect to corporate knowledge-based systems construction.. The key standards are in the language definitions e.g., Knowledge Query and Manipulation Language (KQML), Knowledge 4.4 Capacity to evolve one’s own IT system Interchange Format (KIF), and Virtual Reality technologically Markup Language (VRML). The Knowledge Hypothesis IT4: The capacity of an organization Query and Manipulation Language provides a to innovate increases to the extent that it can messaging format and a message handling fully understand and implement in protocol to supports run-time knowledgesharing information technology itself as these may apply amongst agents. The sharing of knowledgebeing to various aspects of an organization’s tasks supported by communicationfacilitators that co- (Schein, 1994). ordinate the agents and a set of performatives that define permissible operations between The ability of the agile organization to agents. The ability to create and execute understand its ownprocesses and re-configure messages is increased through other data and these in relation to the market demandsis key to information protocol formats and standards. The the organizations competitiveness. The ability to Knowledge Interchange Format allows re-configure systems is based upon the intra- knowledge to be exchanged between programs network of the organization and its flexibility. acting as an "interlingua". KIFis a prefix version This is enhanced through the use of corporate of first order predicate calculus with extensions knowledge-based system, which become the to support non-monotonic reasoning and organisations repository of learning. The effects definitions. The language can also represent of artificial intelligence elsewhere in the meta knowledgeand is therefore also suited to organisation will be enhance through such the creation of knowledge-based systems mechanismsas neural networks which will also (Plant. 1997). The current developmentof these enhance the organisations ability to capture its two formats is in the sharing of information in a own knowledge and grow from it.

31 4. 5 Presence of an IT subculture Readings in Electronic Commerce Addison Wesley Hypothesis I/C 1: The capacity of an organization to innovate increases to the extent Nolan, R.L., and Seger, K.S. (1993) that it has somewhere inside itself a fully "Notes on Information Technology and functioning, technologically sophisticated 1T Strategy" system that can be a demonstration of IT’s Harvard Business School, Note 9-193-137. capacity and a source of diffusion to other parts March 1 1993. of the organization(Schein, 1994). O’Leary, D.E., Kukka, D., & Plant, R.T. (1997) The creation of an IT environment that "Artificial Intelligence and Virtual progresses through the networkera as illustrated Organisations" in Figures 2 and 3 would necessitate the creation CACMJanuary 1997/Vol 40. No 1. pp52-59 of an innovative information-intense community of systems staff. The agile organisation requires Plant, R.T., & Gamble.R. (1997) these high degrees of sophistication in order to "Using Meta-Knowledge within a Multi-Level compete effectively, as more organisations move Frameworkfor KBSDevelopment" towards hyper-connectivity or fail. The artificial International Journal of Human-ComputerStudies intelligence component is a sub-community April, 1997 (46) within that system group, as would a database group be a sub-community. Schein, E.H. (1994) "Innovative Cultures and Organizations" In, Information Technologyand the Corporation 5. Conclusions of the 1990’s: Research Studies, Edited by ThomasJ. Allen, and Michael S.Scott Morton, Throughthe analysis of this section we pp125-146, Oxford University Press, NewYork. have identified several of the keys to becoming 1994 agile and that central to these is the ability to be an innovative. Aninnovative organization is not Schein, E.H. (1985) necessarily agile, but an agile organization has to Organizational Culture and Leadership be innovative to compete and survive in other San Francisco: Jossey-Bass than the short term. The paper identifies the relationship between the culture of the organisation and information technology. Further, the ultimate enabler of agility through technologyis the artificial intelligent component. AI demands greater organisational internal understanding of technology and thus is only applicable to mature organisations that have internally streamlined processes and a high degree of connectivity but whowish to becomea knowledgebased organisation.

References

Kalakota, R., & Whinston, A. (1996) Frontiers of Electronic Commerce Addison Wesley

Kalakota, R., & Whinston, A. (1997a) Electronic Commerce:A Manager’s Guide Addison Wesley

Kalakota, R., & Whinston, A. (1997b)

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