Tuesday 6:00 - 8:50 PM
Office: MEC 9-66
Tel: 212-998 0815
Fax: 212-995 4228
klaudon@stern.nyu.edu
 

This course focuses on the use of information technologies to manage and organize the digital firm. The premise of the course is that digital firms are different from traditional firms. To wit, digital firms are distinguished from traditional firms because of their near total reliance on a set of information technologies to organize and manage. For managers of digital firms, IT is not simply a useful handmaiden, an enabler, but rather it is the core of the business and the primary management tool. Insofar as traditional firms are inexorably driven to become more like digital firms, understanding something about digital firms will help us understand the future a little better.

Managers of digital firms need to identify the challenges facing their firms; discover the technologies that will help them meet these challenges; design business processes to take advantage of the technology; and create management procedures and policies to implement the required changes.

Some of the topics covered are:

Managing the digital assets of the firm

New technology infrastructure and architecture

Strategy for digital firms

Agency and transaction costs

IT-based business models

Supply chain management systems

Enterprise systems

Collaboration systems

Knowledge management

Employee relations

Management of information rights and obligations

During the course we will focus on several organizations that reflect several important themes in the course. Among these ‘signature’ firms are Cisco Systems, Dell Computer, General Electric, and Sun Microsystems.
 
 
 
 

The Class

The class is organized as a symposium where the key ideas of each week are discussed and debated. A symposium means, literally, drinking and talking with friends. The professor will introduce the topic(s), describe their significance and give his personal views. Student teams will make presentations based on the readings, the case study, and a Practicum. Each team will have ten to fifteen minutes to complete its presentation.
 
 

Assignments and Grading

Each student is expected to prepare two individual case analyses of approximately 4-5 pages in length. These individual analyses must be different from the cases assigned to your team. Each student will be assigned to a team by the professor prior to the beginning of class. Team assignments may not be changed. Each student will participate on a team that presents synopses and analyses of articles, books, cases, and a Practicum. The presentations should be about 15-20 minutes with ample time left for Q&A. The team presentations should be written 4-5 page papers (perhaps outline form) with accompanying slides. Last, each student will prepare a term paper on a topic of their choice that reflects the course reading and their personal experience.
 
 

Assignment Length Type Weight
 

Case analyses (2)	4-5 pages	Individual	%30
Team presentations (3)	5+slides	Group	%30
Final term paper	12 pages	Individual	%30
Participation		Individual	%10

 

ALL ASSIGNMENTS ARE DUE IN CLASS ON THE DATES GIVEN IN THE COURSE OUTLINE AT THE BEGINNING OF THE CLASS. THE FINAL PAPER IS DUE AT THE END OF THE LAST CLASS BEFORE THE FINAL EXAM PERIOD. .

Attendance will be taken at every session. A good participation grade requires attendance, solid contributions to the class discussion, and thoughtful response to other students’ contributions.
 
 

Reading

Books:

Clayton M. Christensen, Innovators Dilemma: Why Great Companies Fail, Harper Collins, 1997

Thomas H. Davenport, Mission Critical: Enterprise Systems

Philip Evans and Thomas S. Wurster, Blown to Bits: How the New Economics of Information Transforms Strategy, Harvard Business School Press, 2000.

Cases: Case packet

Articles: Reading packet

Handout Packet: a collection of popular articles

**References. Articles with a ** are for reference purposes. They are not included in the reading packet. They will be on reserve in the Library.

Online References:

The following Web sites may be referred to during the class. Several listed articles are available at these sites:

InformationWeek: http://www.informationweek.com/

CIO Magazine: http://www.cio.com/

CIO/ WebBusiness Magazine: http://webbusiness.cio.com/

ComputerWorld: htttp://computerworld.com

The Economist Magazine: www.economist.com

Business Week: www.businessweek.com

Introduction

September 7

1. The Emerging Digital Firm

Introduction to the course

Understanding three literatures: information technology, organization, management

Defining the Digital Firm

Management, organization and technology issues in the digital firm

What makes firms "digital"?

Comparison of traditional and digital firms

Online with suppliers, customers, assets and knowledge

2. Management and Organizational Challenges in Digital Firms

September 14

Central organizational issues in digital firms

http://www.britannica.com/bcom/magazine/article/0,5744,71245,00.html

or www.economist.com.

Background: http://members.dencity.com/voodoowind/schumpeter.html

Managing the digital assets of the firm

Managing people in a digital environment

Theories of management

Why the rapid pace of technological change poses new challenges to managers

IT both enables and constrains organizations. A basic understanding of technology is needed to understand the case studies and other material later in the course. In this section we briefly outline the existing organizational IT systems infrastructure and then describe new technologies for managing and organizing. Keep an eye on the following business capabilities that may be performed entirely by new technologies:

Managing customer contacts

Providing customer service

Targeting advertising

E-mail direct marketing

Customer knowledge: data analysis engines

Supply chain logistics
 
 

The background reading for this section of the course is Mission Critical

3. Digital Firm Infrastructure I

September 21

IT infrastructure and architecture

Hardware: from mainframes to netpliances

The hardware enables and limits what you can do in business

Technological and business drivers: costs and benefits.

The software is ` your firm’s interface with vendors, customers and employees

Technological and business drivers

Lifespans

Applications, functional areas, enterprise, and ASP

Management issues

"CheckFree Looks at the Total Cost of Ownership"

4. Digital Firm Infrastructure II

September 28

Databases: flat files to relational to Web Servers

Databases determines what you know and what you might learn

Major trends in databases: flat files to relational to hypertext search engines

Web-based database servers

Web page servers

Management issues

The network is the business

Major trends in voice and data communications

Network types

The Internet

WAP and iMode

Connectivity and interoperability

The multi networked digital world of 2005 and beyond

Implications for electronic business and commerce

Management issues and challenges

October 5

Enterprise Systems

Functional area applications

Enterprise Systems: Wholistic efforts (the Total Unified Information System)

Industrial networks and XRP (extended enterprise resource planning)

Reading: Davenport, Mission Critical

Case: Cisco Systems Inc: Implementing ERP 5-699 031

Application Service Providers

Reading:

Rick Whiting, "Software Morphs Into a Service," Informationweek, Oct. 11, 1999

Jennifer Mateyaschuk, "Leave the Apps to Us!", Informationweek, Oct. 11, 1999

(www.informationweek.com)

Information technology is a part of the firm’s external environment. In general, IT cannot be controlled by the firm. The IT environment is beneficent because it supplies a continuing source of new opportunities and advantages. The IT environment is hostile because it destroys the economic value of long-term competencies and enables substitute products and new entrants to the firm’s marketspace. Firms make plans (action plans) for dealing with their environments. These plans are called strategies. Most strategies are not realized although firms do continue to act.

The background reading for this section of the course is The Innovators Dilemma

6. Information Technology and Digital Firm Strategy

October 12

Digital firm strategy

Managing digital assets

Implications of Mergers and Acquisitions for IT

Life cycle issues: difficulties of aligning business strategy to IT strategy

Reading:

October 19

Changing organizations and people in Internet time

Organizational death and dying.

Reading

Book: Innovators Dilemma

Organizing involves creating an environment in which people can perform their assigned tasks. Organizing involves developing hierarchy, division of labor, specialization, standard operating procedures (business processes), and professionalism. Organizations are also a set of moral commitments among employees and employers, customers and firms, and suppliers and firms. IT presents the firm with new opportunities for organizing work.

Background reading for this section of the course is Blown to Bits.
 
 

8. Organizing the Digital Firm

October 26

New age religion and the "virtual" firm

Why prophecy failed

Hierarchies

Network and Matrix Organizations

Reading:

**Reference: Drucker, "The Coming of the New Organization," HBR, Jan/Feb 1988

November 2

November 9

How IT lets you design new organizational forms and industry structures
 
 

11. Leadership, Communication, Collaboration and Coordination in a Digital Firm

November 16

Leadership in a digital firm

Communicating in a digital firm

Collaboration tools in digital firms

Reading

Homer, The Odyssey. Chapter 9, "The Cyclops"

Hiring employees for the digital firm

Retaining and incentivizing employees

Developing 1:1 employee support systems

Reading:

Guest Speaker

**Reference: NRC Report Excerpts

November 23

Working conditions in the digital firm

The "new employment" contract

From employee to "net slave."

Corporate citizenship in a digital firm: employee rights

Telework, Telecommuting, and Overwork

Family, career, and profession

Coordinating Work in Digital Global Environments

Managing in global digital environments

Case: AXI Travel: American Express Interactive, HBS 9-399-014.

13. Knowledge-based Systems

November 30

Managing digital assets--knowledge

How organizations find, store and use knowledge

Knowledge-based Systems

Reading Synopsis: Team 9

Practicum: Team 10

Transforming ideas (knowledge capital) into firm digital assets (plans and routines)

Sharing knowledge: Broadband knowledge delivery systems

Institutionalizing knowledge: Corporate universities

14. New Management Issues Facing Digital Firms

December 7

Managing Information Rights and Obligations

Security

Privacy

Freedom of information

Protecting intellectual property: copyrights

Snooping on Employees

Employer and employee rights and obligations

New technologies for unobtrusive employee surveillance

New techniques for employee protection from unobtrusive employer surveillance systems

Reading:

Laudon, "Privacy and Markets," CACM December 1996.

Class Party

FINAL PAPER DUE
 
 

Reading Packet

Articles

Note: Web available articles are not included in the packet.

Session

1. The Emerging Digital Firm

Venkatramen and Henderson, "Real Strategies for Virtual Organizing," Sloan Management Review, Fall 1998

DeSanctis and Monge, "Communication Processes for Virtual Organizations," Organization Science, December 1999.
 
 

2. Management and Organizational Challenges in Digital Firms

Robey and Boudreau, "Accounting for the Contradictory Organizational Consequences of Information Technology: Theoretical Directions and Methodological Implications," Information Systems Research, June 1999.
 
 

3. Digital Firm Infrastructure I

**Reference: Feeny and Willcocks, "Core IS Capabilities for Exploiting Information Technology," Sloan Management Review, Spring 1998.

**Reference: Applegate, "Doing Business in a Distributed World: Clients, Servers, and the Stuff in Between," HBS 9-195-211

Kadard and Rondinelli, "Innovative Infrastructure for Agile Manufacturers," Sloan Management Review, Winter 1998.

Article: "Eating Their Own Dog Food," The Wall Street Journal , April 19, ’00.
 
 

4. Digital Firm Infrastructure II

Heather Green, "The Information Gold Mine," BusinessWeek e.biz July 26, 1999

Levitan and Redman, "Data as a Resource: Properties, Implications and Prescriptions," Sloan Management Review, Fall 1998

Subirana and Koelewijn, "Technological Alternatives for the Distribution of Information," IES050. revised 1998. [Listed in HBS Case Catalog]

**Reference: Communications of the ACM, April 2000. "ERP Experiences and Evolution." This edition of the CACM is devoted to a discussion of ERP issues. [This does not have to be put on Reserve].
 
 

5. Digital Firm System Architecture: Enterprise Systems and ASP (application service providers)
 
 

6. Information Technology and Digital Firm Strategy

**Reference: Hamel, "Strategy and Revolution," HBR, July/August 1996.

Markides, "Strategic Innovation in Established Companies," Sloan Management Review, Spring 1998

W. Chan Kim and Reneee Mauborgne, "Creating New Market Space," HBR 99105 January-February 1999

7. Why Digital Firms Find it Difficult to Implement Strategies: Managing Change

Markus and Benjamin, "The Magic Bullet Theory of IT-Enabled Transformation," Sloan Management Review, Winter 1997.
 
 

8. Organizing the Digital Firm

**Reference: Drucker, "The Coming of the New Organization," HBR, Jan/Feb 1988
 
 

Malone, "Is Empowerment Just a Fad? Control, Decision Making and IT," Sloan Management Review, Winter 1997.

Kraemer, Dedrick, and Yamashiro, "Refining and Extending the Business Model With Information Technology: Dell Computer Corporation," The Information Society, 16:5-21, 20 00.

9. Re-building Old Organizations as Digital Firms

**Reference: Malone, et. al., "Tools for Inventing Organizations: Toward a Handbook of Organizational Processes," Management Science, March 1999.

**Reference: Hitt, "Information Technology and Firm Boundaries" Evidence from Panel Data," Information Systems Research, June 1999.

Markus and Benjamin, "The Magic Bullet Theory of IT-Enabled Transformation," Sloan Management Review, Winter 1997.
 
 
 
 

10. Building New Digital Firms

Kevin Werbach, "Syndication: the Emerging Model for Business in the Internet Era," HBR R00311 May June 2000.

Brynjolfsson, Renashaw, and Alstyne, "The Matrix of Change," Sloan Management Review, Sinter, 1997.
 
 

11. Leadership, Communication, Collaboration and Coordination in a Digital Firm

Applegate and Bock, "Technology for Teams," 9-196-008

Kraut, et. al., "Coordination and Virtualization: The Role of Electronic Networks and Personal Relationships," Organization Science, November-December 1999.

**Reference: Fjermestad and Hiltz, "An Assessment of Group Support Systems Experimental Research: Methodology and Results," Journal of Management Information Systems, Winter 98/99

Timothy Butler and James Waldroop, "Job Sculpting: The Art of Retaining Your Best People," HBR 99502 September-October 1999.

12. Work and Employment in Digital Firms

Jarvenpaa and Leidner, "Communication and Trust in Global Virtual Teams," Organization Science, November-December 1999.
 
 

13. Knowledge-based Systems

Andrew Hargadon and Robert Sutton, "Building an Innovation Factory," HBR 99504 May-June 2000

Gary Hamel, "Bringing Silicon Valley Inside," HBR 99504 September-October 1999.
 
 

14. Managing Information Rights and Obligations in the Digital Firm

Laudon, "Privacy and Markets," CACM December 1996

Michael J. McCarthy, "Your Manager’s Policy on Employees E-Mail May Have a Weak Spot," Wall Street Journal, April 25, 2000.

Cases

1. The Emerging Digital Firm

No case for this session

2. Management and Organizational Challenges in Digital Firms

September 14

Case: www.springs.com (1998). A traditional firm tries to keep up with its rivals.

September 21

Cases: "Managing Hardware Assets Pays Off"

"CheckFree Looks at the Total Cost of Ownership"

September 28

Case: Sun Microsystems and the N-Tier Architecture. 9-399-037. Suns method for building large scale, networked, enterprise systems.
 
 

5. Digital Firm System Architecture: Enterprise Systems and ASP (application service providers)

October 5

Case: Cisco Systems Inc: Implementing ERP 5-699 031

6. Information Technology and Digital Firm Strategy

October 12

Case: Charles Schwab Corp. A & B. (9-300-024 and 9-300-025). Follows the strategic decision making at Schwab as managers cope with new competitors and new technology.

7. Why Digital Firms Find it Difficult to Implement Strategies: Managing Change

October 19

Case: Providian Trust: Tradition and Technology (A&B). HBS 9-398-008 and 9-398-035. The difficulties faced by managers seeking to re-build business processes in a traditional organization.

8. Organizing the Digital Firm

October 26

Case: Dell Online HBS #9-598-116

9. Re-building Old Organizations as Digital Firms

November 2

Case: Oticon A/S: Project 330, HBS 195-141. A radical redesign of a traditional organization.

10. Building New Digital Firms

November 9

Case: Proctor and Gamble: Improving Consumer Value Through Process Redesign. 9-195-126. P&G introduces a radical new way to do business that involves changing the entire consumer products industry.

Case: Cisco Systems: Managing Corporate Growth Using an Intranet 97E 018. A signature company of the age that grows through aggressive acquisition uses its intranet to create a single corporate culture. This case is also relevant to Session 6, "Information Technology and Digital Firm Strategy."

11. Leadership, Communication, Collaboration and Coordination in a Digital Firm

November 16

Case: Cisco Systems: Managing Corporate Growth Using an Intranet 97E 018.

12. Coordinating Work in Digital Global Environments

November 23

Case: AXI Travel: American Express Interactive, HBS 9-399-014.

13. Knowledge-based Systems

November 30

Case: KPMG Peat Marwick: One Giant Brain," HBS 492-002

Case: American Management Systems, Inc.: The Knowledge Centers. (9-697-068). A rapidly growing consulting firm copes with the difficulties of building a knowledge delivery system for its new consultants.

14. New Management Issues Facing Digital Firms

December 7

There is no case for this session.