In regard to information systems design and use in organizations, the organizational culture helps in anticipating possible reinforcement or conflict involving the organization’s culture and current or proposed features and capabilities. It also helps in anticipating implementation problems and launching change management activities that might otherwise be overlooked.
In the 1980's, we saw an increase in the attention paid to organizational culture as an important determinant of organizational success. Many experts began to argue that developing a strong organizational culture is essential for success. Furthermore, over the past decade, a great deal has been written about organizational culture and the important role it plays in successful performance. Edgar Schein (1992), one of the leading authorities on culture, defines it as a pattern of shared basic assumptions that the [organization] learned as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems. [1]
This essay reports the results of a study of organizational culture and discusses effects and forces of organizational culture driving the performance of firms competing in business-to-business markets using a case study. It begins with a brief overview of organizational culture literature. After a description of the Skandiabanken case, the analysis and discussion of an organizational culture performance case study is presented and discussed.
2. Literature Review
2.1 Theories of Organizational Culture
The term culture, and more specifically organizational culture, has recently come into the common parlance. Culture in organizations can be thought of as the beliefs, values, and meanings shared by members of an organization. Managers, interested in effective and efficient ways to manage their organizations, have begun referring to organizational culture as a management-directed phenomenon and a tool for organizational adaptation and change (Maccoby, 1994; Morey & Morey, 1994). In this view, culture is considered a set of variables linked to organizational performance, and creating organizational culture is considered a top-down, management-directed function. Schein writes that `the only thing of real importance managers do is to create and manage culture' (Shein, 1985). This approach to organizational culture focuses on managing, controlling, or fixing the culture of an organization (Deal & Kennedy, 1982; Kilmann, Saxon & Serpa, 1985). [2]
Nowadays, much has been published in the literature about organizational culture (Peters and Waterman, 1982; Hofstede, 1991), its centrality to business change and the importance of enablers such as leadership, learning organizations and core competencies in the evolution of the corporate culture. [3]
It is essential that the shared norms, values, beliefs, and expectations held by employees be in balance with the external environment. "If an organization’s culture has not facilitated adaptation to the environment, the organization will either not survive or will find a way to change its culture."5 High performing organizations recognize this and proactively take steps to facilitate this culture-environment balance on an ongoing basis. They consciously cultivate an organizational culture that is conducive to the organization’s success. [4]
As most people know, organizational culture is complex and multi-dimensional. For example, a recent qualitative content analysis of the literature on organizational culture since 1992, Detert et al [2000] reviewed over 25 multi-concept frameworks, identified commonalities in their dimensions, and eventually concluded that eight general dimensions listed in Table 1 suffice for characterizing values and beliefs underlying TQM practices. Regardless of whether a table of this type contains 5 or 8 or 15 dimensions, using a purely multidimensional view in practice is difficult because it does not provide a holistic impression of how a culture operates.
Table 1: Variables and issues related to eight dimensions of culture
While there are various models that can be applied in addressing the wide range of organizational culture situations that might present themselves, the four levers illustrated below in Diagram 2 will in some fashion be prominent in virtually all models.
Culture
Leadership
People Systems
Culture
Structure
Diagram 2: The Levers That Shape Organizational Culture
2.2 Organizational Cultures influences IS use & design in organizations
Information systems were initially adopted in order to more efficiently handle the information flow internally. These data processing systems allowed more and faster transaction processing in organizations. As information systems have matured, managers now look not only for efficiency, but also effectiveness and strategic value.
However, as information is the key to modern organizations, changes in information technology will necessarily have an effect on the organization's culture. Moreover, since organizations are an amalgam of functional, political, and social groupings with complex patterns of cooperative and competitive interactions, the organization culture will affect how the information systems is used. This reciprocal influence raises a number of issues. The use of information systems has a significant impact on job design, supervision, power and status in an organization. Organizational culture has also been mentioned as a critical success factor in IS implementation.
Many researchers agree that organizational culture is a complex factor, especially in very large organizations where several subcultures might exist simultaneously. According to Sathe, culture is "the set of important assumptions (often unstated) that members of communities share in common." Every group, corporate otherwise, has a unique culture that is shaped by its members' shared history and experience, because organizational culture acts as a filter through which members grasp the realities inside and outside the organization, organizational culture affects practically all aspects of the way people of a group interact with each other.
Organizational cultures within successful organizations are characterized by agility, alignment with external environmental factors as well as with the organizations’ mission/vision, and a bias for action. These three factors are crucial in a rapidly changing environment. But being aligned today is not enough. Like winning racecar drivers who anticipate the turns in the road, successful organizations are constantly encouraging their employees to look ahead, to anticipate change, so they can position themselves and the organization to slip ahead when there is a curve in the road, when there is a change in direction. [5]
3. Case Study
3.1 Description
Skandiabanken is a very efficient bank and it is shown as a model. Their success was based on the high level of customer service, satisfaction and value, and they have been successful from the start. Skandiabanken has been created in October 1994 and had grown to become Sweden's fifth largest bank in terms of Internet Customers. They expand themselves to the Norwegian market.
Skandiabanken's e-business strategy is based on 3 points:
Truthfulness
Simplicity
High Interest
Skandiabanken developed a philosophy in 2 points:
Developing culture that supported personal responsibility and action.
Get both business and IT people to adopt a "customer view point" of the organization.
Skandiabanken developed IT practices in 3 points:
Low cost
Practicality and simplicity
Adding value: "outsource the rest"
SkandiaBanken’s business model
Simple
Rule all aspects of the e-model (customer relationships, products and services, business processes, development of IT solutions, and organizational structure)
'All-in-One' account (easy moving between funds of deposits, stock trading and certificate of deposits as well as salary and bills can respectively easily be deposited and paid, easy transfers between SkandiaBanken accounts and accounts in other banks and auto, home mortgage, or Skandia insurance products directly paid from the customers account)
Truthful
Truthfulness guide all interactions with customers and employees
Transparency and straightforwardness of service fee schedule (account interest is capitalized every month instead of annual interest based on average and minimal totals)
High Interest Rates
The most competitive interest rates in the market (2% to 3% more than competitors' rate)
SkandiaBanken’s Business Strategy
Company culture that support personal responsibility and action
Totally and quickly responsive with customer needs
Employees do not just learn about customers, but need to listen and learn from customers
It is important to adopt a "customer viewpoint".
Employees have to understand the services, the process and the IT in order to get a complete understanding and to provide not only technical solution but 'philosophical' one. This is the way of business thinking.
Three customer's principles rule developing SkandiaBanken's IT system
- Low cost (what is the gain for the customer and at what cost)
- Practicability and simplicity ( difficult to create easy, small solutions / "group think" excluding technical people was often used to enhance creativity)
- Adding value (developing and managing value-added systems while outsourcing the rest)
Organizational culture:
Open-door culture.
Informal working environment.
Extremely formal information distribution.
Employees do not learn about customers, need to listen and learn from customers.
Customers’ opinions.
3.2 Analysis
3.2.1 Analysis using the Porter’s five competitive forces
Existing Competitors:
All other banks.
Especially Swedish and Norwegian banks.
Customers:
Account.
Car financing.
Home mortgage.
Stock trading.
Fund management.
New Entrants:
Greater competition in the future as traditional European banks grew better at offering internet services.
Niche banks entered the Nordic market.
3.2.2 Analysis using Value Chain Model:
Form Skandiabanken case, you can identify that the value chain of Skandiabanken has to be modified and the traditional value chain has to be updated to the market it belongs to.
We have to take into account that today we will talk more very often of a "value web". To concluded with the environment of Skandiabanken we have to understand that they are on a special market which is providing banking services and products, the only way to deal with them is Internet and Telephone, therefore that is why in the value chain the activity where they cannot afford to be inefficient is the sales & marketing and the customer services.
Skandiabanken has to develop a strong relationship of confidence if they want to gain customers who are not worried to let their money be managed by some people that they did not meet.
3.2.3 Analysis of Skandiabanken's organizational culture:
Skandiabanken has a special organizational culture. The reason why this bank is today so successful in the north of Europe is because of its permanent evolving relationship with the customer. This relationship is based in and from the customer's point of view.
Skandiabanken is an informal working environment in terms of hierarchy, but we have to understand on the other hand that the way information was distributed in the company was extremely formal to make sure that information was accessible. Information was also updated each week.
Moreover, innovation and action were reinforced by a management team that expected mistakes to happen (Murphy’s Law: if it can happen, it will happen).
3.3 Conclusion for SkandiaBanken
Strategic information systems are often affected by the organization culture as well as its services, and operating procedures, driving the organization into new behavior patterns. Using technology for strategic benefit requires careful planning and management. Manager interested in using information systems for competitive advantage will need to perform a strategic system analysis. Competitive advantage can be achieved by enhancing the firm's ability to deal with customers, substitute services, and new entrants to its market, which in turn may change the balance of power between a firm and other competitors.
This SkandiaBanken's philosophy is very different from the competitors' ones because trusting employees and completely on customer oriented. It that way Skandiabanken is always developing its competitive advantage and it is not going to be easy copied by the competitors because involving big organizational culture and spirit change.
The main reasons why Skandiabanken has been so successful come from its customer focusing especially its good organizational culture. The main point is that it would be very difficult for the competitors in term of culture and structure and the way they have traditionally worked to copy this philosophy.
Skandiabanken always has to be ware of being ahead of its competitors' services in order to keep its competitive advantage sustainable and to gather so many customers as the competitors. SkandiaBanken has also to protect itself of unfriendly merger from bigger competitors.
Finally, one of the most dangerous parameter is about security. SkandiaBanken offers its customers a choice of telebanking channels. Now, digital customer relationships are being developed for increased accessibility.
Policies, procedures, and technical measures used to prevent unauthorized access, alteration, theft, or physical damage to information system. Naturally, SkandiaBanken attaches utmost importance to ensuring the security of transactions conducted on the Internet. Consequently, the specific security solution chosen by the bank combines a high level of security with the simplest ease of use for the customers, without separate security devices.
4. Discussion
After analyzing the case study using organizational culture theory, we can clear see the impact of organizational culture on information systems use and design in organizations. However, if the IS using or designing in organizations mis matches its organizational culture, which will lead to failure.
In that case, firstly the top managers should clear know their organizational culture. As Schein pointed out (1985), it is quite difficult to determine what the underlying pattern of assumptions actually is. If a company has already analyzed its culture for some purpose that would be the best foundation on which effective management of IS can be started. However, without cultural analyses of all aspects of the entire company, it is necessary to identify and reveal the fundamental assumptions and mostly visible values shared by the company members. Because the focus of this paper is not on the theme of uncovering corporate culture, in fact, there have been a number of research studies and instruments which focus on the measurement of corporate culture (e.g., Kilmann and Saxton, 1983; Allen and Krafi, 1982).
After top management collects sufficient information about its IS use and design and its organizational culture, it is ready to take some action for positive change, that is, more effective management of IS personnel in the company. First, top management can recognize the mis-tit between the corporate culture and the common characteristics of IS personnel. There are three possible contingencies; (i) When corporate culture never tits the IS personnel and the IS departmental culture, (ii) When there is a partial tit, and (iii) When corporate culture perfectly tits the IS personnel and the IS departmental culture. Among these contingencies, only the frost two cases are discussed below, since in the third case, IS personnel can fully devote themselves to their work and may feel little, if any, cultural frustration or conflict. [6]
It is very difficult to change the organizational culture that has evolved through company history and is shared by all the members of the company. And it is not necessary to completely change the good culture of a company just to manage the IS use and design effectively. In this case, the best way to reduce the level of misfit between the two is to make a creative cultural exception for managing the IS use and design in organizations.
5. Conclusion
All in all, it is can be say that organizational culture is the main and necessary force which drives the information system design and use in corporations. As a result, having a strong organizational culture often helps organizations have better competitive advantages in heated competition, so the strong organizational culture allows the IS department to retain its own departmental sub-culture without substantially changing the corporate culture. Correctly analysis of the organizational culture brings with the strong IS us and design for organizations.
6. References
[1] David W. Young. The six levers for managing organizational culture. Business Horizons, Volume 43, Issue 5, September-October 2000, Pages 19-28
[2] Sharon P. Hodges and Mario Hernandez. How organizational culture influences outcome information utilization. Evaluation and Program Planning, Volume 22, Issue 2, May 1999, Pages 183-197
[3] George Philip and Ian McKeown (December 2004). Business Transformation and Organizational Culture: The Role of Competency, IS and TQM. European Management Journal, Volume 22, Issue 6, Pages 624-636
[4] Edgar H. Schein, Jossey-Bass, 1997.Organizational Culture and Leadership
[5] Harris and Georgios Metallinos. The fact and fantasy of organizational culture management: a case study of Greek food retailing. Journal of Retailing and Consumer Services, Volume 9, Issue 4, July 2002, Pages 201-213 Lloyd C.
[6] Hyogun Kym, Won-Woo Park (May 1992) Proceedings of the 1992 ACM SIGCPR conference on Computer personnel research
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