organizational visions for technology assimilation: the strategic roads to knowledge-based systems...

IEEE TRANSACTIONS ON ENGINEERING MANAGEMENT, VOL. 42, NO. I , FEBRUARY 1995 9

Organizational Visions for Technology Assimilation: The Strategic Roads to Knowledge-Based Systems Success

Maris G. Martinsons and Frederick R. Schindler, Member, IEEE

Abstruct- Despite the dramatically increased application of knowledge-based systems (KBS) technology, most of the enormous potential to leverage expert knowledge remains unrealized. The vast majority of KBS initiatives in industry and commerce have ended with unsatisfactory results. These failures can be primarily attributed to strategic mismanagement rather than technological shortcomings. Inspirational leadership and a needs-driven organizational vision are crucial for the effective assimilation of a new or emerging technology. KBS are no exception. A roads metaphor is identified as a basis for crafting and communicating such an organizational vision. Three alternative approaches for achieving a strategic impact with a technology are identified and described: the user-driven low road, the technostructure-driven high road and the team-based road network. The relative merits of these strategic roads, and their suitability to different organizational and knowledge structures are considered using a case-based methodology. Based on their research of the KBS technology assimilation processes at DuPont, Digital Equipment, and Xerox, the authors offer management advice to practitioners and recommend future areas for study.

Index Terms- Strategic management, organizational vision, organizational behavior, business needs, technology assimilation, technology transfer, information systems, knowledge-based systems, expert systems, case studies.

I. INTRODUCTION

NOWLEDGE-BASED systems (KBS) are computer K software applications which seek to replicate human problem-solving and decision-making. Facts and heuristics, or rules of thumb, are used to represent knowledge about a narrow and bounded subject area, or domain. This knowledge is retained separately from the processing mechanisms, making it easier to modify as expertise and problem-solving approaches evolve. Expert systems are an important subset of KBS, providing output comparable to that of a human expert within a specific problem domain. In contrast to previous generations of information technology (IT), KBS automate what people know rather than what they do.

Growing numbers of knowledge-based systems are being developed in industry and commerce [2], 1191, 1251, [31],

[32], [60]. They have even given rise to the expert company [26]. Major airlines now rely on such applications to support or enhance their scheduling, load planning as well as many of their auditing and customer service activities [14], [24], [33], [83]. In fact, KBS are rapidly being applied to the segmentation and targeting of consumer markets [8], [31]. The financial services industry uses KBS for trading, monitoring, portfolio assessment, underwriting and quality control [34], [35], [44]. A survey of Fortune 500 industrial firms found this technology to be of the greatest use in process planning, product and facility design as well as maintenance scheduling [87]. Knowledge-based techniques have also spread through the software development community. This has resulted in off-the-shelf KBS applications that check grammar and style, diagnose hardware, provide tax and legal advice, and offer language translation [24], [30], [31].

The fundamental technology emerged in the 1960’s as a product of artificial intelligence (AI) research. It has changed little in the last decade. However, more advanced products, better packaging and declining costs have made it progressively easier to develop and use KBS. Larger knowledge bases, more flexible interfaces and greater integration with existing information systems (IS) are also increasing their power and applicability [35], [81], [83]. Not surprisingly, the technology has been transformed from a novel research interest to a thriving business proposition. This is reflected by the proliferation of special interest publications and trade shows. As an example, the first ever World Congress on Expert Systems was held in December 1991. It attracted more than 1100 people from 46 different countries. These delegates were almost evenly divided between the private (industry) and the public (academic and government) sectors [49].

Conventional information systems offer many of the advantages which are associated with KBS applications [7], [9], [ 191, [26]. However, this new-generation technology is uniquely able to integrate existing technology tools, leverage individual knowledge and codify the core competencies of an organizational group 1261, 1541, [60]. KBS enable the

Manuscript received March 5, 1993. Reviews of this manuscript were processed by Editor F. Betz. This work was supported in Part by the Hang Kong Research Grants Council and in part by the benefactors of the Pacific Rim Institute for Studies of Management.

M. Martinsons is with the City University of Hong Kong, Department of Business Management, Kowloon, Hong Kong.

F. R. Schindler is with the Personal Computer Division, VLSI Technology, Tempe, AZ 85257 USA.

IEEE Log Number 9408683.

formalization, preservation and dissemination of expertise which has been accumulated over a long period Of time [261, [35], [81], [82]. They are particularly advantageous when valuable skills are in short supply and professional knowledge is a critical success factor. KBS “are used to change the way business is done so that people can make a more effective contribution to organizational success” [57].

0018-9391/95$04.00 0 1995 IEEE

10 IEEE TRANSACTIONS ON ENGINEERING MANAGEMENT, VOL. 42, NO. I, FEBRUARY 1995

KBS can deliver the following specific benefits [26], [45], - -

1711, [821, W I : retaining and disseminating in-house expertise, even if the human expert leaves the firm; stimulating innovation by enabling creative professionals to explore, understand, discard and rework many alternative paths to a needed solution; improving the understanding of a decision process by forcing the applications developer to decompose or analyze it; raising the quality of decision-making by alleviating some of the cognitive limitations and bounded rational- ities experienced by people; raising consistency of decision-making by having the application serve as a common reference base in the firm; and increasing the cost-effectiveness of staff training and human resource development.

KBS complement the work of professionals and free them to do more challenging and important activities [26]. They can quickly identify patterns in data sets as well as relationships between attribute variables. In addition to reducing white-collar drudgery and off-loading excess information from human decision-makers, intelligent front ends enhance both electronic databases and company help-desks [8], [24], 1261. Meanwhile, smart consumer products offer superior performance and reliability 1241, [25].

High rates of turnover, promotion or retirement among experts make the ability to document and distribute their expertise particularly valuable [52], [75]. KBS have also been used to address the seemingly inverse relationship between the demand for complex software and the productivity of system developers [66]. More recently, their integration with conventional information technologies and mathematical modeling has helped to unify the information science and decision science fields, respectively.

As with any emerging technology, there are also important limitations [22]. Although many of the initial technical problems have now been resolved, the lack of standardized tools and delivery platforms continues to constrain the use of KBS in business. Moreover, the finer details of human knowledge and expertise can not be replicated. Even the most sophisticated present-day KBS lack the general knowledge, broad cognition and subjective judgment capabilities which human experts use to complement their intimate familiarities with specific domains. For applications which give bad advice, automatic learning capabilities based on user feedback are still very primitive. Knowledge bases usually have to be modified by a human programmer [70], [85].

It is possible to purchase off-the-shelf KBS applications or contract for their development. The growing availability of relevant products and services makes these alternatives attractive in selected cases. However, many organizations will choose to develop their KBS applications in-house because they wish to:

I ) maintain or develop competitive advantages based on their IT leadership position,

2) become self-sufficient in operating, modifying and en-

3) protect significant amounts of proprietary, sensitive or

The business literature indicates that thousands of KBS applications have been implemented [24], [32], [45]. Many other implementations have likely been kept secret for competitive reasons [SI, [19]. Moreover, hundreds of KBS projects, largely addressing diagnostic or configuration tasks are in- progress [31], [35]. KBS technology is now generating billions of dollars in product and service revenues per annum. The market for expert system building tools alone has exceeded US $100 million each year since 1991 and is growing at a double-digit annual rate [34], [35]. KBS have undeniably become a significant technology in the contemporary business world [31].

Unfortunately, the majority of KBS development projects have ultimately ended in failure [4], [36], [43], [83]. Industry and commerce has spent enormous sums of money to develop thousands of applications which are seldom if ever used. The overall return on the investment in this technology has been remarkably meagre. In many firms, the only usable products are smaller-scale applications, which serve as intelligent job aids [35]. According to one published estimate, a mere ten per- cent of medium-to-large sized KBS are successful [43]. Even where the initial implementation performs well, difficulties in maintaining these systems and integrating them with other IT applications are common 1191, [221, [571.

Few organizations have successfully institutionalized KBS technology [8], [12]. Those doing so have made a strong commitment to the assimilation process and developed an explicit vision for applying KBS [51], [58], [83]. Although many other firms have been disappointed with their KBS project results, the basic technology has seldom been a stumbling block [26], [43]. Difficulties incorporating a technically sound application into the organization have been far more common. A technology-push perspective has neglected environmental realities. Many of these problems can be directly attributed to a strategic mismanagement of the assimilation process [ 121, C351, 1511.

hancing these applications, or

unique knowledge.

11. TECHNOLOGY TRANSFER AND STRATEGIC ASSIMILATION

Innovation has been defined as “the adoption of an idea or behavior that is new to the organization” [16]. The successful assimilation of a new technology requires an organizational climate which promotes innovation [ 171, [51]. The technology may be considered analogous to a particle in a state of suspension. Its surrounding medium can then be equated to the socioeconomic environment into which it is to transferred [72]. The nature of the surroundings as well as the specific characteristics of the basic particle will determine the success of the transfer process.

Technology transfer may be conceptualized as a cooperative activity between an appropriate donor and a willing recipient [5 11. The interaction between the two determines both the efficiency and effectiveness of the process (see Fig. 1). Such a transfer consists of three distinct phases (each with a unique focus) [38], [70]:

MARTINSONS AND SCHINDLER: ORGANIZATIONAL VISIONS FOR TECHNOLOGY ASSIMILATION 1 1

Technology Business Technology Business

Potential

"THEPUSH"

Needs

7 "THEPULL"

Transfer Efficiency = f(Mobility, Accessibility. Receptivity)

Transfer Effectiveness = f(nature of the intersection between Accessibility and Receptivity)

Adapted from Martinsons (1988) and Holden (1992)

Fig. 1.

1) accessibility (the potential of a transfer), 2) mobility (the interactive transfer activities), and 3) receptivity (the specific needs of the transferee). A systematic approach for the transfer process, emphasizing

communication, cooperation and coordination, is beneficial [4]. This implies proactive management of the technology.

With KBS, experts must be enthusiastic participants in the development process [4], [6], [52]. The resulting software product must also be valued by the intended user community [lo], [66]. In addition, and perhaps most importantly, there must be personnel willing and able to actually develop, or knowledge engineer, such applications [ 1 I], [52]. Feasibility will hinge on the receptivity of the organization and the mobility to capitalize on the technology [6], [381, [571. Po- tential business benefits must be weighed against the resource requirements and the risks. The risks may relate to developing the primary system as well as disrupting or altering current processes and the cultural system [67], [85].

Resistance to change may be the result of natural scepticism related to the term artgcial intelligence, or a belief that the KBS will threaten (replacing rather than augmenting) the skilled professional. Effective management of the technology assimilation process includes evangelizing, exploring, moti- vating, mediating, projecting, planning and problem-solving [5 11, [ S I , 1671. Unfortunately, such a comprehensive approach has rarely been used with KBS [19], [54], [67]. Strategic- level mismanagement severely constrains the conversion of technological possibilities into business realities [5 11. As a result, there is a critical need to examine and enhance the organizational practices which are used to introduce, integrate

There is now a large volume of both prescriptive and descriptive literature related to the micro-mechanisms (tools and techniques) and the process (what has or should be done) of KBS development. As a result, managers may use a classification scheme to estimate the time and resources needed to develop a particular application [60] and assess individual reactions to use the technology using expectancy theory [lo]. Unfortunately, the relatively brief commercial history of KBS technology and the advantages of keeping competitive information secret [5], [39] have severely constrained the quantity and quality of empirical research in this area.

An intensive literature search revealed only two systematic multi-organizational studies related to the broader KBS technology assimilation process. One considered technical development issues from the perspective of the knowledge engineer [ l l ] . The other surveyed work group managers to determine the importance of different KBS implementation factors [83]. Both articles stress the need for further research of this topic, to prevent an uneasy reliance on findings from other information technologies, such as [13], [41], [461, [481.

Technology transfer initiatives frequently fail to consider the high-level process factors which contribute to effective KBS assimilation by an organization [23], [43], [571, [661. The absence of strategic management research related to KBS has perpetuated this problem. There are severe limits and risks to generalizing findings that are anecdotal in nature or based on single organizations. Nevertheless, case study research is appropriate when the aims are to broadly define the topic, to consider contextual conditions as well as the primary phenomenon of study, and to rely on multiple rather than singular sources of evidence [ S I .

The case-study methodology is an appropriate basis for developing a classification scheme by means of an inductive and interpretive, or post-positivist, approach [29], [37]. Such a taxonomy can improve general understanding [23], [28] and stimulate discussion of this strategic issue among time- sensitive top managers [20]. This is an important step in developing a theory to explain the strategic use of technology [28].

This article synthesizes the authors' experiences (which together represent more than fifteen years of active involvement with the technology and its management) and an extensive range of published reports. The critical factors for institution- alizing KBS are considered after identifying and discussing successful approaches. Our major contribution is a descriptive classification scheme of three strategic alternatives or roads for assimilating a new technology. Each has been successfully used to achieve a strategic impact with knowledge-based systems. This taxonomy will help senior-level managers to craft their own visions for a needs-driven change process. Effective communication of an easily understood vision across the organization is an important prelude to the successful introduction, integration and institutionalization of a new technology.

and institutionalize KBS. The potentially enormous benefits available from KBS will only be realized if the assimilation 111. THE MANAGEMENT OF NEW TECHNOLOGIES

process is better managed. More generally, increasing the effectiveness of technology transfer processes must be seen as a corporate priority [31, [51].

The effective management of change is critical if a new technology is to be successfully assimilated [ 121, [67], [831. Meanwhile, the commitment and involvement of senior and

12 IEEE TRANSACTIONS ON ENGINEERING MANAGEMENT, VOL. 42, NO. I , FEBRUARY 1995

middle managers are the most important success factors in applying IT for strategic impact [27], [46]. Top management can ensure adequate resources, negotiate and resolve interde- partmental disputes, prioritize domains for KBS development [6], [51], [55] . Senior executives can also set a direction and inspire the organization by articulating their vision for the future [51], [86].

Top management support is critical for creating an initial focus of KBS application. When management commitment is absent or equivocal, the transfer of a new technology, like KBS, will take place in an exploratory, tentative and sporadic manner [6], [48], [51]. This inhibits its subsequent integration with other IT applications and commonly precludes its institutionalization in the focal organization.

With greater support, technology transfer activities can be coordinated at a strategic level. New KBS applications are then more likely to be aligned with corporate goals and internal capabilities [48]. It is important to formulate, articulate and evaluate an organizational vision before committing significant resources and incurring unnecessary risks [57]. Although an individual KBS application may be developed using an iterative prototyping methodology, a strategic vision is likely to accelerate and increase the returns on the overall technology investment [5 11. Unrealized expectations and implementation difficulties with initial projects can impair future developments [121, [671.

Expectations with KBS will differ across organizations. Some will want significant benefits from their first application. Others will be satisfied to proceed at a slower pace, initially getting their feet wet. The strategy making process will typically have multiple objectives [53]. These may include: aligning IS with the business, searching for competitive advantage, and fostering the commitment of executives and/or employees [21], [27]. The ability to achieve these objectives is contingent on a clear communication of intended organizational behaviors.

In the absence of an articulated strategic vision, the following become more likely: poor results, political infighting and organizational disorder [I], [56], [61], [76]. Adventurous staff will begin clandestine development projects with a pervasive technology such as KBS. Such enthusiastic developers may become competent with the technology, but are unlikely to have the wide perspective and project management skills of senior executives. They will develop applications based on what they know best. This rarely matches the strategic priorities of the organization [13], [54].

The successful assimilation of a new technology is usually a mutually adaptive process. The technology is incrementally altered to fit the organization. Meanwhile, the user environment is shaped to exploit the potential of the technology [51], [68]. There is a need for continuous interactions between general managers, technology managers and end-users during the assimilation process. These communications, previously defined as an “Organizational Approach” [21], should facilitate a shared understanding of strategic themes.

An organizational vision for knowledge-based systems, and certainly the strategy making which may be associated with it is likely to evolve over time. Specific changes may be triggered

by unexpected hazards and unanticipated opportunities or their follow-on effects [53]. However, environmental turbulence does not negate the need for a plan. It merely adds one more requirement-flexibility .

Even corporate-level strategies are likely to emerge through time, rather than merely being the result of programmed planning [64]. In many cases, the existing corporate plan will be too broadly or loosely defined to enable business-led technology planning [21]. However, the mere presence of a shared vision will expedite organizational development and technological progress [51], [65], [76], [86].

IV. VISIONARY ALTERNATIVES

Many business leaders wish to achieve a strategic impact with a new technology. This favors a systematic approach with active leadership from senior management [ 181, [461, [51], [58]. Strategies which are not explicitly created by means of a planning process are likely to evolve implicitly from organizational activities. An articulated KBS strategy enables senior managers to focus the efforts of the entire organization with respect to this impact technology. The authors contend that it may also be used to promote enterprise- wide coordination. A critical first step in formulating such a strategy is choosing among the following roads:

The Low Road (User-driven). The aim is to quickly diffuse the technology. Large numbers of end-users are trained, encouraged and supported to develop smaller- scale applications. The High Road (Technostructure-driven). The aim is to address strategic priorities. A small number of well resourced professional teams develop large-scale applications. The Road Network (Team-based). The aim is to address business needs and simultaneously develop technical expertise. Multidisciplinary teams receive professional guidance as they develop larger-scale applications.

A comparison of these roads, in terms of required resources, risks and limitations is shown in Table I. Managers can choose one or a combination of these alternatives. DuPont de Nemours, Digital Equipment (DEC) and Xerox are transna- tional companies in medium to high technology industries. Each has about 100, 000 employees and a varied product line. Each has also made a very large investment in KBS technology during the past decade. However, the three firms have traveled down very different roads. Their experiences are valuable in describing these strategic alternatives.

V. THE Low ROAD

The low road leads to the rapid development of smaller- scale applications. A limited amount of initial training and subsequent support is designed to promote broad KBS literacy and encourage end-users to build their own applications. Ideally, such a guided grassroots effort will also breed a group of technology champions in the enterprise. These individuals will have a vision for applying KBS technology and the transformational leadership skills to make it a reality [ S I , [86]. Their advocacy of the technology will be instrumental

MARTINSONS AND SCHINDLER ORGANIZATIONAL VISIONS FOR TECHNOLOGY ASSIMILATION 13

~ ___ -~ ~ - ~ ~~ ~~~ ~ ~ ~-

TABLE I

KNOWLEDGE-BASED SYSTEMS TECHNOLOGY STRATEGIC ROADS FOR ASSIMILATING

The Low Road The High Road The Road Network

costs Low per project; High per project High per project substantial for many projects

Lower technical financial financial Low human factor Higher technical Higher technical

Risks Diversified financial Concentrated Concentrated

High human factor Lower human factor

Limitations Limited infusion of Little diffusion of A multi- KBS skills; KBS skills; disciplinary team Quality and systems A professional and professional integration concerns systems team is systems support

necessary are necessary Classic E. I. DuPont du Digital Equipment Xerox Example Nemours (DEC)

in surmounting the not-invented-here syndrome and other resistances to change [481, [671.

Small support groups may subsequently undertake coordination work, share their experiences and serve as catalysts for further developments. Using a familiar analogy, these groups teach end-users how to fish rather than catching the fish for them [26]. The investment and risk for each project is small. Developers are familiar with their own domains while existing or inexpensive hardware may be used. This is a natural extension to end-user computing. The potential for rapid productivity gains has attracted many resource-constrained organizations to this distributed KBS strategy. The low road is very popular in East Asia, where smaller firms predominate in a dynamic and turbulent business environment. Their managers favor the small investments and lower risks associated with PC-based projects [52]. The absence of a dedicated group of IT specialists encourages user self-reliance while facilitating a rapid rate of knowledge transfer. Applications are more likely to be maintained and enhanced when end-users have a strong sense of ownership [521, [741.

E. I. Dupont de Nemours & Co., the US-based chemi- cal firm, perhaps best illustrates this diversification strategy. DuPont has implemented more than one thousand KBS applications using this approach. Employees typically receive one to two days of training and then are given a copy of a PC-based development tool, or shell, such as the internally built Tool Kit or the commercially available Insight PlusTM. They then begin to develop their KBS applications, generically termed Partners for Experts. Such a project is typically completed in a few months [58]. The majority of projects at DuPont have been successfully completed. Most applications are used by the developers or their close colleagues.

Senior management at DuPont considers this to be “casting pebbles into the pond, creating small systems whose ripples move out everywhere” [26]. The average payback is reported to be about US $100 000 per year, making a total annual contribution of some US $100 million [58]. A dedicated group of KBS specialists at DuPont provides applications development support, for the areas of technical advice, process control and production scheduling, and scans the marketplace for new

technology developments. However, it does not develop any applications.

The increasing availability of user-friendly, microcomputer- based development tools favors this low road, but the approach also has potential drawbacks. The overall investment in so many small projects may be considerable. Meanwhile, the return is limited by having large numbers of staff simultaneously going through a trial-and-error learning process. Individual developers are unlikely to match the skill level of professional knowledge engineers or have access to specialized IT resources. Resulting applications have typically taken the form of low-level automated assistants rather than higher-level intelligent consultants [57], 1581, [601.

The possibility of developing different types of low-road applications, such as the classic stand-alone, the embedded application and the expert assistant, may require multiple software tools and micro-management approaches [84]. Moreover, the scope and sophistication of PC-based applications remains limited with current technology [35]. Even if all the possible low road projects are identified, ranked and carried out, larger- scale applications for organization-wide priorities will remain unaddressed.

The activities at Wing On Electronics in Hong Kong before 199 1 illustrate these shortcomings. Employees were playing with inexpensive development shells, but making little real progress. The heavy demands on the time of most professionals led them to use rapid prototyping methodologies. The typical application from this rather undisciplined development approach had poor documentation, loose compliance with enterprise standards and a tendency to address narrow and temporary problems. The management of Wing On decided that if knowledge-based systems were going to prove valuable, a more disciplined approach was needed. The technology would have to succeed in application areas of high impact and great value. An overhaul of Wing On’s integrated human resource information system started the company on the “high road.”

VI. THE HIGH ROAD

The high road is a concentrated initiative with the potential to produce significant benefits from each KBS project. An organization intending to introduce larger-scale applications using this approach must be prepared for an extended learning curve and significant process re-engineering [67], [80], [82]. The modeling of a complex knowledge domain, the use of sophisticated technology and the acceptance of significant implementation risk are needed [68], [78], [82].

Potential areas of application must be careful evaluated and selected [7], [52]. Stakeholders must reach a consensus on an appropriate development methodology while relevant domain experts must agree to cooperate fully [9], [ 1 11. The support of management and their sponsorship of specific initiatives must be unequivocal [9], [57]. There is a critical need for a high- skilled development team to complete each one-to-three year project [68]. This requirement is complicated by the traditional lack of compatibility between knowledge-based technology and conventional computer-based information systems [79],

14 IEEE TRANSACTIONS ON ENGINEERING MANAGEMENT, VOL. 42, NO. 1, FEBRUARY 1995

[ 851. Even if a sizeable expert-level application is successfully developed, the task of maintaining it will be considerable [74]. Knowledge erosion can rapidly reduce its business value. Therefore, potential users must be cultivated as co-developers [471, [671, 1831.

KBS projects are labor-intensive. The time spent by knowledge engineers, domain experts and staff is by far the largest cost component in most developments 151, [211, 1231, 1591, [67]. Fortunately, the talented and motivated people who are typically assigned to such projects can learn and adapt quickly. The impacts on attributes such as productivity, job design, required worker skills and employee attitudes will vary across applications and organizations [8], [ l l ] , [23], 1391, [671. They are also difficult to forecast with any degree of accuracy [lo], [36], [66]. An organization succeeding with this approach may expect to enjoy a sustained advantage, since competitors will find it difficult to duplicate its achievements [54], [77].

The delivery of an acceptable and effective end-product hinges on the quality of the development plan and its implementation. Management must handle a complex and dynamic network of human, technical and organizational factors [47], [68], [85]. A centralized group is needed to coordinate and lead the subsequent development activities. Persistent control is a critical success factor with this high-risk, high-return approach [l], [6], [51]. As the facts and heuristics of the human experts are elicited and documented, there is commonly an increased (and often counter-intuitive) understanding of how the organization really works [8], [26]. This is helpful when assessing and redesigning core business processes and redistributing decision-making responsibilities [8], [23], [26].

Industries such as aerospace, steel, electronics and financial services are known to be broadly following this strategic road [25], [26], [87]. Boeing Computer Services operates a large expert systems group which conducts research and provides consulting, training and development services to the entire aircraft manufacturing company. At Carrier Corporation, the Management Information Systems (MIS) department directed the introduction of the technology [ 11. They spent considerable time and effort to create organizational awareness, and then to develop (and then temper) enthusiasm for KBS before imple- menting specific applications. Managers in many other firms are reluctant to discuss their high road-based strategies. They simply do not want to reveal their game plan to competitors.

The XCON (Expert CONfigurer) application at DEC is the classic example of a successful product from the high road strategy. The presence of XCON in the manufacturing plants, and spinoffs such as XSEL in the sales offices have helped DEC to meet the hardware needs of its customers on an individual basis. Standard parts, which are put together before a minicomputer “system” is delivered to the client, are technically edited for their operational feasibility. The assimilation of KBS technology has significantly transformed business processes, job roles and employee relationships across the company’s major functions [47], [68], [78], [82]. The intelligent software is now so imbedded in corporate operations that many DEC factories refuse to assemble certain computer systems unless they have been processed by XCON [47].

An AI Board of Directors at DEC aligns internal application

priorities with major business goals. The corporate strategic plan is the basis for determining the priority of individual KBS projects. Although top management would like to diffuse the technology across the organization, “because this stuff really works, it can not afford to expend large amounts of resources solving problems which are not important” [80]. Using this centralized approach, Digital had fifty major expert- level systems in place by 1990. They have reportedly raised customer satisfaction levels and contributed US $200 million per year in direct benefits [58], [68].

DuPont also had a group concentrating on major applications, identified as efforts to “bag the elephant,” even as many smaller projects “feast on rabbits” [26]. However, similar to several smaller firms which are familiar to the authors, this group has experienced difficulties in finding suitable domains for big projects. The authors hypothesize that DuPont’s highly dispersed knowledge has forced it to detour from the high road to the low road.

Both of these roads suffer from significant technology transfer limitations [50], [57]. The high road fails to diffuse expertise beyond the professionally-trained knowledge engineers. Much of the organization remains ignorant about KBS development. End-users will have a greater resistance to a foreign technology [48], [67]. Moreover, system specialists must carry the burden of maintaining and enhancing existing applications while simultaneously meeting the demand for new ones. Con- versely, the low road produces superficial levels of technical literacy across the organization. Coordination and integration difficulties may arise from failures to address corporate priorities and to maintain common standards. Significantly, neither approach enables KBS apprenticing. Few new knowledge engineers are developed within the organization [54], [79].

VII. A ROAD NETWORK

The shortage of knowledge engineers is a major bottleneck in creating meaningful KBS applications [50], [79]. This has prompted assorted attempts to augment their numbers in a cost- effective manner [23], [26], [59], [79]. The “road network” is an emerging alternative to the lengthy and intensive formal training which has traditionally produced skilled software engineers. It represents an evolution of the quality circles concept, which originated in Japan and became popular in many manufacturing companies during the 1980’s [ 151, 1691.

An experiential learning group becomes familiar with KBS technology as it develops application which are important to the organization. Such a small team brings together six to twelve people from several (perhaps adjoining) areas of responsibility. In contrast to a traditional work group, it becomes a basic building block of the organization. Such a team is empowered to plan, organize and focus its own activities on a long-term basis. Part of its rewards are based on its results. The characteristics of these work teams are listed in Table 11.

With these self-directed teams, the number of management levels and their associated bureaucracy can be reduced. This can foster continual improvement and enable faster responses to technological change. Of course, a malfunctioning team can

MARTINSONS AND SCHINDLER: ORGANIZATIONAL VISIONS FOR TECHNOLOGY ASSIMILATION 15

produce inferior decisions, retard organizational productivity and contribute to increased rates of staff turnover.

With appropriate incentives and support, the team members, or “associates,” will develop their skills as they work on a KBS project. This group will likely benefit from heterogenous talents as it identifies, plans, designs, produces and deploys a KBS application [50], [57]. This approach represents a synthesis of top-down planning and bottom-up implementation. It has raised flexibility, stimulated innovation and resulted in high-quality KBS applications in several large firms [52], [57].

At Xerox, existing groups of employees are trained in KBS technology, enabling them to develop industrial-strength systems. Self-directed teams participate in a four hour KBS workshop each week. Instruction is given on a just-in-time basis as the group’s development project proceeds. The year-long curriculum consists of system scoping and impact assessment, knowledge elicitation, knowledge representation, knowledge validation, system integration and system testing. As a result, technology transfer takes place as business priorities, identified by the firm’s Cost of Quality process, are addressed [50].

Team members act as both domain experts and system developers, much as they would on an individual basis with the low road. They are supported by a few specialists in both KBS and conventional IS. Collective enthusiasm is used to reduce organizational resistance to change while users who systematically think about their needs and problems produce superior solutions 1601. Xerox has effectively combined these two aspects in its KBS Quality Circles Program.

The technology becomes another problem-solving tool which may be used to help meet customer requirements. The road network approach typically produces high-quality applications which are acceptable to end-users. They can be effectively incorporated into core activities and subsequently integrated with other IT applications. The cross-functional nature of the KBS development program also promotes organization-wide interaction and coordination. The per- project investment is similar to those with the high road. However, projects are completed in 12-15 months while the human factor risk is reduced. Nevertheless, group dynamics, implicit power struggles and other interpersonal phenomena can undermine these efforts.

The critical success factors for these work teams include: 1) an organizational culture which facilitates team-building

2 ) clear aims and objectives for the team in the context of

3) a strong commitment to the team by individual members; 4) frank and open communications to promote constructive

5 ) a reward system which encourages creativity, innovation

Further assessment of this promising road will be possible

and collegiality;

the larger organization;

criticism among team members;

and risk-taking.

after additional organizations have used this approach.

VIII. DISCUSSION

An increasing volume of literature indicates that KBS represent an enormous business opportunity. However, as with other

TABLE I1 CHARACTERISTICS OF SELF-MANAGED WORK TEAMS

Share management and leadership functions Plan, control, and improve their own work processes

Set their own goals and inspect their own work Create their own schedules

Review their performance as a group Take responsibility for personnel matters

Take responsibility for the quality of their outputs

major innovations, important issues of technology acceptance and adoption must be resolved [48], [67], [82]. Strategic integration will occur only if initial developments convince key decision-makers that KBS are viable in their organizations. During the 1980’s, the common advice was to search for big applications with large potential benefits, and develop them first [26], [57], [74]. However, while sophisticated mainstream products enabled firms such as DEC and Boeing to build the high road, many other attempts ended in failure.

The lead author’s previous research suggests that the strategic road for technology assimilation must fit the characteristics of the organization [51], [52], [57]. Knowledge-based systems should not replace the domain experts, but rather increase their existing productivity and make their knowledge more accessible to others. Moreover, it is unlikely that a deep- rooted culture could or should be significantly modified to accommodate a new technology.

Thus, KBS technology assimilation will be most successful if it conforms to prevailing organizational systems and structures. The organizational characteristics most appropriate to each strategic road are suggested in Table 111. Top management should classify their organization using this framework before deciding whether, when and how to assimilate knowledge- based systems.

Henry Mintzberg has proposed a scheme to classify organizations based on their standardization of processes, outputs, skills and norms [62], [63]. The structure of an organization is seen to depend on a variety of environmental factors, including the nature of information flows. Unfortunately, the technology management literature has largely ignored this classification scheme. We feel that it represents a useful basis for considering the organizational context of technology assimilation.

The machine bureaucracy, with specialized jobs and standardized work, is likely to find the high road most appropriate. A large technostructure, under a centralized management authority, can design and maintain its systems. The professional bureaucracy has a standardized set of skills but differentiated work processes or outputs. It may be able to effectively assimilate new technologies using the low road. Meanwhile, the innovative adhocracy draws its experts from different specialities and fuses them into creative teams. Such an organization is likely to use the road network.

The prevailing knowledge structure and corporate culture are also important influences on the choice of a strategic road. DuPont makes some 1700 products. Furthermore, some of them have thousands of sub-types [26]. Corporate knowledge is widely dispersed among employees in more than 120 plants around the world. The expertise for making quality products


TABLE III ORGANIZATIONAL CHARACTERISTICS FAVORING DIFFERENT STRATEGIC ROADS

The Low Road The High Road The Road Network Primary aim Rapid diffusion of the technology Address business priorities Team-based action learning Organizational Type Professional bureaucracy Machine bureaucracy Innovative adhocracy Management authority Distributed Centralized Group consensus Human resource requirements Enthusiastic end-users Skilled KBS professionals Creative and multi-disciplinary teams Knowledge structure Highly scattered Highly standardized Process-based ? Major obstacles Achieving systems quality and later High entry barrier and resistance to Exisiting corporate culture

and solving problems is very localized. Experts on one of DuPont’s assembly lines would do a very poor job with problems on another line. As a result, each application is unique even though they generally address either diagnostic, selection or planning problems. Despite some integration attempts, nearly all the applications at DuPont continue to operate in a stand-alone mode.

Conversely, the Xerox corporate culture facilitated the effectiveness of its road network strategy. The KBS Circles Pro- gram has leveraged the tools and techniques of its Baldridge Award-winning Leadership Through Quality initiative. Op- portunities to apply the technology must be matched with the means of producing a KBS application and the human resources which are available for each phase of the development process. Organizations may wish to examine their overall goals, technology base and human resources in order to determine whether self-directed teams, or other forms of participatory management are appropriate. Such structures can only result from a lengthy (and often difficult) transformation process which has broad employee support [15], 1691.

Technological readiness, resource constraints and propensity for risk will constrain the pace of travel along these roads [54]. The KBS assimilation process may be expected to induce a number of significant changes. An increase in technical systems complexity will typically lead to a more elaborate and professional support staff and reduce the emphasis on formal supervision. With greater automation, the adminis- trative structure is likely to take on a more organic form. Individual job responsibilities may also be enlarged [62]. Thus, with time, even those succeeding with the high road might evolve to a greater reliance on end-user computing, even for KBS development. Empowered and motivated users, with management and technostructural support, will ultimately drive the latter stages of the assimilation process. Such users may be individual employees or cohesive work teams.

The adequacy of present methods for maintaining, accessing and leveraging organizational knowledge can provide a focus for KBS assimilation planning. Current deficiencies can be addressed as part of such a planning exercise. Such knowledge- based issues must be incorporated into the traditional strategy making process [21 J , [27], [53], [65], [73]. The decision at the end of such an analysis should complement the existing organizational strategy, in terms of cost leadership, differentiation or focus [51], [73].

Further research is needed to support our hypothesis that the appropriate vision for assimilating KBS is contingent on both the knowledge structure and corporate culture. In the near

future, more businesses will attempt to introduce, integrate and institutionalize KBS technology. Some will travel down the roads which we have discussed in this article. Many others will proceed without an organizational vision. As the process is researched in greater depth, the critical success factors and best formulas for achieving a strategic impact with KBS will become increasingly apparent.

IX. THE BOTTOM LINE

Knowledge-based systems can now provide enormous advantages to a vast majority of the business community. Knowl- edge, the most valuable organizational asset, can now be significantly leveraged. Undeniably, a few firms will be unable to benefit from the application of this emerging information technology. However, for most, there are opportunities to enhance the effectiveness of individuals and groups, and to standardize core processes through application of KBS.

The common aim must be to build KBS applications that solve meaningful business problems in a cost-effective manner. The steady market growth of domain- and problem- specific expert system-based products, with their built-in knowledge, provides evidence of the market need. However, relatively few organizations are willing to make infrastructural changes (such as hardware investments and development methodologies) simply to use this technology. Many vendors of expert system products have only belatedly recognized this reality. The lesson for technology managers is that their knowledge-based systems must fit the existing organization. The tremendous value of an individual application will only justify an organizational redesign in a few exceptional cases.

With an organizational vision based on our strategic roads framework, companies such as DuPont, DEC and Xerox have rapidly developed technical competence and achieved attractive paybacks with knowledge-based systems. Unfortunately, most other firms have been less successful in their attempts to assimilate the technology. Better development tools and methodologies, more realistic expectations and progressively easier integration with the IS mainstream will continue to increase the business potential of KBS. The number of facts and heuristics in a typical knowledge base will grow dramatically even as greater systems inter-operability and the computer- facilitated cooperation of people enables much more extensive knowledge sharing [261, 1351.

Senior levels of organizational management must play a proactive role if the enormous potential for smarter work is to be realized. Change is more effectively communicated by ac- tions rather than words. In a knowledge-intensive environment,

MARTINSONS AND SCHINDLER: ORGANIZATIONAL VISIONS FOR TECHNOLOGY ASSIMILATION 17

the assimilation process for new technologies, such as KBS, must be integrated with the strategy making and organizational innovation processes 1531, [56]. Managers who have not yet explicitly considered KBS may find it prudent, and perhaps imperative, to do so as the technology matures. Moreover, a strategic management approach is imperative to capitalize on the enormous potential benefits of KBS. An organizational vision for assimilating knowledge-based systems may be based on any one of the three strategic roads presented in this article; waiting for a green light is merely evidence of technology mismanagement.

ACKNOWLEDGMENT This research would not have been possible without the co-

operation of senior managers at the organizations which served as the case studies. The authors are also grateful to academic colleagues in Hong Kong and three anonymous reviewers for their helpful comments and constructive criticisms on earlier drafts of this manuscript.

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Maris G. Martinsons received the B.A.Sc. in engineering science and the M.B.A. from the University of Toronto.

He is currently Associate Professor of Business and Management at the City University of Hong Kong and Research Director of the Pacific Rim Institute for Studies of Management. Prior to his present position, he was a business consultant in North America with firms such as DRVMcGraw-Hill, McKinsey & Co., and Ontario Hydro. As the Asia-Pacific Editor of both the Journal of Management Systems and the Journal of Information Technology Management, he is now active in bridging the gap between organizational scholars and business practitioners, and fostering international research collaboration. He was recently cited as one of the ten most influential management thinkers in Asia. His present research focuses on the strategic management of information resources, organizational change and cross cultural technology transfer.

Mr. Martinsons was awarded a Commonwealth Fellowship from the Uni- versity of Wanvick to study for the Ph.D.

Frederick R. Schindler (S’85-M’85) received the B.Sc.E.E. and M3c.E.E. degrees from the University of Alberta in Edmonton, Canada, in 1984 and 1986, respectively.

After completing his engineering studies, he worked as a consultant in Western Canada. During this time, he specialized in the design of systems for clients in the fields of medicine, industry and consumer electronics. He subsequently accepted an academic appointment with the City Polytechnic of Hong Kong, where his research focused on the application of new technologies in health care and consumer electronics. He is currently a Senior Applications Engineer with the Personal Computer Division of VLSI Technology in Tempe, Az.

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