Narayanan V.K., Armstrong D.J. - Causal Mapping for Research in Information Technology (2005)(en)

280 Ackermann & Eden

Appendix 1 — The “Formalities” of

Mapping

This Support section includes the following:

•Getting the wording of statements right

•Getting the direction of the arrow (causality) right

o Being clear about options and outcomes, means and ends, etc. o Dealing with generic statements appropriately

o Dealing with assertions and facts

oDealing with feedback loops (see also support 1)

•Goals, negative goals and constraints

•Doing mapping in interviews

•An overview of the mapping hierarchy (encompassing goals, issues, competencies, options/actions) when used for strategic thinking

Wording Statements (nodes)

•Make statements action-oriented by including a verb — without doing violence to what was said where possible

•Aim for six to eight words as this will ensure that each statement is discrete and yet descriptive

•If there is likely to be ambiguity then consider including “who,” “what,” “where,” and “when” in the statement (although this requirement can make the statement too long)

•Exclude words such as “should,” “ought,” “need,” etc. (as this makes it more option-like)

oE.g., “we ought to hire more salesmen” becomes “hire more salesmen”

•Avoid using “in order to,” “due to,” “may lead to,” “as a result of,” “through,” “caused by,” etc., as these imply two statements linked together by an arrow

•When a statement includes several considerations, as for example: “postpone writing mapping book, several articles and book chapters, and other books,” then it is important to decide whether the statement should become several statements

oAsk whether:

•They each have different consequences

•They each have the same importance

Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

Using Causal Mapping to Support Information Systems Development 281

•They each might involve different types of actions/explanations in order to create the outcome

oThus, in the example:

•Writing articles may be more important than books or chapters, in which case the statement should be separated into two parts

•Postponing the mapping book may have different consequences because it involves other colleagues, in which case it should be separated

•Writing other books may require large chunks of time whereas others can be done using small intervals, in which case it should be a separate statement

oTherefore, watch the use of “and” as this might suggest two options rather than one

•e.g., split “increase and improve services” into “increase services” and “improve services” as these might lead to different outcomes and have different explanations

Using Contrasting Poles in a Statement (node)

•The meaning of a statement is often best discovered by listening for the contrast

oFor example, the meaning of “warm rather than hot weather” is different from “warm rather than cold weather,” “buy two computers rather than six computers” is different from “buy two computers rather than hire more staff,” etc.

oDifficulties arise when each contrast is an option in its own right, and there might be several options. When the contrast illustrates meaning by suggesting a possible alternative outcome, circumstance, etc., (often contrasting past with now, past with future, now with future) then use the contrast as a part of the statement; when the contrast is a clear option then make it a separate statement (sometimes linked without an arrowhead to other options)

Getting the Link Right: Causality

•The direction of arrow should indicate direction of causality and influence: means to ends, options/actions to outcomes.

•One person’s means can be another person’s ends

oE.g., A→B might be correct for one person but B→A might be for another

•For example: “turning things around means we have to win every battle in the next five years” may be coded with “winning every battle” as the

Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

282 Ackermann & Eden

desired outcome from “turning things around,” or alternatively “winning every battle” is required in order to “turn things around,” depending on the desired ends of the interviewee.

•But, bear in mind some “objective” truths might be subject to debate

oE.g., “putting more policemen on the beat will reduce crime” may be an objective truth to one person, nevertheless another person might argue the objective truth to be that more crime leads to more policemen on the beat.

•Sometimes A→B can be treated as so consensual that it need not be debated, e.g., “obvious” arithmetical relationships.

oMore sales causes more sales revenue

•Means to ends are most difficult to judge when considering a hierarchy of criteria, values and goals

oE.g., is “be unhappy and upset much of the time” more disastrous than “crawl into my shell and give up”? That is, does “be unhappy” lead to “into shell” or vice versa? This can only be judged by the person being mapped, or this choice must be open to consideration.

•It sometimes helps to work with a hierarchy of goals, such as “objectives” lead to “goals” which lead to “ideals or values.” So, objectives are shorter term and more easily measurable; whereas goals are expressions of desirable longer term outcomes; whereas ideals or values are unlikely ever to be attained but guide purposeful behaviour9.

•Avoid mapping time sequences that are not causal relationships (as this will produce flow diagrams or process maps that are not amenable to the same sort of analysis or meaning as cause maps).

•Avoid duplicate and double-headed arrows

oEnsure that the map does not contain duplication of links

•For example, where the map shows A→B→C→D along with A→C and C→D and A→D — ensure that the latter three links show different causal chains (through additional material)

oAvoid double-headed arrows as these are implicit feedback loops suggesting either:

•Muddled thinking that can be resolved by determining means and ends

•A legitimate feedback loop consisting of additional statements that might provide more intervention options

Dealing with Generic Statements

•It is best to ensure that all members of a category are subordinate to the statement expressing the generic category

oFor example: “buy more saucepans” should in most circumstances lead to “buy more kitchen equipment” — that is, the specific leads to the generic

Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

Using Causal Mapping to Support Information Systems Development 283

•When a sub-category has different consequences from those of other members of the category, then it will need its own out-arrow to other consequences (along with the link to the generic).

•Sometimes the generic statement may not be necessary because there are no specific consequences that follow from it, rather they all follow from specific subcategory statements.

Dealing with Assertions and “Facts”

•We presume that when someone makes an assertion then they have a reason to do so, and that it is intended to suggest an implied action is required

oThus, if someone states that “Glasgow has a population of over 500,000 people” then we ask why this assertion is being made — what is its meaning in action terms? For example, they might know that it was 600,000 last year and so the statement “obviously” implies that the “Council will be short of taxes next year,” which also is stated as a “fact” with implied consequences

•Thus, assertions tend to be at “the bottom” of a map, with consequences following from them.

Goals, Negative-Goals, and Constraints

•Goals are desired outcomes that are “good in their own right” (so much so that they are hardly seen as optional by the interviewee)

•Negative goals are undesired outcomes that are bad in their own right

oFor example, “become bitter”

•Constraints are often stated as if they were goals, but will be subordinate and have consequences that constrain actions, goals, issues, etc.

oFor example: “attaining minimum levels of shareholder return” may act as a constraint on management behaviour, rather than act as a goal (even though shareholders would wish to see it expressed as a goal)

Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

284 Micklich

Chapter XII

Strategic Implications

of Causal Mapping in

Strategy Analysis and

Formulation

Douglas L. Micklich

Illinois State University, USA

Abstract

The formulation and implementation of effective strategy at every level within an organization requires that those involved in the process have not only a good overall understanding of the present situation, but also an understanding of the underlying cause and effect relationships which underpin strategy at those levels. This includes understanding the interactions, which occur between the levels of strategy in an organization as well as the benefits of a firm’s executive information system. Using various mapping techniques, e.g., concept mapping, cognitive mapping, causal mapping, we investigate the factors that made WorldCom, Inc., a one-time leader in the telecommunications industry, implode and find itself fighting in courts for its very survival.

Introduction

The strategy formulation process for an organization can be described as consisting of the integration of three perspectives of strategy: corporate, business, and functional

Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

Strategic Implications of Causal Mapping in Strategy Analysis and Formulation 285

(Hax, 1996). The process begins at the uppermost level of an organization, usually with the Board of Directors at the corporate level, and in conjunction with executive management, down through the business level, and finally ending at the functional/ operational level. Corporate strategy deals with decisions that by their nature should be addressed with the fullest scope encompassing the overall firm. Business strategy aims at obtaining superior financial performance by seeking a competitive positioning that allows the business to have a sustainable advantage over the firm’s competitors. Functional strategies not only consolidate the functional requirements demanded by the corporate and business strategies, but also constitute the repositories of the ultimate capabilities needed to develop the unique competencies of the firm. According to Hax (1996), strategy formulation for the organization is intended to frame all of the key strategic issues of the firm through a sequential involvement of the corporate, business and functional perspectives. The strategy formulation process can also be extended to exist within these perspectives as resources and systems are marshaled to implement that chosen strategy.

When beginning to formulate the overall strategy, concept/cognitive mapping can be used to develop a general understanding of the relationship that exists both between these perspectives/levels of the organization and within these perspectives. Within each level we can use causal mapping to help identify cause and effect relationships that can exist due to various courses of action or of inaction. By looking at these cause and effect relationships that exist among the elements at each level for a given situation, changes in the formulation of strategy (how these elements are used) can be undertaken to correct any unwanted (negative) consequences of a chosen strategy.

In this respect, we use the mapping technique approach to accomplish two objectives. The first is to frame the firm’s situations and the elements that surround it. The second is to pinpoint the deficiencies by looking at specific cause and effects and determine a course of action that would correct those deficiencies and allow for the proper allocation of resources throughout the firm.

We begin by first framing the firm’s situation and the elements surrounding that situation. We accomplish this by introducing the skills and concepts required in analyzing and formulating a firm’s strategy through its various levels. The skills introduced and developed are those of synthesis and analysis. These skills are important both in decomposing strategy into its basic elements and in understanding the relationship that exists between these elements. The concepts introduced are those of Critical Success Factors and Critical Value Activities. These concepts are relative to competitive conditions that exist and issues of the existence of organizational silos as they relate to structure. These skills are important to the development of a general understanding of the circumstances surrounding a given firm’s situation and the cause and effect relationships that exist among the levels of strategy from the corporate level through the functional level. Introduced, also, are the concepts of information symmetry and dependence and an explanation how they affect the structural and reporting relationships of the firm and the implementation of strategy through structure.

From here, we go onto our second objective, which is to see where strategy went awry and to be able to diagnose the situation and determine a course of action which would correct any deficiencies and allow for a reallocation of resources. Beginning with an issue

Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

286 Micklich

in narrative form, and using the concepts and skills, we can identify at the lowest possible level, the point where the problem resides. This is accomplished by using as an example WorldCom, Inc., (see Case in Point at the end of the chapter), where perceptions of these general relationships as well as the specific cause and effect relationships at the various levels will be shown.

Components of Strategy

In this section we are going to introduce two basic concepts in strategy analysis and formulation; Critical Success Factors and Critical Value Activities. These two concepts are highly related in that Critical Success Factors are industry related and can affect the firm’s competitive position. Critical Value Activities are those that exist within a firm’s value chain that allow them to address the Critical Success Factors in a given industry. These activities can be classified in one of three ways: Business Value-added, Customer Value-added or No Value-added activities. It is the relationship that exists between these activities that will lead a firm in attaining or sustaining its competitive advantage relative to the industry’s Critical Success Factors.

Critical Success Factors

In the development of strategy, numerous factors or elements are involved in the process. Two major elements are Key or Critical Success Factors and Critical or Strategy-Critical Activities. These are components of strategy where the organization must excel to outperform its competition in either attaining or maintaining a competitive advantage. This also requires a clear understanding of the core competencies that will be needed to underpin these critical success factors (Johnson, 1999).

Critical Success Factors are those factors, usually three or four in any given industry, that most affect the ability of an organization to prosper in the marketplace. They are prerequisites for industry success (Thompson, 1998). These limited numbers of factors are ones around which managers should have information systems designed and which provide the basis for the organization’s success (Jenster, 1986). By its very nature, this would imply a hierarchical structure of constructs. As such, they depict various levels of decomposed relationships describing a complex organizational situation (Jenster, 1986).

Critical Value Activities

Critical value or strategy-critical activities are those activities in the firm’s value chain, which are most critical to a firm’s achieving its competitive advantage. These are also crucial business processes that have to be performed either exceedingly well or in a

Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

Strategic Implications of Causal Mapping in Strategy Analysis and Formulation 287

closely coordinated fashion for the organization to develop capabilities for strategic success (Thompson, 1998).

These activities are part of the firm’s value chain and can be classified in one of three ways: Business value-added activities, which are those that add value to the process from the firm’s perspective. An example would be the exploitation of economies of scale in unused process/production capacity. Customer value-added activities are those that add value to the process/product from the customers’ perspective. An example would be in the ability to meet the customer’s requirements for product quality or timeliness in delivery. No Value-added activities are ones in which neither the firm nor its customers derive any added value and can be considered a candidate for outsourcing. An example here would be the payroll function in many small and medium-sized organizations. Paychex, Inc. is a prime example. By outsourcing this function, client firms are able to redirect resources to those activities that can help their firm increase its competitive ability.

The degree of success that an organization will realize is based on how well they address the industry’s Critical Success Factors. Misdiagnosing the industry factors critical to long-term competitive success greatly raises the risk of a misdirected strategy — one that overemphasizes less important competitive targets and under-emphasizes more important competitive capabilities (Thompson, 1998).

As strategy is implemented, the effects of these activities on the success factors may have a tendency to shift over time given a particular situation the firm is facing. The resulting magnitude of these effects will depend on the factors in the situation (reaction by suppliers, competitors, and consumers), and the effect the information system has that links these areas, and on the outcomes in those areas. The information system used is one that will form both the linkages between these activities and the firm’s value chain in addressing the industry’s critical success factors.

Strategy Analysis and Synthesis

When we begin to formulate strategy, we need to be able to identify the components or elements that comprise a given situation and to understand the relationships between them. To be able to properly understand and map these relationships requires both analysis and synthesis. Analysis has been defined in various ways such as breaking down of a goal or set of intentions into individual or separate steps (Mintzberg, 1994) and the understanding of a company’s current position, analyzing what forces drive competition in their industries, and what capabilities can be leveraged to effect a longterm sustainable posture (DeKluyver, 2000). The level of analysis that we use will determine at what level of the organization we will begin strategy formulation.

Synthesis has been defined as an ability to combine parts or elements so as to form a whole, to begin by identifying the components and their relationships to one another, the limitations imposed by the environment and the system’s resources (Campbell, 1977) and as an integrated perspective of the enterprise (Mintzberg, 1994). Synthesis is very important for developing an understanding of the relationships that exist not only at each level in which strategy is formulated, but also among levels.

Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

288 Micklich

It is through analysis and synthesis that we can progress from cognitive mapping to causal mapping. Using this perspective we can look at those causes and effects of strategy overall, be able to move down and through the various levels, and develop an understanding of the degree of integration within a particular level. It is this movement we will use to drill down in getting to the specifics of a situation. This route is taken for the simple reasoning that you must be able to understand the context of the situation before you can develop it fully and then be able to have an understanding of the cause and effect relationships at any level.

Situational cause and effect outcomes have, in the realm of strategy, two main outcome components. These are long-term outcomes and short-term outcomes. Every level of the organization has some aspects of each of these. For example, at the corporate level a majority are strategic in nature, while at the functional level they tend to be more shortterm or operational in nature. The business level would have relatively equal amounts of both. The nature of these components is determined to a great extent by the situational context and time frame horizon given industry and competitive dynamics. In general, we can define long-term as a horizon extending beyond five years and short-term as having a horizon of one year or less (Jones, 2003).

Basic Origins of Causal Mapping

In order to develop a better understanding of the use of causal mapping we need to look first at its origin from concept mapping. The use of concept mapping as a tool in understanding the broad-based (general) relationships and then progressing through cognitive mapping and finally ending with causal mapping is the taxonomy used to understand these relationships and the effects to strategy. To better understand the linkages in this progression, these techniques are defined in Table 1.

The reason for this approach is to gain a better understanding of the need for information in all aspects: quality, quantity, timeliness, relevance, as well as the cause and effect results in deficiencies in these aspects. The need for developing such a framework comes from the fact that “quality information is critical to decision making.” (Crockett, 1992)

Table 1. Techniques of mapping

Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

Strategic Implications of Causal Mapping in Strategy Analysis and Formulation 289

Mapping Relationships

There are two things we must consider when mapping relationships. Primary consideration must be given to the fact that organizations grow and develop, and that existing relationships among and between elements will change over time. Secondary consideration, although of no less importance, are the cause and effect relationships of elements in the firm’s internal and external environments and the effect those changes have on strategy formulation and implementation. It is in these areas that the organization evolves in response to competitive conditions, both externally and internally. This evolution is sometimes spearheaded by the type of information system used and the level of its involvement and importance.

When maps are constructed, they are based on a person’s perception of a given situation and the factors or areas that will have an impact, positively or negatively, in the situation. As more information surrounding the situation and its factors becomes known and the more we add to or refine a map as it relates to the situation or issue, the greater the sense we will acquire of the whole picture. This is assuming that we have developed an understanding of the relationships that underlie those factors.

While the use of concept/cognitive mapping can give us a general idea of the relationships that exist, and hence the general design of its underlying information system, it is causal mapping that helps us identify the cause and effect relationships of various elements on one another and how they affect the strategic management process. The benefit we gain through defining and illustrating these relationships through mapping, the better the degree of information symmetry and balance that can exist within the organization’s structure due to better sharing of information.

Knowing the relative strength of the relationship and the degree of organizational and information dependency can lead to better knowledge management within the firm which in turn, can lead to both improved strategy formulation and implementation. In addition, as we can better understand the structure of the organization, from an IT perspective as well as a competitive perspective, and the cause and effect relationships that exist within that structure, the better will we be able to design information systems to support that structure and those relationships.

Foundations of Symmetry and

Dependence

Symmetry

The initial concepts of information symmetry and asymmetry stem from the concept of the universe and its origin as described in Pagel’s, “Perfect Symmetry.” In his book, he states “the universe begins in a very hot state of utmost simplicity and symmetry and as it expands and cools its perfect symmetry is broken, giving rise to the complexity we

Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.