Managing Information for the Competitive Edge

Part I: Information Models of Organizations


Information used to be the invisible ether that permeated an organization - everyone was enveloped in information, but no one knew the complete story of where it came from, where it was going, and how it was really being used, if at all. Three developments changed the role of information in organizations. In their normal functioning, organizations accumulated at an alarming rate more as well as more detailed information, partly because of the growth of population and markets, and partly because of governmental and institutional requirements. At the same time, the proliferation of information technologies that capture, store, process and transmit data extended the scope of information collection and greatly increased the speed and range at which information may be exchanged and shared. The final, and perhaps most significant development was that organizations began to learn how to ride the waves of the information deluge. Information is now seen as an economic resource that is as vital as land, labour, or capital. Time and again, organizations have proved that the strategic, intelligent use of information can lead to dramatic improvements in performance and profitability. Yet, information has its own unique attributes different from any other economic good, and the proper handling of information as a strategic resource calls for a new paradigm of information management. Conceptually, information has to be managed at multiple levels - information as content (facts, ideas, knowledge, experience); information as tools (databases, files, libraries, repositories); and information as processes (information needs, information seeking, and information use).

If we are to manage information effectively, we need a holistic understanding of how organizations behave as information-seeking, information-creating, and information-using systems. In other words, we need models to reveal how the various information processes in an organization are connected to each other and may be managed to work together towards goals and objectives. Such models will take time to evolve as we ascend the learning curve of organizational information management. A crucial part of the education is to periodically take stock of what we have learned, to deepen our understanding in incremental steps, to apply the extant knowledge in practice, and to point out new priorities for study. The research on information in organizations has at least two related lineages, one situated in organization theory, and the other, more recent tradition in management theory and information systems.

The two review articles in Part I provide a theoretical background to frame our discussion of information management. We seek conceptual answers to some basic questions: What shapes the information needs of organizations? How do organizational members obtain and process information? What are the dominant modes of information use in organizations? The first article by Chun Wei Choo surveys the organization theory literature, juxtaposing the major theoretical frameworks that have been used to examine the information behavior of organizations. The second article by Marianne Broadbent and Michael Koenig provides an analytical guide to the general business literature on information and information technology in organizations.

A common theme in organizational research has been the treatment, often explicit but sometimes implied, of organizations as information-processing systems - organizations seek information; store, retrieve and transmit it; use it to interpret events, solve problems, and make decisions. Organization theory is therefore a logical starting point in our attempt to apprehend the purpose and scope of information management. The article by Choo summarizes the work of Herbert Simon, James March, Richard Cyert, Jay Galbraith, Oliver Williamson, William Ouchi, Karl Weick, and many others whose work span five decades. Several unifying lines of thought about the use of information are brought together in a tentative information model of the organization. In the model, an organization needs information for two general reasons - to reduce uncertainty, and to reduce equivocality. Uncertainty is the lack of information needed to perform organizational tasks, and information to reduce uncertainty is therefore information that is used typically in decision making and problem solving. Equivocality is created by the ambiguity of the messages received, and information to reduce equivocality is therefore information to enable an organization to make sense of its environment, and to learn rules and schemas that can be used again to interpret future signals. Information is acquired and processed by individual members, and they do so subject to their cognitive limitations and personal preferences, as well as the biases that are formed as a result of their belonging in an organization. The eventual use of information can pursue both rational and non-rational goals. Apart from decision making, problem solving, and organizational learning, information may also be deployed as a social or cultural symbol, as a political resource, as a means to legitimize the existence of the organization, and so on. It is this richness and complexity that create the unique challenges of information management in organizations.

While Choo's article concentrates on information-based organization theories, Marianne Broadbent and Michael Koenig review the general business literature on management information, information technology and information systems. They conclude that there has been a remarkable convergence of management attention on information and information technolgy in recent years. The information model of the organization that emerges appears to be characterized by several features. First, organizations seek to use information to win strategic and tactical advantage in an environment where information and information technology have intensified and redefined competition between organizations. Second, organizations, more than ever, recognize the need of relevant information, especially good external intelligence, in order to enable their managers to make effective strategic decisions. Third, organizations are concerned about the successful planning and design of computer-based information systems. The concern begins with the correct determination of the critical information needs of top management and other members, and extends to the methods and techniques that will transform these information needs into information systems. Fourth, information management in organizations needs to treat information as an economic resource that is as strategic as the traditional factors of production such as capital or labour. Fifth, information management in organizations evolves through distinct stages, driven by the growth of information technology, and by the changing functional context of applying the technology. A pressing information management task is the integration of currently separate enclaves of information resources and technologies into a coherent whole. As a result of their analysis, Broadbent and Koenig suggest that the top three information management issues would be:

    (1) How to create competitive advantage through the strategic use of information and information technology;

    (2) How to manage the archipelago of disparate islands of information resources and services that are scattered all over an organization;

    (3) How to analyze the information requirements of the organization as a whole, beginning with the information needs of top management.

The literatures on information in organizations go back several decades and adopt many different perspectives. The following list of additional readings is necessarily selective, but hopefully still gives a sense of the range and energy that move this research.