Vol. 1 September 2012 - SBS JOURNAL OF APPLIED BUSINESS RESEARCH (SBS-JABR)
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SBS JOURNAL OF APPLIED BUSINESS RESEARCH (SBS-JABR)
Global Excellence in Applied Business Research
Vol. 1
September 2012
Introduction to the SBS-JABR
At SBS Swiss Business School we believe that The Journal contributes to the creation of “State
managerial success in the XXIst Century will be of the Art” academic and professional knowledge
related to the capacity to apply business know- under a fully international dimension.
ledge into practice in a way that can be under-
stood and shared by all the stakeholders of the The Journal is based in a “peer to peer” revision
organization. process according to the traditional academic
practices.
In order support this idea and contribute to
excellence in management skills, SBS Swiss
Business School has developed the SBS Journal
of Applied Business Research (SBS-JABR).
Call for Papers and Submission Guidelines
As a first priority the SBS Journal welcomes high The works submitted will be independently re-
quality papers originated at Universities and Col- viewed by anonymous evaluators. The reviews
leges offering D.B.A. Programs, articles can be will be of blind nature in both senses (peer review
signed by Professors, lecturers, DBA students, double blind).
executives, policy makers and administrators in
private and public sector, strategists, manage- The work will be gone through them in such a
ment consultants and others interested in the way that reviewers and authors won't know each
field of first class management of postgraduate other identity at the time of reviewing. For further
education. information on editorial policies or the preparation
of manuscripts, you should contact the Editor in
The SBS JOURNAL OF APPLIED BUSINESS Chief.
RESEARCH publishes original research works
that deal with any of the specialties relating to the All work must abide by the following technical
field of Business Management. specifications http://jabr.sbs.edu/guidelines.pdf
The Editorial Board has the final responsibility in
accepting works, subject to the reviews of two
anonymous evaluators with knowledge and inte-
rest in the topics submitted to review.
The Reviewers Committee is formed by profes-
sionals belonging to European, American, African
and Asian Universities and B-Schools of well
known prestige in their areas of knowledge.
All originals should be sent to the Editor in Chief,
Dr. Jorge Mongay, jorge.mongay@sbs.edu Artic-
les should be unpublished and should not be in
process or be approved for publication by any
other magazine or journal.
3
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SBS JABR—Vol 1
Aim and Goals Editorial Board
The primary goal of The SBS Journal of Applied Dr. Jorge Mongay, DBA.
Research is to highlight those business prac- SBS Swiss Business School (Switzerland)
tices based under action and applied research
which sustain business excellence. It is a refe- Dr. Roman Borboa, Ph.D.
reed, multidisciplinary Journal which targets to SBS Swiss Business School, Zurich, Switzerland
academics, business managers, CEOs and
Doctor of Business Administration (D.B.A.) Dr. Chen Chuanxing, Ph.D.
candidates and graduates. Shanghai Intern. Studies University, China
The SBS Journal wants to create a new formal Dr. Natalia Cugueró, Ph.D.
channel of communication between universities IESE Business School, Spain
and business schools and management practi-
tioners such as policy makers, government Dr. Larry W. Ettner, D.M.
agencies, academic and research institutions Willamette University, USA
and persons concerned with the complex role of
business. Dr. Diana Andrea Filipescu, Ph.D.
Autonomous University of Barcelona, Spain
It also aims to promote academic discussion
and strategic analysis for practitioners on ma- Mr. Gabriel Izard, Ph.D cand.
naging global competition in products and ser- Autonomous University of Barcelona, Spain
vices for all sectors in a worldwide basis.
Dr. Elena Kasimovskaya, Ph.D.
The publication of at SBS Journal of high-quality SBS Swiss Business School, Switzerland
empirical and research applied papers that ad-
vance knowledge and its application in a com- Dr. John Lambert, Ph.D.
plex global world helps to expand business sy- The University of Southern Mississippi, USA
stems thinking and business modeling issues.
Dr. Carl-Gustaf Malmstrom, Ph.D.
Finally the Journal offers an international dimen- SBS Swiss Business School, Zurich, Switzerland
sion accepting papers from any corner of the
globe, it develops and increases a network of Dr. Roger Palmer, Ph.D.
contributors and editors from many different uni- Bournemouth University, UK
versities and B-Schools in all continents,
fostering the interrelationship of structures and Dr. Julian Peinador, Ph.D.
processes in a global arena. ESIC Business & Marketing School, Spain
The Journal will cover areas for applied rese- Mr. Vincent Onyango Ogutu, Ph.D cand.
arch papers and case studies in the fields of Ge- State University of New Jersey, USA
neral Business, Human Resources, Marketing
and Sales Management, Finance, International Dr. Ignacio Soret, Ph.D.
Business. ESIC Business & Marketing School, Spain
Dr. Jose Torres, Ph.D.
Euncet Business School, Spain
Readership
Academics, researchers and students, especially SBS-JABR Coordinator
graduate students in Doctor of Business Admini- Markus Roth, MSc.
stration (DBA) and similar programs; executives, SBS Swiss Business School (Switzerland)
policy makers and administrators in private and
public sector, strategists, management consul-
tants and others interested in the field of first
class management of postgraduate education.
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SBS JABR—Vol 1
International Academic Databases
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SBS-JABR Volumes Contacts
The SBS-JABR launches 2 Volumes each year. For papers submission and other inquiries please
Spring and Fall. The 1st Volume appears in Sep- contact
tember 2012 and so on. The Journal welcomes
papers up to 2months before launching each volu- Dr. Jorge Mongay, Editor in Chief
me. You can have access to the last volumes and SBS Journal of Applied Business Research
link to each article at: (SBS-JABR).
http://jabr.sbs.edu/volumes.html Email: jorge.mongay@sbs.edu
Journal Website: http://jabr.sbs.edu
Volume 2 will be issued in March 2013.
SBS Swiss Business School
Balz-Zimmermannstr. 34
8302 Kloten-Zurich | Switzerland
© Copyright 1998 - 2012 by SBS Swiss
Business School. All Rights Reserved.
ISSN SBS-JABR:
2235-7742 (print)
2235-7750 (online)
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SBS JABR—Vol 1
Articles in SBS-JABR Vol 1.
How IT Can Contribute to Human Affairs P. 7
Dr. Kurt Weiss, SBS Swiss Business School
Emerging Markets, the Markets of the Future P. 23
Gaston Fornes, PhD. University of Bristol and ESIC Business and Marketing School
The Key Success Factors of Penang as the Silicon Valley of the East P. 34
Sari Wahyuni, Alia Noor Anoviar, Anom Jati Santoso, Faculty of
Economics, University of Indonesia
Research Methods Amid Chaos: P. 48
Special Tactics Used to Discover Answers along the US Gulf Coast in the After-
math of Hurricane Katrina and the B.P. Oil Spill
John Lambert, University of Southern Mississippi
The Theory of Planned Behavior in Applied Research: P. 56
An Examination of the Location Selection Decisions of Independent Filmmakers
in the USA
Stephen R. Alfred, Grenoble School of Management
The DBA in German Speaking European Countries:
New Perspectives in the Old Continent P. 65
Dr. Bert Wolfs, Vladimir Ermakov , SBS Swiss Business School
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SBS JABR—Vol 1
How IT Can Contribute to Human Affairs
Dr.Kurt Weiss, SBS Swiss Business School
We spend billions of dollars trying to understand His life is short if he does not take countermea-
the universe, while we still don’t understand the sures which have been at his disposal only in the
conditions of a stable society, a working econo- very recent past. But man became a possibility.
my, or peace [1]. He survived, as yet, the merciless battle called
evolution, because he engineered all kind of tech-
1. Introduction nical devices and clever tricks to fight the obsta-
cles nature has been putting up against him in
Nothing gets old as fast as the future. ever changing shapes.
From its beginnings life on earth was driven by He began to compensate his natural weaknesses
the adaption to changing environments and the by tools and prostheses. He began to dominate
survival of the best adapted [2] The result we see his competition. He survived his gradual birth. In
today is an overwhelming variety of species, not addition his relative successes made him think
counting the ones vanished during the last centu- that his ability to adapt the environment to his
ry or hundreds of millions of years ago [3], not needs instead of adapting himself to the environ-
counting the ones discovered recently in extre- ment gave him the tools to beat the Darwinian
mely improbable niches such as deep water rules (inventing warm underwear instead of wai-
volcanic environments at temperatures of 8000 C ting for a fortuitous genetic variation luckily provi-
in total darkness under extreme pressures up to ding him with a thick fur).
60 MPa (600 atmospheres) [4], below Vostok in
the Antarctica, the coldest spot on earth, in a lake A lot of tools he invented indeed, but still all his
covered by 3.7 km of ice disconnected from the achievements and innovations always will be
rest of the world for the last 15 million years [5] in overpowered by many orders of magnitude by the
remote and all but inaccessible parts of rain fo- sheer force of nature. There is no conceivable
rests [6], or in oxygen free, poisonous environ- technical trick to stop an earthquake, a tsunami, a
ments [7], not to speak of the untold species ad- volcano outbreak, a celestial body on a collision
ded continuously to the living world. A variety it is trajectory, or to slow down the continental drift.
as incredibly diverse and rich to defy any concei- Nature’s power will overrule any trick in the long
vable master plan pretending to have (had) all run, and Humans better try to adapt to this fact, if
this in “mind” [8]. Accidental variation, coin- they want to stay in the game.
cidences, and survival of the fittest is the name of
the game. How? Homo erectus lives predominantly in socie-
ties which need a certain amount of organization.
Or is it? When Homo erectus entered the stage Of course this is also true for ants, bees, and
more than a million years ago [9] he had a very many other species that cannot survive without
hard time to establish himself in a world full of rules and structures. Rules in ant societies are
possibilities on the one hand, but full of deadly relatively simple. As an example consider their
threats on the other. On first sight nature equip- strategy for finding food. Specialized ants (an ad-
ped him badly for survival. He cannot fly nor aptive success by itself) walk out to find places
swim. He cannot run very fast. He is not very where food is available.
strong or very tall. He is very sensitive to tempe-
rature changes. He has no claws, no fangs, and If successful, they eat and walk back to their ho-
no stings. He is barely resistant to poison. His me anthill all the way depositing olfactory clues
eyesight is comparatively poor, his hearing band- along their path. Other ants smell it, follow it, de-
width is narrow, his sense of taste is unreliable, posit clues again, and enhance the scent. The
his tactile discrimination spectrum is very limited, rules are very simple: (i) always mark your path
and his smelling capacity is short ranged at best. and (ii) always follow the path with the strongest
His reproduction is complex and expensive, the scent [10]. Another, somewhat more sophistica-
production rate is low, and the natural loss rate is ted, example is the well known dance of the bees
high. There is no warranty. Man is prone to all directing other bees the way to blooming flowers
kind of accidents and diseases. He is difficult to where nectar is available [11].
repair.
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SBS JABR—Vol 1
How IT can contribute to human affairs - Dr.Kurt Weiss
These are certainly clever rules, but simple they And if this happens, slowly and small step by
are in comparison with the rules needed for the small step, we will be able to spend more money
survival of human societies. According to the for efforts beyond the horizon of Homo Economi-
available records they were already quite com- cus and to send forth some of us as dedicated
plex in historical times. And then look how invol- servants , to forward the search into the myste-
ved, varied, and entangled they have become in ries and marvelous simplicities of this strange
our developed technological world where tech- and beautiful universe, our home [13].
nology itself has become indispensable to
maintain and improve the organization of human 2. Homo Economicus and IT
society. It is here that IT enters the stage. IT has
become an indispensable tool to keep the ma- Man survived by developing skills. He now needs
chinery of human activities running. The implica- help to survive his skills.
tions of this fact are the topic of this essay. One
should, however, keep in mind that many socie- How can Homo Economicus thrive in the complex
ties on our globe are still living on the basis of environment of our globe? What kind of organiza-
the older, simpler rules. One might even ask tion does he need to survive the brutal, relent-
(and that is what concerned people do) which less, and never sleeping competition that
kind of societies in the long run will be better off. surrounds him? How can he manage efficiently
The ones adapting to nature or the ones trying to and effectively the technology and supply chain
overcome its constraints? logistics driven processes from the resources to
the ever growing number and diversity of pro-
The essay is structured as follows: The next ducts and services he needs or wants to keep
three Sections discuss on a rather general level him nourished, sheltered, healthy, sociable, re-
the interplay of IT with people, change, and the productive, and prepared to adapt to the ever
state. After an interlude about IT as a global changing challenges he encounters at an ever
commodity a more specified Section addresses increasing pace?
the interaction of IT with business (the engine
powering human affairs). Future work will cover Big questions. Too big for an essay dealing with
the interaction of IT with society, and learning the much more restricted question about the how
(the driver of everything). A summary and an the potential of IT can contribute to the answers.
outlook conclude the essay not without soliciting Old questions they are, as old as humanity itself.
further work. IT, in contrast, is by all measures an absolute
newcomer. It’s first signs of life date back to the
Concluding this introduction a disclaimer is in 1930ies as a side branch of mathematics [14]. Its
order. This is a positive, overoptimistic view. practical impact, barely noticed beyond a small
(Quoting David Ben Gurion: One must try the circle of scientists and a few pioneering busi-
impossible to reach the possible.) nesses, began in the 1970ies [15] to get a decisi-
ve boost with the conception and invention of the
Furthermore the eminent role of the arts and the internet in 1989 [16]. A mere 10 years later it be-
humanities is not considered, neither are ethical, came a worldwide commodity. Today (2011),
moral or religious considerations. Artists, poets, about a third of all people on earth are estimated
musicians, adventurers, philosophers, scientists, to be involved in one sense or other with IT [17].
psychologists, medical doctors and many others And counting. Never a technology has spread
clearly should be part of a more complete pic- that fast.
ture. Here we concentrate on Homo Economicus
where we are aware of the fact that humans in Our questions therefore will be addressed kee-
general do not behave rationally [12]. The deep ping in mind the necessarily provisional and ra-
and wide gap in wealth, health, education, trai- pidly changing state of the present human affairs.
ning, and so on across the world is another dra- Homo Economicus is in a state of revolution. And
matically influential factor that is not considered as it has happened so often in history, most
in any detail. And then: If this essay will be of people are not really aware of it. When they final-
any use it might perhaps help to increase the ly wake up to the facts, it may be too late for them
stability of societies, contribute to a working eco- to adapt. They will not be among the winners.
nomy, and increase the chances for peace
(remember Ben Gurion).
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SBS JABR—Vol 1
How IT can contribute to human affairs - Dr.Kurt Weiss,
The future happens, even without them. Homo Some of them will be quite similar for all compa-
Economicus has many aspects. Let’s try to sum- nies (every business needs bookkeeping) and
marize them somewhat frivolously with three therefore can be standardized to a high degree.
terms: Homo Sapiens, Homo Faber, and Homo Others will have to meet very specific needs
Ludens. (devising a precision watch or an airplane are
quite different engineering tasks) so that the IT
Homo Sapiens thinks, learns, and teaches. His tools have to be adapted closely to the tasks at
field is data, information, knowledge, and perhaps hand. (This does not mean that each piece of
wisdom. Homo Faber acquires skills, applies software has to be developed individually for
them, and coaches others to use them. His terri- each application, but it calls for a flexible stan-
tory is craftsmanship and engineering. Homo Lu- dard that can customized to map the specific
dens generates ideas, shapes them, and enables business processes of a given industry or com-
others to put them into practice. His playground is pany [18])
creativity and innovation. Of course, no individual
is in one category only. Every one is a mixture of Homo Economicus and IT are glued together for
all three aspects with weights attached that make good. Business without IT has no future except
up an important part of his or her specific perso- in a few tiny niches. This is not to everybody’s
nality. liking.
IT plays a different role for each category. A There are fears ranging from electro smog alle-
rough sketch might include the following traits. gedly endangering health in many ways to data
For Homo Sapiens IT is a tool to collect and orga- misuse reducing human beings to multidimensio-
nize data, process information, and perform all nal data sets prone to be exploited by marketing
kind of manipulations of numbers and mathemati- strategists, or manipulated by political forces.
cal symbols and graphs to discuss ideas and re-
sults. Homo Faber uses IT to equip his tools with Clearly these dangers exist as every technologi-
all kind of sophisticated devices, steer his ma- cal innovation has taught us during all of human
chinery, and to make the products and services history. There were no car accidents before there
he fabricates run smoothly in the hand of their were cars. Cars, however, persisted and so did
users. Homo Ludens employs IT to model and the accidents. Change always brings about be-
simulate his innovations, find out how they are nefits as well as dangers. As long as the former
affected by changes in design or parameteriza- outweigh the latter, change is here to stay [19].
tion, and to support others to put his ideas into We better take up the positive side and try to
practice. In all cases a central aspect of IT is reduce the negative (with the help of air bags,
communication. Here the impact of the IT induced speed limits, and the like when talking about
revolution is probably felt most radically and, at cars). Complaining will not help. The future hap-
the same time, is grossly underappreciated. Yes, pens. Even without you.
all the technical equipment and sophisticated ser-
vices (including entertainment) that heavily de- 3. Change and IT
pend on IT supported communication (or rather:
which would not work at all without such support) When you change the way you look at things, the
are very impressive indeed and acknowledged things you look at change.
accordingly. Yes, the communicational tools
(internet, emails, handheld devices of all sorts, IT has a qualitative and a quantitative impact on
and so on) that enable all of these achievements human affairs. As for quality, many tasks have
are manifestly around. On the other hand, how- become routine that were extremely difficult and
ever, the impact of all this machinery on Homo time consuming, or outright impossible to accom-
Economicus during working hours and beyond is plish without IT. Quantity simply means that al-
as yet neither really appreciated nor understood. most all business processes have accelerated
In fact it is a sort of nervous system holding often by orders of magnitude [20]. Change, of
everything together. course, is an immediate consequence of these
(linked) developments. In what follows we dis-
Each industry and each kind of business will need cuss a few typical interlinked, representative
a different kind of mix of the three types of Homo examples on the IT equipped stage where mo-
Economicus and accordingly will have to make dern business is performed.
different choices for their IT tools.
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SBS JABR—Vol 1
How IT can contribute to human affairs - Dr.Kurt Weiss
As always there are positive and negative joke that only he is healthy who has not been me-
aspects. The negative ones are by no means dically examined thoroughly enough.
meant to stop or discredit the respective deve-
lopments, but rather to help to avoid the inevita- Another point in case is social and professional
ble traps inherent in all changes. networks, IT driven developments which have
changed the landscape of human interactions.
Communication is the first example and certainly The number of participants (February 2011) has
one of the most influential one. It’s hard to belie- passed 600 million people and counting [22]. On
ve and difficult to appreciate how emails, SMS’s, the social side (anonymous) exchanges around
and so on have revolutionized communication as the clock wherever the internet is accessible,
a whole. It’s not only sheer speed which makes about anything of interest (or not) to anybody are
the difference, but also the contents which are established, maintained, or terminated at a click.
exchanged much more informally, much more Social contacts explode quantitatively and at the
frequently, and between any numbers of cor- same time tend to get evermore superficial in in-
respondents. Language is affected too, ortho- verse proportion to their number. Might the future
graphy is, grammar is, and even manners, be- be that everybody is connected to everybody with
cause politeness often is considered as too time no contents other than being lonely together? On
consuming. Communication has become so the business side networks are very efficient and
overwhelmingly abounding that it threatens to effective global tools to connect offer and de-
end up next to impossible to handle. We might mand (e.g. via marketplaces), to start busi-
be heading towards an information catastrophe, nesses, to organize projects, find people sharing
where any piece of poignant news is irreversibly ideas, and of course to recruit staff for your com-
lost in a haystack of emails [21]. pany [23]. And not to forget: networks may also
have political implications to the better and to the
Knowledge is another issue experiencing a radi- worse.
cal change through the workings of IT. Gone are
the times of patiently (let alone scholarly) As a last example consider what usually is called
collecting data, connecting them to yield informa- collective intelligence. We quoted in this context
tion, and eventually knowledge. Every item is ants and bees in the introduction. Human beings
available at a few clicks. Whatever the clicks rather tend to use their intelligence individually. It
produce is taken for granted because there is is difficult and an art in itself to train humans to
neither time nor the skills to establish the out- think and act collectively (in team sports for in-
put’s validity and because people (rightly?) think stance). In addition collectiveness often comes
it cheaper to accept mistakes than to try to avoid along with negative associations [24]. But there
them. are also visions of superior collective intelli-
gences like Fred Hoyle’s Black Cloud [25] being
One wonders how long it will take until know- incomprehensible to the human mind, overloa-
ledge is so far detached from reality that we will ding it, and eventually even causing its de-
be confronted with uncontrollable disasters. struction. Nevertheless, an IT based gradual build
(Economy and global finance are “good” candi- up of cooperative collective thinking may be a
dates for this to happen.) great opportunity for humanity. Perhaps the hu-
man brain itself, organized as an as yet poorly
The next example is diagnosis. Not only in the understood extremely sophisticated balance bet-
traditional medical world but also when it comes ween localized and aggregate processes, is an
to analyze all kinds of food ingredients, environ- excellent example of creative collectiveness.
mental influences, psychological considerations
in educational issues or human relations, or Concluding this section we see that IT will bring
when we try judging the good and the evil of sci- about a tremendous load of change, open up un-
entific results or research methods. Diagnostic countable options, and also developments people
tools have become so abundant and are applied would rather not like see to happen. Whatever: if
so superficially that they yield a grotesque, we want to end up among the ones fostering
panoptical landscape of interpretations beyond whatever negative aspects IT might bring about
any serious scientific scrutiny. Soon everybody and the ones who push for its opportunities, we
is hopelessly lost in a cacophony of opinions. better address the challenge to be among the
The diagnosis catastrophe is around the corner, winners.
perhaps best exemplified by the not so funny
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SBS JABR—Vol 1How IT can contribute to human affairs - Dr.Kurt Weiss
4. The State and IT Economy of scale is a welcome asset and, at the
same time, a quantitative criterion to assign them
The state should serve the people. It’s them who most efficiently and effectively. Entrepreneurship
pick up the check. and competition will be the driving force for priva-
te businesses and the dwellings of state as well.
How to govern a state? A question, of course, The story does not end here of course. Different
that is way beyond this essay. What we try here is value systems, cultural idiosyncrasies, different
to sketch a model based on three simple princip- languages, and many other disagreements and
les and to discuss a few ideas how IT can be opinions set the various states apart from each
used to make them work. In spirit with the disclai- other. Why not extrapolate the present model to
mer in the introduction many tasks the state agglomerates of states with the proviso that the
should or could take care are left aside. We con- larger it is, the less power is given to its govern-
centrate on the ones essential for economic suc- ing body? Not more than what’s needed to in-
cess in a connected world. crease the efficiency and effectiveness of the
communal services to the benefit of the agglo-
The principles are [26]: merate’s citizens without interfering with their
local interests [28].
1.Each and every institution and all decisions of
the state have to be democratically legitimated. All this may appear as a picture of Utopia (the
The last word always is with the people (the nowhere land). What we propose here, however,
sovereign). is to pursue the idea that the impact of the radi-
2.The power within the state dilutes from the bot- cal technological change caused by IT, with its
tom to the top. Federalism and subsidiary task tools applied responsibly wherever appropriate,
distribution are the key concepts. might help to pave the way towards Eutopia (the
3.The state intervenes as weakly as possible with land of beauty).
the private sector. Its tasks are reduced to a
pragmatic minimum. Change is the essence. Not linear change as we
perceive it, when we look at what we have
The result is a state that is a trusted service provi- learned from archeology and other sciences
der to the citizen who pays for it. Competition bet- used to reconstruct the history of Homo erectus’
ween the various federal sub-units enhances the development. Linear means that it took about
efficiency and effectiveness of these processes. double the time to double the number of people,
The local needs of the people will be locally add- the territory occupied by them, or whatever else
ressed with priorities and financing decided lo- one cares to measure.
cally. By the stakeholders for the stakeholders.
The monopoly of power, law enforcement, and The growth rate was constant. In the last centu-
services that are more easily or effectively provi- ries, however, it was definitely non linear. It was
ded on a larger scale (transport, communicational exponential. The growth rate itself was increa-
networks, management of currencies, and a few sing. Computers not only got faster, they got
others) are provided by coalitions of the basic fe- faster faster as illustrated by Moore’s law [29]
deralist communities. (formulated in 1965 and still valid today after an
astounding 47 years), that predicted the storage
These coalitions should be governed by bodies density of computer memories and their speed of
interfering as little as possible with the internal calculation to double approximately every two
affairs of the smaller ones. In other words: Only years while the prize drops by a factor of two. Or
tasks reaching beyond the local communities are look at Metcalf’s law [30], formulated in 1980,
organized by a coordinating institution whereby telling us that the number of possible connec-
the latter should make sure to take recommenda- tions in a network does not grow linearly with the
tions received from below very seriously [27]. number of the network’s nodes but proportional
Certainly not an easy balance of power this requi- to the number of nodes squared. (Illustrated by
res, but one that has a fair chance to combine a networks such as the telephone system, fax, out-
maximum of individual freedom and general eco- look, and Facebook.) The usefulness of networks
nomic welfare with smoothly connected proces- does not grow at a constant rate in proportion to
ses that empower the local federalist communities the increasing number of nodes, but at a much
to fulfill their tasks in the larger framework of the faster and accelerating rate.
state.
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SBS JABR—Vol 1How IT can contribute to human affairs - Dr.Kurt Weiss
Exponential growth (which in the beginning is The Singularity or whatever else will happen. Or
deceivingly indistinguishable from linear growth) even to get there at all.
cannot go on forever [31]. Physical limits like the
speed of light or the size of an atom will put an 5. IT as a global commodity
end to the validity of Moore’s law in the frame-
work of the presently available technology. But Distribution is more important than quantity.
new technologies like quantum computing will
eventually start the game all over again. And on Water in history, arguably, was the primary com-
we go. modity holding societies together. At a river, a
lake, the sea, or near a source is where people
When everybody is connected by telephone or settled. As the settlements grew, the water had to
internet to everybody else new types of networks be collected at a well or was distributed by irriga-
will be invented. Exponential growth, as long as tion systems of all kinds to supply otherwise dry
it lasts, opens a plethora of mind boggling surpri- places. Water by now is a commodity taken for
ses. For instance Raymond Kurzweil [32] pre- granted, although there are some warnings [36].
dicts, not undisputed of course, that in the year In large parts of the world the same is true for
2045 the computing power of Artificial Intelli- electricity as a power source which became
gence machines will surpass the brain power of available only much later in the 19th century. Wa-
all human brains combined (including creativity, ter of course is indispensable for life. Electricity is
and so on). He calls this moment in time The not, but the ease with which it can be distributed
Singularity [33]. over hundreds of kilometers at low cost and high
speed made it all but vital.
Here, we do not want to try to look that far in the
future (nothing gets old as fast as predictions Equally fast and by all standards at even much
about the future). We are interested in the phase lower cost information can be distributed over any
of exponential growth as caused and dictated by distance from nanometers (in chips) to light years
IT as we know it today. Difficult enough. Our (in space). Not surprisingly therefore IT is force-
minds are not used or trained to think in expo- fully on its way to become a global commodity. If
nential terms. It’s not intuitive. Our built-in pre- it has today (2012) not yet reached everybody on
dictors are linear. When we’re trying to avoid an earth, the reason is neither technical nor cost, but
animal, we pick the linear prediction of where it’s rather the fact that many people are not trained to
going to be in 20 seconds and what to do about use it for the obvious reason that they (still) are
it. That is actually hardwired in our brains [32]. analphabets. They will hopefully learn soon and
then be taught (among others by IT supported
Still worse, when talking about the state: it more tools) to use IT ever more efficiently. It is not risky
often than not it is not even capable to cope with to bet that IT shortly will be the number one com-
constant change rate [34]. (Population growth modity on earth as long as water and electrical
has come to stop in many countries in the last power are available. The world will look very dif-
decennia but no one had reacted seriously to the ferently from what it was in the year 2000.
easily predictable shortage of teachers, medical
doctors, and so on.) A few general remarks might be of interest at this
point. The two arguably most important concepts
Here then is the challenge. The State stands in in physics are energy and entropy. Energy is a
front of a bundle of pressing tasks: It should ap- familiar concept, entropy less so although it
preciate immediately all there is to know about certainly is equally consequential (in and beyond
IT, follow a crash course on how to handle linear physics). Loosely speaking it is a quantity that
change, study thoroughly all there is to know measures the amount of order (or organizational
about exponential change, and the challenges structure) within a system.
connected with growth coming to a stop or may
be even changing sign. If successful the state Consider as an example a closed box separated
will have a chance to end up in a position where by an air tight wall into two compartments. One of
it is able to govern to the benefits of its mul- them is filled with air, the other is evacuated.
tifaceted community of taxpaying citizens [35]. Pierce a hole in the wall and air will stream
The State certainly needs not be afraid to run out through the hole until the pressure on both sides
of tasks. It will be very busy on a 24/7 schedule is equal.
to reach in reasonable shape.
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SBS JABR—Vol 1How IT can contribute to human affairs - Dr.Kurt Weiss
In the beginning of the experiment the gas was Business with money as its only resource will not
more ordered (it was on one side of the wall and survive either. Today’s business needs IT. IT will
not on the other) than at its end (when it was tell the winners from the losers. We better make
equally distributed to both sides). sure to take it seriously and to use it thoughtfully.
If you had cared to install a tiny windmill in the 6. Business and IT
hole, during the transition you would have had the
possibility to exploit the wind power to do usable It takes all the running you can do to keep in the
work. The transition from order (low entropy) to same place [38].
disorder (high entropy) yields useful power.
Introduction
Other examples include temperature differences
(representing order because heat is on one side Information Technology is ever more important
and not on the other), water reservoirs in the for successful businesses. Its efficiency and ef-
mountains, or spatially separated electrical char- fectiveness are in most cases nothing less than
ges. Gradients like these allow producing useful mandatory. Most companies which have not
power. Low entropy (a high degree of order reacted to these developments in the past have
meaning steep gradients) is the driver. If order is vanished.
lost and entropy is high (all parameters are equal
everywhere, no gradients) energy is needed to Those that will not react today will most likely
reestablish order. With other words: The availabi- experience severe difficulties to stay on the map.
lity of energy is necessary but by no means suffi- No board will want to see this happen. Here we
cient. In homogeneous systems its presence alo- describe the most likely IT-influenced deve-
ne is of no help. Energy gradients (order and low lopments to be expected on the basis of what we
entropy) make the difference. know and experience today. From this we will try
to draw a rough (admittedly speculative) picture
Energy shortage is bad, but its availability alone of The Future Company.
will not help. The sun and – to a much smaller
extent – the heat reservoir inside the earth provi- Five Steps for a Change
de us with orders or magnitude more energy per
second than what we consume now or in the fo- Five trends are already quite visible. All of them
reseeable future. There is no shortage of energy, will influence business strongly. Any company of
no energy crisis. The problem is high entropy, not a certain size will have serious difficulties to grow
enough order, not enough structure, or organiza- profitably or even to survive in the years to come,
tion. Resources other than energy display the sa- if they close their eyes to these developments.
me pattern. Notably, when speaking about econo- Or to put it in a more positive way: Only compa-
my or money. Not quantity, but distribution is the nies who face these changes open mindedly will
issue. be rewarded with success in the next decade
and beyond. Let us now proceed with sketching
What does all this mean for information technolo- these developments.
gy? Information is closely related to entropy [37].
If a system is highly ordered (low entropy) it a) Dealing with Complexity
stands for a lot of information. If everything is ho- There is no doubt: the world is complex, busi-
mogenously distributed (maximum entropy) no ness is complex, and software is complex. This
information is available. The human society complexity is not only here to stay, it steadily in-
needs more than randomly distributed data to sur- creases. And there is no hope to get rid of it, if
vive. It needs order, it needs information. IT is society, technology, business, and software con-
more than just a new useful and perhaps amusing tinue to evolve at a pace comparable to what we
technological gadget. IT is the essence of survival have seen in the past. If nothing is done to pre-
in complex systems like today’s technology de- vent it, we are heading full steam into a comple-
pendent human society. It is essential for life itself xity crisis [39].
and of course business. Living beings need a ner-
vous system and environment sensitive sensors What can we do about it? If we cannot get rid of
to organize and coordinate the workings of its or- complexity we must find means to tame it. We
ganisms. Muscles and bones will not suffice. must learn to deal with it.
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SBS JABR—Vol 1How IT can contribute to human affairs - Dr.Kurt Weiss
We must learn to deal with the contradictory re- Value is added in business processes. If we map
quirements that things need to be complex to be these business processes onto software proces-
really useful, while at the same time the more ses we will have made a large step toward mea-
complex they are, the more difficult they are to suring, benchmarking, and, most importantly,
handle. We must learn to navigate successfully handling the complexity of our business proces-
between Scylla and Charybdis, to sail smoothly ses [40]. This is why: Software processes are ba-
in troubled waters. For business this means to sed on strictly defined (mathematical) rules. They
sort out a few key parameters from an incredibly are measurable.
vast number of variables. We must understand
our businesses much more thoroughly and learn We can ask a lot of quantitative questions such
to measure, handle, and benchmark their com- as: How many transactions are supported? How
plexity. many branching points can be counted? How
many elements are found in a given process?
A few examples might be useful to elucidate How efficient are the individual processes?
what we mean. Consider for instance the origin
of life which billions of years ago was born in the The results, numbers, can now for instance be
depth of the primordial soup by the simple me- compared for companies of similar size in diffe-
chanism Charles Darwin called [2] Survival of rent industries, for similar companies
the Fittest. (competitors) in the same industry, for similar
companies in different countries, or for one single
The emerging biological systems’ complexity is global company’s subsidiaries in different count-
boggling the mind. Look at the brain (our soft ries.
disc). It counts about 10 billions of neurons, at
least 10 times as many connections, and contact The results can be used as benchmarks offering
points (synapses). All this complexity enables us companies a tool to improve systematically their
to handle astonishingly well and to survive in our respective performances. Gradually, and most
environment which is, if anything, even more importantly it will become possible to hide the
complex. enormous (inevitable) complexity of a company
vis-à-vis their customers. The complexity of the
Or then: The physical world is extremely com- company’s internal business processes will be
plex too, but scientists found a way to deal with it silent for them [41] and they can concentrate on
quite well so that engineers have been able to their own business.
construct complicated machines such as the mo-
dern car whose more than 50’000 parts probably What we propose, therefore, is a new scientific
no single person understands in sufficient detail discipline: Business Process Mapping [18]. Its
to be able to put it together from scratch. Asto- goal is to make the complexity of companies ma-
nishingly enough, however, (nearly) everybody is nageable by mapping the company’s specific
able to drive a car if he learns to manipulate so- business processes onto business software.
me 10 handles. Business software, of course, is also complex,
but here complexity is in general much easier to
Or think of the conductor of a large orchestra measure, handle, and to control than it would be
who pulls together the “noises” from 100 profes- by looking directly into the company where you
sionally played instruments of many different easily will get as many answers as the number of
kinds into one beautiful piece of music full of har- different managers you care to ask.
mony, melody rhythm, and emotion.
To conclude this section let’s consider another
It is with these examples (and many others) in example: Physics is a scientific discipline whose
mind that we look for a way to handle the method is to map the complexity of nature
complexity of our businesses in a world of ever (business in our case) by means of strictly con-
increasing complexity. And it is here that we call trolled experiments (business processes) onto
on IT to help us out of misery. The scenario is as mathematics (business software) which is also
follows: On the one hand we have the complex complex but easier to handle with the help of for-
companies, on the other one the equally com- mal rules (programming) and computers
plex world of business software. Business is (computers).
about adding value (steel in à Rolex out).
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SBS JABR—Vol 1How IT can contribute to human affairs - Dr.Kurt Weiss
b) Process Innovation vs. Product Innovation Such is the challenge brought about by process
In 1937 the Nobel Memorial Prize winning British innovation and it is change competence which
economist Ronald Coase published a paper The makes process innovation in most cases con-
Nature of the Firm [42] where he established what siderably more difficult than product innovation.
since has become known as Coase’s law. It sta- Martin Hilti, the founder of the HILTI Company
tes that a firm cannot grow any longer if the trans- summarized these ideas from an entrepreneurial
actions needed to empower the growth are more view concisely as follows [44]: Owning markets is
expensive than the profit from the growth. Plausi- much more important than owning factories.
ble enough but like so many – when the dust has
settled - simple truths it had to be discovered, Let us look at a few examples of successful pro-
supported by convincing arguments, and shown cess innovations. Henry Ford realized that the
to be useful. conveyer belt (which was not his invention) made
it possible for unskilled men to put together com-
Here we propose to paraphrase and restate this plicated machines. Gottlieb Duttweiler a Swiss
law [43] with respect to the role of innovations in entrepreneur in the first half of the 20th century,
business by saying that if a firm wants to grow started a hugely successful retail company
profitably it better makes sure that its product in- (Migros) based on the simple process idea to
novations do not get torpedoed by the cost of the bring the products needed for daily life on (in the
processes needed to bring them to the market. beginning) small trucks to villages with no shop
And as a consequence we claim that nowadays (then quite common in Switzerland) so that
process innovation is more often than not at least people did not need to go to town.
as important as product innovation.
Michel Dell did not sell different computers than
Clearly we are talking about production lines, di- did his competitors, but he created a new me-
stribution channels, customer relationship ma- thod to produce and distribute them. He even-
nagement, administration, and the like. Loosely tually became the market leader for quite some
speaking we are talking about “logistics”. We are time. Amazon in its large storehouses does not
talking about doing things right rather than about sort the half million and more books according to
doing the right things. Business, as we discussed some alphabetical order of authors or what, but
in the previous section, is becoming ever more equips each of them with an electronically reada-
complex. Doing things right, therefore, is the lon- ble tag so that they can be stored and fetched
ger the more the call of the day. Doing the right automatically. Containers revolutionized ship-
things is not enough. ping.
Innovation is never easy. Ideas are one thing but Alfred Hiestand, another Swiss entrepreneur in
development to market is another matter all toge- the second half of 20th century became rich by
ther. One part of it is the development of the pro- selling semi frozen croissants which, after hea-
duct itself, in essence mostly a technical challen- ting them for 30 seconds, are fresh, crusty and
ge. The task here is to change the color of some- tasty form 5 am till midnight. The same products,
thing, add or eliminate a button, make it faster or different processes! As a final and very specta-
slower, bigger or smaller, heavier or lighter, use cular example watch in Mumbai at noon each
new materials, or what have you. Not easy but working day how over two million lunch boxes
involving skills quite successfully acquired and are extremely reliably distributed to the workers
practiced by generations of technical experts of in town with the help of a code consisting of
all kinds. It is the other part where process inno- circles, crosses and triangles by carriers who do
vation comes in. not know to read or write. Six sigma at its best
[45].
Here the real challenge is not technical. The chal-
lenge is people. People will be asked to change What today’s companies need, then, is a driving
their habits, to enthuse themselves for new pro- force which enables both: product innovation and
jects, to integrate in new teams, and so on. They process innovation. They need an innovation dy-
need a skill not usually in the focus of in house namo [46], a virtual device based on creativity,
training in companies (or taught at schools for communication skills, and change competence.
that matter): They need change competence.
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SBS JABR—Vol 1How IT can contribute to human affairs - Dr.Kurt Weiss
On the one hand it will help to fill effectively the They are summarized efficiently to furnish decisi-
company’s product pipeline, while on the other on tools at the right moment and at the right place
hand it will enable the company to bring these in a given process. The third is the integration of
products efficiently to the customers. This dyna- processes. Internal and external business pro-
mo will be an additional and important manage- cesses are effectively correlated. They are as
ment tool for The Future Company. uniform as possible, scalable, flexible, and reach
beyond artificial system boundaries. Furthermore
c) ERP goes SOA business processes are to be easy to revise and
You are hungry. If you are to be helped, three improve. The forth (the heart of SOA) is integrati-
steps are called for. Eating of course is one of on of applications.
them. But you also need to order your meal and
to pay for it. In what order? It depends in the An application platform supports all relevant tech-
business model you choose. McDonalds will nical standards and empowers a smooth interplay
want you to order first, pay then, and to eat last. of web-services beyond company boundaries. It
In a traditional restaurant you will order first, eat also allows for different ways to program additio-
then, and pay at the end. If you take your lunch nal software to yield optimally adapted (best prac-
in the self service canteen of your employer you tice) solutions to the encompassing business pro-
will pay and eat in that order. If a sit down buffet cesses. As a result the company will speak with
is available you again pay first, order then and one voice to the customer. The customer will
eat at the end. Finally, if you are eating at home know all he needs to know about the company’s
you just sit down and eat. Five business models products and services. The processes are optimi-
for three steps [47]! zed with respect to the value chain and they are
always easily adaptable to the changing de-
This is what Service Oriented Architecture (SOA) mands of the market. Any dependence on a
is all about. It allows you to structure your busi- specific technology is substantially and
ness processes with utmost flexibility. SOA is a sustainably reduced.
method to encapsulate and orchestrate all
available components (including IT) in such a Another important aspect is, as always, cost. As
way that internally and externally (relative to new and more SOA applications are created their
customers, suppliers, partners, and so on) busi- individual cost tends to zero, because most of the
ness solutions are available as needed in each services are already available and only need to
specific case. be orchestrated. As said before, the flexibility of
the business solutions is greatly increased which,
It should be clear that not the technical tasks on the cost side, allows to dedicate a much larger
(manipulating data, calculations, maintaining share of the IT budget to adapt the company’s IT
hardware, and the like) are addressed but rather solutions to the changing market conditions and
the easy and effective coordination of IT services new software developments, rather than to use
according to the business transactions at hand. nearly all of it to keep the system running.
SOA is a structure which integrates the business
applications and at the same time hides their On a grander scale SOA offers even more be-
complexity behind a cleverly chosen architec- nefits to business. For instance consider the four
ture. Silent processes are the result. most prominent driving forces behind SOA: dere-
gulation (protected markets open up), globaliza-
Integration is the buzzword here. It has four main tion (end of low cost competition), technology
components. The first is integration of people. (work is rapidly transferable), and commoditiza-
Every employee will have a unique “single sign tion (increased consumption at lower margins).
on” access to all and every information handling
equipment he needs in his specific role. Every Consequently, value chains characterized by
information channel he is entitled to use is open concepts such as company centered, command
at all times, and all other means of communica- and control, ownership driven, and self contained
tion will be available to him in real time. The se- risk develop into business networks where the
cond integration concerns information. Data are corresponding modified concepts are customer
uniformly and reliably administrated and distri- centric, connect and collaborate, relationship
buted. driven, and shared risk.
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SBS JABR—Vol 1How IT can contribute to human affairs - Dr.Kurt Weiss
The relationship between IT and business started No wonder ways out of this technological
in the 1960ies with a shy friendship between ma- bottleneck are on top of the shopping list for the
nagers thinking technically and in functions and whole industry. There is by now little doubt that
inert monolithic Enterprise Resource Planning the solution is to be found in the idea of replacing
(ERP) systems running on equally monolithic hard discs by centralized internet services. Even
main frame computers. 30 years later it evolved better: this development is already in full flight.
towards a wavering romance with the same ERP Music, films, videos and much more is already
systems but now running on a much more flexible available in the net (iPads have no hard disc.). If
client server architecture. today you buy a software package most likely
you will not get an installation CD but an internet
Today all is set for a formal engagement between link, from where you can download what you ha-
entrepreneurs thinking in processes with integra- ve ordered and paid.
ting SOA systems running on any appropriate
technical platform. This platform is center stage in Consequently notebooks – smaller and lighter as
the next chapter. the former ones - without CD slots are already on
the market. (It is not difficult to foresee that CD’s
d) Hard Discs go Internet will become obsolete altogether and vanish as
25 years ago, in 1984, computing became have the floppy discs five or six years ago.)
available to everybody. Replacing “write and en-
ter” on a keyboard (involving programming) by Your personal computer will reduce to a screen
“point and click” on a graphical user interface with an integrated keyboard connected to the
(GUI) transformed the interaction with computers internet. It will shrink to what today is your cell
hitherto only accessible to well trained specialists phone which you will use less than 1 percent of
into a commodity for the public at large. the time for telephone calls. Economy of scale
will have won the day.
Personal computers started their enormously suc-
cessful invasion of the developed world and We are entering the age of Cloud Computing.
beyond, and conquered the desks and the laps of There are a confusing lot of definitions to explain
by now much more than one billion people. De- what this is all about [48]. To quote one by Jeff
sktops and laptops make up most of this techno- Kaplan it is a broad array of web-based services
logy platform, backed up by servers, data banks, aimed at allowing users to obtain a wide range of
glass fiber networks, and so on. functional capabilities on a “pay-as-you-go” basis
that previously required tremendous hardware/
Each of these personal computers contains a software investments and professional skills to
hard disc were the data and the programs are acquire. Cloud computing is the realization of the
stored for each individual device. Hard discs are earlier ideals of utility computing without the
sophisticated technological machineries featuring technical complexities or complicated deploy-
small magnetic reading and writing heads ho- ment worries.
vering not much more than 10 billionth of a meter
(10 nanometers) on top of some 10 rapidly Web-based services such as Software as a Ser-
swiveling patters covered by a complicated layer vice (SaaS), Platform as a Service (PaaS) or
of tricky magnetic materials about 10-20 nanome- even Anything as a Service (AaaS) are the cor-
ters thick. nerstones of cloud computing. They provide
computing services that are highly reliable,
Hard discs are heavy, consume a considerable scalable, and autonomic to support ubiquitous
amount of the power which keeps the PC running, access, dynamic recovery, and composability. In
and produce most of its waste heat which in turn particular consumers can determine the required
asks for noisy cooling systems. service level through Quality of Service (QoS)
parameters and Service Level Agreements
They are quite shock sensitive and prone to all (SLAs) [49].
kinds of failures with drastic consequences of lo-
sing precious data not saved regularly (on other Cloud Computing of course also needs an appro-
hard discs). And they are slow: Manipulating data priate hardware to make it work. Grid is its name.
on a hard disc is slower by at least a factor of 105
than performing a calculation.
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