The Governance of Strategic IT Initiatives for Innovation

The research explores the different governance systems used by senior IT managers to manage their strategic IT initiatives for business transformation, innovation and value creation. The research proposes a systemic model composed of three governance axes and two governance modes where exploitative efficiency-oriented IT initiatives are opposed to exploratory innovation-oriented initiatives. 

While a decade ago IT was seen as a tool for automation, economies of scale and efficiency, today our research findings show that IT can also be used for innovation, growth and market creation. Existing IT management and governance approaches largely focus on exploitation and value creation through efficiency and do not provide the multi-dimensional perspectives needed to address the front-end of IT strategy where new systems are co-created in project contexts characterized by high levels of uncertainty and change. To manage such strategic IT initiatives managers need alternatives to the rational planning and forecasting techniques. 

Three governance approaches observed in the literature were leveraged to build the final research model: (1) IT governance, (2) project governance, and (3) relational governance. None of these approaches provides the systemic perspective needed in strategic IT initiatives where project, intra-organizational and inter-organizational decision-making relationships are addressed simultaneously. 

The following question that emerged from both initial field observations and the literature review guided the research: What governance mechanisms and systems senior IT managers use to manage their strategic and innovative IT initiatives? 

To answer this broad question and to study the highly dynamic nature of strategic IT initiatives, a theory-developing qualitative approach was adopted. A research model was developed and stabilized through a process of conceptual saturation. An exploratory stage of interviews and ix travels was followed by a stage of analysis and the Grounded Theory (GT) methodology was chosen as an underlying approach along with two qualitative analysis techniques, typological analysis and qualitative content analysis. 

The results and key findings suggest important theoretical and managerial implications. First, the findings indicate that governance in strategic IT initiatives is systemic. Instead of a one-dimensional view that either focuses on ongoing intra-organizational or inter-organizational relationships (in the literature), strategic IT initiatives require a three-dimensional view. The final model suggests mechanisms to connect the temporary one-off project relationships and activities to the more stable and long-term intra-organizational and inter-organizational relationships. 

Second, the results show that two very distinct governance architectures (sets of governance mechanisms) are used to manage two different types of strategic and innovative IT initiatives: (1) efficiency-oriented initiatives, and (2) growth-oriented initiatives. This distinction is significant and provides the central finding of this thesis. 

Lastly, governance was found to be more diverse, intense and open when the IT initiative is oriented toward exploratory innovation and growth. Uncertainty is higher in growth-oriented initiatives and more complex relationships need to be coordinated. In other words, the results suggest that higher levels of uncertainty and complexity in interactions require higher levels of governance. Moreover, IT-enabled innovation in growth-oriented initiatives is open and collaborative in two different ways: (1) inter-organizational governance is more critical than intra-organizational governance in growth-oriented IT initiatives, and (2) firms use collaborative strategies as opposed to competitive strategies, and. The results show that in growth-oriented initiatives senior IT managers use highly collaborative strategies that draw upon the principles of open innovation and focus more on key inter-organizational governance mechanisms to manage their IT initiatives effectively.

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