Robert G. Fichman

The Illusory Diffusion of Innovation: An Examination of Assimilation Gaps

Innovation researchers have known for sometime that a new information technology maybe widely acquired, but then only sparsely deployed among acquiring firms. When this happens, the observed pattern of cumulative adoptions will vary depending on which eventin the assimilation process (i.e., acquisition or deployment) is treated as the adoption event. Instead of mirroring one another, a widening gap-termed here an assimilation gap-will existbetween the cumulative adoption curves associated with the alternatively conceived adoption events. When a pronounced assimilation gap exists, the common practice of using cumulative purchases or acquisitions as the basis for diffusion modeling can present an illusory picture of the diffusion process-leading to potentially erroneous judgments about the robustness ofthe diffusion process already observed, and of the technologys future prospects. Researchers may draw inappropriate theoretical inferences about the forces driving diffusion. Practitioners may commit to a technology based on a belief that pervasive adoption is inevitable, when it is not. This study introduces the assimilation gap concept, and develops a general operational measure derived from the difference between the cumulative acquisition and deployment patterns. It describes how two characteristics-increasing returns to adoption and knowledge barriers impeding adoption-separately and in combination may serve to predispose a technology to exhibit a pronounced gap. It develops techniques for measuring assimilation gaps, for establishing whether two gaps are significantly different from each other, and for establishing whether a particular gap is absolutely large enough to be of substantive interest. Finally, it demonstrates these techniques in an analysis of adoption data for three prominent innovations in software process technology-relational database management systems (RDBs), general purpose fourth generation languages (4GLs), and computer aided software engineering tools (CASE). The analysis confirmed that assimilation gaps can be sensibly measured, and that their measured size is largely consistent with a priori expectations and recent research results. A very pronounced gap was found for CASE, while more moderate-though still significant-gaps were found for RDBs and 4GLs. These results have the immediate implication that, where the possibility of a substantial assimilation gap exists, the time of deployment should be captured instead of, or in addition to, time of acquisition as the basis for diffusion modeling. More generally, the results suggest that observers be guarded about concluding, based on sales data, that an innovation is destined to become widely used. In addition, by providing the ability to analyze and compare assimilation gaps, this study provides an analytic foundation for future research on why assimilation gaps occur, and what might be done to reduce them.

Real Options and IT Platform Adoption: Implications for Theory and Practice

The decision processes surrounding investments in innovative information technology (IT) platforms are complicated by uncertainty about expected payoffs and irreversibilities in the costs of implementation. When uncertainty and irreversibility are high, concepts from real options should be used to properly structure the evaluation and management of investment opportunities, and thereby capture the value of managerial flexibility. However, while innovation researchers have posited that option value can influence the motivations of early adopters, and options researchers have identified emerging IT as a promising area for application of options valuation techniques, there has yet to be a systematic theoretical integration of work on IT innovation and real options.This paper seeks to fill this gap by developing a model of the determinants of option value associated with investments in innovative IT platforms. In so doing, the model addresses a central question in the innovation field: When should a firm take a lead role in innovation with emerging technologies? The analysis begins with an explanation of real options analysis and how it differs from conventional approaches for evaluating new technologies. Then a set of 12 factors--drawn from 4 complementary perspectives on organizational innovation (technology strategy, organizational learning, innovation bandwagons, and technology adaptation)--is synthesized into a model of the option value of IT platform investments. Rationales are provided to explain the direct effects of these factors on option value, and selected interactions among the factors are also considered. Finally, the implications of the model are presented in three areas: predicting IT platform initiation and adoption, valuing IT platform options, and managing IT platform implementation.

The role of aggregation in the measurement of IT-related organizational innovation

The extent of organizational innovation with information technology, an important construct in the IT innovation literature, has been measured in many different ways. Some measures have a narrow focus while others aggregate innovative behaviors across a set of innovations or stages in the assimilation lifecycle. There appear to be some significant tradeoffs involving aggregation: more aggregated measures can be more robust and generalizable and can promote stronger predictive validity, while less aggregated measures allow more context-specific investigations and can preserve clearer theoretical interpretations. This article begins with a conceptual analysis that identifies the circumstances when these tradeoffs are most likely to favor aggregated measures. It is found that aggregation should be favorable when: (1) the researchers interest is in general innovation or a model that generalizes to a class of innovations, (2) antecedents have effects in the same direction in all assimilation stages, (3) characteristics of organizations can be treated as constant across the innovations in the study, (4) characteristics of innovations can not be treated as constant across organizations in the study, (5) the set of innovations being aggregated includes substitutes or moderate complements, and (6) sources of noise in the measurement of innovation may be present. The article then presents an empirical study using data on the adoption of software process technologies by 608 U.S. based corporations. This study-which had circumstances quite favorable to aggregation- found that aggregating across three innovations within a technology class more than doubled the variance explained compared to single innovation models. Aggregating across assimilation stages also had a slight positive effect on predictive validity. Taken together, these results provide initial confirmation of the conclusions from the conceptual analysis regarding the circumstances favoring aggregation.

The shoemaker's children: using wikis for information systems teaching, research, and publication

This paper argues that Web 2.0 tools, specifically wikis, have begun to influence business and knowledge sharing practices in many organizations. Information Systems researchers have spent considerable time exploring the impact and implications of these tools in organizations, but those same researchers have not spent sufficient time considering whether and how these new technologies may provide opportunities for us to reform our core practices of research, review, and teaching. To this end, this paper calls for the IS discipline to engage in two actions related to wikis and other Web 2.0 tools. First, the IS discipline ought to engage in critical reflection about how wikis and other Web 2.0 tools could allow us to conduct our core processes differently. Our existing practices were formulated during an era of paper-based exchange; wikis and other Web 2.0 tools may enable processes that could be substantively better. Nevertheless, users can appropriate information technology tools in unexpected ways, and even when tools are appropriated as expected there can be unintended negative consequences. Any potential changes to our core processes should, therefore, be considered critically and carefully, leading to our second recommended action. We advocate and describe a series of controlled experiments that will help assess the impact of these technologies on our core processes and the associated changes that would be necessary to use them. We argue that these experiments can provide needed information regarding Web 2.0 tools and related practice changes that could help the discipline better assess whether or not new practices would be superior to existing ones and under which circumstances.

Beyond Valuation: “Options Thinking” in IT Project Management:

Real options can be a powerful tool for quantifying the value of strategic and operational flexibility associated with uncertain IT investments. However, they also constitute a new way of thinking about how projects can be organized and managed to maximize upside potential while minimizing downside risk. Explains how practitioners can incorporate options thinking into contemporary IT project management. Options thinking means recognizing real options and how they add value. Just as important is managing projects so that the option value that exists in theory is realized in practice. Several real-world examples illustrate how the value of embedded real options can be realized through active project management. There are pitfalls associated with each option, as well as benefits and limitations of different approaches to valuing options. Organizations must decide whether to undertake the challenges of adopting options thinking as a project management philosophy.

Digital innovation as a fundamental and powerful concept in the information systems curriculum

The 50-year march of Moores Law has led to the creation of a relatively cheap and increasingly easy-touse world-wide digital infrastructure of computers, mobile devices, broadband network connections, and advanced application platforms. This digital infrastructure has, in turn, accelerated the emergence of new technologies that enable transformations in how we live and work, how companies organize, and the structure of entire industries. As a result, it has become important for all business students to have a strong grounding in IT and digital innovation in order to manage, lead, and transform organizations that are increasingly dependent on digital innovation. Yet, at many schools, students do not get such grounding because the required information systems core class is stuck in the past. We present a vision for a redesigned IS core class that adopts digital innovation as a fundamental and powerful concept (FPC). A good FPC serves as both a foundational concept and an organizing principle for a course. We espouse a particularly broad conceptualization of digital innovation that allows for a variety of teaching styles and topical emphases for the IS core class. This conceptualization includes three types of innovation (i.e., process, product, and business model innovation), and four stages for the overall innovation process (i.e., discovery, development, diffusion, and impact). Based on this conceptualization, we examine the implications of adopting digital innovation as an FPC. We also briefly discuss broader implications relating to (1) the IS curriculum beyond the core class, (2) the research agenda for the IS field, and (3) the identity and legitimacy of IS in business schools.

Information Systems Project Continuation in Escalation Situations: A Real Options Model

Software project escalation has been shown to be a widespread phenomenon. With few exceptions, prior research has portrayed escalation as an irrational decision-making process whereby additional resources are plowed into a failing project. In this article, we examine the possibility that in some cases managers escalate their commitment not because they are acting irrationally, but rather as a rational response to real options that may be embedded in a project. A project embeds real options when managers have the opportunity but not the obligation to adjust the future direction of the project in response to external or internal events. Examples include deferring the project, switching the project to serve a different purpose, changing the scale of the project, implementing it in incremental stages, abandoning the project, or using the project as a platform for future growth opportunities. Although real options can represent a substantial portion of a projects value, they rarely enter into a projects formal justification process in the traditional quantitative discounted cash-flow-based project valuation techniques. Using experimental data collected from managers in 123 firms, we demonstrate that managers recognize and value the presence of real options. We also assess the relative importance that managers ascribe to each type of real option, showing that growth options are more highly valued than operational options. Finally, we demonstrate that the influence of the options on project continuation decisions is largely mediated by the perceived value that they add. Implications for both theory and practice are discussed.

Object technology and reuse: lessons from early adopters

Four longitudinal case studies (EnergyCo, BankCo, FinCo and BrokerCo) illustrate the costs and risks of early object-oriented technology adoption, including the difficulty of achieving systematic reuse in practice. The authors recommend general strategies and specific tactics for overcoming adoption barriers.

INCENTIVE COMPATIBILITY AND SYSTEMATIC SOFTWARE REUSE

Abstract Systematic software reuse has emerged as a promising route to improved software development productivity and quality. Many large corporations have initiated systematic reuse programs, and many reuse frameworks have been developed to guide organizations in these efforts. Yet, in spite of this, systematic reuse in practice has been difficult to achieve. In this paper we argue that a key inhibitor has been the incentive conflict inherent in traditional programs of reuse. We reach this conclusion based on an analysis of interview data gathered from 15 projects across eight different sites in a company once viewed as a leader in the reuse movement. We found that one key contributor to the absence of widespread systematic reuse in this firm was a perception among project teams that reuse was incompatible with prevailing project team priorities and incentives, such as to complete projects on time and within budget. Based on this finding, we undertake a survey of different approaches to establishing reuse described in the literature, and analyze them to determine whether incentive incompatibility is inherent in the nature of software reuse for larger organizations. We conclude that it is not, and provide guidance on how such organizations can design an incentive-compatible program of reuse, i.e., one that generates a climate in which developers and teams view reuse as having a more favorable “value proposition” according to the prevailing incentives operating at the team level.

Information-rich commerce at a crossroads: business and technology adoption requirements

The day is approaching when most of our common transactions may be information-rich, but first an extensive supporting infrastructure must be developed in three areas: devices, networking, and trust.