The Manager’s Guide to IT Innovation Waves
Is the latest IT innovation the Next Big Thing — or just the Next Big Sell? Understanding the dynamics that produce IT innovation waves can help executives make wise decisions about which innovations to adopt when.
Over the last half century, managers have faced one wave of information technology innovation after another, each promising to change the way companies do business. Many of those innovations have: The sheer ubiquity of computing and communications devices and people’s devotion to their electronic devices bear witness to the transformation. Still, at any one point in time, an executive is likely to feel more or less inundated by the current wave, unsure of what all the commotion is about, unable to avoid the topic in everyday business conversation and suspicious that the latest gizmo is not the Next Big Thing but the Next Big Sell.
Some years ago, Neil Ramiller, in his doctoral research at UCLA, polled a number of managers about how they made sense of the new in IT. Most of them struggled. Initially, hopeful managers sooner or later grew disenchanted with the problems involved in the latest technology, whether it was electronic commerce or computer aided software engineering. One manager lamented, “I keep waiting for a silver bullet, a magic formula, an answer to all my prayers, and it never happens!” Yet, for that manager and most others, the promise of the newest IT never seemed to dim.1
Many economists and analysts have noted these adoption waves. In IT, the best-known observer is the technology assessment company Gartner, which formulated what it calls the “hype cycle” to describe how new IT innovations break upon the business scene in a wave-like, attention-grabbing fashion. In this model, each noteworthy new technology is portrayed as taking off and gathering mounting interest, only to reach a “peak of inflated expectations,” falling then into a “trough of disillusionment,” from which it slowly recovers to follow an upward “slope of enlightenment.” Since it was first introduced in 1995, the hype cycle has become Gartner’s most popular analytic tool for assessing the progress and acceptance of new IT.
1. N.C. Ramiller and E.B. Swanson, “Organizing Visions for Information Technology and the Information Systems Executive Response,” Journal of Management Information Systems 20, no. 1 (summer 2003):13-50; N.C. Ramiller, “The ‘Textual Attitude’ and New Technology,” Information and Organization 11, no. 2 (April 2001): 129-156; and N.C. Ramiller, “’Airline Magazine Syndrome’: Reading a Myth of Mismanagement,” Information Technology & People 14, no. 3, (2001): 287-303.
2. J. Fenn and M. Raskino, “Mastering the Hype Cycle: How to Choose the Right Innovation at the Right Time,” (Cambridge, Massachusetts: Harvard Business Press, 2008).
3. The research on which this article is principally based has been done in collaborations with Neil Ramiller, Ping Wang, Yutaka Yamauchi, David Firth and Arnaud Gorgeon, supported in substantial part by the UCLA Anderson School’s Information Systems Research Program.
4. See W. Goffman and V.A. Newill, “Generalization of Epidemic Theory: An Application to the Transmission of Ideas,” Nature 204, no. 4955 (Oct. 17, 1964): 225. The logistic curve provides perhaps the simplest form of the S-shaped curve, with wide application to dynamic processes beyond the present discussion. In the business context, an elaborated form termed the Bass model after its originator, Frank Bass, has achieved widespread use and extension in marketing to describe a product life cycle.
5. See especially, E.M. Rogers, “Diffusion of Innovations,” 4th ed. (New York: Free Press, 1995) for an authoritative synthesis of research on innovation diffusion. The role of change agents in the management innovation process is newly illuminated in J.M. Birkinshaw, G. Hamel and M.J. Mol, “Management Innovation,” Academy of Management Review 33, no. 4 (2008): 825-845. In the IT context, the technology champion provides a special case of the change agent. See, for example, C.M. Beath, “Supporting the Information Technology Champion,” MIS Quarterly 15, no. 3 (September 1991): 355-372.
6. For this reason, firms purchasing new enterprise software often present competing vendors with their own case particulars and require that each undertake a demonstration project that shows how the software would work in this context.
7. This illustration is adapted from P. Wang and E.B. Swanson, “Launching Professional Services Automation: Institutional Entrepreneurship for Information Technology Innovations,” Information and Organization 17, no. 2 (2007): 59-88.
8. D.R. Firth and E.B. Swanson, “How Useful Are IT Research and Analysis Services?” Business Horizons 48, no. 2 (March/April 2005): 151-159.
9. E.B. Swanson and N.C. Ramiller, “The Organizing Vision in Information Systems Innovation,” Organization Science 8, no. 5 (September/October 1997): 458-474. See also, E.B. Swanson, “Talking the IS Innovation Walk,” in “Global and Organizational Discourse About Information Technology,” eds. E.H. Wynn, E.A. Whitley, M.D. Myers and J.I. DeGross (Norwell, Massachusetts: Kluwer Academic Publishers, 2003): 15-31. For recent studies in addition to those discussed here, see W.L. Currie, “The Organizing Vision of Application Service Provision: A Process-oriented Analysis,” Information and Organization 14, no. 4 (October 2004): 237-267; and J.L. Reardon and E. Davidson, “How Do Doctors Perceive the Organizing Vision for Electronic Medical Records? Preliminary Findings from a Study of EMR Adoption in Independent Physician Practices,” Proceedings of the 40th Annual Hawaii International Conference on System Sciences (Jan. 3-6, 2007).
10. E. Keller, interview with the author, April 12, 2000. See also, E. Keller, “Lessons Learned,” Manufacturing Systems 17, no. 11 (November 1999): 44-50. Gartner’s first ERP publication was L. Wylie, “A Vision of the Next-Generation MRP II,” Scenario S-300-339, Gartner Group, April 12, 1990. The excitement associated with SAP’s R/3 system in the mid-1990s is conveyed in R.B. Lieber and M. Jaynes, “Here Comes SAP,” Fortune, Oct. 2, 1995, 122-124.
11. Herbert Simon’s interpretation of attention as a scarce resource is nicely stated in the article, “Designing Organizations for an Information-Rich World,” in “Computers, Communication, and the Public Interest,” ed. M. Greenberger (Baltimore: Johns Hopkins Press, 1971).
12. Our interpretation of bandwagon effects comes from J.H. Rohlfs, “Bandwagon Effects in High-Technology Industries” (Cambridge, Massachusetts: MIT Press, 2001.) See also, C. Shapiro and H.R. Varian, “Information Rules: A Strategic Guide to the Network Economy” (Boston, Massachusetts: Harvard Business Press, 1999).
13. That adoptions may signal likely benefits to others is fundamental to the formation of an informational cascade as described in S. Bikhchandani, D. Hirshleifer and I. Welch, “A Theory of Fads, Fashion, Custom, and Cultural Change as Informational Cascades,” Journal of Political Economy 100, no. 5 (October 1992): 992-1026.
14. See E. Abrahamson, “Management Fashion,” Academy of Management Review 21, no. 1 (1996): 254-285; and E. Abrahamson and G. Fairchild, “Management Fashion: Lifecycles, Triggers, and Collective Learning Processes,” Administrative Science Quarterly 44 (December 1999): 708-740. Fashion researchers often track the wave of discourse associated with a fashion, as reflected in the published literature. Because the attention given to an IT innovation is rooted in beliefs and discourse around the organizing vision, it is particularly subject to the fashion phenomenon, even as it contributes for a time to the innovation’s adoptive momentum. Recent research by Ping Wang confirms the importance of the fashion phenomenon to the successful diffusion of IT innovations, in particular. See P. Wang, “Chasing the Hottest IT: Effects of Information Technology Fashion on Organizations,” MIS Quarterly 34, no. 1 March (2010): 63-85.
15. T.H. Davenport, “Putting the Enterprise Into the Enterprise System,” Harvard Business Review (July-August, 1998). The important notion that the deployment of an IT innovation can lag its adoption is articulated in R.G. Fichman and C.F. Kemerer, “The Illusory Diffusion of Innovation: An Examination of Assimilation Gaps,” Information Systems Research 10, no. 3 (September 1999): 255-275.
16. The observation that with the implementation of ERP, organizational performance will often get worse before it can eventually get better is articulated in J.W. Ross, “The ERP Revolution: Surviving Versus Thriving,” CISR working paper, MIT Sloan School of Management, 1999. See also, M.L. Markus and C. Tanis, “The Enterprise System Experience — From Adoption to Success,” in “Framing the Domains of IT Management: Projecting the Future … Through the Past,” ed. R.W. Zmud (Cincinnati, Ohio: Pinnaflex Educational Resources, 2000), 173-208, for a similar view.
17. P. Wang and E.B. Swanson, “Customer Relationship Management as Advertised: Exploiting and Sustaining Technological Momentum,” Information Technology & People 21, no. 4 (2008): 323-349.
18. E.B. Swanson and N.C. Ramiller, “Innovating Mindfully with Information Technology,” MIS Quarterly 28, no. 4 (December 2004): 553-583. For an addendum, see too, N.C. Ramiller and E.B. Swanson, “Mindfulness Routines for Innovating with Information Technology,” Journal of Decision Systems 18, no. 1 (January-March 2009): 13-26.