Technology Mediated Control Case Study

Case Study 3?1 Uber’s Use of Technology?Mediated Control   Uber Technologies, founded in 2009, is a ride?hailing company that leverages the cars and time of millions of drivers who are independent contractors in countries around the globe. One recent estimate by Uber Group Manager, Yuhki Yamashita, is that Uber drivers globally spend 8.5 million hours on the road—daily. As independent contractors, Uber tells its drivers “you can be your own boss” and set your own hours. Yet, Uber wants to control how they behave. Uber exerts this control not through human managers, but through a “ride?hail platform on a system of algorithms that serves as a virtual ‘automated manager.’” Drivers’ work experiences are entirely mediated through a mobile app. Uber’s mobile app collects data and guides the behavior of the drivers in such a way that in reality they aren’t as much their own boss as they might like to be. For example, while they can work when they want, Uber’s surge fare structure of charging riders more during high?volume periods motivates them to work during times that they might not otherwise choose. The app even sends algorithmically derived push notifications like: “Are you sure you want to go offline? Demand is very high in your area. Make more money, don’t stop now!” Hence, Uber uses technology to exert “soft control” over its drivers. Uber employs a host of social scientists and data scientists to devise ways to encourage the drivers to work longer and harder, even when it isn’t financially beneficial for them to do so. Using its mobile app, it has experimented with video game techniques, graphics and badges and other noncash rewards of little monetary value. The mobile app employs psychologically influenced interventions to encourage various driver behaviors. For example, the mobile app will alert drivers that they are close to achieving an algorithmically generated income target when they try to log off. Like Netflix does when it automatically loads the next program in order to encourage binge?watching, Uber sends drivers their next fare opportunity before their current ride is over. New drivers are enticed with signing bonuses when they meet initial ride targets (e.g., completing 25 rides). To motivate drivers to complete enough rides to earn bonuses, the app periodically sends them words of encouragement (“You’re almost halfway there, congratulations!”). The mobile app also monitors their rides to ensure that they accept a minimum percentage of ride requests, complete a minimum number of trips, and are available for a minimum period of time in order to qualify to earn profitable hourly rates during specified periods. Uber has a blind acceptance rate policy, where drivers do not get information about the destination and pay rate for calls until after they accept them. This can mean that drivers might end up accepting rates that are unprofitable for them. On the other hand, drivers risk being “deactivated” (i.e., be suspended or removed permanently from the system) should they cancel unprofitable fares. The system keeps track of the routes taken to ensure that the driver selected the most efficient route. The mobile app also captures passenger ratings of the driver on a scale of one to five stars. Since the drivers don’t have human managers per se, the passenger satisfaction ratings serve as their most significant performance metric, along with various “excellent?service” and “great?conversation” badges. But how satisfied are the drivers themselves? Uber’s driver turnover rate is high—reportedly closing in on 50% within the first year that the drivers sign up. One senior Uber official said: “We’ve underinvested in the driver experience. We are now re?examining everything we do in order to rebuild that love.”  Answer these questions: What is the relationship between the information strategy and organization strategy? (refer to Information Systems Strategy Triangle, page 19). In the given case: What do you think are the (1) points of alignment between the IS strategy and the organization strategy;    (2) points of misalignment between the IS strategy and the organization strategy? Indicate clearly the different elements of IS strategy and organization strategy in the case which are aligned and not aligned.   This chapter introduces a simple framework for describing the alignment necessary with business systems and for understanding the impact of IS on organizations. This framework is called the Information Systems Strategy Triangle because it relates business strategy with IS strategy and organizational strategy. This chapter also presents key frameworks from organization theory that describe the context in which IS operates as well as the business imperatives that IS support. The Information Systems Strategy Triangle presented in Figure 1.1 suggests three key points about strategy.   Successful firms have an overriding business strategy that drives both organizational strategy and IS strategy. The decisions made regarding the structure, hiring practices, vendor policies, and other components of the organizational design, as well as decisions regarding applications, hardware, and other IS components, are all driven by the firm’s business objectives, strategies, and tactics. Successful firms carefully balance these three strategies—they purposely design their organizational and IS strategies to complement their business strategy. IS strategy can itself affect and is affected by changes in a firm’s business and organizational design. To perpetuate the balance needed for successful operation, changes in the IS strategy must be accompanied by changes in the organizational strategy and must accommodate the overall business strategy. If a firm designs its business strategy to use IS to gain strategic advantage, the leadership position in IS can be sustained only by constant innovation. The business, IS, and organizational strategies must constantly be adjusted. IS strategy always involves consequences—intended or not—within business and organizational strategies. Avoiding harmful unintended consequences means remembering to consider business and organizational strategies when designing IS implementation. For example, deploying tablets to employees without an accompanying set of changes to job expectations, process design, compensation plans, and business tactics will fail to achieve expected productivity improvements. Success can be achieved only by specifically designing all three components of the strategy triangle so they properly complement each other.         FIGURE 1.1 The Information Systems Strategy Triangle.     Before the changes at Kaiser Permanente, incentives for doctors were misaligned with the goals of better health care. Its IS Strategy Triangle was out of alignment at that time. Its organizational strategy (e.g., a “fix?me” system) was not supported by the IS strategy (e.g., tracking and reporting billable procedures). Neither the organizational strategy nor the IS strategy adequately supported their purported business strategy (helping patients at lower cost). For Kaiser Permanente, success could be achieved only by specifically designing all three components of the strategy triangle to work together. Of course, once a firm is out of alignment, it does not mean that it has to stay that way. To correct the misalignment described earlier, Kaiser Permanente used online services to enable quick communications between patients, physicians, and care providers. Further, it changed its bonus structure to focus on health rather than billing amounts. The new systems realign people, process, and technology to provide better service, save time, and save money. What does alignment mean? The book Winning the 3?Legged Race defines alignment as the situation in which a company’s current and emerging business strategy is enabled and supported, yet unconstrained, by technology. The authors suggest that although alignment is good, there are higher goals, namely, synchronization and convergence, toward which companies should strive. With synchronization, technology not only enables current business strategy but also anticipates and shapes future business strategy. Convergence goes one step further by exhibiting a state in which business strategy and technology strategy are intertwined and the leadership team members operate almost interchangeably. Although we appreciate the distinction and agree that firms should strive for synchronization and convergence, alignment in this text means any of these states, and it pertains to the balance between organizational strategy, IS strategy, and business strategy.9 A word of explanation is needed here. Studying IS alone does not provide general managers with the appropriate perspective. This chapter and subsequent chapters address questions of IS strategy squarely within the context of business strategy. Although this is not a textbook of business strategy, a foundation for IS discussions is built on some basic business strategy frameworks and organizational theories presented in this and the next chapter. To be effective, managers need a solid sense of how IS are used and managed within the organization. Studying details of technologies is also outside the scope of this text. Details of the technologies are relevant, of course, and it is important that any organization maintain a sufficient knowledge base to plan for and adequately align with business priorities. However, because technologies change so rapidly, keeping a textbook current is impossible. Instead, this text takes the perspective that understanding what questions to ask and having a framework for interpreting the answers are skills more fundamental to the general manager than understanding any particular technology. That understanding must be constantly refreshed using the most current articles and information from experts. This text provides readers with an appreciation of the need to ask questions, a framework from which to derive the questions to ask, and a foundation sufficient to understand the answers received. The remaining chapters build on the foundation provided in the Information Systems Strategy Triangle.     Brief Overview of Business Strategy Frameworks A strategy is a coordinated set of actions to fulfill objectives, purposes, and goals. The essence of a strategy is setting limits on what the business will seek to accomplish. Strategy starts with a mission. A mission is a clear and compelling statement that unifies an organization’s effort and describes what the firm is all about (i.e., its purpose). Mark Zuckerberg’s reflection on the mission of Facebook provides an interesting example. Originally conceived as a product rather than a service, the CEO of Facebook commented: “after we started hiring more people and building out the team, I began to get an appreciation that a company is a great way to get a lot of people involved in a mission you’re trying to push forward. Our mission is getting people to connect.”10 In a few words, the mission statement sums up what is unique about the firm. The information in Figure 1.2 indicates that even though Zappos, Amazon, and L.L. Bean are all in the retail industry, they view their missions quite differently. For example, Zappos’ focus is on customer service, Amazon is about customer sets, and L.L. Bean is about the outdoors. It’s interesting to note that although Amazon purchased Zappos in 2009, the acquisition agreement specified that Zappos would continue to run independently of its new parent. Today, Zappos continues to remain both culturally and physically separate from Amazon. Zappos is located near Las Vegas, Nevada, and Amazon is in Seattle, Washington. A business strategy is a plan articulating where a business seeks to go and how it expects to get there. It is the means by which a business communicates its goals. Management constructs this plan in response to market forces, customer demands, and organizational capabilities. Market forces create the competitive context for the business. Some markets, such as those faced by package delivery firms, laptop computer manufacturers, and credit card issuers, face many competitors and a high level of competition, such that product differentiation becomes increasingly difficult. Other markets, such as those for airlines and  (Pearlson, 10/2019, pp. 18-21)   Pearlson, K. E., Saunders, C. S.  (2019). Managing and Using Information Systems: A Strategic Approach,  7th Edition. [[VitalSource Bookshelf version]].  Retrieved from vbk://9781119561156

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