Hyperknowledge in Practice - Users Attitudes to Active DSS

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1 Hyperknowledge in Practice - Users Attitudes to Active DSS Pirkko Walden, Christer Carlsson and Ossi Kokkonen* Institute for Advanced Management Systems Research, Åbo Akademi University DataCity, Åbo, Finland, pwalden@abo.fi *Metsä-Serla Oy, Finland, ossi.kokkonen@pp.kolumbus.fi Abstract There is some common wisdom that managers do not use computers and that nothing much could be gained with computer support. We have made an empirical study of the attitudes of a group of senior managers towards computer support. We found that senior managers do use computers and computer-based systems; they do believe in support systems and they have high expectations on the impacts of support systems on decision-making. 1. Introduction The definitions of Decision Support Systems (DSS) - in the early 1970 es - focused on three novelties: (i) the possibility of dealing with unstructured or semi-structured problems, which formed a distinction from management science and operations research; (ii) interactive computerbased systems, which represented distinctions from the descriptive systems theory and the batch-oriented MIS applications, and (iii) the separation of data and models in computer applications [7]. The implications of this were promised to be that decision makers could, more effectively than before, deal with complex and difficult problems, and make better and more reasoned decisions. Over the years experience has shown that the expectations were not always fulfilled. Among the early contributions in the field there were also some quite visionary statements [5]: DSS was seen as a way combining the intellectual resources of management decision makers with the capabilities of computer-based systems to improve the quality of decisions. These intellectual resources were later expanded to include experience and knowledge with the introduction of expert systems technology and knowledge-based systems [7]. The standard DSS:s have, over the years, become passive support system: (i) they are built to respond with a series of pre-programmed routines to standardized and well-defined commands; (ii) they find and present data in a standard form in response to predefined data requests, (iii) they analyze changes in its context with predesigned routines, and (iv) they compute the consequences of input data on the basis of well-defined model structures. It appears that this approach actually reduces nonstructured (includes un- and semi-structured) problems to well-defined and unambiguous tasks, i.e. to wellstructured problems. In this sense standard DSS has failed to live up to the expectations formulated in the early years of DSS development. It is, in fact, quite easy to verify that the traditional DSS-building methodology quite closely follows standard operations research methodology. Then it is not surprising that the expected synergy of human decision makers and computer-based support systems tackling complex problems in interaction has not materialized [1]. One of the reasons for that is that senior managers - the intended users - are not active DSS users; as a consequence they have been replaced by junior analysts and staff people with support functions for senior decision makers, and these people do not have the knowledge, experience and overview to fully utilize the potential of a DSS. There has, over the years, happened a few fallacies in the field of DSS:s [3]. One of the insights, earned the hard way, is that it is counter-productive to give executives tools to carry out tasks they normally do not perform at all. Thus something has gone rather wrong with the standard DSS approach and the promised more effective and productive way to deal with nonstructured problems have not become a reality. 2. The Woodstrat Project In the Woodstrat project we developed and implemented a support systems technology for strategic management in two major Finnish forest industry corporations in The development work was done interactively with management teams and involved more than 60 managers in 14 strategic business units (SBUs). The total amount of resources used for developing the system was about 20 man-years [10, 11]. Woodstrat is a knowledge based support system of analytical models which have been developed from

2 empirical market, competitor and production data; this system has been enhanced with mathematical and logical links to analytical models, which cover investments, financing, profitability and capital structure; the overall structure - which was created with added mathematical and logical links - supports synthesis along a number of dimensions (the following is a sample): (i) effects of critical success factors on market positions (country / market / segment); (ii) effects of macroeconomic factors on volume and price developments in markets (country / market / segment); (iii) effects of competitors and their critical success factors on market positions (country / market / segment); (iv) effects of productivity on competitive positions country / market / segment); (v) effects of investments on productivity; (vi) effects of productivity on profitability; (vii) effects of product mix on profitability, market position and competitive position; (viii) effects of customer reactions (in benchmarking tests) on market and competitive positions; (ix) effects of product mix, market and competitive positions on long term cash flow and capital structure; (x) effects of strategic investments (new markets, new products, new production technology, new distribution networks, strategic alliances, etc.) on market and competitive positions, profitability, productivity, long term cash flows and capital structure; With the Woodstrat we have found that the management teams work through their business more carefully: (i) they are guided to determine their own market positions in all their markets/segments in a number of countries; (ii) then they assess their own competitive positions in the same markets/segments by determining how good they are going to be on critical success factors, both independently and in relation to the competition; (iii) they evaluate their production technology and productivity, and compare themselves with their competitors; (iv) they work out the necessary investment plans and their corresponding financial plans; finally, (v) they work out a profitability position, a forecast on the capital structure, the long-term cash flows and key ratios. The overall objective is to find and establish a set or a system of sustainable competitive advantages. It seems clear that the passive, vehicle-oriented DSS approach would not support the key elements of strategic management - the forming of strategic visions. Visions are future pictures of the environment and the key strategic elements of the SBU. The future is rarely a replay of the past, even if hindsight seems to play a major role in many strategic planning exercises. Visions should be based on a solid factual foundation of deep insights in production technology, markets, customers, economic and financial constraints and regulations, competitive possibilities, evolving needs among industrial customers, etc. - visions should build on those factors which rewrite industry rules and create new competitive space. The results with the Woodstrat have so far shown definite improvements in the quality of some key elements of the strategic management process. The managers were tested in 5-6 seminars during the development work in ; among the features studied were: (i) their cognitive maps of strategic management as compared with the strategic planning documents prior to Woodstrat; (ii) the minimum knowledge base for effective strategic management; (iii) the effectiveness of strategic planning with Woodstrat; (iv) the effectiveness of group processes supported with Woodstrat; and (v) their insights on the critical elements that form the sustainable competitive advantages [2, 8, 9, 10, 11, 12]. A Senior VP, who is himself a very active Woodstrat user, commented on a few observations he had made during the process: "In the beginning of the project we were far too eager to cover the complete strategic arena, but as we went along with the development process we were able to separate the important strategic issues from those of minor interest and this made the system more easy to grasp. My SBU managers do not accept a system which they do not fully understand. Implementing traditional numerical measures is of course easy, but implementing non-traditional measurements, such as customer satisfaction, is not an easy thing to do, not to mention linking it to profitability. We designed the Woodstrat as a hyperknowledge environment, which we believe is a possible theoretical foundation for moving from passive to active DSS constructs. The need for an active DSS was very well described by Keen [3] when he outlined the next decade of DSS. His first point is that the DSS as such is not important, it is the support we intend to provide which is the key element. He gives it the following broad agenda: (i) it looks for areas where the proven skills of DSS builders can be applied in new, emergent or overlooked areas; (ii) it makes an explicit effort to apply analytic models and methods; it will embody a far more prescriptive view of how decisions can be made more effectively; (iii) it exploits the emerging software tools and experience base of AI to build semi-expert systems, and (iv) it reemphasizes the special value of DSS practitioners as being their combination of expertise in understanding decision making and knowing how to take advantage of developments in computer-related fields. Since 1987 we have had quite some development in software technology and much of the things Keen wanted

3 to be included in a DSS can now readily be built and implemented. The results we got with the Woodstrat project have been reported in a number of publications [10, 11, 12]. As we had immediate access to more than 60 managers in a number of SBUs for more than 3 years we also carried out a number of empirical studies with the managers. One of the topics we wanted to test was the common belief that managers do not use computer support. In the study reported here we worked with a group of very senior managers from one of the Finnish forest industry corporations. As we had carried out a similar study with groups of middle management people in another forest industry corporation in 1995 [9], we had a basis for comparing attitudes to computer support. A rather surprising outcome was that senior managers appear to have more positive attitudes towards computer support than middle management, although the findings were quite similar in many respects. The corporation arranges a series of seminars every year preceding the start of their strategic planning cycle. During these seminars key guidelines for strategic plans are discussed and agreed upon among the participants. There is also a common conceptual framework created to be used in the next strategic planning process, which (i) should support the business units in developing their strategic plans; (ii) it should clarify the meaning of strategic management, and (iii) support the whole process of strategic work in general. The Woodstrat system played a major role in supporting the key issues of this process. We got an opportunity to carry out a study with senior managers during these seminars and grasped the chance. In a Finnish corporation senior management includes the operative management board, senior vice presidents and vice presidents with line responsibility for business areas. In our case these included: (i) paper and board, (ii) converting (tissue, packaging and chemicals) and (iii) base products (pulp and container board). In the study, we addressed the following questions: (i) do senior managers use computers at all? (ii) do senior managers use computer-based systems in their work? (iii) what is the perceived impact of support systems on decision making? The data collection approach was rather straightforward. The senior managers were asked to answer a series of questions at the end of the seminars. The overall response was quite good: 36 senior managers took the time to participate in the survey. 3. The Results The senior managers in the forest industry have as a rule been in the business for a long time. When looking at the age distribution, 14 of the senior managers ( 14/38.9 %) are more than 50 years old, 13 of the senior managers ( 13/36.1%) are between 50 and 41 years old and only 2 (2/5.6%) are 40 years old or younger. The age distribution suggests that the majority of the managers have had to learn to use a computer by their own initiative. Only two senior managers did not have a computer of their own but they had planned to buy one in the very near future. The majority of the senior managers had had their computer more than 2 years (26/ 72.2%) and only 3 senior managers (3/8.3%) reported that they have had their computer less than six months. We were interested in knowing how much (hours/week) the senior managers were using the computer. It was quite a nice surprise to find out that 23 senior managers (23/ 63.9%) were using the computer at least seven hours a week and of those, 12 senior managers (12/33.3%) were using the computer more than 10 hours per week (fig.1). Obviously senior managers use computers quite a few hours per week. Figure 1. How often do you interact or interface computer systems. A typical senior manager is over 50 years old. He has used a computer for more than two years and works more than ten hours per week on it. Our findings certainly do not support the common belief that top level managers do not use computers. Computers are used for a wide variety of purposes. We were pretty eager to find out for what purposes the senior managers were using their computers. We were especially interested in finding out if senior managers use , graphics or spreadsheet programs? There were only 9 senior managers (9/25%) who do not use at all. The rest of them used more or less frequently - 19 senior managers(19/52.8%) used

4 daily. The majority of the senior managers seemed to be very pleased with the as they did not consider the use of to be complicated (27/75%). There were only 3 managers who found the to be complicated. Figure. 4. Graphics programs in use. Figure 2. How often do you use . Figure 5. The use of graphics programs is demanding. Figure 3. The use of is complicated. In addition, we found out that 20 managers (20/55.6%) were using one or several graphics programs, the applications were created by the managers themselves. Only 6 managers (6/16.7%) said that they did not use graphics programs at all and 10 managers (10/27.8%) said they were using graphics programs but the applications were not done by themselves. The use of graphics programs was considered by 10 managers (10/ 27.85) to be demanding; the majority of managers (16/44.5%) disagreed to the idea of the use being demanding. Spreadsheet programs are normally considered to be tools for middle managers, planners. We found out that only two senior manager (2/5.6%) did not use a spreadsheet program. The majority of senior managers did not only use the programs they also developed their one applications. This seems to be quite surprising. Only 7 managers (7/19.4%) thought that the use of spreadsheet programs was demanding. Figure 6. Spreadsheet programs in use.

5 Figure 7. The use of spreadsheet programs is demanding. preferred to have the documents both electronically and on paper, and 15 managers (15/41.7%) preferred to have them only electronically. We also wanted to know how experienced the managers where in using computers and computer-based systems. It turned out that 14 managers (14/38.9%) agreed or strongly agreed that they had got enough training in using computers and computer-based systems, 19 managers (19/52.7%) disagreed or strongly disagreed. Quite a few of the senior managers ( 19/52.8%) found it easy to work with computer-based systems, only 8 of the managers (8/22.3%) seemed to be of the opposite opinion. When the senior managers were asked if they had extensive experience in working with computer-based systems 18 senior managers thought that this was the case. On the other hand 16 (16/44.4%) did not agree, but still they had a very positive attitude against computer-based systems. Figure 8. Reading the follow up documents in an electronic form is easy. Figure 10. I have got enough training in using computers and computer-based systems. Figure 9. I want to have the follow-up documents only on paper, electronically or both ways. We also found out that the majority (20/51.5%) of the senior managers thought that reading the follow-up documents in an electronic form was easy. Only 9 managers (9/25%) had the opposite opinion but still it turned out that only 3 managers would like to have the documents only on paper. Half of the managers (18/50%) Figure 11. I have always found it easy working with a computer based system.

6 When asked if the managers believed that the DSS helped them to set clear objectives for the strategic planning process, 24 managers (24/66.7%) agreed or strongly agreed with the statement. Only 5 senior managers (5/13.95) did not agree, and 6 managers (6/16.7%) neither agreed nor disagreed. We were also interested in knowing what the managers thought about the decision-making processes if supported with a system. The managers believed that computerbased DSS:s lead to more satisfactory decision-making processes - 26 managers thought that this was the case and only 2 managers(2/5.6%) had the opposite opinion. Figure 12. I have extensive experience in working with computer-based systems. The decision support system that the senior managers used in the seminars is constructed to provide both advanced level knowledge support in strategic management and an environment for linking assessments of qualitative factors with systematic quantitative evaluations of their consequences. The system is interactive and intuitive; it supports managers in the way they would ask questions about their target countries, products and markets; it supports them in working out interrelations between the factors which form the strategic management context, and it helps them to simulate and evaluate their resulting profitability positions. The support system is easy to use and adaptive, which means that when new knowledge becomes available, updating is no problem. We were quite eager in finding out what the managers attitudes were about decision-making and computer-based systems. Figure 14. I believe that the computer-based DSSs lead to more satisfactory decision-making processes. The majority of the managers (22/61.2%), agreed or strongly agreed that the computer-based decision support systems will lead to better decisions. Only 2 managers (2/5.6%) disagreed. Figure 13. I believe that the DSS helped us to set clear objectives for the strategic planning process. Figure 15. The use of computer-based DSSs lead to better decisions. It is claimed that the support systems cannot provide timely, complete, accurate and easily accessible data and

7 these are some of the reasons why managers do not use them [4]. Our findings do not support these claims. What is especially notable is that not one of the senior managers disagreed that decision support systems are the way of the future. The large majority of the managers (35/97.2%) either agreed or strongly agreed that these systems are the way of the future. Figure 16. I believe that computer-based decision support systems are the way of the future. The results we have so far do not support the common belief about computers and computer support. According to the empirical findings managers do use computers and computer-based systems; they do believe in support systems and they have some very clear opinions of the impacts of support systems on decision-making. 4. Conclusions Our results do not support the common belief that nothing much could be gained with computer support for senior managers. According to our empirical findings senior managers do use computers and computer-based systems; they work several hours per week with their computers, they develop their own applications both with graphics as well as with spreadsheet programs, they use e- mail on a daily bases and they even found it easy to work with a computer-based system. They do believe in support systems and they have some very clear opinions of the impacts of support systems on decision-making - they believe that computer-based decision support systems are the way of the future. [2] C. Carlsson and P. Walden, "More Effective Strategic Management with Hyperknowledge: The Woodstrat Case", (accepted for publication in Journal of Decision Systems, 1996). [3] P.G.W. Keen, "Decision Support Systems: The Next Decade", Decision Support Systems 3, 1987, pp [4] Mintzberg, H., The Rise and Fall of Strategic Planning, The Free Press, New York, [5] Sprague, R. H. and Watson, H. J. Decision Support Systems: Putting Theory into Practice, Prentice-Hall, Englewood Cliffs, [6] Turban, E. McLean, E. and Wetherbe, J., Information Technology for Management- Improving Quality and Productivity, John Wiley & Sons, Inc. New York, [7] Turban, E. Decision Support Systems and Expert Systems, Prentice Hall, Fourth Edition, Englewood Cliffs [8] P. Walden and C. Carlsson, "Enhancing Strategic Market Management with Knowledge Based Systems", HICSS-26 Proceedings, IEEE Computer Society Press, Los Alamitos, 1996, pp [9] P. Walden, "Managers and Hyperknowledge - Computer Support with Practical Dimensions", Proceedings of the Fourth European Congress on Intelligent Techniques and Soft Computing, EUFIT 96, Verlag Mainz, Aachen, 1996, pp [10] Walden P. and Carlsson C., Strategic Management with a Hyperknowledge Support System, HICSS-27 Proceedings, IEEE Computer Society Press, Los Alamitos, 1994, pp [11]Walden P. and Carlsson C., Hyperknowledge and Expert Systems: A Case Study of Knowledge Formation Processes, HICSS-28 Proceedings, IEEE Computer Society Press, Los Alamitos, 1995, pp [12] Walden, P., Kokkonen O. and Carlsson C., Woodstrat: A Support System for Strategic Management, in Turban, McLean and Wetherbe, Information Technology for Management- Improving Quality and Productivity, John Wiley & Sons, Inc. New York, 1996, pp References [1] A. A. Anghern, "Stimulus Agents: An Alternative Framework for Computer-Aided Decision Making", DSS-92 Transactions, TIMS College on Information Systems, Providence 1992, pp