On the Strategic Importance of Building and Using Complex, Algorithmic Systems

Organizations build and use increasingly capable algorithmic systems to solve increasingly complex problems. As algorithmic systems become more powerful, they also become more complex and challenging to understand and manage. Thus, we face a situation where technologies are progressively used in high-stakes situations yet less well understood by traditionally trained managers and organizational scholars. Further, the wide use of such systems has strategic implications: the design of algorithmic systems influences strategic options available, strategy is operationalized into and enacted through such systems, and these systems influence emergent strategy. In this thesis, I explore how organizations build and use complex algorithmic systems and highlight the potential strategic implications of such systems. This thesis consists of three qualitative case studies in which building and using complex algorithmic technologies is at the forefront. Essay 1 explores how technological complexity affects post-merger integration dynamics at a large technology company. Focusing on the perceptions and behaviors of one focal unit in a situation of attempted synergy capture through portfolio streamlining, this study demonstrates how technological complexity affects strategic decision-making and illustrates the bi-directional influence between technological and strategic decisions. Essay 2 studies how a large retail organization develops and uses strategically important algorithmic tools. This study describes how strategy is encoded into the tools through the processes of negotiating a role for the tool, making abstract concrete through quantified measures, and materializing the emerging sense into the tool, and further, how tool use can induce masking of uncertainty by hiding technical details. These processes affect emergent strategy and strategizing dynamics. Essay 3 analyzes how a start-up organization develops and uses advanced speech recognition technology to provide transcription services and products. This study describes how the organization maintained and improved system performance as the system's scope was extended and identifies a set of organizational practices that enable this. This thesis makes three contributions. First, I describe the continuous interplay of the development and use of technology, typically described by organizational literature as two separate processes, thus conceptualizing technology development as an ongoing sensemaking process. Second, I contribute to the literature on strategy-as-practice by detailing the strategic role of complex algorithmic systems and recognizing and describing technology development as a strategic activity. I also portray how strategically important algorithmic systems are built and used and how such systems can influence strategizing dynamics. Third, I contribute to the emerging discussion on data practices by describing the essential and often ill-recognized role organizational processes that generate data and data practices play in building efficient algorithmic systems.