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«A DISSERTATION SUBMITTED TO THE DEPARTMENT OF CIVIL AND ENVIRONMENTAL ENGINEERING AND THE COMMITTEE ON GRADUATE STUDIES OF STANFORD UNIVERSITY IN ...»

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THE VIRTUAL TEAM ALLIANCE (VTA):

MODELING THE EFFECTS OF GOAL INCONGRUENCY

IN SEMI-ROUTINE, FAST-PACED PROJECT

ORGANIZATIONS

A DISSERTATION

SUBMITTED TO THE DEPARTMENT OF CIVIL AND ENVIRONMENTAL

ENGINEERING

AND THE COMMITTEE ON GRADUATE STUDIES

OF STANFORD UNIVERSITY

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS

FOR THE DEGREE OF

DOCTOR OF PHILOSOPHY

Jan Thomsen March 1998  Copyright by Jan Thomsen 1998 All Rights Reserved ii I certify that I have read this dissertation and that in my opinion it is fully adequate, in scope and quality, as a dissertation for the degree of Doctor of Philosophy.

Professor Raymond E. Levitt (Principal Adviser) I certify that I have read this dissertation and that in my opinion it is fully adequate, in scope and quality, as a dissertation for the degree of Doctor of Philosophy.

Professor Martin A. Fischer I certify that I have read this dissertation and that in my opinion it is fully adequate, in scope and quality, as a dissertation for the degree of Doctor of Philosophy.

Dr. John C. Kunz I certify that I have read this dissertation and that in my opinion it is fully adequate, in scope and quality, as a dissertation for the degree of Doctor of Philosophy.

Professor Clifford I. Nass

Approved for the University Committee on Graduate Studies:

iii Abstract This dissertation introduces a new computational organizational model, called the Virtual Team Alliance (VTA), for investigating the effects of goal incongruency on the performance of semi-routine, fast-paced project organizations. I represent project participants as teleological professionals, and explicitly model goal incongruency between them. By modeling activity complexity, flexibility, uncertainty, and interdependence strength, my work process representation captures the effects of goal incongruency on the performance of semi-routine, fast-paced projects.

Because tasks in the VTA model are flexible, differences in goals may influence which solution approach project participants prefer; thus, goal incongruency can have profound implications for the performance of project teams. VTA actors comprise a complex system that is endowed with fragments of canonical information-processing micro-behavior. VTA integrates economic agency theories about supervisor-subordinate behavior and social psychological theories about peer-to-peer behavior with respect to information processing in the presence of goal incongruency. The canonical micro- behaviors in VTA include monitoring, selective delegation of authority, exception generation, searching for alternatives, clarifying goals, steamrolling, and politicking. The VTA model simulates the micro-level communication and coordination behavior of actors within the organization, including the impact of goal incongruency between individual actors, in order to determine the emergent, aggregate project behavior and performance. To Galbraith’s sociological analysis, based on information-processing "organizational physics," I add new "organizational chemistry" notions based on social psychological and economic agency theories.

VTA generates useful and measurable emergent quantitative performance predictions regarding the efficiency and quality of a project’s configuration of work processes and organizational structure. The model produces two measures of efficiency: project duration and total salary cost; and three measures of work process quality: problemsolving quality, coordination quality, and decision-making quality.

iv I validated my model retrospectively on an offshore field development project, contemporaneously on two portions of an ongoing aerospace launch vehicle project, and prospectively on a project aimed at developing a new generation of pyrovalves for positioning satellites in space. I demonstrated that the VTA micro-contingency theory makes predictions that are both theoretically and practically interesting.

v Acknowledgments

My three and a half years at Stanford University have really been mind-expanding.

Several wonderful people have contributed to make my Ph.D. study delightful and exhilarating.

Professor Ray Levitt, my principal adviser, has been tremendously supportive during the whole Ph.D. process. Ray has managed to combine excellent overall guidance with detailed, incisive suggestions to my day-to-day challenges. Ray has truly been an adviser extraordinaire.

To the rest of my advisers, Professor Martin Fischer, Dr. Yan Jin, Dr. John Kunz, and Professor Cliff Nass, I am deeply indebted for having provided me with constant intellectual nourishment and warm comradeship.

My research has benefited immensely from a symbiosis with other students of human organizations and computer science at Stanford University. I deeply grateful to Yul Kwon, Dr. Doug Fridsma, Paul Moore, Dr. Gaye Oralkan, Ed Divita, Andrew Arnold, Jeannie Kahwajy, Jerker Denrell, Mats Olzon, Sam Miller, Dr. Andrew Hargadon, Jolene Vasquez, Jolin Salazar-Kish, and Walid Nasarallah. At my company, Det Norske Veritas, I particularly appreciate the support of Dr. Wiggo Smeby, Dan Kyrre Stangebye, Dr. Sverre Gran, Dr. Tore R. Christiansen, Dr. Pål Bergan, Dr. Nils Sandsmark, Dr. Leif Buene, and DTP 343.





No dissertation has reached publication without much painstaking preliminary work, retyping of endless drafts, and countless hours of proofreading. I am thankful to Dr.

Mary McDevitt for her superb job of providing me with tactful suggestions about errors in grammar and incomprehensible sentences.

While pursuing a Ph.D. at Stanford University does not compete in cost with atom smashing or moon shooting, it is not inexpensive. Thanks to generous financial support from Det Norske Veritas, The Norwegian Research Council, The National Science Foundation, The Fulbright Foundation, The American-Scandinavian Foundation, and Jansons Legat, the limit on my rate of Ph.D. progress has been fixed not by my budget, but by my own capacity to generate fertile ideas.

vi I would also like to thank my parents, Gerd and Osvald Thomsen, who have offered me lifetime support and encouragement. My wife, Mette, has given me endless love and inspiration throughout the Ph.D. process, and Olav, our son, makes life beyond research simply wonderful. I dedicate this dissertation to Mette and Olav.

–  –  –

This introductory chapter presents the motivating problem, a set of research questions, the current state of knowledge and its limitations, and my extensions of the current state of knowledge. The chapter concludes with an integration of the general theme of my research and the relationships among the autonomous papers that constitute chapters II, III, IV, and V.

1. The Problem of Investigation The dominant approach for studying performance in multi-constituency project teams has been grounded in the transaction-cost framework (Williamson, 1979). This theory focuses on the relationship among consumers and suppliers and the contracts, which regulate their transactions. In this dissertation, I have chosen to focus on the constituents of a project team, seeking to analyze project team performance in terms of the diversity of opinions or preferences between the participants or "actors." Individual preferences and beliefs concerning solutions to project goals are often a product of the particular organization or profession to which the individual belongs (Drazin, 1990). In turn, these preferences and beliefs determine how actors will weigh different factors and rank alternatives for conducting work. Since most tasks in projects are affected by decisions that take into consideration trade-offs among such factors as cost, duration, and quality, the fact that actors may choose different solutions to problems as a result of discrepant individual priorities has profound implications for the performance of project teams. I refer specifically to these differences in priorities between actors as the phenomenon of "goal incongruency."

The problem of goal incongruency is exacerbated in large engineering projects by the sheer complexity of modern engineering artifacts. The need for high levels of interaction among diverse groups (e.g., disciplines, departments, subcontractors) prohibits organizations from simply decomposing tasks and responsibilities and assigning them to 1 strictly delineated departments or groups (Simon, 1996). Consequently, not only must organizations deal effectively with goal incongruency problems arising within supervisor-subordinate relationships, but they must also negotiate goal incongruency problems arising in lateral relationships between peers working on interdependent activities.

Many technology-based industries have tremendous pressure to get their products out faster. For example, the aerospace industry is confronting an increasingly competitive environment brought on by overseas competition and reduced domestic demand from the U.S. military. Much of the work is outsourced to external component suppliers whose goals may be incongruent with those of the prime contractor. In addition, firms have shortened work plans by taking many activities that have traditionally been scheduled sequentially and executing them in parallel. In such fast-paced projects, the habitual character of routine activities is lost. The project team needs work process flexibility to come up with solutions to tightened and challenging performance targets (Brown and Eisenhardt, 1997). Work process flexibility means that an actor has a range of potential solutions, all of which will meet the project goals. Actors have to make a choice among solutions. Interdependent, goal-incongruent actors may prefer different solutions. As a consequence, they engage in task conflicts that need to be resolved constructively by collaboration or by hierarchical decision making.

2. Research Questions The basic idea underlying my research is that goal incongruency affects the local interaction between a supervisor and a subordinate as well as the local interaction between interdependent peers. These interactions may have significant impact on project cost, duration, and quality (i.e., money, time, and the number of engineering change orders). An example of a supervisor-subordinate interaction pattern is the level of managerial checking. A supervisor perceives the subordinate to be a perfectionist (a person who focuses on quality manifested through a beautiful engineering design). If the most important project goal is to finishing on schedule, the supervisor will tend to check the subordinate's work more often and stringently to ensure that the project goals will be met.

2 My research asks the following questions (Thomsen, 1995): (1) As the level of goal incongruency between actors varies, how does it moderate the effect of organizational variables on emergent project performance? (2) What are the behavioral mechanisms that produce these emergent project performance effects?

In a nutshell, my research will advance our understanding of the interplay between goal incongruency and organizational performance.

3. The Current State of Knowledge and its Limitations Project management techniques, such as the Critical Path Method (CPM) and the Program Evaluation and Review Technique (PERT) cannot give practical answers to the problems brought about by goal incongruency for three reasons. The first reason is that CPM assumes an idealized situation in which concurrent activities for different deliverable parts of the project are independent and uncoupled. Earlier computational models such as the Virtual Design Team (VDT) (Jin and Levitt, 1996) address this shortcoming. Second, CPM/PERT models also view project participants as "omnipotent clairvoyants" who always act (they do not interact!) in perfect harmony with the project plan. Third, they assume there is only one way to perform the tasks on the project (Moder et al., 1983). In other words, neither CPM/PERT nor VDT considers goal incongruency between project participants and how incongruent goals can create conflict in the face of task flexibility.

Based on models demonstrating that deviation from managerially prescribed goals by subordinates will necessitate additional coordination and communication efforts to resolve the discrepancies (Eisenhardt, 1985, 1989; Levinthal, 1988; Milgrom and Roberts, 1992; Ouchi, 1979), conventional management and economic theories assume that goal incongruency is categorically detrimental to performance. These theories posit that goal incongruency should be unequivocally discouraged.

New data from experiments in social psychology indicate that an intermediate level of goal incongruency may have potentially positive effects on group problem-solving performance (e.g., Amason, 1996; Jehn, 1995; Pelled, 1996; Watson et al., 1993; Weick, 1979). On a micro-organizational level, theorists hypothesize that goal incongruency confers two distinct advantages. It forces actors to consider a wider range of possible 3 solutions to a problem, which increases the likelihood that a more ideal solution will be found. Moreover, it leads to a greater understanding and clarification of the trade-offs associated with each solution under consideration, and encourages actors to formalize their knowledge of these trade-offs implicitly or explicitly into a "goal trade-off table."

Shared goal trade-off beliefs among project participants can be viewed as a common set of values or a shared culture. The existence of shared values or culture is now widely viewed to increase efficiency by serving as a guidepost or touchstone that allows actors to make decisions more quickly and consistently when similar problems arise further downstream.



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