Paul Strassman: Mistakes and Responsibility of Schwegman From Overstock.com

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Schwegman of Overstock.com is the person who is accountable for the decisions made that caused his company’s loss. Schwegman’s memo to suppliers in which he took a “buck-stops-here” approach set him up as a scapegoat by other department heads, jockeying for position on the corporate ladder and using his mea culpa as leverage (Donovan, 2007). Instead of appearing responsible, professional and capable of navigating the political atmosphere at Overstock.com Schwegman came across instead as naïve taking the full responsibility for IT architecture that was in place long before he started with the company.

By taking all the responsibility Schwegman set himself up as an easy target for other senior management executives and of rival companies, such as Amazon.com. Additionally, according to Donovan, Schwegman destroyed his image amongst other department heads, portraying himself as an ineffective corporate communicator. It appears, to Donovan’s argument, that Schwegman did not align himself with political principles as set out by Strassman, 1995, in that like any politician it is necessary that Schwegman find the balance between their commitment to the success of their organization and self-preservation. As such, Donovan contends that future CIOs should seek to understand the hidden agendas of other executives and modify their communication to achieve this aim. Hence, Schwegman needs to know when to make them visible so that they can obtain an appropriate level of positive acknowledgment, whilst knowing when to keep a low profile so that they are not made the scapegoat when the need arises.

However, an alternative viewpoint is that Schwegman made the right decision to admit to at least have a hand in the responsibility, as social expectations of 21^st-century corporate social responsibility (CSR), is that companies will publicly claim responsibility for decisions that negatively impacted the company’s image and the confidence of stakeholders. Transparency is part of the process of governance is being asked for more and more in an age of technology where the public can quickly access information. Such candor allows policymakers to better identify the responsibilities of Schwegman within a company, restores public faith in a company’s ability to live up to its vision of leadership and progress, and reinforces Overstock.com’s organizational culture which values accountability and problem-solving focus.

Such a view does align with Strassman’s recommendations for political navigation with regard to information management. What is needed, suggests Strassman, are company cultures that embrace a “constitutional convention” separating the powers of Schwegman and other senior staff members to better identify departmental (state) rights (Goldsmith, 1995). Strassman strongly recommends that the role of Schwegman abide by a charter, such as delineated by the Department of Defense document called Directive 5144.1, issued on May 2 (Strassman, 2005). He emphasizes that observing the responsibilities given to Schwegman; such as whether they have the authority to set and implement information management policies; determines the importance of IT to the organization. In regard to Overstock.com, given that Schwegman has such authorities as set out by Strassman’s criteria; it is fair to say he was correct in admitting his weaknesses. The 14-page brief of Strassman is comprised of a list of duties, such as the authority to stop projects and to ensure that compliance is enforced with the department’s IT architecture, is summarized below:

Does Schwegman put in place measures for the evaluation of results?
Is the office of Schwegman set up to periodically report on the progress achieved on all major projects?
Can Schwegman authorize investigations?
Does Schwegman have the authority to approve the continuation, modification, or termination of projects?
Does his reach extend to scattered but increasingly critical functions such as records management, custody of archives, printing and copying, fax, cell phones, wireless transmitters and videoconferencing?
Is Schwegman empowered to oversee the development of his staff to ensure that qualified personnel will be available to support future information management tasks?
Does Schwegman take responsibility for the security of network services?

Strassman argues that the answer of “No” by a CIO to any of these points is a key indicator of the lack of value placed on IT within a company. In turn, this means that the company lacks clear guidelines as to how to attribute accountability. This state of affairs could encourage an organization to not disclose or to mislead stakeholders as to actual losses, due to the organization not knowing exactly what has gone wrong where, and how to rectify the situation for future procedures (Shuman, 2005). As Overstock.com’s CIO is unable to answer “No” to any of the above statements it can be concluded that IT is important to the company and that Schwegman is accountable for much of the decision making; such as not “starting early enough” to put new infrastructure into place.

In this way, by recognizing the responsibilities of the role of CIO companies are better able to identify where responsibilities lie as well as determine the level of transparency allowable for senior executives, such as Schwegman (Strassman, 2005). However, he also stresses that Schwegman is not to be caught up in public relations hype in an attempt to extend their role to one of the reengineering departments. Instead, as “executive politicians” Schwegman should seek to use their role as one of building support for the organization, and that this can be successfully undertaken by identifying the needs of the organization rather than seeking to enforce rigid standards and procedures. Strassman contends, “Without an empowered CIO, accountability for technology will be diffused and unfocused” (Strassman, 2005, p. 1).

As Strassman (1995) notes on page 324 of his book, Schwegman does not admit to mistakes is “like blaming the roof for rain in the living room”. He also points out on page 318 that it is more insightful for Schwegman to acknowledge information management failures, rather than focusing on maintaining an image of superiority. Schwegman makes no excuses, but he’s also pragmatic. “Sometimes, if you make an omelet, you have to break a couple of eggs,” Schwegman says. “It is like the CIA. Nobody knows our successes, but the failures are public knowledge” (Konster, 2005).

Ultimately, as Strassman recommends, Schwegman must determine which organizational environment they are operating in so as to be sensitive to the unwritten rules that exist within the company culture and to then act according to these unspoken values. Schwegman of Overstock.com did appear to have met this goal, in that the CEO stated “My bad” when accounting errors were revealed in the previous year (Finney, 1999). As such, Schwegman could be seen as following the lead of the CEO, who, at the end of the day, is the most influential leader within the company in portraying values that are held highly. Schwegman could be forgiven for believing that the business of a “client’s perspective” is one of open transparency given that the CEO of his company took this approach.

In conclusion, it appears that Schwegman would be wise in the future, within a political atmosphere such as exists as Overstock.com, to coordinate with the other executives of departments with a technology plan that aligns as closely as possible with what l department heads want. By taking time to campaign his plan to the different department heads, tailoring the highlights of the plan to meet their expectations, could lead to more positive outcomes next time.

References

Donovan, E. (2007) Overstock.com: The perils of being too accountable. 2009. Web.

Finney, R. (1999) The politics of information and projects. ITMWEB White Paper. Web.

Goldsmith, N. M. (1995) Book Review: The Politics of Information Management. Business Technology, 2, 2009. Web.

Konster, T. (2005) IT project delays put Overstock.com on the spot. 2009. Web.

Shuman. E. (2005) The CIO who admitted too much. Retrieved online, 2009, Web.

Strassmann, P. A. (2005) Check: How to Verify if You are Important. CIO Insight, 2009. Web.

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Paul Strassman: Mistakes and Responsibility of Schwegman From Overstock.com

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