Organization Design: Today's Challenges

Organization Design - Facing Today's Challenges

• Globalization, hypercompetition, intense competition, sustainability, the green movement, and ethics all influence organizational design
• Speed and responsiveness are key with the introduction of technology to meet customer needs
• Organization design is a toolkit for understanding, designing, and managing organizations effectively

Organization as an Open System

• Organizations take raw materials, people, information and financial resources as Input
• Organizations use a transformation process on those inputs
• Organizations use that process to create products and services for Output

Perspectives on Organizations Explained

• Organizations can be viewed as closed or open systems
• Closed systems do not depend on the external environment, are autonomous and sealed off, and do not exist
• Open systems must interact with the environment for survival by acquiring resources, adapting to changes, and controlling internal activities, which is important for hypercompetition
• Organizations bring resources together to achieve goals, produce goods and services efficiently, and adapt to changing environments
• Organizational design is the act of organizing people and resources to achieve a specific purpose, while providing tools to understand, design, and manage organizations
• Organizations are open systems the obtain inputs from the environment, and discharge products and services

Structural Dimensions

• Structural dimensions are labels describing an organization's characteristics that help compare and measure organizations
• Formalization is how documentation is written down
• Specialization is how departments are subdivided to perform tasks
• Hierarchy of authority indicates who reports to whom
• Complexity is the number of departments or activities within the organization
• Horizontal complexity involves different departments like HR, Marketing, and Finance
• Vertical complexity includes roles like CEO, CFO, VP, Manager, and Supervisor, moving from top to bottom
• Spatial complexity measures the geographical dispersion of departments and personnel
• Centralization shows the hierarchy level with the authority to make decisions

Contingency Factors

• Contingency Factors are elements that influence structural dimensions
• Size is the number of employees or amount of sales
• Organizational technology transforms inputs into outputs
• The environment is the industry and general environment surrounding the company
• Goals and strategy encompass the mission, vision, and strategy
• Company culture is the values, beliefs, and norms shared by employees

Comparing Organizational Styles

• Mechanistic designs are machine-like, with standard procedures, central control, and are suitable for stable environments
• Organic designs are more flexible, decentralized, and encourage innovation

Management Viewpoints

• Frederick Winslow Taylor believed decisions about organizations and job design should be based on scientific, precise study
• Selznick stated that "the most important thing about organizations is that, though they are tools, each nevertheless has a life of its own"
• Individuals do not act purely based on formal roles, and Organizations do not act purely based on formal structures
• Hawthorne found that positive treatment of employees improved motivation and productivity, with "efficiency is everything"
• Tim Hortons achieves its competitive edge through human resource and internal cost efficiency by using a standard design formula with the same displays, uniform, and menu items

Chapter 2: Organizational Purpose and Structural Design

• Operative goals focus on overall performance, resources, market share, and innovation

Porter's Competitive Strategies

• Low-cost leadership (broad) involves low cost, efficiency, and tight control, such as Walmart
• Differentiation (broad) means competing with uniqueness and innovation, like Bullfrog Power
• Low-cost leadership (focused) means narrow focus with low cost, such as Westjet airlines
• Differentiation (focused) involves a narrow focus, but are pricer and unique, like Four Season Hotels

Miles & Snow’s Strategy Typology

• Prospectors innovate, take risks, and seek market opportunities, for example, Nike producing shoes from recycled materials
• Defenders focus on efficiency and stability, maintain their current customer base, and do not seek growth, for example, HBC and large wineries when Inniskillin entered
• Analyzers maintain stable business but innovate, combining the defender and prospector strategies; Rogers with Showme and wireless data transfer
• Reactors react poorly to threats and environmental changes, lacking a clear strategy like McDonalds for a very long time between 2010-2014

Selecting a Strategy

• Cost leadership strategies have centralized authority, tight control, standardized procedures, routine tasks, and limited employee empowerment, like a defender
• Differentiation strategies value research, creativity, and innovation, empowering employees to work together, take risks, and create a fluid structure, like a prospector

Assessing Organizational Effectiveness

• Organizational goals are the reason for existence, and the outcomes sought
• Effectiveness means goal attainment, while efficiency relates to resources and output
• The resource-based approach measures effectiveness through input acquisition/resource availability
• The internal-process approach measures effectiveness based on internal efficiency and employee well-being
• The goal approach measures effectiveness by output achieved
• A productivity goal is achieving high output with minimal input
• The competing values model balances internal vs external and flexibility vs control

Chapter 3: Organizational Structure

• Key components of organizational structure include formal reporting relationships (hierarchy levels/control), department groupings, and systems design for communication and coordination

Information Processing

• Vertical organizations designed for efficiency are characterized by specialized tasks, strict hierarchy, many rules, vertical communication, few teams, task forces, and centralized decision making
• Horizontal organizations designed for learning feature shared tasks, empowerment, a relaxed hierarchy, few rules, many teams, and decentralized decision making
• Vertical information linkages use top-down communication for control
• Horizontal information linkages facilitate coordination across various departments, such as Chrysler where every function from engineering to manufacturing worked on a vehicle product together
• Information systems involve direct contact, task forces, and teams

Organizational Design - Departmental Grouping

• Functional groups are people performing similar functions (marketing)
• Divisional groups focus on product or service production (P&G)
• Multifocused/matrix structures use division and geography or division and function
• Horizontal organizations use an end-to-end process providing value to the customer
• Hybrid organizations use a mix of various elements

Functional Structures

• Promoting economies of scale, employees share facilities, and solving functional goals are pros of functional structures (marketing, accounting)
• However, it has a slow response to environmental changes that need coordination amongst functions

Divisional Structures

• Suited for fast change with decentralized decision making and adaptable to regions, products, and customers are pros of divisional structures
• Cons include limited economies of scale at times, difficult standardization amongst product lines, and poor coordination amongst product lines
• LEGO shifted from a functional to a divisional structure, offering 3 different product divisions

Matrix Structures

• Matrix structures are used when technical expertise and product innovation are important for meeting organizational goals
• Vertical and horizontal lines of authority must be equally recognized under certain conditions including pressure to share scarce resources across product lines, environmental pressure for critical outputs of technical function and new products, and a complex/unstable domain environment

Holacracy Team Structure

• Holacracy team structures are self-managed teams without traditional hierarchy, where employees perform varying roles, generally on 3-4 teams
• They promote teamwork and collaboration and are well suited for innovative responses to customer needs
• Determing individual and team responsibilities takes time, and social skills training is a must

Applications of Structural Design

• Situations and designs follow purpose by using structural alignment
• Structural alignment balances vertical control with horizontal coordination , aligning structure with organizational goals
• Structural deficiency includes lack of collaboration among units, delayed decision making, and misalignment between structure and goals
• A Task Force is a team created to solve specific coordination problems

Chapter 4: External Environment

• Studying the external environment is important to understanding uncertainty and resource dependency

Task Environment

• Industry sectors: Netflix in home entertainment disrupted Blockbuster and faces challenges from Cable companies
• Raw materials sectors (suppliers): Supplier power example is Reynolds's launch of an aluminum can to compete against steel cans
• Market sectors (buyers): Buyer power; Kraft expanded its gourmet and organic offerings
• Human resources sectors (supplier): Essential skills are important; Knowledge has more leverage
• International sectors: Outsourcing, with companies starting globally

General Environment

• The general environment includes the government, sociocultural factors (demographics), technology, financial resources,(venture capitalists) and economic conditions

The Changing Environment

• As the environment becomes more complex, things becomes less stable
• The level of uncertainty goes up as financial resources are less available

Factors Causing Uncertainty

• Uncertainty is the lack of enough information about environmental factors and the difficulty predicting external changes
• Uncertainty comes from a lack of financial resources
• Uncertainty stems from the complexity of the elements at play
• Uncertainty also stems from dynamism, which is whether the organization operates in a stable or unstable environment

More About Enviromental Uncertainty

• Uncertainty increases when moving from a simple to complex environment (Universities/Airline manufacturers vs family run hardware store)
• The amount of uncertainty increases from a stable to unstable environment due to rate of predictability of change
• Unpredictable events such as the oil crisis or FTA affect environmental uncertainty
• Simple, stable environments have low uncertainty
• Complex, stable environments have somewhat greater uncertainty
• Simple, unstable environments have even greater uncertainty
• Complex, unstable environments have the greatest uncertainty

Comparing Mechaniistic and Organic Forms

• Mechanistic forms include tasks being broken down into specialized parts, with a hierarchy for control
• Organic forms have employees contributing, with teamwork and low hiearchy

Resource-Dependence Perspective

• Organizations aim to acquire control in order to minimize dependence
• Organizations team up with others when resources are scarce

Chapter 5: Interorganizational Relationships

• 2 Strategies to Achieve Balance: Establishing formal relationships and influencing key sectors
• Inter-organizational relationships involve resource transactions between organizations
• Interorganizational research involves organizational ecosystems, resource dependence, collaborative networks, population ecology, and institutionalism

Organizational EcoSystems

• Organizational Ecosystems :system of interconnected organizations and their environments

Resource Dependence

• Resource dependence means organizations minimize their dependence on other organizations for resources and to influence said environment
• Dependence on resources depends on resource importance, and which business entity controls the resource
• Resource strategies maintain control and reduce uncertainty by adapting or altering interdependent relationships and using trade associations and mergers
• Power strategies involve looking at Large companies and small suppliers, and looking at supply-chain relationships

Chapter 5: Collaborative Networks

• Collaborative Networks are when organizations work together to share resources, risks, and innovation

Chapter 5: Institutionalism

• Institutionalism means performing well stems from being perceived as legitimate
• Doing this shows organizations survive and succeed

Process of Ecological Change

• Population ecology is when organizations engage with a like mindness to utilize resouces
• The population of organizations shows a large number of variations
• Selecting a viable niche to survive is key
• Organizations can retain success by growing and being intutionalized
• Specialist organizations are adaptable to niche markets, flexible and focused
• Generalist organizations have better survival to protect against a broad change

Chapter 5: Institutional View

• Institutional View and Organizational Design are when a collective adopts structures and processes to gain legitimacy
• Legitimacy depends on if an org's actions are desirable
• The Technical Dimension depends on the norms of effeciency
• The Institutional Dimension: depends on what's visible to the outside public
• Institutional Theory is surviving by conforming to societal norms and gaining legitimacy
• Institutional Similarity is when multiple org's adopt similar structures

Chapter 6: International Designs

• Motivations for Global Expansion: Economies of scale, economies of scope, low-cost prodution

Stages of International Development

• Domestic stage: focus only on home market
• International stage: exporting and operating in a few countries
• Multinational stage: decentralized with a large presence in many countries
• Global stage: integrating operations worldwide

Chapter 6: Economies

• Economies of Scope are cost savings from offering multiple products/services
• Economies of Scale are cost savings from high levels of prodution

Chapter 6: Global Strategy

• Globalization Strategy depends on a standard product
• Multi-domestic Strategy means products are customized per region
• Transnational Strategy is balancing global integration

Chapter 6: Structures

• Global Product Structure: Divides by product. and has planning managers
• Global geographic Structure: based on communication, difficulty, new products

Chapter 6: Global Challenges

• Org Challenges increases with culture and language

Chapter 6: Global Value

• Global Coordination Mechanisms are stronger among teams
• National Value Systems looks at cultural differences
• Joint ventures: = strategic alliance where 2 or more firms create a new legal entity

Chapter 6: Global Approaches

• Centralized Coordination depends Japanese knowledge
• European Firms are decentralized with values
• North American control shares information

Chapter 7: Transnational Model

• Transnational assets are flexible

Chapter 7: Dual-Purpose Orgs

• Dual purpose Orgs pursue environment goals

Chapter 7: Patagonia

• Patagonia encourages a better supply chain
• Patagonia encourages people not to buy their products

Chapter 7: Hybrid Organizations

• Hybrid oragnizations have both profits and social
• May cause mission drift

Chapter 7: Hybrids

• Commercial logic depends on products
• Social Welfare depends on societal goals
• Benefit Corp are for profit with positve goals
• B Corps have transparent accountability
• Shrared value increases competitiveness

Chapter 7: Social Audit

• Social Audits include welfare to org stakeholders

Chapter 7: Top bottom line

• Peoples performance includes treatment
• Planet perforamnce includes sustainability
• Profits financial measures profitability

Chapter 7: Consequences for good

• Good behavior and social responsibility
• Doing this leads to more sales and reputation

Chapter 8: Tech and Processes

• Manufacuring Firms study firms

Chapter 8: Custom Manufacturing

• Small batch units are customized wth high flex

Chapter 8: Production

• Large production made in big quantities
• Continuous process is large using chemicals

Chapter 8: Flexible Systems

• Mass customization includes dell computes
• Flexible includes customer wants
• Lean manufacturing with high employees

Chapter 8: Smart Factories

• Smart increases automation via flex
• Increases prodution and better customer

Chapter 8: Service Firms

• Service Firms is simultaneous
• Involves employees

Chapter 8: Interdependece

• Pooled interdependence is share resources
• Sequenctial interdependence means to unit is next input
• Reciprocal Interdependence is both at the same time
• Work flow depends on inputs

Chapter 8: Workflows

• Routine is predictable
• Craft Skills interntives
• Engineering is formuls

Chapter 9: Culture

• Org Culture is values
• Culture is internal

Chapter 9: Culture Types

• Adaptablility has external
• Mision has stable environment
• Clan is engagemnt
• Bureaucratic has order

Chapter 9: Leaders

• Adaptive has stock holders
• Maladaptive internal politics

Chapter 9: Ethical Values

• Valued based is honest
• Formal structures integrate the systems

Chapter 9: Leaders Ethics

• A leaders ethics is to be honest

Chapter 9: Social Audits

• Social Audits increase transparency

Chapter 10: Strategic roles

• The strategic value is leadership
• Incrimental has feedback for loop

Chapter 10: Strategies

• Reforms require structural
• Product services improve

Chapter 10: Management

• There are 5 staging processes
• Combine approaches

Chapter 10: Cultural Forces

• Culturual change via sharing

Chapter 10: Barriers vs Change

• Barriers are costs

Chapter 11: Digital Org

• Digital Media is infomation used

Chapter 11: Automatic Systems

• Transaction process auto day to day
• Data warehouse is storage
• Iternal Business Intelligenceis inform

Chapter 11: Process Outout

• Pipes vs platforms
• Org is traditional

Chapter 11: Platforms

• Platform is linked
• Exchange Facilitates interaction
• Maker Facilitates members
• Big data sets require data process

Chapter 11: Big Data controls

• Big data volumn vercot
• Algorithmic software

Chapter 11: SNA

• SNA shows relationships in a netowkr
• hubs are key
• perpiheral paleyrs are edges
• Brojers connect

Chapter 11: Knowledge

• Knowledge Is capture and distributed
• Intellecutal capial has a edge
• Codfied knowwledge via docs
• Tacit knowldege is personal