Organizational Design PDF

Organizational Design Chapter 10 - Organization Size, Lifecycle & Decline  Organizational Size: Is Bigger Better? Pressures to Grow Organizations face pressures to grow to compete globally, invest in technology, secure market access, prevent stagnation, and maintain economic health,...

Organizational Design Chapter 10 - Organization Size, Lifecycle & Decline  Organizational Size: Is Bigger Better? Pressures to Grow Organizations face pressures to grow to compete globally, invest in technology, secure market access, prevent stagnation, and maintain economic health, as seen in companies like Walmart, which prioritizes expansion even at the cost of reduced ROI Advantages of Large & Small Organizations: Large Small Economies of scale: Lower costs, increased resources. Flexibility: Quick responses to market changes. Resilience: Better survival during economic downturns Entrepreneurship: Encourages innovation and multitasking. Community support: Stability for employees and local areas during crises. Employee engagement: More personal and rewarding work environment. Complex capabilities: Specializations to handle multifaceted tasks  Challenges and Solutions for Size Dilemmas of Large Size Bureaucracy reduces adaptability. Mergers/acquisitions often fail to meet expectations. Dilemmas of Small Size Limited resources can stifle growth. Hybrid Model Solution Combine large-scale efficiency with small-company creativity. Example: Johnson & Johnson operates as 250 autonomous companies.  Organizational Life Cycle Organizations’ progress through predictable stages with specific characteristics. Each Stages, It’s Crisis & The Soultions Stage Description Crisis Solution Example Foursquare's founders Focus on survival and product creation; informal Need for leadership: Growth requires management systems or Bring in skilled managers or adjust Entrepreneurial transitioned leadership as the and founder-led. external managers. structure to handle growth. company scaled. Clear goals, mission alignment, rapid growth, Need for delegation: Strong leadership limits lower-level Delegate authority to lower levels while Diamond Wipes hired a general Collectivity emerging procedures. autonomy. maintaining coordination. manager to coordinate teams. Simplify systems, reduce bureaucracy, Airbnb introduced standardized Bureaucratic systems emerge with rules, Too much red tape: Bureaucracy stifles innovation and creates Formalization and promote innovation through task policies for reliability but faced processes, and a division of labor. inefficiencies. forces or teams. resistance. Apple’s decline and revitalization Collaboration and teamwork to prevent Focus on innovation, reorganization, and Need for revitalization: Over-bureaucratization leads to under Steve Jobs with innovative Elaboration bureaucratic stagnation; streamlined renewal to align with environmental stagnation. products like the iPod and processes. changes. iPhone.  Lifecycle Characteristics Characteristic Entrepreneurial Collectivity Formalization Elaboration Structure Informal, one-person show Mostly informal, some procedures Formal procedures, division of labor Teamwork within bureaucracy, small-company thinking Products/Services Single product or service Major product/service with variations Line of products or services Multiple product/service lines Reward/Control Systems Personal, paternalistic Personal, contribution to success Impersonal, formalized systems Extensive, tailored to product/department Innovation By owner/manager By employees and managers By separate innovation group By institutionalized R&D department Goal Survival Growth Internal stability, market expansion Reputation, complete organization Top Management Style Individualistic, entrepreneurial Charismatic, direction-giving Delegation with control Team approach, attacking bureaucracy  What Is Bureaucracy? Max Weber viewed bureaucracy as both a potential threat to personal liberties and the most efficient way to organize business and government operations. He predicted its success due to its ability to streamline organizational functioning. Weber identified 6 key characteristics of bureaucracy: Rules and procedures Written communications and records Specialization and division of labor Hierarchy of authority Technically qualified personnel Separation of position from position holder  6 Key Characteristics of Bureaucracy Characteristic Description Rules and procedures Establish predictability and routine. Written communications and records Provide organizational memory and continuity. Specialization and division of labor Assign clear tasks to employees. Hierarchy of authority Enable supervision and control. Technically qualified personnel Hire based on competence, not favoritism. Separation of position from position holder Prevent ownership of roles, promoting efficiency. These features replaced favoritism-based systems, ensuring fairness and efficiency. Despite criticism, research validates that specialization, formalization, and standardization benefit organizations.