MAN 3201 Exam 2

Creating a Culture for Innovation

- Organizational structure - Creating the right setting is important to fostering innovation - People - Organizations need to guard against too much similarity - Property rights - Create career paths to show that success is closely linked with future promotion and rewards

Team Leadership

-A lightweight team leader is a mid-level functional manager who has lower status than the head of a functional department. The lightweight team leader is not given control over human, financial, and functional resources. The result can be limited cross-functional coordination. Still, this arrangement might be appropriate in those cases when minor modifications of an existing product are all that is required -A heavyweight team leader is a true project manager who has higher status within the organization. The heavyweight team leader is given primary control over key human, technological, and financial resources for the duration of the project. Greater power gives the heavyweight team leader more ability to assemble a cross-functional team with the skills needed to develop a successful new product. Heavyweight team leaders often function as product champions, the people who take ownership of the project, solve problems as they occur, smooth over disputes between team members, and provide leadership to the team

Skunk Works

-A skunk works is a task force, a temporary team that is created to expedite new product design and to promote innovation by coordinating the activities of functional groups -The task force consists of members of the R&D, engineering, manufacturing, and marketing functions who are assigned to a separate facility, at a location isolated from the rest of the organization -This independent "autonomous" setting gives skunk works members the opportunity to engage in the intensive face-to-face interactions necessary for successful innovation -Thus a skunk works is an island of innovation; it provides a large organization with a small-organization-type setting in which skunk works members have the opportunity and motivation to bring a new product to market quickly

Lewin's Force-Field Theory of Change

-According to his force-field theory, these two sets of forces are always in opposition in an organization -When the forces are evenly balanced, the organization is in a state of inertia and does not change -To get an organization to change, managers must find a way to increase the forces for change, reduce resistance to change, or do both simultaneously

The Incrementalist Model

-According to the incrementalist model of organizational decision making, when selecting a set of new alternative courses of action, managers tend to choose those that are only slightly, or incrementally, different from those used in the past, thus lessening their chances of making a mistake -During the muddling-through process, organizational goals and the courses of action for achieving them may change, but they change very slowly so that corrective action can be taken if things start to go wrong -According to the incrementalist model, managers, limited by lack of information and lack of foresight, move cautiously one step at a time to limit their chances of being wrong

The rational model of decision making and its three-staged process

-According to the rational model, decision making is a straightforward three-stage process -At stage 1, managers identify problems that need to be solved. Managers of an effective organization, for example, analyze all aspects of their organization's specific and general environments to identify conditions or problems that call for new action. To achieve a good fit between an organization and its environment, they must recognize the opportunities or threats it presents. At stage 2, managers seek to design and develop a series of alternative courses of action to solve the problems they have identified. They study ways to take advantage of the organization's specific competences to respond to opportunities and threats. At stage 3, managers compare the likely consequences of each alternative and decide which course of action offers the best solution to the problem they identified in stage 1 -The ideal situation is one in which there is no uncertainty: Managers know all the courses of action open to them -The rational model ignores the ambiguity, uncertainty, and chaos that typically plague decision making. Researchers have criticized as unrealistic or simplistic three assumptions underlying the rational model: (1) the assumption that decision makers have all the information they need, (2) the assumption that decision makers have the ability to make the best decisions, and (3) the assumption that decision makers agree about what needs to be done

Disadvantages of Isomorphism

-Although organizational isomorphism can help new and growing organizations develop stability and legitimacy, it has some disadvantages -The ways organizations have learned to operate may become outdated, inertia sets in, and the result is low effectiveness -Also, the pressure to imitate competitors and beat them at their own game may reduce the incentive to experiment so that the level of innovation declines

Technology and the three stages in the value creation process—input, conversion, and output

-Although we usually think of technology only at the conversion stage, technology is present in all organizational activities: input, conversion, and output -At the input stage, technology-skills, procedures, techniques, and competences- allows each organizational function to handle relationships with outside stakeholders so that the organization can effectively manage its specific environment -At the conversion stage, technology —a combination of machines, techniques, and work procedures -transforms inputs into outputs -At the output stage, technology allows an organization to effectively dispose of finished goods and services to external stakeholders -Ex: To be effective, an organization must possess competences in testing the quality of the finished product, in selling and marketing the product, and in managing after-sales service to customers -The technology of an organization's input, conversion, and output processes is an important source of a company's competitive advantage

Downsizing

-Another type of organizational restructuring that has become very common in recent years is downsizing, the process by which managers streamline the organizational hierarchy and lay off managers and workers to reduce bureaucratic costs -The drive to reduce bureaucratic costs is often a response to increasing competitive pressures in the environment as companies fight to increase their performance and introduce new information technology -Often, after one industry company downsizes, other industry companies are forced to examine their own structures to search out inefficiencies; thus downsizing waves take place across companies in an industry -Downsized organizations lack the creative middle managers who perform this vital task of expansion and growth, and this may hurt them in the future. Hence the terms anorexic or hollow are used to refer to organizations that downsized too much and have too few managers to help them grow when conditions change

Task Interdependence: The Theory of James D. Thompson

-Another view of technology, developed by James D. Thompson, focuses on the way in which task interdependence, the method used to relate or sequence different tasks to one another, affects an organization's technology and structure -When task interdependence is low, people and departments are individually specialized -that is, they work separately and independently to achieve organizational goals. When task interdependence is high, people and departments are jointly specialized - that is, they depend on one another for supplying the inputs and resources they need to get the work done -Thompson identified three types of technology: mediating, long linked, and intensive

Risk aversion

-As organizations grow, managers often become risk averse-that is, they become unwilling to bear the uncertainty associated with entrepreneurial activities -Risk aversion may set in for several reasons -Managers' overriding concern may be to protect their power and status so they pursue safe courses of action and choose inexpensive projects -Often, managers try to maximize the chance of success by pursuing new projects similar to those that have already brought the organization success

Rate of technological change

-As this discussion suggests, the most important determinant of the length of a product's life cycle is the rate of technological change -In some industries-such as PCs, semiconductors, and online books and music-technological change is rapid and product life cycles are very short -For example, technological change is so rapid in laptops that a new model becomes outdated only several months after its introduction. -In other industries the product life cycle is somewhat longer. In the car industry, for example, the average product life cycle is three to five years -In contrast, in industries where the pace of technological change is slower, product life cycles tend to be much longer

Information efficiencies

=the cost and time savings that occur when IT allows individual employees to perform their current tasks at a higher level, assume additional tasks, and expand their roles in the organization owing to advances in the ability to gather and analyze data

Evolutionary change vs Revolutionary change

-Evolutionary change is gradual, incremental, and narrowly focused -Evolutionary change involves not a drastic or sudden altering of the basic nature of an organization's strategy and structure but a constant attempt to improve, adapt, and adjust strategy and structure incrementally to accommodate to changes taking place in the environment -Sociotechnical systems theory, total quality management, and the creation of empowered, flexible work groups are three instruments of evolutionary change that organizations use in their attempt to make incremental improvements in the way work gets done -Revolutionary change is rapid, dramatic, and broadly focused -Revolutionary change involves a bold attempt to quickly find new ways to be effective. It is likely to result in a radical shift in ways of doing things, new goals, and a new structure. It has repercussions at all levels in the organization - corporate, divisional, functional, group, and individual -Reengineering, restructuring, and innovation are three important instruments of revolutionary change

Types of Organizational Learning (Exploration vs Exploitation)

-Exploration involves organizational members searching for and experimenting with new kinds or forms of organizational activities and procedures to increase effectiveness -Learning that involves exploration might involve finding new ways to manage the environment-such as experimenting with the use of strategic alliances and network organizations— or inventing new kinds of organizational structures for managing organizational resources-such as product team structures and cross-functional teams -Exploitation involves organizational members learning ways to refine and improve existing organizational activities and procedures to increase effectiveness -Learning that involves exploitation might involve implementing a total quality management program to promote the continuous refinement of existing operating procedures, or developing an improved set of rules to perform specific kinds of functional activities more effectively -Exploration is therefore a more radical learning strategy than exploitation, although both must be used together to increase organizational effectiveness

Flexible Workers and Flexible Work Teams

-First, employees need to acquire and develop the skills to perform any of the tasks necessary for assembling a range of finished products -As the demand for components or finished products rises or falls, flexible workers can be transferred to the task most needed by the organization. As a result, the organization is able to respond quickly to changes in its environment -Performing more than one task also cuts down on repetition, boredom, and fatigue and raises workers' incentives to improve product quality -To further speed the development of functional capabilities, flexible workers are then grouped into flexible work teams -A flexible work team is a group of workers who assume responsibility for performing all the operations necessary for completing a specified stage in the manufacturing process -A flexible work team is self-managed: The team members jointly assign tasks and transfer workers from one task to another as necessary -Separate teams assemble different components and turn those components over to the final-product work team, which assembles the final product

Resistances to Change (Group-Level Resistance to Change)

-First, many groups develop strong informal norms that specify appropriate and inappropriate behaviors and govern the interactions between group members. Often, change alters task and role relationships in a group; when it does, it disrupts group norms and the informal expectations that group members have of one another -Group cohesiveness, the attractiveness of a group to its members, also affects group performance. Although some level of cohesiveness promotes group performance, too much cohesiveness may actually reduce performance because it stifles opportunities for the group to change and adapt -Groupthink is a pattern of faulty decision making that occurs in cohesive groups when members discount negative information in order to arrive at a unanimous agreement. Escalation of commitment worsens this situation because even when group members realize their decision is wrong, they continue to pursue it because they are committed to it

Resistances to Change (Individual-Level Resistance to Change)

-First, people tend to resist change because they feel uncertain and insecure about what its outcome will be -Workers' resistance to the uncertainty and insecurity surrounding change can cause organizational inertia -Absenteeism and turnover may increase as change takes place, and workers may become uncooperative, attempt to delay or slow the change process, and otherwise passively resist the change in an attempt to quash it -Thus, when change takes place, workers tend to focus only on how it will affect them or their function or division personally. If they perceive few benefits, they may reject the purpose behind the change -Habit, people's preference for familiar actions and events, is a further impediment to change

Game Theory

-In understanding the dynamics of decision making between competitors in the environment, a useful tool that can help managers improve decision making and enhance learning is game theory, in which interactions between organizations are viewed as a competitive game -From a game theory perspective, companies in an industry can be viewed as players that are all simultaneously making choices about which decisions to make that will maximize their effectiveness -The problem that managers face is the potential effectiveness of each decision they make, for example of which competitive strategy they select is not some "fixed or stable amount." -What value they will get from making a certain choice-the payoff-will vary depending on the strategies that rivals also select -In a sequential move game, such as chess, players move in turn, and one player can select a strategy to pursue after considering its rival's choice of strategies -In a simultaneous move game, the players act at the same time, in ignorance of their rival's current actions. -In the environment, both sequential and simultaneous move games are commonplace as managers compete for scarce resources. -Indeed, game theory is particularly useful in analyzing situations where a company is competing against a limited number of rivals in its domain and they are highly interdependent-something very common in most environments. In such a setting, the value that can be created by making a certain choice-for example, to pursue a low-cost or differentiation strategy-depends critically on the strategies pursued by rivals -A fundamental premise of game theory is that when making decisions, managers need to think in two related ways. First, they need to look forward, think ahead, and anticipate how rivals will respond to whatever might be their competitive moves. Second, managers ne

Tactics for Playing Politics

-Increasing indispensability -Increasing nonsubstitutability -Increasing centrality -Associating with powerful managers -Building and managing coalitions -Manipulating decision making -Controlling the agenda -Bringing in an outside expert

Mimetic isomorphism

-Isomorphism is mimetic when organizations intentionally imitate and copy one another to increase their legitimacy -A new organization is especially likely to imitate the structure and processes of successful organizations when the environment is highly uncertain and so it needs to search for a structure, strategy, culture, and technology that will increase its chance of survival -Although imitating the most successful organizations in a population increases their chances for survival and success, there is a limit to how much a new organization should seek to imitate existing ones -Each new organization must develop some unique competences to differentiate itself and define the niche where it has access to most resources

Normative isomorphism

-Isomorphism is normative when organizations come to resemble one another over time because they indirectly adopt the norms and values of other organizations in the environment -Managers and employees frequently move from one organization to another and bring with them the norms and values of their former employers -Organizations also indirectly acquire specific sets of values and norms through membership in industry, trade, and professional associations

Coercive isomorphism

-Isomorphism is said to be coercive when an organization adopts certain kinds of values and norms because it is pressured to by other organizations or by society in general -Coercive isomorphism also results when organizations are forced to adopt nondiscriminatory equitable hiring practices because they are mandated by law

Joint Ventures

-Joint ventures between two or more organizations are another important means of managing high-tech innovation -A joint venture allows organizations to combine their skills and technologies and pool their resources to embark on risky R&D projects. A joint venture is similar to a new venture division in that a new organization is created in which people can work out new procedures that lead to success

Stage-Gate Development Funnel

-One of the mistakes that top managers often make as they control the innovation process is to fund too many development projects simultaneously -The result is that limited human, functional, and financial resources are spread too thinly over too many different projects. As a consequence, no single project or PM is given the resources necessary for a project to succeed, and the level of innovation falls -The purpose of a stage-gate funnel is to establish a structured and coherent innovation process that both improves control over the product development effort and forces managers to make choices among competing new product development projects so resources are not spread too thinly over too many projects

Project management

-One technique that has proved useful at promoting quantum, but especially incremental, innovation is project management, the process of leading and controlling a specific ongoing work program so it results in the creation of new or improved products -Effective project management begins with a clearly articulated plan that takes a product from its concept phase, to its initial test phase, to the modification phase, and to the final manufacturing or—in the case of services-setup phase

Knowledge management (A codification approach and A personalization approach)

-One type of IT-enabled organizational relationship that has important implications for both organizational learning and decision making is knowledge management, the sharing and integrating of expertise within and between functions and divisions through real-time, interconnected IT -With a codification approach, knowledge is carefully collected, analyzed, and stored in databases where it can be retrieved easily by users who input organization-specific commands and keywords. Essentially, a codification approach results in collection of standardized organization best practices, rules, and SOPs that can be drawn on by anyone who needs them (for standardized products) --By contrast, a personalization approach to knowledge management is pursued when an organization needs to provide customized products or solutions to clients, when technology is changing rapidly, and when employees rely much more on know-how, insight, and judgment to make decisions. In these cases, it is very difficult (often impossible) to write down or even verbalize a course of action that leads to a solution. Often, the solution results from mutual adjustment between people and groups when intensive technology is employed.

Organizational birth

-Organizational birth, the founding of an organization, is a dangerous stage of the life cycle and associated with the greatest chance of failure -A new organization is fragile because it lacks a formal structure to give its value-creation processes and actions reliability and stability -A flexible structure can be an advantage when it allows the organization to change and take advantage of new opportunities, but it can also be a disadvantage. A formal structure provides stability and certainty by serving as the organization's memory -Structure specifies an organization's activities and the procedures for getting them done. If such procedures are not written down, a new organization can literally forget the skills and procedures that made it successful -Another reason why organizational birth is a dangerous stage is that conditions in the environment may be hostile to a new organization

Organizational life cycle

-Organizations experience a predictable sequence of stages of growth and change over time: the organizational life cycle -The four principal stages of the organizational life cycle are birth, growth, decline, and death -Organizations pass through these stages at different rates, and some do not experience every stage. Moreover, some companies go directly from birth to death without enjoying any growth if they do not attract customers or resources -The way an organization can change in response to the problems it confronts determines whether and when it will go on to the next stage in the life cycle and survive and prosper or fail and die

Large-Batch and Mass-Production Technology

-Organizations that employ large-batch or mass production technology produce massive volumes of standardized products, such as cars, razor blades, aluminum cans, and soft drinks -With large-batch and mass production technology, machines control the work process. Their use allows tasks to be specified and programmed in advance -As a result, work activities are standardized, and the production process is highly controllable -The control provided by large-batch and mass production technology allows an organization to save money on production and charge a lower price for its products

Organizational Inertia

=the forces inside an organization that make it resistant to change -Some factors that cause inertia were discussed in the previous chapter. Three more are risk aversion, the desire to maximize rewards, and an overly bureaucratic culture. When these factors operate together, the problems facing managers are greatly compounded

Small-Batch and Unit Technology

-Organizations that employ small-batch and unit technology make one-of-a-kind customized products or small quantities of products -Small-batch and unit technology scores lowest on the dimension of technical complexity because any machines used during the conversion process are less important than people's skills and knowledge -The flexibility of small-batch technology gives an organization the capacity to produce a wide range of products that can be customized for individual customers -Small-batch technology allows a custom furniture maker, for example, to satisfy the customer's request for a certain style of table made from a certain kind of wood -Small-batch technology is relatively expensive to operate because the work process is unpredictable and the production of customized made-to-order products makes advance programming of work activities difficult. However, flexibility and the ability to respond to a wide range of customer requests make this technology ideally suited to producing new or complex products

Survival Strategies (R-strategy versus K-strategy)

-Organizations that follow an r-strategy are founded early in a new environment —they are early entrants. Organizations that follow a K-strategy are founded late — they are late entrants -The advantage of an r-strategy is that an organization obtains first-mover advantages and has first pick of the resources in the environment -Organizations that follow a K-strategy are usually established in other environments and wait to enter a new environment until the uncertainty in that environment is reduced and the correct way to compete is apparent

Interorganizational (Learning)

-Organizations with organic, adaptive cultures, for example, are more likely to actively seek out new ways to manage linkages with other organizations, whereas mechanistic, inert cultures are slower to recognize and to take advantage of new linkage mechanisms, often preferring to go it alone. -In general, interorganizational learning is important because organizations can improve their effectiveness by imitating each other's distinctive competences. The previous chapter discusses how mimetic, coercive, and normative processes encourage organizations to learn from one another to increase their legitimacy, but this can also increase their effectiveness -Similarly, organizations can encourage explorative and exploitative learning by cooperating with their suppliers and distributors to find new and improved ways of handling inputs and outputs -In fact, Senge's fifth principle of organizational learning, systems thinking, is that to create a learning organization, managers must recognize the effects of one level of learning on the others -Similarly, the nature of interorganizational learning is likely to be affected by the kind of learning going on at the organization and group levels

Technical Complexity and Organizational Structure

-Organizations with small-batch technology typically have three levels in their hierarchy; organizations with mass production technology, four levels; and organizations with continuous-process technology, six levels. As technical complexity increases, organizations become taller, and the span of control of the CEO widens. -The span of control of first-line supervisors first expands and then narrows -The main coordination problem associated with small-batch technology is the impossibility of programming conversion activities because production depends on the skills and experience of people working together. With small-batch technology, each supervisor and work group decides how to manage each decision as it occurs at each step of the input-conversion-output process. The most appropriate structure for unit and small-batch technology is an organic structure in which managers and employees work closely to coordinate their activities to meet changing work demands, which is a relatively flat structure -In an organization that uses mass production technology, the ability to program tasks in advance allows the organization to standardize the manufacturing process and make it predictable. Decision making becomes centralized, and the hierarchy of authority becomes taller (four levels) as managers rely on vertical communication to control the work process. A mechanistic structure becomes the appropriate structure to control work activities in a mass production setting, and the organizational structure becomes taller and wider -In an organization that uses continuous-process technology, tasks can be programmed in advance and the work process is predictable and controllable in a technical sense, but there is still the potential for a major systems breakdown. The principal control problem facing the organization is monitoring the pr

Developing a Plan for a New Business

-Planning for a new business begins when an entrepreneur notices an opportunity to develop a new or improved good or service for the whole market or for a specific market niche -The next step is to test the feasibility of the new product idea. The entrepreneur conducts as thorough a strategic planning exercise as possible, using SWOT analysis, the analysis of organizational strengths and weaknesses and environmental opportunities and threats -If the environmental analysis suggests that the product idea is feasible, the next step is to examine the strengths and weaknesses of the idea. At this stage the main strength is the resources possessed by the entrepreneur -After conducting a thorough SWOT analysis, if the entrepreneur decides that the new product idea is feasible, the hard work begins: developing the actual business plan that will be used to attract investors or funds from banks

A Population Ecology Model of Organizational Birth

-Population ecology theory seeks to explain the factors that affect the rate at which new organizations are born (and die) in a population of existing organizations -A population of organizations comprises the organizations that are competing for the same set of resources in the environment -Different organizations within a population may choose to focus on different environmental niches, or particular sets of resources or skills

property rights

-Property rights give people and organizations the right to own and control productive resources and to profit from them. To motivate entrepreneurs and companies to take risks and invest in new ventures whose payoff is unknown, laws are enacted to protect the profits that result from successful efforts to innovate or create new products. Individual inventors and companies are given the legal property rights to own and protect their creations by the granting of patents, copyrights, and trademarks.

Technical complexity

=the extent to which it can be programmed so it can be controlled and made predictable— is the important dimension that differentiates technologies -High technical complexity exists when conversion processes can be programmed in advance and fully automated. With full automation, work activities and the outputs that result from them are standardized and can be predicted accurately -Low technical complexity exists when conversion processes depend primarily on people and their skills and knowledge and not on machines

Two Types of Innovation

-Quantum technological change refers to a fundamental shift in technology that revolutionizes products or the way in which they are produced. Examples of quantum changes in technology include the development of the first PCs, which revolutionized the computer industry; the development of biotechnology that has revolutionized the treatment of illness by replacing conventional pharmaceutical compounds with genetically engineered medicines; and the emergence of advanced computer software that permits social networking, payments through smartphone, and mobile game playing. New products or operating systems that incorporate a quantum technological improvement are referred to as quantum innovations -Quantum innovations are likely to cause major changes in an environment and to increase uncertainty because they force organizations to change the way they operate -Incremental technological change refers to the improvements that are continuously made to particular technologies over time, and incremental innovations refer to the superior products or operating systems that incorporate and benefit from those refinements -All these incremental technological changes have dramatically improved the performance, quality, and safety of all kinds of products-and reduced their cost-such as the new mobile computing devices and fuel efficient vehicles currently being introduced -As one might expect, quantum innovations are relatively uncommon

Restructuring

-Restructuring and reengineering are also closely linked, for in practice the move to a more efficient organizational structure generally results in the layoff of employees, unless the organization is growing rapidly so employees can be transferred or absorbed elsewhere in the organization -It is for this reason that reengineering efforts are unpopular both among workers —who fear they will be reengineered out of a job-and among managers —who fear the loss of their authority and empires -Nevertheless, restructuring refers to the process by which managers change task and authority relationships and redesign organizational structure and culture to improve organizational effectiveness -The move from a functional to some form of divisional structure, and the move from one divisional structure to another, represents one of the most common kinds of restructuring effort

Innovation

-Restructuring is often necessary because changes in technology make the technology an organization uses to produce goods and services, or the goods and services themselves, obsolete -Innovation is the successful use of skills and resources to create new technologies or new goods and services so an organization can change and better respond to the needs of customers

Role of fads and fashion

-So organizations are increasingly watching the changing needs of customers- their fads and fashions- and investing resources to develop new technologies and products that will meet those needs -Thus today product life cycles may last no more than months, and only those companies that have the technological capability to respond fast—by developing new lines of clothing, perfumes, or mobile computing devices —will perform well -The faster technology changes a product's life cycle, the more important it is to innovate products quickly and on a continuing basis. In industries where product life cycles are very short, managers must continually develop new or improved technologies or their growth and even their survival is threatened

Sociotechnical systems theory

-Sociotechnical systems theory was one of the first theories that proposed the importance of changing role and task or technical relationships to increase organizational effectiveness -This study of coal miners led to the development of sociotechnical systems theory, which argues that managers need to fit or "jointly optimize" the workings of an organization's technical and social systems —or, in terms of the present discussion, culture — to promote effectiveness -A poor fit between an organization's technology and social system leads to failure, but a close fit leads to success -The lesson to take from sociotechnical systems theory is that when managers change task and role relationships, they must recognize the need to adjust the technical and social systems gradually so group norms and cohesiveness are not disrupted -Managers need to be sensitive to the fact that the way they structure the work process affects the way people and groups behave

Specialist strategy versus general strategy

-Specialist organizations (or specialists) concentrate their competences and skills to compete for resources in a single niche-for example, smartphones -Generalist organizations (or generalists) use their well-developed competences to compete for resources in many or all niches in an environment-for example, smartphones, inexpensive cellphones, landline phones, netbooks, tablets, and so on -By focusing their activities in one niche, specialists are often able to develop core competences that allow them to outperform generalists in that niche -Generalists can often outcompete specialists when there is considerable uncertainty in the environment and when resources are changing so that niches emerge and disappear continually. Generalists can survive in an uncertain environment because they have spread their resources over many niches -Specialists and generalists normally coexist in many environments because generalists create the conditions that allow specialists to operate successfully

programmed technology

-Technology is said to be programmed when rules and SOPs for converting inputs into outputs can be specified in advance so that tasks can be standardized and the work process be made predictable -The more difficult it is to specify the process for converting inputs into outputs, the more difficult it is to control the production process and make it predictable

What Is Technology?

-Technology is the combination of skills, knowledge, abilities, techniques, materials, machines, computers, tools, and other equipment that people use to convert or change raw materials, problems, and new ideas into valuable goods and services -Inside an organization, technology exists at three levels: At the individual level, technology is the personal skills, knowledge, and competences that individual women and men possess At the functional or departmental level, the procedures and techniques that groups work out to perform their work create competences that constitute technology. The interactions of the members of a surgical operating team, the cooperative efforts of scientists in a research and development laboratory, and techniques developed by assembly-line workers are all examples of competences and technology at the functional or departmental level -The way an organization converts inputs into outputs is often used to characterize technology at the organizational level. Mass production is the organizational technology based on competences in using a standardized, progressive assembly process to manufacture goods. -Craftswork is the technology that involves groups of skilled workers interacting closely and combining their skills to produce custom-designed products

product life cycle

-The product life cycle reflects the changes in demand for a product that occur over time -Demand for the most successful, innovative, new products passes through four stages: the embryonic stage, growth, maturity, and decline. In the embryonic stage a product has yet to gain widespread acceptance; customers are unsure what the technology embedded in the product has to offer them, so there is little demand for it. In the growth stage many consumers are entering the market and buying the product for the first time; demand increases rapidly. The growth stage ends and the mature stage begins when market demand peaks because most customers have already bought the product (relatively few first-time buyers are left). At this stage, demand is typically replacement demand because incremental innovation has resulted in a new generation of products that have better features. The decline stage follows the mature stage if and when demand for a product falls because quantum technological change results in the emergence of a superior alternative product and a product becomes technologically obsolete

Reengineering

-The term "reengineering" has been used to refer to the process by which managers redesign how tasks are bundled into roles and functions to improve organizational effectiveness -Change resulting from reengineering requires managers to go back to the basics and pull apart each step in the work process to identify a better way to coordinate and integrate the activities necessary to provide customers with goods and services -Instead of focusing on an organization's functions, the managers of a reengineered organization focus on business processes -Processes, not organizations, are the object of reengineering. Companies do not reengineer their sales or manufacturing departments; they reengineer the work the people in those departments do

E-Engineering

-The term e-engineering refers to companies' attempts to use all kinds of information systems to improve their performance -New IT can be employed in all aspects of an organization's business and for all kinds of reasons -The importance of e-engineering is increasing as it changes the way a company organizes its value-creation functions and links them to improve its performance

The Unstructured Model

-The unstructured model of decision making, developed by Henry Mintzberg and his colleagues, describes how decision making takes place when uncertainty is high -The unstructured model recognizes that decision making takes place in a series of small, incremental steps that collectively have a major effect on organizational effectiveness over time -Incremental decisions are made within an overall decision-making framework consisting of three stages —identification, development, and selection -In the identification stage, managers develop routines to recognize problems and to understand what is happening to the organization -In the development stage, they search for and select alternatives to solve the problems they have defined. Solutions may be new plans or modifications of old plans, as in the muddling-through approach -Finally, in the selection stage, managers use an incremental selection process-judgment and intuition, bargaining, and to a lesser extent formal analysis (typical of the rational model) - to reach a final decision -In the unstructured model (unlike the incrementalist model), however, whenever organizations encounter roadblocks, they rethink their alternatives and go back to the drawing board -Thus decision making is not a linear, sequential process but a process that may evolve unpredictably in an unstructured way -In essence, Mintzberg's approach emphasizes the unstructured nature of incremental decision making: Managers make decisions in a haphazard, intuitive way, and uncertainty forces them to reexamine their decisions continuously to find new ways to behave in a constantly changing environment -Thus the unstructured model explains why and how managers make nonprogrammed decisions, and the incrementalist model explains why and how managers can improve their programmed decision making over time

The Garbage-Can Model

-This model turns the decision-making process around and argues that managers are as likely to start decision making from the solution side as from the problem side -In other words, decision makers may propose solutions to problems that do not exist; they create a problem they can solve with solutions that are already available -Garbage-can decision making arises in the following way: An organization has a set of solutions deriving from its competences and skills with which it can solve certain problems —for example, how to attract new customers, how to lower production costs, or how to innovate products quickly -Possessing these organizational competences, managers seek ways to use them and so they create problems -or decision-making opportunities-for them to solve -While an organization's managers must tackle new problems of their own making, at the same time they must also generate alternatives and find solutions to problems that have arisen because of shifts in the environment or strains and stresses that stem from the way it operates -To further complicate decision making, different coalitions of managers may champion different alternatives and compete for resources to implement their own chosen solutions -In this situation, an organization becomes an "organized anarchy" in which the decision about which alternative to select depends on which manager or coalition has the most influence or power to sway other decision makers at that moment

The Costs and Benefits of Organizational Politics

-To manage organizational politics and gain its benefits, an organization must establish a balance of power in which alternative views and solutions can be offered and considered by all parties and dissenting views can be heard -It is also important for the balance of power to shift over time, toward the party that can best manage the uncertainty and contingencies facing the organization -An organization's ability to obtain the benefits of politics depends on the assumption that power flows to those who can be of most help to the organization -When the balance of power between stakeholders or subunits does not force the allocation of resources to where they can best create value, organizational effectiveness suffers. When powerful managers can suppress the views of those who oppose their interests, debate becomes restricted, checks and balances fade, bad conflict increases, and organizational inertia increases -Thus, ultimately, whether power and politics benefit or harm an organization is a function of the balance of power among organizational stakeholders

Task analyzability

=the degree to which search and information-gathering activity is required to solve a problem -The more analyzable a task, the less search activity is needed; such tasks are routine because the information and procedures needed to complete it have been discovered, rules have been worked out and formalized, and the way to perform a task can be programmed in advance -Tasks are hard to analyze when they cannot be programmed - that is, when procedures for carrying them out and dealing with exceptions cannot be worked out in advance -The greater the number of exceptions that workers encounter in the work process, and the greater the amount of search behavior required to find a solution to each exception, the more complex and less routine are tasks

Top-down change vs Bottom-up change

-Top-down change is implemented by managers at a high level in the organization. The result of radical organizational restructuring and reengineering is top-down change. Top-down change proceeds rapidly and forces employees to keep up with the pace of change, troubleshooting to solve problems as they arise -Bottom-up change is implemented by employees at low levels in the organization and gradually rises until it is felt throughout the organization. When an organization wants to engage in bottom-up change, the first step in the action research process - diagnosing the organization -becomes pivotal in determining the success of the change. Managers involve employees at all levels in the change process, to obtain their input and to lessen their resistance -In general, bottom-up change is easier to implement than top-down change because it provokes less resistance -Poorly run organizations, those that rarely change or postpone change until it is too late, are forced to engage in top-down restructuring simply to survive

Dedicated machines

-Traditional mass production is based on the use of dedicated machines, machines that can perform only one operation at a time, such as repeatedly cutting or drilling or stamping out a car body part. To maximize volume and efficiency, a dedicated machine produces a narrow range of products but does so cheaply -When the component being manufactured needs to be changed, a dedicated machine must be retooled - that is, fitted with new dies or jigs— before it can handle the change. Because retooling a dedicated machine can take days, during which no production is possible, long production runs are required for maximum efficiency and lowest costs

Continuous-Process Technology

-With continuous-process technology, technical complexity reaches its height -In continuous-process production, the conversion process is almost entirely automated and mechanized; employees generally are not directly involved. Their role in production is to monitor the plant and its machinery and ensure its efficient operation. The task of employees engaged in continuous-process production is primarily to manage exceptions in the work process, such as a machine breakdown or malfunctioning equipment. -The hallmark of continuous-process technology is the smoothness of its operation. Production continues with little variation in output and rarely stops -Continuous-process production tends to be more technically efficient than mass production because it is more mechanized and automated and thus is more predictable and easier to control. It is more cost efficient than both unit and mass production because labor costs are such a small proportion of its overall cost -When operated at full capacity, continuous-process technology has the lowest production costs -For many organizational activities, the move to automate production is not possible or practical -Thus there is a market for the products of small-batch companies even though production costs are high

Conflict Resolution Strategies

1. Acting at the Level of Structure -Because task interdependence and differences in goals are two major sources of conflict, altering the level of differentiation and integration to change task relationships is one way to resolve conflict -adjust structure/roles, ensure hierarchy of authority is consistent with goals 2. Acting at the Level of Attitudes and Individuals -set up a procedural system that allows parties in conflict to air their grievances, third party negotiator, rotate people in subunits, have a good CEO -an important component of bargaining in labor disputes is attitudinal structuring— a process designed to influence the attitudes of the opposing party and to encourage the perception that both parties are on the same side and want to solve a dispute amicably

Sources of Organizational Power

1. Authority (legal and cultural foundations) 2. Control Over Resources 3. Control Over Information 4. Nonsubstitutability 5. Centrality 6. Control Over Uncertainty 7. Unobtrusive Power: Controlling the Premises of Decision Making

Types of Cognitive Biases

1. Cognitive dissonance: the state of discomfort or anxiety that a person feels when there is an inconsistency between his or her beliefs and actions 2. Illusion of control: a cognitive bias that leads managers to overestimate the extent to which they can control a situation because they have the skills and abilities needed to manage uncertainty and complexity 3. Frequency: a cognitive bias that deceives people into assuming that extreme instances of a phenomenon are more prevalent than they really are 4. Representativeness: a cognitive bias that leads managers to form judgments based on small and unrepresentative samples 5. Projection: a cognitive bias that allows managers to justify and reinforce their own preferences and values by attributing them to others 6. Ego-defensiveness: a cognitive bias that leads managers to interpret events in such a way that their actions appear in the most favorable light 7. Escalation of commitment is a cognitive bias that leads managers to remain committed to a losing course of action and to refuse to admit they have made a mistake, perhaps because of ego-defensiveness or because they are gripped by the illusion of control

Forces for Change (Competitive forces, Economic, political, and global forces, Demographic and social forces, and/or, Ethical forces)

1. Competitive Forces -Competition is a force for change because unless an organization matches or surpasses its competitors in efficiency, quality, or its capability to innovate new or improved goods or services, it will not survive 2. Economic, Political, and Global Forces -Economic and political unions among countries are becoming an increasingly important force for change 3. Demographic and Social Forces -Changes in the composition of the workforce and the increasing diversity of employees have presented organizations with many challenges and opportunities -Increasingly, changes in the demographic characteristics of the workforce have led managers to change their styles of managing all employees and to learn how to understand, supervise, and motivate diverse members effectively 4. 4. Ethical Forces -Just as it is important for an organization to take steps to change in response to changing demographic and social forces, it is also critical for an organization to take steps to promote ethical behavior in the face of increasing government, political, and social demands for more responsible and honest corporate behavior

OD Techniques to Promote Change

1. Counseling, Sensitivity Training, and Process Consultation -Sensitivity training is an intense type of counseling 2. Team Building and Intergroup Training -Intergroup training takes team building one step further and uses it to improve the ways different functions or divisions work together. Its goal is to improve organizational performance by focusing on a function's or division's joint activities and output -A popular form of intergroup training is called organizational mirroring, an OD technique designed to improve the effectiveness of interdependent groups 3. Total Organizational Interventions -A variety of OD techniques can be used at the organization level to promote organization-wide change. One is the organizational confrontation meeting -At this meeting, all of the managers of an organization meet to confront the issue of whether the organization is effectively meeting its goals -Task forces are formed from the small groups to take responsibility for working on the problems identified

OD Techniques to Deal with Resistance to Change

1. Education and Communication 2. Participation and Empowerment 3. Facilitation 4. Bargaining and Negotiation 5. Coercion

Targets of Change (Human resources, organizational function)

1. HR -Typical kinds of change efforts directed at human resources include (1) a new investment in training and development activities so employees acquire new skills and abilities; (2) socializing employees into the organizational culture so they learn the new routines on which organizational performance depends; (3) changing organizational norms and values to motivate a multicultural and diverse workforce; (4) an ongoing examination of the way in which promotion and reward systems operate in a diverse workforce; and (5) changing the composition of the top-management team to improve organizational learning and decision making 2. Organizational Function -As the environment changes, organizations often transfer resources to the functions where the most value can be created. Crucial functions grow in importance while those whose usefulness is declining shrink -An organization can improve the value that its functions create by changing its structure, culture, and technology

Levels of Organizational Learning

1. Individual (personal mastery) 2. Group (team learning, synergy) 3. Organizational (structure, inert/adaptive culture) 4. Inter organizational (imitation, systems thinking)

Strategies for Organizational Learning

1. Listening to Dissenters 2. Converting Events into Learning Opportunities 3. Experimenting 4. Using Game Theory 5. Nature of the Top-Management Team 6. Devil's Advocacy and Dialectical Inquiry 7. Collateral Organizational Structure (shadows an organization's decision making)

Resistances to Change (Organization-Level Resistance to Change)

1. Power and Conflict -Change usually benefits some people, functions, or divisions at the expense of others -When change causes power struggles and organizational conflict, an organization is likely to resist it -The conflict between the two functions will slow the process of change and perhaps prevent change from occurring at all 2. Differences in Functional Orientation -Different functions and divisions often see the source of a problem differently because they see an issue or problem primarily from their own viewpoint -This tunnel vision increases organizational inertia because the organization must spend time and effort to secure agreement about the source of a problem before it can even consider how the organization needs to change to respond to the problem 3. Mechanistic Structure -A mechanistic structure is characterized by a tall hierarchy, centralized decision making, and the standardization of behavior through rules and procedures -By contrast, organic structures are flat and decentralized and rely on mutual adjustment between people to get the job done -Mechanistic structures are more resistant to change. People who work within a mechanistic structure are expected to act in certain ways and do not develop the capacity to adjust their behavior to changing conditions -A mechanistic structure typically develops as an organization grows and is a principal source of inertia, especially in large organizations 4. Organizational Culture -The values and norms in an organization's culture can be another source of resistance to change. Just as role relationships result in a series of stable expectations between people, so values and norms cause people to behave in predictable ways -If organizational change disrupts taken-for-granted values and norms and forces people to change what they do and how they do it

Four Types of Technology (Routine manufacturing, Craftswork, Engineering production)

1. Routine Manufacturing -Routine manufacturing is characterized by low task variability and high task analyzability -Few exceptions are encountered in the work process, and when an exception does occur, little search behavior is required to deal with it -Mass production is representative of routine technology -There are standard procedures to follow if an exception or a problem presents itself -Low-cost advantages of mass production 2. Craftswork -With craft technology, task variability is low (only a narrow range of exceptions is encountered), and task analyzability is also low (a high level of search activity is needed to find a solution to problems) -Employees in an organization using this kind of technology need to adapt existing procedures to new situations and find new techniques to handle existing problems more effectively -Other examples of craftswork are the manufacture of specialized or customized products like furniture, clothing, and machinery, and trades such as carpentry and plumbing 3. Engineering Production -With engineering production technology, task variability is high and task analyzability is high. -The number or variety of exceptions that workers may encounter in the task is high, but finding a solution is relatively easy because well-understood standard procedures have been established to handle the exceptions -Thus, in organizations that use engineering production technology, existing procedures are used to make many kinds of products -Ex: A firm of architects may specialize in customizing apartment buildings to the needs of different builders -Like craftswork, engineering production is a form of small-batch technology because people are primarily responsible for developing techniques to solve particular problems. A civil engineering group may use its skills in constructing airports, dams,

Four Types of Technology (Engineering Production)

3. Engineering Production -With engineering production technology, task variability is high and task analyzability is high. -The number or variety of exceptions that workers may encounter in the task is high, but finding a solution is relatively easy because well-understood standard procedures have been established to handle the exceptions -Thus, in organizations that use engineering production technology, existing procedures are used to make many kinds of products -Ex: A firm of architects may specialize in customizing apartment buildings to the needs of different builders -Like craftswork, engineering production is a form of small-batch technology because people are primarily responsible for developing techniques to solve particular problems. A civil engineering group may use its skills in constructing airports, dams, and hydroelectric projects to service the needs of clients throughout the world

Targets of Change (Technological capabilities, and/or Organizational capabilities)

3. Technological Capabilities -Technological capabilities give an organization an enormous capacity to change itself to exploit market opportunities -At the organizational level, an organization has to provide the context that allows it to translate its technological competences into value for its stakeholders. This task often involves the redesign of organizational activities 4. Organizational Capabilities -Organizational change often involves changing the relationships between people and functions to increase their ability to create value -Changes in structure and culture take place at all levels of the organization and include changing the routines an individual uses to greet customers, changing work group relationships, improving integration between divisions, and changing corporate culture by changing the top-management team

Four Types of Technology (nonroutine research)

4. Nonroutine Research -Nonroutine research technology is characterized by high task variability and low task analyzability and is the most complex and least routine of the four technologies in Perrow's classification -Tasks are complex because not only is the number of unexpected situations large, but search activity is high. Each new situation creates a need to expend resources to deal with it -High-tech research and development activities are examples of nonroutine research

quantum innovations

=New products or operating systems that incorporate a quantum technological improvement

The Technological Imperative

=The argument that technology determines structure (Woodward)

Organizational Development

=a series of techniques and methods that managers can use in their action research program to increase the adaptability of their organization -In the words of organizational theorist Warren Bennis, OD refers to a "complex educational strategy intended to change beliefs, attitudes, values, and structure of organizations so that they can better adapt to new technologies, markets, and challenges and the dizzying rate of change itself" -The goal of OD is to improve organizational effectiveness and to help people in organizations reach their potential and realize their goals and objectives

Action research

=a strategy for generating and acquiring knowledge that managers can use to define an organization's desired future state and to plan a change program that allows the organization to reach that state 1. Diagnosing the Organization 2. Determining the Desired Future State 3. Implementing Action 4. Evaluating the Action 5. Institutionalizing Action Research

Project

=a subunit whose goal centers on developing a program of activities that delivers a product or service on time, within budget, and that meets predetermined performance standards

Flexible manufacturing technology

=allows the production of many kinds of components at little or no extra cost on the same machine. Each machine in a flexible manufacturing system is able to perform a range of different operations, and the machines in sequence are able to vary their operations so a wide variety of different components can be produced -Flexible manufacturing technology combines the variety advantages of small-batch production with the low-cost advantages of continuous-process production -In flexible manufacturing systems, the key factor that prevents the cost increases associated with changing operations is the use of a computer-controlled system to manage operations.

Computer-integrated manufacturing (CIM)

=an advanced manufacturing technique that controls the changeover from one operation to another by means of the commands given to the machines through computer software -A CIM system eliminates the need to retool machines physically -Computer-integrated manufacturing depends on computers programmed to (1) feed the machines with components, (2) assemble the product from components and move it from one machine to another, and (3) unload the final product from the machine to the shipping area

Computer-aided design

=an advanced manufacturing technique that greatly simplifies the design process. CAD makes it possible to design a new component or microcircuit on a computer screen and then press a button, not to print out the plans for the part but to physically produce the part itself -Detailed prototypes can be sculpted according to the computer program and can be redesigned quickly if necessary -Cutting the costs of product design by using CAD can contribute to both a low-cost and a differentiation advantage. Design advances that CAD makes possible can improve the efficiency of manufacturing -The risk of later failure or of breakdown is reduced if potential problems have been eliminated at the design stage -Finally, CAD enhances flexibility

Computer-Aided Materials Management

=an advanced manufacturing technique used to manage the flow of raw materials and component parts into the conversion process, to develop master production schedules for manufacturing, and to control inventory -The difference between traditional materials management and the new computer-aided techniques is the difference between the so-called push and pull approaches to materials management -Computer-aided materials management makes possible the pull approach. The flow of input materials is governed by customer requests for supplies of the finished products, so the inputs are pulled into the conversion process in response to a pull from the output stage rather than a push from the input stage -CAMM technology allows an organization to increase integration of its input, conversion, and output activities -CAMM increases task interdependence because each stage must be ready to react quickly to demands from the other stages. CAMM increases technical complexity because it makes input, conversion, and output activities a continuous process, in effect creating a pipeline connecting raw materials to the customer -CAMM also helps an organization pursue a low-cost or differentiation strategy. The ability to control the flow of materials in the production process allows an organization to avoid the costs of carrying excess inventory and to be flexible enough to adjust to product or demand changes quickly and easily

Collateral Organizational Structure

=an informal organization of managers set up parallel to the formal organizational structure to "shadow" the decision making and actions of managers in the formal organization -An organization establishes a collateral structure to improve the organization's ability to learn and adjust to new situations, and to enhance its ability to make decisions in an unstructured way -A collateral organizational structure allows an organization to maintain its capacity for change at the same time it maintains its stability

Total Quality Management

=an ongoing and constant effort by all of an organization's functions to find new ways to improve the quality of the organization's goods and services -In many companies, the initial decision to adopt a TQM approach signals a radical change in the way activities are organized -Once TQM is adopted by an organization, however, it leads to continuous, incremental change, and all functions are expected to cooperate with each other to improve quality -As in sociotechnical systems theory, the emphasis in TQM is on the fit or match between technical and social systems -Changing cross-functional relationships to help improve quality is important in TQM -Note that the changes associated with TQM (as with sociotechnical systems theory) are changes in task, role, and group relationships

Mediating technology

=characterized by a work process in which input, conversion, and output activities can be performed independently of one another -Mediating technology is based on pooled task interdependence, which means that each part of the organization -whether a person, team, or department- contributes separately to the performance of the whole organization -With mediating technology, task interdependence is low because people do not directly rely on others to help them perform their tasks

Intensive Technology and Reciprocal Interdependence

=characterized by a work process where input, conversion, and output activities are inseparable -Intensive technology is based on reciprocal task interdependence, which means that the activities of all people and all departments fully depend on one another -Thus the move to reciprocal interdependence and intensive technology has two effects: Technical complexity declines as the ability of managers to control and predict the work process lessens, and tasks become more complex and nonroutine --The difficulty of specifying the sequencing of tasks that is characteristic of intensive technology makes necessary a high degree of coordination and makes intensive technology more expensive to manage than either mediating or long-linked technology. Mutual adjustment replaces programming and standardization as the principal method of coordination. Product team and matrix structures are suited to operating intensive technologies because they provide the coordination and the decentralized control that allow departments to cooperate to solve problems

Materials technology

=comprises machinery, other equipment, and computers -With AMT, the organization actively seeks ways to increase its ability to integrate or coordinate the flow of resources among input, conversion, and output activities -AMT allows an organization to reduce uncertainty not by using inventory stockpiles but by developing the capacity to adjust and control its procedures quickly to eliminate the need for inventory at both the input and the output stages

Organizational Politics

=comprises, in the words of Jeffrey Pfeffer, "activities taken within organizations to acquire, develop, and use power and other resources to obtain one's preferred outcomes in a situation in which there is uncertainty or disagreement about choices -Even if organizational members or subunits have no personal desire to play politics, they still must understand how politics operates because sooner or later they will come up against a master player of the political game. In such situations, apolitical managers (those who do not engage in politics) get all the tedious assignments or the responsibility for projects that do little to enhance their career prospects. Astute political managers get the visible and important projects that bring them into contact with powerful managers and allow them to build their own power base, which they can use to enhance their chances of promotion

Advanced manufacturing technology (AMT)

=consists of innovations in materials technology and in knowledge technology that change the work process of traditional mass production organizations

Intrapreneurs

=employees who notice opportunities for either quantum or incremental product improvements and are responsible for managing the product development process to obtain them -There is an interesting relationship between entrepreneurs and intrapreneurs. Many intrapreneurs become dissatisfied when the organization they work for decides neither to support their creative new product ideas nor to fund development efforts that the intrapreneurs think will succeed. In other words, intrapreneurs become entrepreneurs and found their own organizations that may compete with the organizations they left

Slack resources

=extra or surplus resources that enhance its organization's ability to deal with unexpected situations Used in long linked technology to reduce coordination needs

Creativity

=going beyond the current boundaries, whether those boundaries are technology, knowledge, social norms, or beliefs -Creativity is not just making new things; it is also combining and synthesizing two or more previously unrelated facts or ideas and making something new or different out of them. It is also modifying something to give it a new use or to make it perform better

Information synergies

=occur when IT allows individuals or subunits to adjust their actions or behaviors to the needs of the other individuals or subunits on an ongoing basis and achieve gains from team-based cooperation

knowledge-creating organization

=one in which such innovation is going on at all hierarchical levels and across all functions and divisions. Different teams meet to share their growing information and insights, so as knowledge is shared throughout the organization, new heights of innovation can be reached

Institutional theory

=studies how organizations can increase their ability to grow and survive in a competitive environment by becoming legitimate, that is, accepted, reliable, and accountable, in the eyes of their stakeholders -To increase their survival chances as they grow, organizations must become acceptable and legitimate in the eyes of their stakeholders, and they do this by satisfying the latter's needs -Institutional theory also argues that to increase their chances of survival, new organizations adopt many of the rules and codes of conduct found in the institutional environment surrounding them

First-mover advantages

=the benefits an organization derives from being an early entrant into a new environment. They include customer loyalty, a recognized brand name, and the best locations for new businesses like restaurants. Similarly, the best managers and workers prefer to work in organizations that have established reputations and offer secure employment opportunities

Groupthink

=the conformity that emerges when like-minded people reinforce one another's tendencies to interpret events and information in similar ways

Organizational growth

=the life cycle stage in which organizations develop value-creation skills and competences that allow them to acquire additional resources -Growth allows an organization to increase its division of labor and specialization and thus develop a competitive advantage -An organization that is able to acquire resources is likely to generate surplus resources that allow it to grow further -Over time, organizations thus transform themselves: They become something very different than they were when they started -Growth should be the by-product of an organization's ability to develop core competences that satisfy the needs of its stakeholders and so provide access to scarce resources

Organizational decline

=the life cycle stage that an organization enters when it fails to "anticipate, recognize, avoid, neutralize, or adapt to external or internal pressures that threaten [its] long-term survival" -A declining company may be unable to attract financial resources from banks, customers, or human resources because the best managers or employees prefer to work for the most successful organizations -Decline sometimes occurs because organizations grow too fast or too much

Organizational power

=the mechanism through which conflict gets resolved. It can be defined as the ability of one person or group to overcome resistance by others to achieve a desired objective or result -More specifically, organizational power is the ability of A to cause B to do something that B would not otherwise have done -Thus, when power is used to resolve conflict, the element of coercion exists

Task variability

=the number of exceptions-new or unexpected situations-that a person encounters while performing a task -Task variability is high when a person can expect to encounter many new situations or problems when performing his or her task -Similarly, great variability in the quality of the raw materials makes it especially difficult to manage and maintain consistent quality during the conversion stage -Task variability is low when a task is highly standardized or repetitious so a worker encounters the same situation time and time again

A devil's advocate

=the person willing to stand up and question the beliefs of more powerful people, resist influence attempts, and work to convince others that new ideas or plans may be flawed or wrong and harmful -The goal of both is to improve decision making -An organization that uses devil's advocacy institutionalizes dissent by assigning a manager or management team the role of devil's advocate. The devil's advocate is responsible for critiquing ongoing organizational learning and for questioning the assumptions the top-management team uses in the decision-making process

Organizational Isomorphism

=the process by which organizations in a population become more alike or similar increases -Three processes that explain why organizations become more alike have been identified: coercive, mimetic, and normative isomorphism

What Is Organizational Change?

=the process by which organizations move from their current or present state to some desired future state to increase their effectiveness -The goal of planned organizational change is to find new or improved ways of using resources and capabilities to increase an organization's ability to create value and improve returns to its stakeholders -Managers must constantly search for better ways to use organizational resources to develop a flow of new and improved products or find new markets for their existing products

Innovation

=the process by which organizations use their resources and competences to develop new and improved products or to find better ways to make these new products and thus increase their effectiveness -Although innovation brings about change, it is also associated with a high level of risk because the outcome of research and development (R&D) is often uncertain. It has been estimated that only 12% to 20% of R&D projects result in products that get to market; the rest are failures

The Process of Natural Selection

=the process that ensures the survival of the organizations that have the skills and abilities that best fit with the environment -Natural selection is a competitive process. New organizations survive if they can develop skills that allow them to fit with and exploit their environment. Entrepreneurship is the process of developing new capabilities that allow organizations to take advantage of new niches or find new ways to serve existing niches more efficiently -Early in an environment, as a niche develops and new resources become available, new organizations are likely to be r-specialists — organizations that move quickly to focus on serving the needs of particular customer groups -As they grow, they often become generalists and compete in new niches -While this is happening, however, K-generalists (usually the divisions or subsidiaries of large companies like IBM or GE) move into the market and threaten the weakest r-specialist organizations -Eventually, the strongest r-specialists, r-generalists, and K-generalists dominate the environment by serving multiple market segments and by pursuing a low-cost or differentiation strategy. Large companies, having chosen the K-generalist strategy, often create niches for new firms to enter the market, so K-specialists are founded to exploit the new market segments

Organizational learning

=the process through which managers seek to improve organization members' desire and ability to understand and manage the organization and its environment so they make decisions that continuously raise organizational effectiveness

institutional environment

=the set of values and norms that govern the behavior of a population of organizations

cognitive structure

=the system of interrelated beliefs, preferences, expectations, and values that a person uses to define problems and events -In an organization, cognitive structures reveal themselves in plans, goals, stories, myths, and jargon. Cognitive structures shape the way top managers make decisions-and determine the degree to which forces in the environment are perceived as opportunities and threats

Inert cultures

=those that are cautious and conservative, do not value middle and lower-level managers taking such action, and, indeed, may actively discourage such behavior

Adaptive cultures

=those that value innovation and encourage and reward experimenting and risk taking by middle and lower-level managers -According to Kotter and Heskett, organizational learning is higher in organizations with adaptive cultures because managers can quickly introduce changes in the way the organization operates that allow the organization to adapt to changes occurring in the environment -As a result, organizations with adaptive cultures are more likely to survive in a changing environment and should have higher performance than organizations with inert cultures-exactly what Kotter and Heskett found

Routine Tasks and Complex Tasks: The Theory of Charles Perrow

According to Charles Perrow, two dimensions underlie the difference between routine and nonroutine or complex tasks and technologies: task variability and task analyzability

Dialectical Inquiry

An organization that uses dialectical inquiry creates teams of decision makers. Each team is instructed to generate and evaluate alternative scenarios and courses of action and then recommend the best one. After hearing each team's alternatives, all of the teams and the organization's top managers sit down together to cull the best parts of each plan and synthesize a final plan that offers the best chance of success

entrepreneurs

Organizations are born when people called entrepreneurs recognize and take advantage of opportunities to use their skills and competences to utilize resources in new ways to create value

Patents

Patents give their owners the property right to use, control, license, and otherwise profit from their creation— a new product such as a door handle, machine, or new drug —for a period of 20 years from the date the patent is issued by the U.S. Patent Office. But once a patent has expired any company can manufacture a copy of the original drug, a generic drug, which is then sold for a fraction of the price of the patented drug, so the huge profits of the company that invented the drug disappear

Pondy's Model of Organizational Conflict and the five stages of conflicts

Pondy views conflict as a process that consists of five sequential episodes or stages 1. Latent Conflict (potential for conflict is present) 2. Perceived Conflict (search for origin, construct a scenario) 3. Felt Conflict (develop emotional response, us-vs-them) 4. Manifest Conflict (goal thwarting, open and passive aggression, not recommended) 5. Conflict Aftermath (result depends on if resolved before or after manifest conflict)

The Carnegie Model (Satisficing, Bounded rationality, Organizational coalitions)

Satisficing -Carnegie model suggests that managers engage in satisficing, limited information searches to identify problems and alternative solutions -Instead of searching for all possible solutions to a problem, as the rational model suggests, managers resort to satisficing. That is, to save time and cost, they choose a set of problem-specific criteria or measures they will use to evaluate a range of possible solutions -They then work together to develop several best alternative solutions and select the one that best satisfies the criteria they have previously chosen 2. Bounded Rationality -The Carnegie model assumes that managers' ability is restricted by bounded rationality, meaning they only have limited capacity to process information about alternatives -Thus bounded rationality in no way implies lack of ability or motivation. The Carnegie model recognizes that decision making is subjective and that decision-making quality depends on managers' prior experience, knowledge, beliefs, and intuition 3. Organizational Coalitions -The Carnegie model, in contrast, explicitly recognizes that the preferences and values of managers differ and that disagreement and conflict between different managers is inevitable -The Carnegie model views an organization as a coalition of different interests, in which decision making takes place by compromise, bargaining, and negotiation between managers from different functions and areas of the organization -Any solution chosen must be approved by the dominant coalition, the collection of managers or stakeholders who have the power to decide which solution is chosen and can commit resources to implement it

Weitzel and Jonsson's Model of Organizational Decline (5 stages)

Stage 1: Blinded -In the blinded stage, the first decline stage identified by Weitzel and Jonsson, organizations are unable to recognize the internal or external forces and problems that threaten their long-term survival -The most common reason for this blindness is that organizations do not have in place the monitoring and information systems they need to measure organizational effectiveness and to identify sources of organizational inertia -Internal signals that indicate potential problems are an excessive number of personnel, a slowdown in decision making, a rise in conflict between functions or divisions, and a fall in profits -At this stage, remedial action to gain access to good information and effective top managers who are able to react quickly and put in place the right strategies and structures can stop the decline and put the organization back on its growth path Stage 2: Inaction -If an organization does not realize it is in trouble in the blinded stage, its decline advances to the inaction stage -In this stage, despite clear signs of deteriorating performance such as falling sales or profits, top managers make little attempt to correct problems -This failure to act may be because managers are misinterpreting available information -Managers might decide that their problems are owing to a short-term environmental change that the organization can weather -Inaction may also occur because managers are focused on the pursuit of goals that benefit them in the short run, even though in the long run this will hurt other stakeholders -Now, prompt wide-ranging action by managers is vital to reverse the decline. Managers must take major steps to stop decline, such as by downsizing and laying off employees or by scaling back the scope of their operations. Often a major reorganization and change to a new form of struc

Greiner's Model of Organizational Growth (Stage 1)

Stage 1: Growth through Creativity -Greiner calls the first stage in the life cycle the growth through creativity stage -In this stage (which includes the birth of the organization), entrepreneurs develop the skills and abilities to create and introduce new products for new market niches -In this stage, innovation and entrepreneurship go hand in hand as an organization's founders work long hours to develop and sell their new products with the hope of being rewarded by future profits -In the creativity stage, the norms and values of the organization's culture, rather than the hierarchy and organizational structure, control people's behavior -Once a new organization is up and running, a series of internal forces begin to change the entrepreneurial process -As the organization grows, the founding entrepreneurs confront the task of having to manage the organization, and they discover that management is a very different process from entrepreneurship -Thus, after securing a niche, the founding entrepreneurs are faced with the task of developing the functional competences necessary to allow their organization to grow effectively, a task to which they are often not really suited and for which they lack the necessary skills Crisis of Leadership -Frequently, when an entrepreneur takes control of the management of the organization, significant problems arise that eventually lead to a crisis of leadership -Very often, investors realize that the founding entrepreneur is not the best person to manage a growing company because he or she lacks the organizational skills to develop the right strategy and structure to cross the chasm

Greiner's Model of Organizational Growth (Stage 2)

Stage 2: Growth through Direction -The crisis of leadership ends with the recruitment of a strong top-management team to lead the organization through the next stage of organizational growth: growth through direction -The new top-management team takes responsibility for directing the company's strategy, and lower-level managers assume key functional responsibilities -Then the adoption of formal standardized rules and procedures allows each organizational function to monitor and control its activities better -Often, growth through direction turns around an organization's fortunes and propels the organization up the growth curve to new levels of effectiveness, as happened at eBay in the 1990s -As an organization continues to grow rapidly, however, the move to centralize authority and formalize decision making often leads to a new crisis Crisis of Autonomy -With professional managers now running the show, many organizations experience a crisis of autonomy, which arises because the organization's creative people in departments such as R&D, product engineering, and marketing become frustrated by their lack of control over new product development and innovation -Thus the increased level of bureaucracy that comes in the growth-through-direction stage lowers entrepreneurial motivation -Employees and managers feel lost in the growing organizational bureaucracy and become more and more frustrated with their lack of autonomy -What happens if the crisis of autonomy is not resolved? Internal entrepreneurs are likely to leave the organization and a company falls into the chasm -By not resolving the crisis of autonomy, an organization creates a major problem for itself and limits its ability to grow and prosper

Greiner's Model of Organizational Growth (Stage 3)

Stage 3: Growth through Delegation -To solve the crisis of autonomy, organizations must delegate authority to lower-level managers in all functions and divisions and link their increased control over organizational activities to a reward structure that recognizes their contributions -In essence, growth through delegation allows the organization to strike a balance between recruiting experienced managers to improve performance and the need to provide room for entrepreneurship so that the organization can innovate and find new ways to reduce costs or improve its products -Thus, in the growth-through-delegation stage, more autonomy and responsibility are given to managers at all levels and functions -At this stage in organizational growth, top managers intervene in decision making only when necessary -Once again, however, the organization's very success brings on another crisis: Explosive growth can cause top managers to feel that they have lost control of the company as a whole Crisis of Control -When top managers compete with functional managers or corporate-level managers compete with divisional managers for control of organizational resources, the result is a crisis of control. -The need to resolve the crisis of autonomy by delegating authority to lower-level managers increases their power and control of organizational resources -Lower-level managers like this extra power because it is associated with prestige and access to valued rewards. If managers use this power over resources to pursue their own goals at the expense of organizational goals, the organization becomes less effective -Sometimes during this power struggle, top management tries to recentralize decision making and take back control over organizational activities

Greiner's Model of Organizational Growth (Stage 4)

Stage 4: Growth through Coordination -To resolve the crisis of control, an organization must find the right balance between centralized control from the top of the organization and decentralized control at the functional or divisional level -Top management takes on the role of coordinating different divisions and motivating divisional managers to take a company-wide perspective -Top functional managers and corporate headquarters staff must create the "matrix in the mind" that facilitates international cooperation between divisions and countries -At the same time, corporate management must use its expertise to monitor and oversee divisional activities to ensure that divisions efficiently use their resources, and it must initiate company-wide programs to review the performance of the various divisions -If not managed correctly, all this coordination and the complex structures to handle it will bring about yet another crisis Crisis of Red Tape -Achieving growth through coordination is a complex process that has to be managed continuously if organizations are to be successful -When organizations fail to manage this process, they are plunged into a crisis of red tape -The number of rules and procedures increases, but this increased bureaucracy does little to increase organizational effectiveness and is likely to reduce it by stifling entrepreneurship and other productive activity -The organization becomes overly bureaucratic and relies too much on the formal organization and not enough on the informal organization to coordinate its activities

Greiner's Model of Organizational Growth (Stage 5)

Stage 5: Growth through Collaboration -In Greiner's model, growth through collaboration becomes the way to solve the crisis of red tape and push the organization up the growth curve -Growth through collaboration emphasizes "greater spontaneity in management action through teams and the skillful confrontation of interpersonal differences. Social control and self-discipline take over from formal control" -For organizations at this stage of the growth cycle, Greiner advocates the use of the product team and matrix structure -Developing the interpersonal linkages that underlie the "matrix in the mind" for managing global linkages is also a part of the collaborative strategy. Collaboration makes an organization more organic by making greater use of mutual adjustment and less use of standardization -Changing from a mechanistic to an organic structure as an organization grows is a difficult task fraught with problems; hence, many companies do fall into the chasm

liability of newness

The failure rate is high because new organizations experience the liability of newness - the dangers associated with being the first to operate in a new environment

Trademarks

Trademarks are property rights to the name of a product (such as Nescafe or Ivory Soap), any symbols or logos associated with it, and the company that produces it (such as Nestle or Procter & Gamble). Trademarks give their owner the sole legal right to use these names or symbols and control the use to which they are put —for example —advertising a product, in perpetuity

Long-linked technology

based on a work process where input, conversion, and output activities must be performed in series -Long-linked technology is based on sequential task interdependence, which means that the actions of one person or department directly affect the actions of another, so work cannot be successfully completed by allowing each person or department to operate independently -Mass production technology is based on sequential task interdependence. The actions of the employee at the beginning of the production line determine how successfully the next employee can perform his task, and so forth on down the line -One result of sequential interdependence is that any error that occurs at the beginning of the production process becomes magnified at later stages -Sports activities like relay races or football, in which the performance of one person or group determines how well the next can perform, are based on sequential interdependence -An organization with long-linked technology can respond in a variety of ways to the need to coordinate sequentially interdependent activities. The organization can program the conversion process to standardize the procedures used to transform inputs into outputs. The organization can also use planning and scheduling to manage linkages among input, conversion, and output processes.

Just-in-Time Inventory Systems

requires inputs and components needed for production to be delivered to the conversion process just as they are needed, neither earlier nor later, so input inventories can be kept to a minimum -Computer-aided materials management is necessary for a JIT system to work effectively because CAMM provides computerized linkages with suppliers-linkages that facilitate the rapid transfer of information and coordination between an organization and its suppliers -A JIT system increases task interdependence between stages in the production chain. Traditional mass production draws a boundary between the conversion stage and the input and output stages and sequences conversion activities only. JIT systems break down these barriers and make the whole value-creation process a single chain of sequential activities. Because organizational activities become a continuous process, technical complexity increases, in turn increasing the efficiency of the system -At the same time, JIT systems bring flexibility to manufacturing. The ability to order components as they are needed allows an organization to widen the range of products it makes and to customize products -Like CAMM, JIT systems require an extra measure of coordination, and an organization may need to adopt new methods to manage this new technology -In sum, just-in-time inventory systems, computer-aided materials management, and computer-aided design increase technical complexity and task interdependence and thus increase the degree to which a traditional mass production system operates like a continuous-process technology; they also increase efficiency and reduce production costs

Organizational conflict

the clash that occurs when the goal-directed behavior of one group blocks or thwarts the goals of another -Although conflict is often perceived negatively, research suggests that some conflict is good for an organization and can improve organizational effectiveness. Beyond some point however, extreme conflict between stakeholders can hurt organizational performance -Conflict can be beneficial because it can overcome organizational inertia and lead to organizational learning and change -Conflict between different managers or between different stakeholder groups can improve decision making and organizational learning by revealing new ways of looking at a problem or the false or erroneous assumptions that distort decision making -The conflict that arises when different groups perceive the organization's problems in different ways and are willing to act on their beliefs is a built-in defense against the organizational inertia produced by a top-management team whose members have the same vision of the world -In short, conflict can improve decision making and allow an organization to better change and adapt to its environment

Mass production

the organizational technology based on competences in using a standardized, progressive assembly process to manufacture goods

Craftswork

the technology that involves groups of skilled workers interacting closely and combining their skills to produce custom-designed products