Principles of Management - Cohort 2

Identify the steps in the bureaucratic control process sequence

1. Setting performance standards. 2. Measuring performance. 3. Comparing performance against the standards and determining deviations. 4. Taking action to correct problems and reinforce successes.

Identify and describe the various conflict styles and how conflict strategies function in organizations

Accommodation A style of dealing with conflict involving cooperation on behalf of the other party but not being assertive about one's own interests. Compromise A style of dealing with conflict involving moderate attention to both parties' concerns. Competing A style of dealing with conflict involving strong focus on one's own goals and little or no concern for the other person's goals. Collaboration A style of dealing with conflict emphasizing both cooperation and assertiveness to maximize both parties' satisfaction.

Describe what "Intrapreneurship" is and identify and apply the concepts of Bootlegging and Skunkworks

Building Intrapreneurship Building an entrepreneurial culture is the heart of the corporate strategy at Acordia, a successful insurance company that recently changed its name to Wells Fargo TPA.106 Its success in fostering a culture in which intrapreneurs flourish came from making an intentional decision to foster entrepreneurial thinking and behavior, creating new-venture teams, and changing the compensation system so that it encourages, supports, and rewards creative and innovative behaviors. In other words, building intrapreneurship derives from careful and deliberate strategy. Two common approaches used to stimulate intrapreneurial activity are skunkworks and bootlegging. Skunkworks are project teams designated to produce a new product. A team is formed with a specific goal within a specified time frame. A respected person is chosen to be manager of the skunkworks. In this approach to corporate innovation, risk takers are not punished for taking risks and failing—their former jobs are held for them. The risk takers also have the opportunity to earn large rewards. Skunkworks- A project team designated to produce a new, innovative product. Bootlegging refers to informal efforts—as opposed to official job assignments—in which employees work to create new products and processes of their own choosing and initiative. Informal can mean secretive, such as when a bootlegger believes the company or the boss will frown on those activities. But companies should tolerate some bootlegging, and some even encourage it. To a limited extent, they allow people freedom to pursue pet projects without asking what they are or monitoring progress, figuring bootlegging will lead to some lost time but also to learning and to some profitable innovations. Bootlegging- Informal work on projects, other than those officially assigned, of employees' own choosing and initiative. Merck, desiring entrepreneurial thinking and behavior in research and development, explicitly rejects budgets for planning and control. New-product teams don't get a budget. They must persuade people to join the team and commit their resources. This creates a survival-of-the-fittest process, mirroring the competition in the real world.107 At Merck, as at Wells Fargo TPA, intrapreneurship derives from deliberate strategic thinking and execution.

Describe Constructive Conflict, why it can be beneficial to organizations and what structured processes can be used to encourage it

Constructive Conflict Total and consistent agreement among group members can be destructive. It can lead to groupthink, uncreative solutions, and a waste of the knowledge and diverse viewpoints that individuals bring to the group. Therefore, a certain amount of constructive conflict should exist.50 Some companies, including United Parcel Service, take steps to ensure that conflict and debate are generated within their management teams.51 The most constructive type of conflict is cognitive conflict, or differences in perspectives or judgments about issues. In contrast, affective conflict is emotional and directed at other people. Affective conflict is likely to be destructive to the group because it can lead to anger, bitterness, goal displacement, and lower-quality decisions. Cognitive conflict, in contrast, can air legitimate differences of opinion and develop better ideas and problem solutions. Conflict, then, should be task related rather than personal.52 But even task-related conflict can hurt performance;53 disagreement is good only when managed properly. cognitive conflict Issue-based differences in perspectives or judgments. affective conflict Emotional disagreement directed toward other people. Conflict can be generated formally through structured processes.54 Two techniques that purposely program cognitive conflict into the decision-making process are devil's advocacy and the dialectic method. A devil's advocate has the job of criticizing ideas. The group leader can formally assign people to play this role. Requiring people to point out problems can lessen inhibitions about disagreeing and make the conflict less personal and emotional. devil's advocate A person who has the job of criticizing ideas to ensure that their downsides are fully explored. An alternative to devil's advocacy is the dialectic. The dialectic goes a step beyond devil's advocacy by requiring a structured debate between two conflicting courses of action.55 The philosophy of the dialectic stems from Plato and Aristotle, who advocated synthesizing the conflicting views of a thesis and an antithesis. Structured debates between plans and counterplans can be useful prior to making a strategic decision. For example, one team might present the case for acquiring a firm while another team advocates not making the acquisition. dialectic A structured debate comparing two conflicting courses of action. Constructive conflict does not need to be generated on such a formal basis and is not solely the leader's responsibility. Any team member can introduce cognitive conflict by being honest with opinions, by being unafraid to disagree with others, by pushing the group to action if it is taking too long or making the group slow down if necessary, and by advocating long-term considerations if the group is too focused on short-term results. Introducing constructive conflict is a legitimate and necessary responsibility of all group members interested in improving the group's decision-making effectiveness.

Discuss how a larger organization can promote and maintain the spirit of entrepreneurship and innovation

Large corporations are more than passive bystanders in the entrepreneurial explosion. Consider Microsoft. Every spring, the company hosts Techfest, essentially a threeday science fair that spotlights innovations the company may pursue. The first day is open to the public, and the second two are for Microsoft employees. About half of Microsoft's researchers come from around the world to be inspired and energized by the glimpse at their colleagues' creative projects.104 Even established companies try to find and pursue new and profitable ideas—and they need in-house entrepreneurs (sometimes called intrapreneurs) to do so. If you work in a company and are considering launching a new business venture, Table 7.5 can help you decide whether the new idea is worth pursuing.

Understand and be able to apply the Entrepreneurial Strategy Matrix to assess an entrepreneurial opportunity

The upper-left quadrant, high innovation/low risk, depicts ventures of truly novel ideas with little risk. As examples, the inventors of Lego building blocks and Velcro fasteners could build their products by hand, at little expense. A pioneering product idea from Procter & Gamble might fit here if there are no current competitors and because, for a company of that size, the financial risks of new product investments can seem relatively small. In the upper-right quadrant, high innovation/high risk, novel product ideas are accompanied by high risk because the financial investments are high and the competition is great. A new drug or a new automobile would likely fall into this category. Most small business ventures are in the low innovation/high risk cell (lower right). They are fairly conventional entries in well-established fields. New restaurants, retail shops, and commercial outfits involve high investment for the small business entre preneur and face direct competition from other similar businesses. Finally, the low innovation/low risk category includes ventures that require minimal investment and/or face minimal competition for strong market demand. Examples are some service businesses having low start-up costs and those involving entry into small towns if there is no competitor and demand is adequate. How is this matrix useful? It helps entrepreneurs think about their ventures and decide whether they suit their particular objectives. It also helps identify effective and ineffective strategies. You might find one cell more appealing than others. The lower-left cell is likely to have relatively low payoffs but to provide more security. The higher risk/return trade-offs are in other cells, especially the upper right. So you might place your new-venture idea in the appropriate cell and determine whether that cell is the one in which you would prefer to operate. If it is, the venture is one that perhaps should be pursued, pending fuller analysis. If it is not, you can reject the idea or take steps to move it toward a different cell.

Identify the common characteristics that entrepreneurs possess

What can we learn from the people who start their own companies and succeed? What talents enable entrepreneurs to succeed? We express these characteristics in general terms with Figure 7.1. Successful entrepreneurs are innovators and also have good knowledge and skills in management, business, and networking.21 In contrast, inventors may be highly creative but often lack the skills to turn their ideas into a successful business. Manager-administrators may be great at ensuring efficient operations but aren't necessarily innovators. Promoters have a different set of marketing and selling skills—useful for entrepreneurs, but those skills can be hired, whereas innovativeness and business management skills remain the essential combination for successful entrepreneurs.

Explain the need for organizational controls and the types of control mechanisms that exist

bureaucratic control-The use of rules, regulations, and authority to guide performance. market control-Control based on the use of pricing mechanisms and economic information to regulate activities within organizations. clan control-Control based on the norms, values, shared goals, and trust among group members.