OS286 Exam 3 Chp 15: Organizational Design, Effectiveness, and Innovation

Coordination of effort

- achieved through formulation and enforcement of policies, rules, and regulations

Hierarchy of authority (aka chain of command)

- a control mechanism dedicated to making sure the right people do the right things at the right time - this is maintained by adhering to the unity of command principle which states each employee should report to a single manager

Common Denominators of Organizations

- coordination of effort - aligned goals - division of labor - hierarchy of authority (chain of command)

How Organizations Learn

- informational acquisition - informational distribution - information interpretation - knowledge integration - organizational memory

Open Organizational System

are entities that rely on constant interaction with environment for survival

Organization

- is a system of consciously coordinated activities or forces of two or more persons

Division of Labor

- occurs when the common goal is pursued by individuals performing different but related tasks

The Learning Organization

- one that proactively creates, acquires, and transfers knowledge and changes its behavior on the basis of new knowledge and insights - important to understand how organizations learn because learning is essential to an organization's continuous improvement and renewal over time - positively associated with organizational performance and innovation

Aligned Goals

- start from the companywide strategic plan, then cascade down through the organization so the employees are aligned in their pursuit of common goals

Traditional Design

A design approach that has functional, divisional, and/or matrix structure. Each structure relies on a vertical hierarchy and attempts to define clear departmental boundaries and reporting relationships

Organizational Design

Are the structures of accountability and responsibility used to develop and implement strategies Includes human resource practuces and info and business processes that activate those structures Organizations are more effective and more successful when their structure supports the execution of corporate strategies Many managers underestimate the complexity of this task

Matrix Structure

Can be used with a variety of vertical and horizontal elements. Used when stronger horizontal alignment and cooperation in order to meet their goals GM uses this structural bc multiple product lines

Organic Organizations

Flexible networks of multitalented individuals who perform a variety of task More likely to use horizontal designs or those that open boundaries between organizations. These organizations tend to have fewer layers of management and tend to have "squatty" wider structures

Virtual Structure

One or companies create or manage a wide network of virtually connected employees, represented by the dots, for a specific business process that otherwise appears as a traditional company Example: amazon

Mechanistic

Rigid bureaucracies with strict rules, narrowly defined tasks, and top-down communication Generally would have one of the traditional organization designs described earlier and a hierarchical culture The structure of these firms will be steeped in bureaucracy with many layers of middle management resulting in a taller and narrower structure The "orderliness" of this structure is expected to produce reliability and consistency in internal processes resulting in higher efficiency, quality, and timeliness. Important to note that being mechanistic does not mean that an organization should not be responsive to employee and customer feedback.

Modular Structure

The main part of the organization (M) is structured and managed to make it easy to plug in vendors for well-defines functions (F1 through F3) as parts of the business process

Categories of Organizational Design

Traditional - Functional - Divisional - matrix Horizontal Open - Hollow - Modular - virtual

Balanced Scorecard (BSC)

Translated an organization's vision and strategy into a comprehensive set of performance measures that provides the framework for a strategic measurement and management system Comprehensive view includes 4 perspectives - Financial Customer Internal business Learning and growth

Hollow Structure

Within the organization, a number of function are outsourced Example: JOHNSON AND JOHNSON

Horizontal Design

Work hard to flatten hierarchy and organize people around specific segments of the workflow. Sometimes called a team or process structure, it relies on horizontal workflow and attempts to dissolve departmental boundaries and reporting relationships *several flexible teams,

Functional Structure

Work is organized into separate vertical functions, such as finance, sales, production, and human resources Groups people according to the business functions they perform (manufacturing, marketing, finance) Manager is responsible for performance of each of these functions and employees tend to identity strongly with their particular function

Divisional Structure

Work is organized into separated vertical divisions, which may focus on products or services, or customers or clients, or even geography Household, commercial, industrial

Product innovation

a change in the appearance or the performance of a product or service or the creation of a new one

Process innovation

a change in the way a product or service is conceived, manufactured or distributed

Closed Organizational System

are self-sufficient entities that are fundamentally closed to the surrounding environment these types of organizations theoretically have little or no interactions with the outside environment

Organizational systems

can be either be open or closed; the type of system reveals the basic dimensions of organizational structure

Open Design

have hollow, modular, or virtual structures. Each relies on leveraging technology and structural flexibility to maximize potential value through outsourcing and external collaboration.

Transformational innovations

targeted at creating new markets and customers and they rely on developing breakthroughs and inventing things that don't currently exist

Core innovations

targeted at existing customers and they rely on optimizing existing products/services for existing customers