Organizational Behavior, 9/E Chapter 18 Organizational

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Organizational Behavior, 9/EChapter
18Organizational Design for Strategic Competency

• Prepared by
• Michael K. McCuddy
• Valparaiso University
• John Wiley Sons, Inc.

2
Chapter 18 Study Questions

• What is organizational design and how is it
  linked to strategy?
• What is information technology and how is it
  used?
• Can the design of the firm co-evolve with the
  environment?
• How does a firm learn and continue to learn over
  time?

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What is organizational design and how is it
linked to strategy?

• Organizational design.
• The process of choosing and implementing a
  structural configuration.
• The choice of an appropriate organizational
  design depends on the firms
• Size.
• Operations and information technology.
• Environment.
• Strategy for growth and survival.

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What is organizational design and how is it
linked to strategy?

• The structural configuration of organizations
  should
• Enable senior executives to emphasize the skills
  and abilities that their firms need to compete,
  and to remain agile and dynamic in a rapidly
  changing world.
• Allow individuals to experiment, grow, and
  develop competencies so that the strategy of the
  firm can evolve.

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What is organizational design and how is it
linked to strategy?

• Co-evolution.
• The firm can adjust to external changes even as
  it shapes some of the challenges facing it.
• Shaping capabilities via the organizations
  design is a dynamic aspect of co-evolution.
• Even with co-evolution, managers must maintain a
  recognizable pattern of choices in organizational
  design.

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What is organizational design and how is it
linked to strategy?

• Organizational size.
• As the number of employees increase, the possible
  interconnections among them increase even more.
• The design of small firms is directly influenced
  by core operations technology.
• Larger firms have many core operations
  technologies in a variety of specialized units.

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What is organizational design and how is it
linked to strategy?

• The simple design for smaller units and firms.
• A configuration involving one or two ways of
  specializing individuals and units.
• Vertical specialization and control emphasize
  levels of supervision without elaborate formal
  mechanisms.
• Appropriate for many smaller firms because of
  simplicity, flexibility, and responsiveness to a
  central manager.

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What is organizational design and how is it
linked to strategy?

• Organizational design must be adjusted to fit
  technological opportunities and requirements.
• Operations technology.
• The combination of resources, knowledge, and
  techniques that creates a product or service
  output.
• Information technology.
• The combination of machines, artifacts,
  procedures, and systems used to gather, store,
  analyze, and disseminate information for
  translating it into knowledge.

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What is organizational design and how is it
linked to strategy?

• Thomsons view of technology.
• Technologies classified according to the degree
  of specification and degree of interdependence of
  work units.
• Intensive technology.
• Uncertainty as to how to produce desired outcomes.

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What is organizational design and how is it
linked to strategy?

• Thomsons view of technology (cont.).
• Mediating technology.
• Links parties that want to become interdependent.
• Long-linked technology.
• The way to produce desired outcomes is known and
  broken down into a number of sequential steps.

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What is organizational design and how is it
linked to strategy?

• Woodwards view of technology.
• Small-batch production.
• The organization tailor makes a variety of custom
  products to fit customer specifications.
• Mass production.
• The organization produces one or a few products
  through an assembly line system.
• Continuous-process technology.
• The organization produces a few products using
  considerable automation.

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What is organizational design and how is it
linked to strategy?

• Woodwards view of technology (cont.).
• The proper matching of structure and technology
  is critical to organizational success.
• Successful small-batch and continuous-process
  plants have flexible structures with small work
  groups at the bottom.
• Successful mass production operations are rigidly
  structured and have large work groups at the
  bottom.

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What is organizational design and how is it
linked to strategy?

• Adhocracy.
• An appropriate structural design when managers
  and employees do not know the appropriate way to
  service a client or produce a particular product.

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What is organizational design and how is it
linked to strategy?

• An adhocracy is characterized by
• Few rules, policies, and procedures.
• Substantial decentralization.
• Shared decision making among members.
• Extreme horizontal specialization.
• Few levels of management.
• Virtually no formal controls.

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What is organizational design and how is it
linked to strategy?

• An adhocracy is useful when
• The tasks facing the firm vary considerably and
  provide many exceptions.
• Problems are difficult to define and solve.

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Study Question 2What is information technology
and how is it used?

• Why IT makes a difference.
• IT provides a partial substitute for
• Some operations.
• Some process controls.
• Some impersonal methods of coordination.
• IT provides a strategic capability.
• IT provides a capability for transforming
  information to knowledge for learning.

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Study Question 2What is information technology
and how is it used?

• Information technology as a substitute.
• Initial implementation of IT often displaced
  routine, highly specified, and repetitious jobs.
• Did not alter fundamental character or design of
  the organization.
• A second wave of substitution replaced process
  controls and informal coordination mechanisms
  with IT.
• Brought some marginal changes in organizational
  design.

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Study Question 2What is information technology
and how is it used?

• Information technology as a strategic capability.
• IT has been used to improve the efficiency, speed
  of responsiveness, and effectiveness of
  operations.
• IT provides individuals the information they
  need to plan, make choices, coordinate with
  others, and control their own operations.
• This new strategic IT capability resulted from IT
  being broadly available to everyone.

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Study Question 2What is information technology
and how is it used?

• IT and learning.
• IT systems empower individuals and expand their
  jobs.
• IT encourages the development of a virtual
  network.
• IT transforms how people manage.

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Study Question 2What is information technology
and how is it used?

• IT and e-business.
• Many dot-com firms adopted some variation of
  adhocracy.
• As the dot-coms grew, the adhocracy design became
  problematic.
• Limits on the size of an effective adhocracy.
• Actual delivery of products and services rested
  more on responsiveness to clients and maintaining
  efficiency than on continual innovation.

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Can the design of the firm co-evolve with the
environment?

• Understanding the environment is important
  because an organization is an open system.
• General environment.
• The set of cultural, economic, legal-political,
  and educational conditions found in the areas in
  which the organization operates.
• Specific environment.
• The owners, suppliers, distributors, government
  agencies, and competitors with which an
  organization must interact to grow and survive.

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Can the design of the firm co-evolve with the
environment?

• Environmental complexity.
• The magnitude of problems and opportunities in
  the organizations environment, as reflected in
• Degree of richness.
• Degree of interdependence.
• Degree of uncertainty.
• More complex environments provide more problems
  and opportunities.

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Can the design of the firm co-evolve with the
environment?

• Environmental richness.
• The environment is richer when
• The economy is growing.
• Individuals are improving their education.
• Those on whom the organization relies are
  prospering.
• A rich environment has more opportunities and
  dynamism.
• The opposite of richness is decline.

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Can the design of the firm co-evolve with the
environment?

• Environmental interdependence.
• Linkage between environmental independence and
  organization design may be subtle and indirect.
• Organization may co-opt powerful outsiders.
• Organization may absorb or buffer demands of
  powerful external elements.

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Can the design of the firm co-evolve with the
environment?

• Environmental uncertainty.
• Uncertainty and volatility can be particularly
  damaging to large bureaucracies.
• A more organic form is the appropriate
  organizational design response to uncertainty and
  volatility.
• Adhocracy may be needed extreme uncertainty and
  volatility.

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Can the design of the firm co-evolve with the
environment?

• In a complex global economy, firms must learn to
  co-evolve by altering their environment.
• Two important ways of co-evolution
• Management of networks.
• Development of alliances.

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Can the design of the firm co-evolve with the
environment?

• Networks and alliances around the world.
• Informal combines or cartels exist in Europe but
  are illegal in the United States except in rare
  cases.
• Networks are called keiretsu in Japan.
• Bank-centered keiretsu.
• Vertical keiretsu.
• In the United States, outsourcing is developing
  as a specialized form of network organization.

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Can the design of the firm co-evolve with the
environment?

• Interfirm alliances.
• Announced cooperative agreements or joint
  ventures between two independent firms.
• Alliances are quite common in high technology
  industries.
• Since firms cooperate rather than compete
  consequently, both the alliance managers and
  sponsoring executives must be patient, flexible,
  and creative in pursuing goals.

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Can the design of the firm co-evolve with the
environment?

• Virtual organization.
• An ever-shifting constellation of firms, with a
  lead corporation, that pool skills, resources,
  and experiences to thrive jointly.
• A design option when internal and external
  contingencies are changing quickly.

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Can the design of the firm co-evolve with the
environment?

• Key to making a virtual organization work.
• The production system needs to be in a partner
  network bound together by mutual trust and
  survival.
• The partner network needs to develop and maintain
  an advanced IT, trust and cross-owning of
  problems and solutions, and a common shared
  culture.
• The lead firm must take responsibility for the
  whole network and coordinate member firm actions.
• The lead corporation and the partners need to
  rethink how they are internally organized and
  managed.

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Can the design of the firm co-evolve with the
environment?

• Boundaryless organization.
• A design option that eliminates vertical,
  horizontal, external, and geographic barriers
  that block desired action.
• Actions to create a boundaryless organization.
• Executives should systematically examine the
  organization and its processes.
• Organization members should initiate a process of
  improving their cooperation.

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How does a firm learn and continue to learn over
time?

• Organizational learning.
• Process of knowledge acquisition, information
  distribution, information interpretation, and
  information retention in adapting successfully to
  changing circumstances.
• Adjustment of organizations and individuals
  actions based on experience.
• The key to successful co-evolution.

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How does a firm learn and continue to learn over
time?

• Mimicry.
• Occurs when managers copy what they believe are
  the successful practices of others
• Is important to new firms.
• Provides workable, if not ideal, solutions to
  many problems.
• Reduces the number of decisions that need to be
  analyzed separately.
• Establishes legitimacy or acceptance and narrows
  the choices requiring detailed explanation.

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How does a firm learn and continue to learn over
time?

• Experience.
• A primary way to acquire knowledge.
• Besides learning by doing, managers can also
  systematically embark on structured programs to
  capture the lessons to be learned.
• The major problem with emphasizing learning by
  doing is the inability to precisely forecast
  changes.

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How does a firm learn and continue to learn over
time?
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How does a firm learn and continue to learn over
time?

• Scanning.
• Involves looking outside the firm and bringing
  back useful solutions.
• Grafting.
• The process of acquiring individuals, units, or
  firms to bring in useful knowledge.

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How does a firm learn and continue to learn over
time?

• Common problems in information interpretation.
• Self-serving interpretations.
• People seeing what they want to see, rather than
  seeing what is.
• Managerial scripts.
• A series of well-known routines for problem
  identification and alternative generation and
  analysis that are commonly used by a firms
  managers.

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How does a firm learn and continue to learn over
time?

• Organizational myths.
• Commonly held cause-effect relationships or
  assertions that cannot be empirically supported.
• Common myths.
• Single organizational truth.
• Presumption of competence.
• Denial of tradeoffs.

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How does a firm learn and continue to learn over
time?

• Information retention mechanisms.
• Individuals.
• Organizational culture.
• Transformation mechanisms.
• Formal organizational structures.
• Ecology.
• External archives.
• Internal information technologies.

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How does a firm learn and continue to learn over
time?

• Deficit cycles.
• A pattern of deteriorating performance that is
  followed by even further deterioration.
• Factors associated with deficit cycles.
• Organizational inertia.
• Hubris.
• Detachment.

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How does a firm learn and continue to learn over
time?

• Benefit cycles.
• A pattern of successful adjustment followed by
  further improvements.
• Firms can successfully co-evolve by initiating a
  benefit cycle.
• The firm develops adequate mechanisms for
  learning.

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Organizational Behavior, 9/EChapter
19Organizational Culture and Development

• Prepared by
• Michael K. McCuddy
• Valparaiso University
• John Wiley Sons, Inc.

43
Chapter 19 Study Questions

• What is organizational culture?
• How do you understand an organizational culture?
• How can the organizational culture be managed?
• How can you use organizational development to
  improve the firm?

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What is organizational culture?

• Organizational culture.
• The system of shared actions, values, and beliefs
  that develops within an organization and guides
  the behavior of its members.
• Called corporate culture in the business setting.
• No two organizational cultures are identical.

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What is organizational culture?

• External adaptation.
• Involves reaching goals and dealing with
  outsiders regarding tasks to be accomplished,
  methods used to achieve the goals, and methods of
  coping with success and failure.
• Important aspects of external adaptation.
• Separating eternal forces based on importance.
• Developing ways to measure accomplishments.
• Creating explanations for not meeting goals.

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What is organizational culture?

• External adaptation involves answering important
  goal-related questions regarding coping with
  reality.
• What is the real mission?
• How do we contribute?
• What are our goals?
• How do we reach our goals?
• What external forces are important?
• How do we measure results?
• What do we do if specific targets are not met?
• How do we tell others how good we are?
• When do we quit?

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What is organizational culture?

• Internal integration.
• Deals with the creation of a collective identity
  and with finding ways of matching methods of
  working and living together.
• Important aspects of working together.
• Deciding who is a member and who is not.
• Developing an understanding of acceptable and
  unacceptable behavior.
• Separating friends from enemies.

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What is organizational culture?

• Internal integration involves answering important
  questions associated with living together.
• What is our unique identity?
• How do we view the world?
• Who is a member?
• How do we allocate power, status, and authority?
• How do we communicate?
• What is the basis for friendship?

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What is organizational culture?

• Subculture.
• A group of individuals with a unique pattern of
  values and philosophy that are not inconsistent
  with the organizations dominant values and
  philosophy.
• Counterculture.
• A group of individuals with a pattern of values
  and philosophy that outwardly reject the
  surrounding culture.

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What is organizational culture?

• Problems associated with subcultural divisions
  within the larger culture.
• Subordinate groups are likely to form into a
  counterculture pursuing self-interests.
• The firm may encounter extreme difficulty in
  coping with broader cultural changes.
• Embracing natural divisions from the larger
  culture may lead to difficulty in international
  operations.

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What is organizational culture?

• Taylor Coxs five step program.
• Step 1 The organization should develop
  pluralism.
• Step 2 The organization should fully integrate
  its structure.
• Step 3 The organization must integrate the
  informal networks.
• Step 4 The organization should break the linkage
  between naturally occurring group identity and
  organizational identity.
• Step 5 The organization must actively work to
  eliminate identity-based interpersonal conflict.

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How do you understand an organizational culture?
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How do you understand an organizational culture?

• Sagas.
• Heroic accounts of organizational
  accomplishments.
• Rites.
• Standardized and recurring activities that are
  used at special times to influence organizational
  members.
• Rituals.
• Systems of rites.
• Cultural symbols.
• Any object, act, or event that serves to transmit
  cultural meaning.

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How do you understand an organizational culture?

• Culture often specifies rules and roles.
• Rules.
• The various types of actions that are
  appropriate.
• Roles.
• Where individual members stand in the social
  system.

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How do you understand an organizational culture?

• Shared values.
• Help turn routine activities into valuable and
  important actions.
• Tie the organization to the important values of
  society.
• May provide a very distinctive source of
  competitive advantage.

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How do you understand an organizational culture?

• Characteristics of strong corporate cultures.
• A widely shared real understanding of what the
  firm stands for, often embodied in slogans.
• A concern for individuals over rules, policies,
  procedures, and adherence to job duties.
• A recognition of heroes whose actions illustrate
  the companys shared philosophy and concerns.

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How do you understand an organizational culture?

• Characteristics of strong corporate cultures
  (cont.).
• A belief in ritual and ceremony as important to
  members and to building a common identity.
• A well-understood sense of the informal rules and
  expectations so that employees and managers know
  what is expected of them.
• A belief that what employees and managers do is
  important and that it is essential to share
  information and ideas.

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How do you understand an organizational culture?

• Organizational myths.
• Unproven and often unstated beliefs that are
  accepted uncritically.
• Myths enable managers to redefine impossible
  problems.
• Myths can facilitate experimentation and
  creativity.
• Myths allow managers to govern.

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How do you understand an organizational culture?

• National culture influences.
• Widely held common assumptions may be traced to
  the larger culture of the host society.
• National cultural values may become embedded in
  expectations of organization members.

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How can the organizational culture be managed?

• Strategies for managing corporate culture.
• Managers help modify observable culture, shared
  values, and common assumptions directly.
• Use of organizational development techniques to
  modify specific elements of the culture.

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How can the organizational culture be managed?

• Why a well-developed management philosophy is
  important.
• Establishes generally understood boundaries on
  all members of the firm.
• Provides a consistent way for approaching new and
  novel situations.
• Helps hold individuals together by showing them a
  known path to success.

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How can the organizational culture be managed?

• Strategies for building, reinforcing, and
  changing organizational culture.
• Directly modifying the visible aspects of
  culture.
• Changing the lessons to be drawn from common
  stories.
• Setting the tone for a culture and for cultural
  change.
• Fostering a culture that addresses questions of
  external adaptation and internal integration.

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How can the organizational culture be managed?

• Mistakes that managers can make in building,
  reinforcing, and changing culture.
• Trying to change peoples values from the top
  down
• While keeping the ways in which the organization
  operates the same.
• Without recognizing the importance of
  individuals.
• Attempting to revitalize an organization by
  dictating major changes and ignoring shared
  values.

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How can you use organization development to
improve the firm?

• Organization development (OD).
• The application of behavioral science knowledge
  in a long-range effort to improve an
  organizations ability to cope with change in its
  external environment and to increase its internal
  problem-solving capabilities.

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How can you use organization development to
improve the firm?

• Organizational development.
• Designed to work on both issues of external
  adaptation and internal integration.
• Used to improve organizational performance.
• Seeks to achieve change so the organizations
  members maintain the culture and longer-run
  organizational effectiveness.

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How can you useorganization development to
improve the firm?

• Underlying assumptions of OD.
• Individual level.
• Respect for people and their capabilities.
• Group level.
• Belief that groups can be good for both people
  and organizations.
• Organizational level.
• Respect for the complexity of an organization as
  a system of interdependent parts.

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How can you useorganization development to
improve the firm?

• Organization development goals.
• Outcome goals.
• Mainly deal with issues of external adaptation.
• Process goals.
• Mainly deal with issues of internal integration.

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How can you useorganization development to
improve the firm?

• In pursuing outcome and process goals, OD helps
  by
• Creating an open problem solving climate.
• Supplementing formal authority with knowledge and
  competence.
• Moving decision making where relevant information
  is available.
• Building trust and maximizing collaboration.
• Increasing the sense of organizational ownership.
• Allowing people to exercise self-direction and
  self-control.

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How can you useorganization development to
improve the firm?

• Action research.
• The process of systematically collecting data on
  an organization, feeding it back to the members
  for action planning, and evaluating results by
  collecting and reflecting on more data after the
  planned actions have been taken.

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How can you useorganization development to
improve the firm?
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How can you useorganization development to
improve the firm?
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How can you useorganization development to
improve the firm?

• Organizationwide OD interventions.
• Survey feedback.
• Collection and feedback of data to organization
  members for action planning purposes.
• Confrontation meetings.
• Activities for quickly determining how an
  organization can be improved and taking initial
  actions for betterment.

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How can you useorganization development to
improve the firm?

• Organizationwide OD interventions (cont.).
• Structural redesign.
• Realigning the organizations structure or major
  subsystems.
• Collateral organization.
• Using representative organizational members in
  periodic small group problem-solving sessions.

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How can you useorganization development to
improve the firm?

• Group and intergroup OD interventions.
• Team building.
• Activities to improve the functioning of a
  group.
• Process consultation.
• Activities to improve the functioning of key
  group processes.
• Intergroup team building.
• Activities to improve the functioning or two or
  more groups.

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How can you useorganization development to
improve the firm?

• Individual OD interventions.
• Role negotiation.
• Clarifying expectations in working relationships.
• Job redesign.
• Creating long-term congruence between individual
  goals and organizational career opportunities.
• Career planning.
• Structured opportunities for individuals to work
  with managers or staff experts on career issues.