9
-
1
Bateman
Snell
Management
Competing
in the
New Era
5th
Edition
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
2
Part Three
Chapter 9 - The Responsive Organization
Chapter Outline
Today’s Imperatives
Organizing for Optimal Size
Organizing for Environmental Response
Organizing for Technological Response
Organizing for Strategic Response
Final Thoughts about Responsive Organizations
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
3
Learning Objectives
After
studying Chapter 9, you will know:
 the
market imperatives a firm must meet to survive
 the potential advantages of creating an organic form of
organization
 how a firm can “be” both small and big
 how to manage information-processing demands
 how firms manage information-processing demands
 how firms organize to meet customer requirements
 how firms organize around different types of technology
 the new types of dynamic organizational concepts and forms
that are being used for strategic responsiveness
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
4
Today’s Imperatives
Responsiveness
 quickness,
agility, and the ability to adapt to changing
demands
Burns
and Stalker
 mechanistic
structures - a form of organization that seeks to
maximize internal efficiency
 organic structure - an organization form that emphasizes
flexibility
people
work more as teammates than as subordinates
break away from the traditional bureaucratic form
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
5
Elements Of Organic Structure
Employees relate
more informally
and personally
Broad,
changing job
responsibilities
Commitment to
organizational
goals
Greater reliance
on judgement
than rules
Communication
is advisory
Organic
Structure
Decentralized
and informal
decision making
Expertise is
highly valued
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
6
Organization Chart Shows Who’s
On Top
Leers
(CEO)
O’Hara
(SVP)
Blair
Stewart
Ruiz
Calder
(SVP)
Long
(SVP)
Stern
(SVP
Harris
Muller
Huttle
Benson
Jules
Atkins
Fleming
Baker
Kibler
Church
Daven
Martin
Thomas
Lee
Zanado
Wilson
Swinney
Carlson
Hoberman
Fiola Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
7
Advice Network Reveals
Knowledge Flow
Blair
Church
Baker
Muller
Zanado
Jules
Thomas
Swinney
Leers (Ceo)
Long (SVP)
Daven
Lee
Harris
O’Hara (SVP)
Martin
Fiola
Calder (SVP)
Stewart
Ruiz
Carlson
Stern (SVP)
Fleming
Wilson
Huttle
Kibler
Hoberman
Benson
Atkins
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
8
Organizing For Optimal Size
Large
organizations
 tend
to have more specialized jobs
 are more difficult to control
adopt
bureaucratic controls such as rules, procedures, and
paperwork
The
case for big
 scale
economies - lower costs per unit of production
lowered
operating costs, easier access to capital, greater
purchasing power
 economies
of scope - materials and processes used with one
product can be used for other, related products
 diseconomies of scale - cost of being too big
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
9
Organizing For Optimal Size
(cont.)
The
case for small
 smaller
companies can:
move fast
provide quality goods and services to targeted market niches
inspire greater involvement from their people

 today,
Being
premium exists for flexibility and responsiveness
big and small
 small
is beautiful for unleashing energy and speed
 large size offers market power
 challenge is to be both big and small to capitalize on the
advantages of each
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
1
0
Organizing For Optimal Size
(cont.)
Downsizing
 the
planned elimination of positions or jobs
 common approaches include eliminating functions,
hierarchical levels, or units
 rightsizing - a successful effort to achieve an appropriate size
at which the company performs most effectively
 survivor’s syndrome - loss of productivity and morale in
employees who remain after a downsizing
struggle
with heavier workloads
wonder who will be the next to go
try to figure out how to survive
become narrow-minded and self-absorbed
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
1
1
Easing The Pain Of Downsizing
Carefully choose
positions to be
eliminated
Emphasize a
positive future
Communicate
constantly
Train people
how to cope
Positive
practices
Protect talented
people
Attend to those
who have lost
their jobs
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
1
2
Organizing For Environmental
Response
Organizing
to manage information
 huge
amounts of information flow to and from the
environment
 Option one: Reducing the need for information
slack

resources - extra resources which can be used “in a pinch”
e.g., inventory
creating
self-contained tasks - change from a functional
organization to a product or project organization
each unit has the resources needed to perform its task
 communications flow within each team rather than among a
complex array of interdependent groups

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
1
3
Organizing For Environmental
Response (cont.)
Organizing
 Option
to manage information (cont.)
two: Increasing information processing capability
invest
in information systems - employing or expanding
computer systems
create horizontal relationships - foster coordination across
different units

horizontal processes include:
 direct contact
 liaison roles
 task forces
 teams
 product, program, or project managers
 matrix organization
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
1
4
Managing High InformationProcessing Demands
Reduce the
need for
information
High
information
processing
demands
Process
more
information
Create
slack
resources
Create
self-contained
tasks
Invest in
information
systems
Create
horizontal
relationships
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
1
5
Organizing For Environmental
Response (cont.)
Organizing
for customer responsiveness
 no
other aspect of the environment has had a more profound
impact on organizing recently than the focus on customers
 strategic triangle - managers must balance this triangle
Customers
Corporation
Competitors
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
1
6
Organizing For Environmental
Response (cont.)
Organizing
 Customer
for customer responsiveness (cont.)
Relationship Management (CRM) -multifaceted
process
creates
two-way exchanges with customers in order to learn
their needs and buying patterns
 traditional
thinking - customers wanted high quality or low
costs
 kaizen - attain and retain competitive advantage by
continuing to improve
 customer - refers to the next process, or wherever work goes
next
highlights
interdependence among related functions
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
1
7
Organizing For Environmental
Response (cont.)
Organizing
for customer responsiveness (cont.)
 Total
Quality Management (TQM) - comprehensive
approach to improving quality and customer satisfaction
characterized
by a strong orientation toward internal and
external customers
involves people across departments in improving all aspects of
the business
requires integrative mechanisms that facilitate group problem
solving, information sharing, and cooperation across business
functions
 Baldrige
award - given to U.S. companies that achieve
quality excellence
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
1
8
The Baldrige Criteria
Leadership
Customer focus
and satisfaction
Information
and analysis
Quality
excellence
Quality and
operational
results
Management of
process quality
Strategic
quality planning
Human resource
development and
management
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
1
9
Organizing For Environmental
Response (cont.)
Organizing
for customer responsiveness (cont.)
 ISO
9000 - a series of quality standards developed by a
committee working under the International Organization for
Standardization
intended
to improve total quality in all businesses
companies that comply with standards entitled to certification
 Reengineering
- revolutionizes key organizational systems
and processes
completely
overhauls the operation
based on a vision for how the organization should run
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
2
0
Organizing For Technological
Response
Technology
 systematic
application of scientific knowledge to a new
product, process, or service
 the methods, processes, systems, and skills used to transform
resources (inputs) into products (outputs)
Types
of technology configurations
 Small
batch technologies - produce goods and services in
low volume
job
shops
structure tends to be organic
few rules and formal procedures
 decentralized decision making

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
2
1
Organizing For Technological
Response (cont.)
Types
of technology configurations (cont.)
 Large
batch technologies - produce goods and services in
high volume
structure
tends to be more mechanistic
many more rules and formal procedures
 centralized decision making
 higher spans of controls
 more formal communication

 Continuous
process technologies - highly automated
continuous production flow
structure
can be more organic
less monitoring and supervision required
 more informal communication

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
2
2
Organizing For Technological
Response (cont.)
Organizing
for flexible manufacturing
 Mass
customization - the production of varied, individually
customized products at the low cost of standardized, massproduced products
a
dynamic network of relatively independent operating units
module - a specific process or task performed by a unit
different modules joined to make a good or service
 combination of modules dictated by unique customer requests

 Computer-integrated
manufacturing (CIM) - use of
computer-aided design and computer-aided manufacturing to
sequence and optimize a number of production processes
team members work on the network from remote sites
 provides maximum process flexibility

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
2
3
Organizing For Technological
Response (cont.)
Organizing
 Flexible
for flexible manufacturing (cont.)
factories - differ from traditional factories
have
much shorter production runs, with different products
organized around products in work cells or teams
use local or decentralized scheduling
 Lean
manufacturing - operation that strives to achieve the
highest possible productivity and total quality, cost
effectively, by eliminating unnecessary steps in the
production process and continually strives for improvement
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
2
4
Conditions For Effectiveness Of
Lean Manufacturing
Broad training
of people
Concurrent
product
development
Long-term
supplier
relationships
Informal and
horizontal
communication
Effective
operation of
lean
manufacturing
General-purpose
equipment
Work is
organized in
teams (cells)
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
2
5
Organizing For Technological
Response (cont.)
Organizing
for speed: Time-based competition (TBC)
 time
is emerging as a key competitive advantage that can
separate market leaders from also-rans
 TBC - strategies aimed at reducing the total time it takes to
deliver a product or service
 Logistics - the movement of resources into the organization
(inbound) and products from the organization (outbound)
an
extension of the organization’s technology configuration
a great mass of parts, materials, and products moving via trucks,
trains, planes, and ships
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
2
6
Organizing For Technological
Response (cont.)
Organizing
for speed: Time-based competition (cont.)
 Just-In-Time
(JIT) - system that calls for subassemblies and
components to be manufactured in very small lots and
delivered to the next stage of the production process just as
they are needed
a
company-wide philosophy oriented toward eliminating waste
throughout all operations and improving materials throughout
excess inventory is eliminated
 costs are reduced

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
2
7
Production Concepts Included In
JIT
Perfect
quality
Elimination
of waste
Problem
discovery and
prevention
Value-added
manufacturing
JIT
Reduced
cycle times
Employee
involvement
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
2
8
Organizing For Technological
Response (cont.)
Organizing
for speed: Time-based competition (cont.)
 Simultaneous
engineering - a design approach in which all
relevant functions cooperate jointly and continually in
maximum effort aimed at producing high-quality products
that meet customers’ requests
departure
from old development process in which tasks were
assigned to various functions in sequence
incorporates the issues and perspectives of all functions - and
customers and suppliers - from the beginning of the process
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
2
9
Organizing For Strategic
Response
Organizing
 companies
around core competencies
compete on the basis of their core strengths and
expertise
core
competence - the capability - knowledge, expertise, skill that underlies a company’s ability to be a leader
 company
viewed as a portfolio of competencies
 company should strive for core competence leadership by:
identifying
existing core competencies
acquiring or building core competencies that will be important
in the future
investing in competencies in order to remain world-class
extending competencies
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
3
0
Organizing For Strategic
Response (cont.)
The
network organization
a
collection of independent, mostly single-function firms
 not one organization, but a web of interrelationships among
many firms
 dynamic network (modular or virtual corporation) temporary arrangement among partners that can be
assembled and reassembled to adapt to the environment
contracts
stipulate expected results
offers flexibility, innovation, quick responses, and reduced costs
and risks
managers become brokers

play several important boundary roles
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
3
1
A Dynamic Network
Producers
Designers
Brokers
Suppliers
Distributors
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
3
2
Organizing For Strategic
Response (cont.)
Strategic
alliances
a
formal relationship created among independent
organizations with the purpose of joint pursuit of mutual
goals
 individual organizations:
share
administrative authority
form social links
accept joint ownership
 managers
must foster and develop the human relationships in
the partnership
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
9
-
3
3
Organizing For Strategic
Response (cont.)
The
learning organization
 an
organization skilled at creating, acquiring, and
transferring knowledge
 modifies its behavior to reflect new knowledge and insights
High-involvement
organization
 top
management ensures that there is consensus about the
direction of the business
seeks
input from lower-levels of the company
techniques used to foster participation in decision making
continual feedback to participants
flat, decentralized structure built around customer, product, or
service
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.