MO Study Guide
Class 1
1. Class Notes
a. Intrapreneurial vs Entrepreneurial Skills
i. Intrapreneurial Skills
1. understanding the organization’s operating system (i.e. strategy,
structure, incentives, culture)
2. Mapping social networks and identifying key players and
pathways
3. Build your own capital for getting things done
4. Knowing how to have influence and to create mutually
advantageous outcomes
ii. Entrepreneurial Skills
1. Working effectively in diverse teams that draw on everyone’s
talents
2. Designing creative solutions to address pressing problems
3. Building an organization to deliver your solution
4. Transitioning from startup to enterprise
b. MO: a science of behavior in work organizations (an applied social science)
i. Discover and integrate social science findings to address organizational
issues
2. Congruence Hypothesis
a. Definition: Organizations are more effective when all the components of the
organizational architecture – operations, talent, formal organization and
informal organization – fit with each other and with the organization’s strategy
3. Congruence Model
a. Leadership/Talent
i. Making better individual and group decisions
ii. Working effectively in teams
iii. Building social capital
iv. Using power and influence
v. Negotiation and conflict management
b. Formal Organization & Information Organization
i. Navigating the Organization
1. Organizational Architecture
2. Organizational culture and socialization
3. Compensation systems
4. Job design
5. Social network
c. Leadership/Strategy/Environment
i. Organizations in a Changing Society
1. Big data and people analytics
2. New world of work
3. Business impact (intra/entrepreneurial venture)
4. Google
a. Google’s Strategy:
b. Kinds of products that work best at Google:
c. Google’s Culture:
d. Core Values:
e. Google’s Hiring Process:
f. New recruit attributes:
g. People who thrive at Google:
h. Google’s strategy in relation to culture and hiring:
5. Intrapreneurship
a. A social intrapreneur leads initiatives that create value for society and that serve
the organization’s objectives
b. Skills of a successful intrapreneur = skills of an effective leader
i. Reading organization’s landscape and knowing its priorities
ii. Framing your idea effectively to match the context
iii. Mapping social networks to identify key players and their interests
Class 2
1. System 1 vs System 2
a. System 1
i. Characteristics
1. Hot
2. Fast
3. Automatic and effortless
4. Stereotypic
5. Implicit
6. Bounded
7. We use this system for most of our decisions in life
8. Relies on heuristics and is susceptible to biases
ii. Strengths
1. Instincts – basic needs are fulfilled
a. Gets you out of bed, etc.
2. Constantly constructs reality
iii. Weaknesses
1. Can’t turn it off (always running in the background)
2. Primed for action and will always take over
3. Lousy for complex problems that require multiple, ordered steps
b. System 2
i. Characteristics
1. Cool
2. Slow
3. Deliberate and effortful
4. Logical
5. Explicit
6. Rational
7. Should use this system to influence our most important decisions
ii. Strengths
1. Steps in when system 1 doesn’t have an answer
2. Uses multiple criteria and performs tough calculations
3. Can solve a wide range of problems using it
iii. Weaknesses
1. Gets tired
2. Can do complicated tasks, but not a lot of them
3. Could lead to analysis paralysis
4. Sometimes just listens to system 1
c. What encourages system 1 vs system 2 processing?
2. Heuristics & Biases
a. Heuristic
i. Definition: a cognitive “rule of thumb” (or shortcut) that we use make
guesses or quick estimates
ii. Availability Heuristic
1. Assessing the likelihood of an event given its “availability” in
memory
2. Events that are vivid, evoke emotion, and are easily imagined will
be more available
iii. Representativeness Heuristic
1. Looking for traits that correspond with previously formed
stereotypes (i.e. what we already know) when making a
judgement
iv. Affect Heuristic
1. Using affective or emotional evaluation as the basis of a decision
b. Bias
i. Definition: the inappropriate application of heuristics resulting in
systematic error in measurement, estimates, and decisions
ii. Often unconscious and see them more in others than in ourselves
iii. Selection Bias
1. Survivorship bias/sampling on the dependent variable
2. Issues
a. Do not observe counter-factual
b. Confuses correlation with causation
iv. Retrievability Bias
1. The more easily you can grab something from your memory:
a. The more likely you will think it is to occur
b. The more likely you will apply that knowledge
v. Anchoring Bias
1. Individuals make estimates based on whatever information is
provided (even if the information is irrelevant) and typically make
insufficient adjustments from the anchor when establishing a final
value
vi. Overconfidence Bias
1. People tend to be overconfident of the infallibility of their
judgements and do not sufficiently acknowledge uncertainty
a. i.e. giving an overly narrow range when answering
moderately to extremely difficult questions
vii. Regression to the Mean Bias
1. Individuals tend to ignore the fact that extreme effects tend to
regress to the mean on subsequent trials
a. i.e. companies that have achieved outstanding
performance tend to perform less well the next year
b. counter-intuitive because we often assume future
outcomes will be perfectly correlated to past outcomes
viii. Conjunction Fallacy
1. Individuals falsely judge that two events co-occurring are more
probable than a more global set of occurrences of which the
conjunction is a subset
a. P(AB) < P(B)
b. Occurs because the conjunction appears more
representative and better matches stereotypes
ix. Framing Effects
1. Prospect Theory
a. Losses loom larger than equivalent gains
b. Choices will change based on framing of the issue even
when the set of options are equivalent
c. Process for combatting biases
i. Be aware of your use of heuristics so you can recognize any emerging
biases
1. Explain them to others so you understand them
ii. Recognize the power of framing
1. Don’t let interested parties frame the decision for you
iii. Have a process for making decisions
1. Devil’s advocate
2. Award quality of processes for organizations
3. Hazards of Learning from Success
a. ???
Class 3
1. Model of Team Performance
a. Inputs
i. Individual characteristics of group members
ii. Situational and external environmental factors
b. Process
i. Group Structure
2.
3.
4.
5.
6.
1. Hierarchy vs Equality
2. Roles, Division of Labor
ii. Group Process
1. Norms
2. Communication
3. Patterns of Influence
4. Conflict
5. Internal Environment
c. Outputs
i. Group Production
1. Creativity
2. Quality
3. Efficiency
ii. Group Experience
1. Cohesion
2. Independent Growth
Dimensions of Diversity
a. Surface level
i. Gender, Age/Generation, Race, Ethnicity, Physical Abilities
b. Just below surface
i. Language, Sexual Orientation, Education, Religion, Work Experience, etc.
c. Deep below surface
i. Background, Income, Socio-Economic Status, etc.
Two views of ability
a. IQ View
b. Toolbox View
c. Regardless, most of the time the diverse group outperforms the alpha group by a
substantial margin
Problems of Diversity
a. Communication
i. Problem solvers with diverse perspectives may have difficulty
understanding each other
b. Misunderstanding and mistrust
c. Less comfortable atmosphere
i. We are all more comfortable with like-minded individuals
Two Important Aspects of Inclusion
a. People experience tension between the need to be a unique individual and the
need to belong with others
Focus on the Process
a. Plan of Action
i. What are we doing?
1. Common understanding of purpose
2. Clear, shared goals
ii. Who is doing what?
1. Task roles
2. Division of labor
iii. When do we have to have it done?
1. Project timeline
2. Intermediate milestones
iv. How are we working?
1. Keeping all teammates in the loop
2. Delegation and integration
b. Team Interaction
i. Sources of disagreement?
1. Fundamental attribution error (i.e. thinking someone is lazy or
doesn’t care because they show up late to a meeting)
2. Naïve realism (human tendency to believe that we see the world
around us objectively, and that people who disagree with us must
be uninformed, irrational, or biased)
3. Clashes in values/interests
ii. Influence
1. Is one person ruling the roost?
2. Subgroups – double edged sword
iii. Task Conflict vs Relationship Conflict
1. Disagreement about process and tasks can be beneficial
2. Problematic if it gets personal
c. Shared Norms
i. Come up with norms to regulate the process and revisit these norms
frequently
d. Psychological Safety
i. One of the best predictors of team success
ii. Climate in which people feel free to express relevant thoughts and
feelings without fear of being penalized
iii. Improves members’ ability to ask questions, seek help, tolerate mistakes,
share thoughts openly, and act without excessive concern about what
others think of them
Class 4
1. Organizational Architecture
a. Core Problem: How do we build an organization whose parts are aligned to
achieve the objectives set out in our strategy?
b. The formal organization
i. Organization design
ii. Compensation and reward systems
iii. Job design and job crafting
c. The informal organization
i. Culture and socialization
ii. Power structures
iii. Networks
2. Organizational design as a managerial tool
a. It affects work and information flow and helps determine who talks to who
b. It directs attention to critical issues
c. It can change operating styles
d. It is linked with all other significant organizational structures
3. Principles of Organizational Design
a. How to structure the internal organizational architecture
i. Division of labor
ii. Coordination mechanisms
iii. Distribution of decision rights
iv. Span of control
b. How to determine what you make vs what you buy
i. Organizational boundaries
4. Division of Labor
a. Generalists/JOATs (Jack Of All Trades) = early stages ; Specialists = growth
requires specialization
b. Two Decisions
i. How much horizontal and vertical specialization?
1. Horizontal: how many different activities will be performed in a
particular job?
2. Vertical: extent to which conception, execution, and
administration of activities are combined
ii. How will you group tasks and related work activities?
5. Coordination Mechanisms
a. Hierarchy (common reporting relationships)
b. Cross-unit groups (liaison groups; task forces)
c. Integrator roles (project manager)
d. Matrix structures (multiple reporting relations)
6. Distribution of Decision Rights
a. Vertical rights: how centralized or decentralized will decisions be; may differ
depending on the decision
b. Horizontal rights: will marketing or engineering have the right to decide on
specifications of new products
7. Span of Control
a. How many employees each manager has responsibility for
8. Three Basic Organization Structures
a. Grouping options
i. By activity/function
ii. By output
iii. Simultaneous grouping: the matrix
b. Comparison of Organizational Structures
9. Rules of Design at Google
a. Rule of 7: no one should have fewer than 7 direct reports
b. Two Pizza Rule: project groups should be small enough that they can be fed with
two pizzas
c. Organize by functions, rather than by divisions with separate profit and loss
d. Functionally integrated with product managers living among the engineers
10. When should you re-design?
a. When strategies change
b. When work processes are redefined
c. When there are cultural or political changes
d. When size increases beyond the capacity of the current design
e. Organizational causes – problems of:
i. Coordination, conflict, role clarity
ii. Resource misuse, work flow, reduced responsiveness
iii. Proliferation of extra organizational units
11. Taxonomy of Process Types
12. Task Interdependence
13. Content Analysis
a. Systematically examines the use of words and phrases in a text
b. Prevalence of certain kinds of words tell us something about the speaker
c. Content analysis of corporate documents can tell us something about corporate
culture
Class 5
1. Culture
a. A group’s taken-for-granted behavioral expectations and commonly shared
values and beliefs
b. Three levels
i. What you observe (the feel of the place)
1. Artifacts/props = used to reinforce values of ideology
2. Stories & jargon = used to draw attention to norms heroes/role
models
3. Ceremonies/rituals = to build cohesion and morale
4. Dress/uniform = used to establish positive organizational identity
5. Physical settings = surroundings
6. Language = used to communicate assumptions
ii. Values and beliefs
1. Sense of what ought to be, norms, philosophies, shared
convictions about right and wrong
a. i.e. mission statement
iii. Underlying assumptions (components of culture)
1. The organization’s relationship to its environment: what business
are we in? Who are our major constituencies?
2. The nature of reality and truth: How are facts determined? How
do we make decisions?
3. The nature of human nature: Are people fundamentally good or
bad, fixed or changeable?
4. The nature of human activity: What are the right things for people
to do? What is the best way to influence or control human action?
5. The nature of human relationships: How should people relate to
each other – cooperation or competition, individualism or
collaboration?
c. Requirements for culture to emerge
i. A recognizable social unit
ii. A shared history
iii. A repeated way of doing things
d. Organizational Culture
i. A system of shared assumptions, values, and beliefs that govern how
people behave in organizations
ii. Diagnosing organizational culture
1. Who belongs and who doesn’t?
2. How is power gained, lost, and maintained?
3. What’s the system of rewards and punishments?
4. What problems have been successfully addressed in the past and
how?
5. Are values and beliefs upheld during crises?
e. Culture as a management tool
i. Strong cultures that support the organization’s goals can be a
competitive advantage by:
1. Internalizing desired behaviors
a. Decrease need for supervision
b. Smoother communication and coordination
2. Increasing salience of core values
a. Provide normative guidelines to navigate situations of
ambiguity/uncertainty
2. 7 Steps of Socialization (Pascale’s Model)
3. Socialization Practices
a. Institutionalized Tactics  Organizational identity
i. Encourage newcomers to accept preset organizational norms and values
ii. Reduces possibility of self-expression and authenticity
b. Individualized Tactics  Personal identity
i. Highlight and leverage newcomers’ unique perspective and skills
ii. Increases possibility of self-expression and authenticity
Class 6
1. Firms face two fundamental problems
a. Coordination Problem: getting everyone to work together to jointly pursue the
goals of the organization
i. Compensation and reward systems aim at solving both
b. Agency Problem: goals of individuals and goals of the firm are not likely to be
naturally aligned
i. Not a simple optimization problem because what motivates people varies
on multiple dimensions
2. Dimensions of Reward Systems
a. What pecuniary and other rewards are offered?
b. How is performance defined and measured?
i. Output vs process
ii. Quantity vs quality
c. How are rewards distributed?
i. Individual vs group vs corporate performance
ii. Degree of differentiation
d. Is the pay-setting process perceived as equitable and participative?
e. How are rewards framed and presented?
i. Carrots dressed as sticks
3. Linking Pay to Performance
a. 𝑌 = 𝐸 + 𝑛 𝑣𝑠. 𝑊 = 𝑠 + 𝑏𝑌
b. Y = sales, profits, performance evaluations, etc.
i. Could be measured at individual, team, or firm level
c. E = effort by workers
d. n = noise
e. W = worker’s pay
f. s = fixed component
g. b = sensitivity of pay to performance
4. Main Pay For Performance (PFP) Schemes
a. Merit Pay
i. Base salary tied to position
ii. Increases based on periodic performance appraisals
b. Profit Sharing
i. Based on corporate performance
ii. May be linked to specific (group) contributors (i.e. gainsharing, stock
options, etc.)
c. Incentive Pay
i. For specific performances
ii. For learning skills
5. What can go wrong with PFP
a. Pay not seen contingent upon individual performance
i. Unclear goals
ii. Free-rider problem
b. Performance ratings seem biased or uninformative
i. Subjective evaluations leave process open to bias/politics
ii. Egocentric bias
iii. Managers dislike making performance distinctions among their
subordinates
c. You think you pay for A but in reality, you are getting B – YGWYPF
6. What about group incentives?
a. Use when:
i. Work is highly interdependent (teamwork matters)
ii. Group can encourage coordination and knowledge transfer
iii. Peer norms or culture can overcome the free-rider effect
7. When are individual incentives sensible?
a. Output is sensitive to worker’s effort (i.e. output can be credited to individuals)
b. Interdependencies among workers is not large
c. Level of risk beyond worker’s control is not large
d. Output is easy to measure (if quantity is easier to observe, quality might be
compromised)
e. No tension between multiple dimensions of output
Class 7
1. Job Design
a. The way employee’s work is structured and executed
b. Key assumption: performance/motivation at work has more to do with how
work is designed and managed than the personal dispositions of the people who
do the work
2. Scientific Management Model
a. Frederick Taylor analyzed and planned workflows to improve efficiency
i. Labor process is broken into maximum number of discrete standardized
tasks; jobs are composed of one or more tasks
ii. Works controlled with external punishments and incentives
iii. Assembly line!!!
3. Job Characteristics Model (Hackman and Oldham)
a. Skill Variety: being challenged to develop and use a range of different capabilities
and skills
b. Task Identity: doing a whole, identifiable piece of work from start to finish
c. Task Significance: having impact on the well-being of other people
d. Autonomy: discretion in making decisions about what to do and when and how
to do the work
e. Feedback: the work itself provides direct information about effectiveness of
performance
4. Changing Job Characteristics
a. Skill Variety: cross-training, multi-tasking, form natural work units (teams)
b. Task Identity: form natural work units (teams)
c. Task Significance: provide client contact and customer feedback
d. Autonomy: set clear outcome goals, but leave room for people to design work
processes, alternate tasks, and schedule work
e. Feedback: ask people to test their own quality, provide real-time data that
allows workers to see the consequences of their work
5. Job Crafting
a. Employees actively changing their formal job designs to better fit their motives,
strengths, and passions
b. Using and altering elements of a job to make the more work fulfilling and
engaging
Class 8
1. Big Data
a. Extremely large data sets that may be analyzed computationally to reveal
patterns, trends, and associations especially relating to human behavior and
interactions
b. 4 V’s of Big Data
i. Volume: massive quantities of information
ii. Variety: diverse in type and structure
iii. Velocity: rapidly generated
iv. Veracity: data quality is not guaranteed (can be messy)
2. Webpage Enterprise
a. Coordinates inputs to create outputs through software and algorithms rather
than via hierarchy, much as a webpage coordinates calls on resources to create
the output on a browser
3. Predictive Analytics
a. The use of data, statistical algorithms, and machine learning techniques to
identify the likelihood of future outcomes based on historical data
b. Benefits
i. Can model complex scenarios to improve decision-making, optimize
processes, and help reach business goals
c. Limitations
i. Data analysts tend to overestimate the accuracy and predictive
capabilities of their models
ii. Predictive models can mistake coincidences for meaningful patterns
iii. Models are only as good as the quality of input data
1. Even if you have massive quantities of data, if measurement is
poor or you are omitting important information, the model will be
inaccurate
iv. Even the best models cannot account for surprise events
v. Models can be overfit to past data and mistake correlation with
causation; they can chain us to our past
Class 9
1. Corporate Centered Society
a. The typical corporation makes tangible products
b. Corporate ownership is broadly dispersed
c. Corporate control is concentrated
d. Corporations aim to grow bigger in assets and number of employees
e. Corporations live a long time