iMBA 509: Final Study Guide Anything that is in the readings or covered in class is fair game for the exam. That said, this should give you a general idea of where you may want to focus your study. Intro Material 1. What is theory and why does it matter for a manager? (e.g. Key lessons from “Why Hard- Nosed Managers Should Care about Management Theory”) ● Theories help us understand why the world looks the way that it does. ● The best theories help us see causal relationships and their underlying mechanisms ● Theories focus our attention and direct our actions ○ Good theories applied in the right context motivate intelligent and effective action ○ Bad theories, or good theories that are misapplied do the opposite 2. What is the relationship between theory, principle, and application? 3. Understand key characteristics of three organizational perspectives rational, natural, open system perspective Module 1 1. What is the purpose of business (Friedman vs. Handy)? Handy: Companies have a social responsibility to a larger community. To have a positive impact on those around them whether they work for the company or not. Friedman: Social responsibility of a company is to be profitable 2. What is corporate governance? Firm’s consciously coordinated, willingness to cooperate, ability to communicate, existence and acceptance on purpose. Bundles of economics, technology and social practices Governance is fundamentally about two things: 1. Purpose What is the organization for? (“Ends”) 2. Control Who rules the organization? How do they rule it? (“Means”) -Good governance facilitates value creation while protecting stakeholders from harm -Governance mechanisms should provide checks and balances that hold managers accountable -Most recommendations focus on structural aspects of the board (e.g. increased independence, separation of CEO and board chair positions) or on increasing shareholder power (e.g. say on pay) Governance is all about setting the purpose of the organization, then determining how to hold leaders accountable for pursuing that purpose (i.e. control). 3. What is the agency problem? How is it overcome? Conflict of interest between company management and shareholders (not 100% sure on this) web definition: A conflict arising when people (the agents) entrusted to look after the interests of others (the principals) use the authority or power for their own benefit instead Overcome by Separation of ownership and control leads to two different groups: Principals – owners of the company (shareholders) Agents – hired to act on behalf of owners (managers) 4. What is a stakeholder approach to governance? Interests of employees, communities, customers, suppliers, creditors, government and other corporate constituents are significant factors in the long-term success of the corporation. 5. How can pluralistic ignorance affect boards? pluralistic ignorance is a situation in which a majority of group members privately reject a norm, but go along with it because they assume, incorrectly, that most others accept it. The core mission of a corporate board is to provide strong, or they should provide strong, oversight and provide support for the managers to develop their strategies, so that the firm and management is successful in creating long-term value. Boards' comprehensive understanding of company issues that the managers face unfortunately seems to be limited when they are asked which part of the organization you are more familiar. Module 2 1. Understand key principles from “What is disruptive innovation?” article. "Disruption" - smaller company with fewer resources is able to successfully challenge established incumbent businesses. - incumbents focus on improving their products and services for their most demanding (and usually most profitable) customers, they exceed the needs of some segments and ignore the needs of others. - Entrants that prove disruptive begin by successfully targeting those overlooked segments, gaining a foothold by delivering more-suitable functionality -- frequently at a lower price. Incumbents, chasing higher profitability in more-demanding segments, tend not to respond vigorously. -Entrants then move upmarket, delivering the performance that incumbents' mainstream customers require, while preserving the advantages that drove their early success. When mainstream customers start adopting the entrants' offerings in volume, disruption has occurred. Start on low end of the market, meeting ‘niche’ needs unmet by large competitors 2. How can incumbent firms avoid being disrupted? Have a transformation A and B, don’t only focus on your main and constant customers, 3. What are some of the key elements of the external environment? Opportunities, Threats, Uncertainty, Resource Availability 4. What is contingency theory and what are its implications for organizational design? Contingency theory is a type of organizational theory, that claims that there is no best way to organize a corporation, to lead a company, or to make decisions. Instead, the optimal course of action is contingent (dependent) upon the internal and external situation. Module 3 1. Understand the basic designs available to organizations (e.g. functional, divisional, hybrid, matrix) 2. What are the advantages and disadvantages of different designs? 3. What is the appropriate context for each of these designs? 4. What are the key purposes of an organizational structure? Org Structure defines how job tasks are formally divided, grouped, and coordinated -Helps define boundaries - Designates formal relationships -Division of labor specify... who does what create groups/divisions - Integration Coordinate across groups, individuals 5. Understand key lessons from Microsoft’s “One Microsoft” reorganization Module 4 1. What is the difference between mechanistic and organic structures? Under what conditions might one be more appropriate than the other? -Mechanistic: Internal efficiency more important -Organic: External Flexibility more important -Vertical is geared more to internal efficiency. If you have specialized tasks then you want centralized decision making. -Horizontal is geared more towards flexibility. More shared tasks more shared resources. Decentralized decision making. 2. What is a competency trap? Why do they occur? -Sometimes, being really good at something can become a disadvantage when the world changes -Organizations can become over-reliant on what they are currently good at while neglecting new opportunities (exploit too much) -Other extreme may also be problematic as organizations that explore too much never develop basic competence -So must find a balance between exploitation and exploration 3. Understand key principles behind “Transformation A” and “Transformation B” from the “Two Routes to Resilience” article. Transformation A is separating out the core competencies of the company in order to make money and keep the company going. Isolating out the current competitive advantage that your company has and putting all your efforts behind that. How do we make money Today? Transformation B is building the future. Create a division within your company that runs parallel and shares resources with Transformation A, but focuses all its efforts on innovation and moving the company to what is the next step. How are we going to make money tomorrow? 4. What are the different approaches to measuring organizational effectiveness? Understand the basic idea behind a balanced scorecard. -Several things to measuring effectiveness - Financial and Operational like rational approaches.Lagging indicators- often too late - Balance with not so obvious measures, more like Natural system, Leading indicators Module 5 1. Know the characteristics of different stages of the organizational life cycle and the different crises that organizations face through their life cycle. L1-1: Organizational Life Cycle Why do business grow? - Business expectations (org. goals) - Executive advancement - Economic well-being and survival - What happens when organizations get larger? - Formalization: rules, procedures manuals - Complexity: expansion of dept and positives - Decentralization: decision making authority Life Cycle Process: - The Internal dynamics of growth (stages) -- (has initial burst in growth then level off/decline = b/c of crisis for that stage) org. Last about 50 yrs… many do not make it through each stage - Entrepreneurial stage: growth through creativity - Crisis: need for leadership - Collectivity Stage: provision of clear direction - Crisis: need for delegation and control - Formalization Stage: addition of internal systems of coordination and control - Crisis: need to deal with red tape - Elaboration Stage: development of teamwork - Crisis: need for revitalization After Elaboration Stage: - Creating new growth platforms: build families of products, services and businesses, extend capabilities into multiple new domains Identifying firms’s hidden assets: leverage hidden assets that are not utilized by firm to have sustained growth Growing through an organic process: change org structure to link all critical activities… better consumer products/goods… 2. What are some of the reasons why people resist organizational change? - For anything to change people have to act differently -- How can this occur? How do we facilitate change? - Two critical thinking about change: - ANALYZE - THINK - CHANGE - SEE - FEEL - CHANGE - Cultivate ID rather than consequence thinking: - Consequences Model: look at the cost and benefits of our choices and choose the one that max our satisfaction (failure focus) - Identity Model: we ask ourselves three questions: Who am I, What kind of situation is this, What would someone like me do in this situation? - Fixed Mindset: we believe that our abilities are basically static - Growth Mindset: we believe abilities are like muscles - they can be developed by practice (IDEAL) - Build new habits, have those around you assist you.. We are sensitive to our environment and a product of those around us The Logic of Organization Change: - What looks like a people problem is often a situation problem - to change someone’s behavior you first change that person's situation - What looks like laziness is often exhaustion - when making change usually dealing with automatic behaviors and changing these requires more energy - What looks like resistance is often lack of clarity - need to explain how 3. Be familiar with Lewin’s 3 stage change model and Kotter’s 8 step model. Lewin’s 3 stage change model: Kotter’s 8 Step Model: Per lecture: 1. Establish a sense of urgency 2. Create the guiding coalition 3. Develop a vision and strategy 4. Communicate the change vision 5. Empower broad-based action 6. Generate short term wins 7. Consolidate gains and produce more change 8. Anchor new approaches in the culture 4. What are the key lessons from the Peter Browning case? What Browning Did (application of Kotter’s Model) ● ● ● ● ● ● ● ● ● ● ● Set up a lunch meeting with Lawson Expressed respect for Lawson and for White and tried to get their support for his initiatives Pledged to keep Lawson informed Changed the reporting structure so he had more direct reports Renewed company traditions and affirmed culture / values Invited Bob White to sit in at all company occasions Reassigned Jim Stark as director of packaging development Brought in successful regional sales manager to replace Stark Stark leveraged relationships to boost WC presence among plastic packaging manufacturers Fired Tom Green after a trial period Brought in Cindy Hansen from Bondware (who had previous experience at WC) Per lecture: Tried to create a culture of openness Encouraged people to report bad news, question supervisors etc. Encouraged complainers to “do something” Instituted new performance appraisals and performance based pay Retained differentiation strategy and increased marketing efforts Began “Why White Cap” presentations to major accounts Opened new plant to make plastic closures Leveraged his relationship with corporate to get resources Reduced S&A costs through attrition and targeted firings of “nonperformers” Met directly with employees at all levels of the organization 20 meetings per month during first year on the job Kept traditions such as family picnic, including new additions like “toss a boss Module 6 Ethics is the code of moral principles and values that governs the behaviors of a person or group with respect to what is right or wrong 1. Understand common ethical breakdowns (e.g. ill-conceived goals, overvaluing outcomes, motivated blindness etc.) 2. Know the common ethical principles we discussed in class (utilitarianism, justice, categorical imperative etc.) Ethical Decision Principles: - The gut test: if it feels wrong to pay attention to it - Utilitarianism: an ethical choice leads to the “greatest good for the greatest number of people” = must consider cost/benefits beyond you & those close - Justice: an ethical choice distributes benefits and burdens equitably - Process & Outcome Justice - Reversibility: “the golden rule” take the other party’s perspective and see if its a good decision.. If so more clear - Rights: an ethical choice respects and protects the basic rights of others - Virtue: the ethical act is in line with moral virtues/values ex. Honest, couragem passion, fairness, integrity, etc. - Disclosure: would still make decision knowing it would be broadcasted to all - Categorical Imperative: Act as if the action were to become through your will a universal law of nature. Ethical choice would be ok if became a universal principle Common decision-making pitfalls? Escalation of commitment-Availability heuristics- Representative heuristicsConfirmation bias-Anchoring trap-Prospect theory-Confusing correlation and causation-Halo effect-Connect the winning dots-Fundamental attribution error 3. What are the common rationalizations we use to justify questionable behavior? Moral Disengagement (rationalization) - Moral justification - serving a greater good - Euphemistic Labeling - using language to mask reality - Advantageous comparison - there is always something worse - Displacement of responsibility - just following orders - Diffusion of responsibility – everyone was doing it - Distortion of consequences – it’s not that bad - Dehumanization – treating victims as less than human - Blame the victim – they had it coming 4. How could common decision-making biases influence ethical decisions? Module 7 1. Where are the sources of organizational culture? - - What is culture: commonly held ideas, beliefs and practice among a collective Culture is very important and changing it can lead to improved performance Organizational Culture: - Commonly known stories - A set of rituals or practices when specific things happen - A certain unique office structure or design 3 basic elements that you need to think about: 1. It is a way of thinking, behaving, or working that exists in an organization 2. It is maintained through language, material objects, rituals, and organizational practices 3. Culture not only makes us distinct but also separate us from others (bean counters vs. engineers) 2. What are some things you might do as a manager to try and change culture? How does culture evolve? - - - Major drivers that shape and reinforce organizational culture: - Decision making practices that shape managerial attention - Org reaction to crisis - Eval criteria and practices for allocating rewards - Hiring, promotion, and management development practices How easy it is to change culture: - A bad system will defeat a good person every time - If you can’t describe what you are doing as a process, you don’t know what you are doing - Managers - need to understand people are different, understand performance is governed largely by the system that he works in, the responsibility of management - The system is more powerful than the individual Build an Innovation Culture: Need to build a sense of community - Purpose: Why we exist - Shared Values: What we agree in important - Rules of Engagement: How we interact with one another 3. What is the difference between a high commitment vs. a high flexibility HR system? High Commitment Workforce -- 5 Pillars of its Philosophy: - Hiring for Fit: - Selectively in recruitment - Promotion from within - Long-term commitment - Investing in People: - Training and skill development - Employment security - Information Sharing: - Transparency in financial information - Transparency in operational information - Team Based Work Design: - Participation and empowerment - Cross-utilization and cross-training - Rewards and Recognition: - High wages - Incentive pay - Employee ownership High Flexibility Workforce - Jobs in the 21st century are more rapid & unpredictable; adaptability and creativity as keys to success. With these changes needed to take place. - The new concept is based on flexibility: - Hiring employees for defined “tours of duty” - - Encourage, even subsidizing the building of employee networks outside the organization - Creating active alumni networks that facilitate career-long relationships b/t employers and former employees The new philosophy of High Flexibility Work Force - Flexible time, space, and division of labor - Flextime (staggered start/end times), Compressed workweek, Job sharing, Phased and partial retirement, Voluntary reduced work time programs, Expanded leave options, Working at home/telecommuting - Flexible skills, assignments, and rewards - Multitasking and job enrichment, Cross-training and multi-skilling, Job rotation, Redefinition of jobs into tasks clusters, Pay-for knowledge, payfor-skills, pay-for-contribution - Flexible size and type of workforce - Non-linear view of careers and advancement, Periods of greater and lesser focus on work, coordination with periods of greater and lesser, focus on family, personal life and civic causes, Rethinking the nature of work not just marginal innovation, Use temporary workers, subcontractors, consultants contingent workers, to make easier to grow or shrink size of labor force, More opportunity for employees to develop, occupation=specific rather than firm-specific skills, Emphasizing employability rather than job security - Flexible boundaries of the frim - Outsourcing to other firms for a variety of inputs and services, Outsourcing entire functions or departments, The “virtual” organization 4. What are the implications of the “How Will You Measure Your Life” article for you? Module 8 From Coursera Module 1. Myths and realities of being a manager 2. Strategic tensions in organizations
