Introduction to Organisation Design Lecture 1 Relevance of Organisation Design Healthcare system - Long waiting times - Explosion of costs - High prevalence of stress etc. Such problems can be addressed through anaylsing and solving structural problems Less hierarchy and bureaucracy at the police - Reorganisation of dutch police 26 -> one national police - Overcome hierarchical structure - Professional responsibility of police -> work for citizen central stage Media attention to new ways of working - Work not just sth. to earn money -> meaningful activity for greater good e.g police - E.g. worker central design -> choose own salary, more transparency in company What is design? - Functionality Pleasing Architecture Systems Infrastructure Designing - Fine dining vs. fast food Managing as designing Core aspects of designing - Multiple models of possible futures with continuous refinement - Throwness -> designer dropped into conditions Collaboration no one can know everything Liquid crystal -> iterations between leaving open and fixing Legacy -> being conscious of the effects of one’s action Design thinking Applying the way designers think to business problems - Empathy -> what’s human need - Ideations -> using creative tools to generate many possible ideas - Experimentation -> testing ideas with prototyping, making ideas tangible - Iterative approach -> learning from mistakes Designing as future- orientated activity Organisation design as part of responsible organising - Social pressure Four approaches to organisation design Different perspectives - What design is, what problems -> solutions related 1. Fit approach 2. Sociotechnical system design 3. Lean management 4. Human centred job design Introduction to Organisation Design Lecture 2 What is organizational design - General sense -> form of an organization Whether a bureaucracy, matrix organization, cellular, network organization etc. Examples of line structure - Assembly line Seems outdated but still in use Examples of machine bureaucracy - Works with sort of assembly line think like MCd kitchen, but with middle management and sociotechnical design Example of autonomous working group - Established in 2006 by Jos Block A nurse-led model of holistic Low hierarchy, autonomous working groups Revolutionized care in NL -> higher client satisfaction, higher worker satisfaction a. cheaper According KPMG -> program empowers nurses to deliver all the care that patients need Labor service platforms as part of the gig economy - Mediate between supply a demand, connect both They do not own the means of production or service Digitalization leads to boost in scope and size E.g. Uber, Airbnb What is organisation design? Involves the challenge on how to 1) Partition a big task into more smaller tasks 2) How to coordinate these smaller tasks in such a way that they fit together to realize the org goals Burton et al. -> deciding who does what Very general definition How to design? 9 components in 5 steps with interrelated aspects/ Burton et al. - When big tasks are partitioned a coordinated E.g. - strategy vs structure - Individual training vs. structure - Environment vs. internal structure Burton et al. propose a fit approach Important for big companies in order to adopt to local needs/ working behaviour etc. Why do we need a fit approach? - Implementing or single aspects, might not work According to research -> 30% of variation in org performance can be attributed to org design Organizations need to adapt to their environment - Globalization - Competition - Deregulation etc. General perspective of Burton et al. Contingency vs one size fits all - Classical theories “one size fits all” -> Taylor Fayol, Ford Contingency theory - starting in 50s - Org are open systems -> interact with the environment Depend on contingencies: - Need to adapt to environment -> external fit - Components need to fit together -> internal fit How to achieve fit? - Involve 9 components in 5 steps with interrelated aspects 1. Getting started -> goals and scope 2. Assessing the strategy 3. Analyzing the structure 4. Analyzing processes and people 5. Analyzing coordination, control See slides Pillar 1: Burtons et al. multi-contingency model 2 - Each component is discussed with the help of 2 dimensions - ideal: all should fit together -> Reflection is this too much? Pillar 2: Information processing approach - Burton et al. see org as information processing entities in line with Galbraith Logic - Organizations process information - …..to coordinate a. control activities - Sees what is happening, analyses a. makes choices what to do - Observe, transmit, analyze, understand, decide, store a take action for implementation Two elements of the information processing approach 1. How capable are organizations to process information? Information processing abilities This depends on their design e.g. machine bureaucracy vs teams 2. How much information do they need - Demand depends on a) Task uncertainty -> difference between amount of info needed a. amount of info possessed by org. b) Interdependency complexity -> the greater the interdependency the more information processing is needed These both pillars are relevant for design Information process ability - Configuration, Formalization, Decentralisation, Incentives, IT systems, Agents Information processing demand - Goal, Strategy, Environment, Leadership Style, Climate, Tasks Paradox: - The more uncertainty in org environment the more infromations needs to be processed, but the quicker response has to be How to do that? - See slide Burton et al.: 9 components in 5 interrelated aspects in the middle can be used to - Tailor way for org for information process to environmental demands, by coming up design responses Should fit coherently with each other Design can also create more information processing demands e.g. increase interdependency complexity Example predictable environment Situation - Product/ service demanded by customers does not vary a lot - Low task uncertainty - Not much information sharing needed, no quick response needed - Tasks can be standardized, control can be hierarchical - When problems arise, they can be “bumped up” in the hierarchical line because no quick response is needed - E.g. McDonalds -> unflexible Onion Example dynamic environment - Dynamic environment Product/ service demand by customer, clients, citizens change often/ strongly Examples: military on mission, police, crises response High task uncertainty Much information processed to come up with solution No task standardization How to deal with an uncertain environment - Quick responses needed Either reduce the need for information processing Or increase the capacity to process information How (for example)? - By forming units that can operate relatively autonomously - Or by implementing information management systems Step by Step approach Step 1: Assessing the scope and goals of the organization Scope - What is the domain the organization derives its existence from Influences degree of uncertainty Demands for information processing E.g. - Bakery around the corner - Microsoft - Faculty of management Goals - Efficiency -> related to inputs, use of resources in primary process a costs - Effectiveness -> related to outputs, products or services a revenue (environmental demands) A: startup/ monopoly B: stick to what they do low costs/ cash cows C: change products constantly, high prices, org. in a dynamic environment D: both product innovations and low costs Example for A: - Start up Libratone - Goals is to set sound free - Focus on quality, charging high prices, not efficiency - Focus on deisgn but not on customers and their wishes Example of D: - Microsoft - Operates in dynamic environment & needs to innovate/ react to competitors, consumer wishes - And has standard products that bring in a constant flow of money/ cash cow How do the two dimensions effectiveness & efficiency affect the need of information processing? - Efficiency -> first order learning, learn to produce the same product as cheap as possible, low information processing Effectiveness -> change products according to demands, second order learning, high information processing Successful companies can do both a hence have to balance their capacities for information sharing Take- away - Internal and external fit are central Misfit is costly -> when reading the news, observe fit/ misfit Organization as information processing entities Assessing the goals a scope of organizations -> efficiency, effectiveness Looking ahead - What about quality of work or sustainability? Observe -> what is important for you from an organization Fit and misfit -> widely accepted notions, but rigour of burtons et al approach sticks out Organizational design is deciding who does what when Different design theories have different perspectives on how to do this Questions for throughout the course: where do they agree, disagree, supplement each other etc.. Introduction to Organisation Design Lecture 3 Academic approaches to strategy Strategic management as rational approach - Achieve competitive advantage, earn above average returns - I/O model takes external environment as main input for strategy formulation, which is then implemented a produces performance outcomes - Resource based model looks at firms capabilities to define competitive advantage Carnegie school/ behavioural theory of the firm: critical of normative stance - Good managers do not make policy decisions - All human decision making is affected by bounded rationality Deliberate vs emergent strategy Burton: Fit approach to strategy & design Burton chap. 2: Relevance of strategy for org. design - Chandler 1962 -> structure follows strategy Contingency theory -> fit between strategy, org. design a. environment is crucial Strategy space: Miles & Snow (1978) Typology Reactor - Adjusting to bad news -> loss customer/ decreased profits/ internal problems - Focussed neither on efficiency nor on effectiveness - No efforts to create innovation -> technological developments come as surprise - E.g. Start ups - Problematic in long run Defender - Aimed at keeping the org position in the market - Focussed on exploitation of resources rather than new ideas - Vulnerability comes from products no longer desired in the market -> change to slowly Prospector - High on exploration: focus on innovation - First mover advantage - Risky strategy Analyser without innovation - Passive innovation or copy strategy - strong focus exploitation, moderate on exploration - avoid riskiness of first mover - Using defender strategies combined with an eye on trends - Vulnerability -> following wrong trends Analyser with innovation - Active innovation strategy -> new products on a regular basis - split exploration/ exploitation - Like prospector: going beyond what others do - Dual focus -> difficult to balance Strategy as fit: Does the strategy fit the org. goals? Strategy, Environment and Design Environment Context in which the firm operates - Marketplace - Institutional context - Financial markets, exchange rates - Opportunities Interaction between strategy and environment - Environment is an input factor for strategy formulation -> some strategic goals are more realistic or urgent - Strategic choices influence in turn which aspects of the environment become relevant Conceptualisations of the environment - Uncertainty-> unpredictability, unavailability of data Complexity -> number of factors in the environment and their interdependence Temporal dynamics -> instability, turbulence, high velocity environment Ignorance -> or confusion about some factors Hostility -> malicious external threats Burton et al chap. 3: Relevance of environment for organisation design - Contingency theory -> relevance The greater the uncertainty of task < amount of information processed Knowing more allows you to better understand your firms environment and anticipate its impact on the firm Only the paranoid survive Ashby 1956: Law of requisite variety - Stable system: Number of states of its control mechanism greater than or equal to the number of states controlled The environment space Calm environment - Low complexity and unpredictability - Simple and known, few surprises - Few products, predictable markets - Globalisation, deregulation, financial crises -> eroded calm environment - Scholars argue since 1950 no calm environment Dangerous to think environment is calm when its not Varied environment - Complex -> many factors to consider, interrelated but relatively predictable - Many products, predictable markets - Market forecasts, analysis of political trends used as tools Locally stormy environment - Highly unpredictable but not very complex - E.g. weather conditions for farming, access to funds or customer deals for start- ups - Can be dealt with locally if you organise for flexibility Turbulent environment - High complexity, high unpredictability - Most difficult environment in which to operate: - forecasting does not work - you need to be flexible and quick Fit between strategy, environment and design Introduction to Organisation Design Lecture 4 Recap Org design involves 1) Partition big task into smaller 2) Coordinate smaller tasks - How to decide who does what when? Depends on contingencies - Org are open systems -> interact with environment They depend on contingencies - Need to adapt to environment -> external fit - Components need to fit together -> internal fit Recap information processing approach How do org deal with contingencies? -> via processing information Analysing the structure What is an organizational structure/ configuration/ form? - Structure/ configuration -> dividing bigger tasks into smaller parts - Burton uses configuration/ structure/ form synonymously - Configuration influences information processing abilities - Different config fit different contingencies Structure Basics - Transformation process has to be divided into smaller parts for departments, teams - a people -> E.g. Table a chair factory Two distinct forms of splitting up bigger tasks 1. One the nature of their specific function in the primary process (functional specialisation) = functional departments 2. Or on the basis of outputs (products/ services or markets) Structure according to Burton et al. - Choices in design determine organizational complexity But what influences the organizational complexity according to Burton et al? - Horizontal differentiation -> width, how many units next to each other? - Vertical differentiation -> height, how many “layers” of management? - Span of control -> how many subordinates fall under particular hierarchical responsibilities? Decisions along these dimensions, create different level of complexity Step 3 of Burton et al. allows to find the fitting config for each combination of choices Step 3 Burton et al.: Analyzing structure of an org 1 Step 3 Burton et al.: Analyzing structure of an org 2 Four traditional configurations 3 Different configurations a how they relate to the environment: Simple Low on - p/s/c orientation - functional specialisation - vertical differentiation - organizational complexity Fit calm environment E.g.: family company, start up, small company Problems of simple structure - Easily overflown with information - Information processing capacity is low - Apt for calm environments not for turbulent ones According to the book Simple structure can also be very flexible Different configurations a how they relate to the environment (according to Burton et al.: Functional Problems of the functional structure - Information sharing needs increase exponentially with the number of units, not good in dealing with much variation - High vertical differentiation results in high overhead costs Different configurations a how they relate to the environment (according to Burton et al.: Divisional Problems of divisional structures - Sharing information across divisions might be problematic - (But: dealing with changes in environment per division good, i.e. appropriate for locally stormy environments) Different configurations a how they relate to the environment (according to Burton et al.: Matrix Overview: the fit approach so far 1 New organizational forms? What is new about ‘new org forms’? Change or adapt traditional configurations along four dimensions 1. Task division 2. Task allocation 3. Provision of rewards 4. Provision of information Other aspects mentioned or explained - Self- organizing & boss- less organizations - Self- organizing vs hierarchy - Shifting boundaries - Roles of contracts etc.. Examples Provision of reward & role of contracts -> voluntary work Shifting boundaries -> local to internationally, not a top- down process but more evolving self- organizing New organizational forms & fit approach Burton et al. What is new about new organizational forms? - Still need to divide tasks, allocate them, coordinate them - Use of IT, local dispersed, self- organizing, boss- less etc - Mix/ degree of ‘new’, forms of self- organizing can for example also be used in traditional forms Reflection on fit approach & looking ahead 5 Burtons et al. interpretation: “Complexity should match complexity” – 1 - Turbulent environment + analyser strategy + efficiency & effectiveness = high org complexity Appropriate design response to high complexity is the matrix BUT: - Sometimes organizational “internals” increase disturbances and thus can be minimized by alternative design - Design can help in increasing regulatory options Design theorties interpret Ashbys law of requisite variety differently - Complexity should match complexity - Or: the ratio between (variety of) disturbances and (variety of) regulatory options of any system? Link between Burtons et al. interpretation of Ashbys and how they place the 9 components of their approach in Galbraiths information processing perspectives - Different views with far- reaching consequences for re- designing organizations Critique on matrix organizaitons - See slides Take aways Choices in design/ configuration affect the complexity of organizations - Organizational complexity has 3 dimensions, i.e. horizontal differentiation, vertical differentiations, span of control To analyze ort Introduction to Organisation Design Lecture 5 Task design - Decomposing work into sub- task and coordinate among the sub- tasks to meet org goals Lowest level of org design Why is it important? 1 - Fit idea Misfit is costly Why is it important? 2 - Quality of care jobs affect quality of nursing Why? - Limited a. sufficient training Underappreciation of their complex roles Few career advancement opportunities Other research “Bad job on mental health as harmful as no job at all” Three historical influences: Joan Woodward 1 - Burtons et al. task definition is based on different classical authors Joan woodward - Pioneer in org design - Foundation for contingency theory Study - 100 manufacturers -> was driven by the production methods a technology in use Three different technological groupings that affect task design - Small batch & unit -> craft like (custom- made products) - Continues process -> automated work - Large batch & mass -> assembly line influences the complexity of task and ways to coordinate a control Three historical influences: James Thompson - Relation between interdependence of activities a coordination mechanisms Three historical influences: Richard Scott and Gerald Davis Link task design to three elements -> influence information processing - Complexity of task: items requiring simultaneous attention - Uncertainty: unpredictability of activities in tasks - Interdependence: between tasks Assessing process and people, i.e. task design as part of this step 1 How do Burton et al. use the various insights? By becoming them into two dimensions 1. Variability -> degree task can be defined, standardization possible 2. Connectedness -> how much coordination needed to perform task Task design basics & examples Orderly - Build on Woodwards unit production and Thompsons parallel production Our example: shoe shop - Coordination need low - Each task assigned to separate person - Some variation in tasks but not much - Fit simple configuration & calm environment Complicated - build on Woodwards mass production a. Thompsons sequential technologies Our example: assembly line - subtasks done by separate units but are independent - much coordination needed - tasks do not vary a lot - Fit functional configuration and varied environment Fragmented - Build on woodwards unit production and Thompsons parallel production University research group - Each researcher can work independent from each other - Variability within team (but not between teams) - Fit craftmanship, adjustments need to be made but only for own task/ product/ service or region - Fit divisional configuration and locally stormy environment Knotty - Do not fit well Woodwards or Thompsons categories Examples in line with book: innovation departments/ groups - High on both dimensions - A lot of knots i.e. interdependence among each other - splitting up work in standardized tasks - High information processing needs - Burton et al this fits the turbulent environment & the matrix structure Overview fit approach so far - According to Burton et al. each type of task fits a particular (macro- level) structural form, environment Coordination and control systems, and knowledge systems 2. Basics coordination, control, and information and knowledge systems 1 - “Coordination, control and information and knowledge systems support Integration of the organization And they provide monitoring and support for decision making So that managers can anticipate and react to internal and external changes that require organizational adjustment Basics coordination, control, and information and knowledge systems 1 The distinction between 1. Coordination and control system 2. Information and knowledge systems - Largely conceptual in nature Tightly interlinked in practice but discussed separately - Observation Coordination and control systems examples Step 5: Coordination and control systems – two dimensions How do Burton et al. categorize coordination and control systems? 2 dimensions: 1. Degree of formalization 2. Degree of decentralization - This time not aimed at specific implementation advice - But more at general implementation philosophies Examples - General heuristics for design (not really specific) - Family -> start- ups, family business - not much formalization needed, centralized control - Machine -> Walmart, machine bureaucracies - a lot of formalization a centralization - Market -> Haier (IT systems to improve sustainability) - low formalization and high decentralization between business units - Clan/ Mosaic - Ikea - Unilever Knowledge and information systems - Coordination and control systems: govern how work is done - Information a. knowledge systems: providing meaningful data to decision makers Distinction is largely conceptual in nature Introduction to Organisation Design Lecture 6 STSD from a historical perspective Development of STSD Phase 1 - Early development, research in UK coal mines 1950 - 1958 Type 1 - Teamwork, craftmanship - Entire team responsible for entire process of coal Type 2 - Introduction of the Longwall machine: specialisation - Teams all have a specialist task - Cutting - Ripping - Filling Consequences of Longwall method - Loss of craftmanship - “Bad Work” mistakes can happen, but: - magnification of local disturbances - Strain of “cycle control”: introduction of hierarchy of managers - workers complaining about top- down control - managers complaining of lack of oversight of workers Conclusions - Design of work influenced workers outcomes - Organizational choices: technical machines do not have to determine work design Further developments in the early days - Idea of “autonomous work groups” was further developed - By conducting experiments in other mines Experiments later on showed that - Output was increased by 25% - Costs went down - Absenteeism decreased Phase 2 Scandinavian developments in the “classic STSD perspective” - Industrial democratization ID - Worked closely together with Emery a Trist - Autonomous work groups in which workers a managers self- regulated work - Role of trade union, worker representation - In chemical companies, paper industry, ship yards Phase 3 - Development into four “tracks” or variants within STSD Variant A: Participant design - Find solutions by means of workshops, action research a future search conference - Create “design” for work problems solutions together (shared vision) - Integrate stakeholders - Clients, workers, managers, unions - Able to improve quality of work - BUT: weak theoretical basis: shared vision is not necessarily the best solution Variant B: Dutch approach, integral Organizational Renewal - Strong relationship between theory and design strategies - Focus on integral redesign of the entire organization to influence - Quality of organization, Quality of work and Quality of work relations - Strong theoretical basis but often critiqued for lack of implementation/ change perspective Variant C: Scandinavian approach Democratic dialogue - Creating intras- and inter- organizational networks (outside the organisations) - Democratic communication strategies - Case studies conducted in a scientific way (ID experiments) - BUT: almost no “structure” insights, the way work is divided remains roughly the same in experiments Variant D: American approach, appreciative inquiry - Sometimes called consultancy approach - Aimed at “hearing the voice” of employees - A getting multiple parties aligned - Starting change in organizations, get organizations to move - BUT: weak on the level of design theory a structure General introduction in STSD- Lowlands IOR: main premises of De Sitters STSD Why Dutch approach important - Integral perspective on designing org in such way that - Quality of work improves -> commitment increases - Quality of working relations improves -> decline in miscommunication - Quality of the organization is improved - costs go down - Flexibility goes up - As is innovation Main premises - Way activities are divided, grouped a coordinated over departments Thereby specifically to 1. Number of relations within organizations (minimal as possible) 2. Amount of control capacity, autonomy, at departments What are activities? What are different ways of dividing tasks? Examples Music group - Operational: performance - Regulatory: choose type of music - Preparatory: make calendar for performance - Supporting: taking care of music instruments Factory of chairs - Operational: make chairs Regulatory: work method Preparatory: design chairs Supporting: cleaning Research institute - Operational: research - Regulatory: choose research topic - Preparatory: write project proposals - Supporting: HRM/ administration What are different ways of dividing operational tasks: Functional - Classic line structure (remember “longwall method” of coal mining) Consequences for organisation - Number of relationships between departments go up - Control capacity goes down Consequences for 3Qs? - Quality of work: chances on stress increases - Quality of working relations: not effective - Quality of organisation: lead time issues What are different ways of dividing operational tasks: Divisional or both -> Matrix Consequences for social system - Number of relationships between departments/ work units go down - Control capacity goes up Consequences for 3 Qs? - Quality of work: chances on stress decreases - Quality of working relations: more effective - Quality of organizations: lead time better What are different ways of dividing regulatory, supporting and preparatory tasks - Concentration/ Deconcentration: Support & preparatory tasks - Centralisation/ Decentralisation: Regulatory tasks Ideal: deconcentration & decentralisation Deconcentration - Operational units conducting operational as well as supporting & preparatory tasks Concentration - Operational units -> operational tasks - Supporting & preparatory units -> Supporting & preparatory tasks Decentralisation - Operational units conducting operational as well as regulatory tasks Centralisation - Operational units -> operational tasks - Supervisory units -> supporting & regulatory tasks Example concentration Conclusion way of dividing activities over work units impacts: - number of relations: flows & deconcentration - control capacity: decentralisation Which impacts 3Qs: - the way disturbances can be solved in work units - the way people feel committed to their work and the degree of stress they experience - the degree of flexibility, reliability and innovation at the org level Introduction to Organisation Design Lecture 7 Small recap ways activities are grouped over departments in relation to flows - amount of disturbances -> structural complexity (no. of relationships) - way individual workstations can deal with disturbances -> regulatory capacity Structure parameters 2 Structural parameters Different types - preparing - making - supporting performance activities - controlling (sensing, evaluating, adjusting) - These can all be divided over departments Difference between production a. control structure Bureaucracy (efficiency through specialisation) - divide all types of activities over specialised departments Functional org always bad for three Q’s What are structural parameters? Production structure 1. Functional concentration - degree performance activities located in departments? - degree all orders have to pass departments? 2. Differentiation of operational transformations - preparing, supporting a. making activities separated? 3. Level of specialisation of performance activities - degree performance activities further split up within departments? 1,2 org. level 3 is in department level Relationship between production and control structure 4. Level of separation between performance and control- activities - performance a regulatory- activities split an assigned to specialist departments? Control structure 5. Control specialisation - Control activities split per aspect (quality, safety, logistics etc.)? 6. Control differentiation - Splitting into separate control levels (operational, institutional, strategic) 7. Division of control functions - Sensing, evaluating a. adjusting activities split (classic feedback loop) “Worst case” scenario 3 What can we see? Value on parameters? 1. Functional concentration? 2. Making/ preparing/ supporting split? 3. Division between control a. performance activities? Example hospital - Parameter values seem to be high Which results in: - Structural complexity - Limited autonomy at the level of individual specialisms - Problems with organizational outcomes - Inflexibility - Long “lead times” - low effectiveness of communication network Sociotechnical redesign of organizations Designing sociotechnical structures What structural form has: 1. 2. low value on structural parameters Decrease in structural complexity Amplifies regulatory capacity Achieve low parameter value Important to note: - No blueprint - Redesign should be understood as conceptual compass - Iterative process between theory a. practice Will look different but are not violating general premises: - lower functional concentration - do not split making, preparing, supporting Design sequence - Most important rule of thumb production structure >> Control structure >> Information structure Start with design production structure - most disturbances enter org -> regulatory capacity high Design rules - From macro to micro level Macro level - group all performance activities together on the basis of: - Order or family of products - Grouping together of making, preparing a support activity within homogenous department -> parallel flows - Flows as independent as possible Meso level - Is there need for creating segments? - Many sub- orders, difficult or large product? - Splitting products into (more or less) finished parts - Group making, supporting a preparing activities per segment - Need for interaction, dependence, between segments should be low Micro level (team level) 1. What making, preparing, a. supporting activities have to be conducted per capacity within the team? 2. Design specifications for individual jobs/ tasks - Task variety - Ability to learn and use capacity - Recognizable contribution to the whole Design of control structure - From micro to macro level Start grouping control activities at the level of capacities - Look at control demands for performance of the segments, not control demand of top management - What can works decide for themselves and for what is (some form) of control needed? - Minimal critical specifications Ideally production a control structure come then together Result By means of grouping activities differently - Number of interactions that are needed to perform Transformation Process decreased, structural complexity decreased - Autonomy, process oversight and regulation activities at capacities increased Some examples Issues related to structural complexity a shortage of regulatory capacity - Lead gets lost - Clients get lost - Problems cannot be solved at individual departments This contributed to: - Poor lead time - Poor revenue - Stressed employees Short diagnosis - High parameter 1 a. 2 Learned that people were able to redesign themselves in a STSD Introduction to Organisation Design Lecture 8 Example chemical sector 1. 2. Production structure 1. Operational structure each team responsible for one workflow 2. Support + preparatory task Control structure -> decentralise as much as possible Example insurance Production structure 1. Individual/ family Regional distribution 2. Business Regional Sector company is working Tutorial 3 - Burton et al. only speaks about 1. and 2. Level Be precise in describing Information process ability goes up, information distribution across divisions decrease Introduction to Organisation Design Lecture 9 Lean production is - A catch- all term to describe combination of techniques used to help companies attain low- cost status Also known as Toyota production system Agile or synchronous manufacturing Lean thinking - Approach aimed at eliminating waste In order to - Reduce cost - Make better use of resources - Deliver better customer value Through - Designing better ways of working - Improving connections - Easing flow within supply chains Some history on industrial revolution or what was the problem that lean management attempted 1. Craft 2. Mass production 3. Customization Taylor Scientific management - First systematic studies Major impact on management a human factors Time a. motion studies Separation of thinking a doing Henry ford Model T - Assembly line Principles of mass and flow production Woolard 1925 - Mass production -> mass consumption - Products -> standardized, specialized, simplified in general and in detail - Supplies must conform to specification and be delivered on time - Machines must be continuously History of manufacturing systems Background Toyota Production System Two problems after WWII 1. Small home market required flexible production to manufacture different types of cars - no resources for many plants - Too many different products to have dedicated plant 2. Short cycles time essential for capital flow: reduce the time between purchasing materials a being paid by customer Second revolution: Toyota Production system - Japan in 1970/80s impressive exports What are the answers that Lean Management proposes What is lean management - Involves all processes pertaining to acquisition, design development and manufacturing Strives to eliminate non value added or wasteful resources Waste minimization, flexibility, responsiveness to change, optimizing flow of material & information Decision making responsibility at level closest to where work Mass production vs lean - More is better – make the next persons job easier Faster is better – make what is needed when it is needed Overproduction is good – Overproduction is evil Don’t stop the production line – Stop production to fix the problem Front line workers responsible for output – manager responsible for enabling production workers to do job effectively Muda = Waste - An activity that is wasteful and doesn’t add value or is unproductive - Waiting, transport, overproduction Seven muda - Transport -> moving products not required to perform processing Inventory -> WIP a finished products not being processed Motion -> moving more than required Waiting -> for next step in production Overproduction -> production ahead of demand Over processing -> higher quality than required Defects -> effort involved in inspecting for fixing defects Five principles of lean thinking Specify value Value as defined by customer - Not shareholder value - Not functional performance - Not benefit to local economy - What the customer wants, where a when they want it - Kano model: creating delight by building on latent customer needs Entire product - Product development: Creating a team for each product that stays with it for its life cycle - Enter dialogue with leading users about their needs a wishes Target cost defined as muda- free - How much cost can be taken out by applying lean methods - Opens new choices: reduce price, offer other features a services, make profit to invest in other products Identify value streams - All actions required to bring a specific product about: - problem solving task - information management task - Physical transformation task - Value stream management - Provide end to end view of all steps involved - Eliminate wasteful steps Analyse value streams 1. Actions that create value as perceived by customer 2. Actions that create no value but are currently required by product development, order filing or production system (Muda type 1) -> reduce 3. Actions that don’t create value as perceived by customer (Muda type 2) -> eliminate Analysing process steps - Mapping operations -> value adding activities - Non- value adding activities can amount to 98% -> Example Coca- Cola Value stream of carton of Cola Design flows - Organise production according to value streams Abandon batch & queue a functional department - Products proceed from order to delivery without stoppages, scraps or backflows Create single piece flow: uninterrupted movement Avoid work- in- progress Planning for flow production - Just in time delivery - Reduce lead time/ inventory - Chaku- chaku -> Load- Load: operator - takes part from one operation to next - Heijunka: level schedule - creating a level schedule by sequencing orders for smooth day-to-day variations in total orders - if fewer orders are required, ‘takt time’ is slowed down with fewer people working on the line Abandon functional departments Streamline production (work flows) Customer pull - Entire supply chain operates in response to demand - Example of demand amplifications around specific times, e.g. bubble bath before Christmas - Flow is not enough: if Lean is used to make unwanted goods faster, only more Muda will be created No one upstream produces when no demand customer downstream Customer pull distribution system Aim for perfection - Japanese quality concept: KAIZEN: continues improvement Everyone responsible for quality: Do not pass on faulty parts Introduction to Organisation Design Lecture 10 Woods paper: Lean Thinking - - Condensed version of 5 principles from Womack & Jones book Overview of key terms in alphabetical order - Batch and queue -> producing in batches (no single items possible) - Cycle time - Flow - Just- in- time Brief description of some of the many techniques - Processing mapping - Big picture map - Information board Example lecture Toyota Lean factory - Production cells rather than spaghetti chart layout 2-3 ppl, 1 step apart, material within reach Kanban system Making information visual - Notice board as means of communication with all involved in the process The theory behind lean production Lean thinking - A design approach in search of theoretical foundation It works in practice 5 principles of lean thinking: Womack & Jones seen by Christies & Soepenberg 1. 2. 3. 4. 5. Specify value as defined by customer -> not specifically addressed Identify value streams & eliminate was Design flows Customer pull Aim for perfection Designing flows to deal with variability - Core aspects of lean and socio- technical systems: Abandon batch & queue systems and design flows Ashby: minimize disturbances (attenuating) and enhances regulatory capacity (amplifying) - Reduces functional concentration a separation between performance and control activities Forming value streams = functional deconcentration - - Organise according to value streams - Market based grouping - Business segment: product family or customer family - Restricted set of similar orders This works because it - reduces complexity of production structure by placing interdependent activities in the same unit - this in turn reduces coordination needs and enables simplified planning Design flows - Abandon functional departments Create single piece flow -> avoid WIP, batch a queue JIT -> reduces lead time a inventory Takt time defined by demand of next process Designing flows: avoid bottlenecks Reduce undesirable sources of variability - Variability in demand -> inherent, cannot be avoided - customer want different things at different times - Demand can fluctuate depending on financial market, currency exchange, competitor - Variability in transformation process Leads to - Shorter cycle time - Lower WIP - Faster response time Better customer service Buffer to deal with variability 1. 2. 3. - - Time: demand waits for products Inventory: product is finished before demand Capacity: idle resources Traditional bureaucracy is aimed at resource utilization through a functional structure - Home care example Toyota used 30% capacity buffer to reduce cycle time & inventory Internal structure: Functional integration and cross training - Cross functional teams carry out all interrelated operations Workers help each other Creates higher quality of work through job enlargement/ job enrichment Cellular organisation reduces coordination needs Bureaucratic organisations - huge triangle with high functional specialisation -> high coordination needs -> high hierarchical specialisation Modular organisations - cross trained teams with team ownership a delegated planning Reducing inventory levels exposes weaknesses Lean needs reliability - Cell system only works if all steps are designed properly - standard work = best practices - Works write their own job description - Poor maintenance can stop cell flow Reduce variability Invest in preventive maintenance Use routines, but remain alert if they actually work Preventive maintenance - Regular short interruptions reduce downtime Makes maintenance predictable Continuous improvement as final step Critical voices about lean - Lean can go dramatically wrong if you do not do it right: - JIT disaster - Insufficient knowledge about lean philosophy - Lack of senior management - Lean does not come with morals -> you need to bring your own - Lean thinking can be part of sustainability programme - Lean & mean refers to taking away too much - Does not necessarily lead to meaningful work More about human centred work design Tutorial - Illustrate it as a flow -> low hierarchy Introduction to Organisation Design Lecture 11: Human centred work design Why do we work? - Fulfil meaningful part within a community Work = intentional transformation of reality Most work characterised by division of labour and payment for results Paid job also fulfils other function than income Transforms individual skills, knowledge, well- being a needs Psycho- social function of work Jahoda & Zeisel (1933) - Social and psychological effects of unemployment - Shutdown of textile factory People lost time structure Jahodas theory of deprivation: What you lose when you lose work: - Competence a. Mastery - Time structure: - Social acceptance, shared experience - Physical and mental activity - Personal identity: Status, self-esteem Development of human centred work design Job design for human centred work - Before focused on production structure and allocation of staff now zooming in on quality of work Content of job: What do these people actually do? Conditions of performing the job Ethical/ normative approach that proposes - Human well- being, mental & physical health - Potential for growth and development Origins of Human centred job design Cherns: Principles of Socio- technical design 1. Compatibility of design and social organisation - process design align with organizations objectives 2. Minimum critical specification - avoid premature closing of options 3. Variance control - solve problems where they arise do not export problems inspection in separate department = poor design for learning 4. Multifunctional principle - each element should possess more than one function so it can adapt to changes in demand 5. Boundary location - group activities together 6. Information flow - do not tempt managers to intervene in operations 7. Support congruence - Reward and information systems to reinforce groups 8. Design and human values - objective is to provide high quality of work 9. Incompletion: iterative process - myth of stability to cope with the demands of change, but really transition state into another Quality of work as design criterion Quality of the organisation - Ability of org. to efficiently & effectively adapt to goals Quality of work - Meaningfulness of work and possibility to deal with stress Quality of work relations - Effectiveness of communication in org Quality of working life movement - 1960s in Europa and north America - Strong normative claim to improve workers well being - Research for evidence- based policy and practice - Legislation on health & safety, equal pay - Worker representation Quality of working life criteria - Adequate and fair compensation: equal pay Safe and healthy environment Development of human capacities: skills deviation, task identity Growth and security: employability Social integration: positive or climate, psych safety, diversity Constitutionalism: employee rights & representation Consideration of the total life space: balancing different life domains Social relevance Individual proactivity: support for personal initiative Flexible working Future QWL research Action regulation theory as theoretical basis for human centred job design Why action regulation theory? - Diagnosed work psychology as applied discipline without sufficient theoretical foundation Transfer concepts from general psychology not appropriate as they do not capture goal directed work processes Work is more than stimulus response: goal directed action Concept of action - Smallest psychological unit of voluntary activities - Driven by conscious goal = intention and anticipation of outcome - Identifiable elements of overall activity - Unity of mental regulation and physical interaction with material world Characteristics of action regulation theory Action is driven by intention - Work as conscious, goal directed behaviour - Connection between thinking and doing Concrete doing - Interaction with transformation of material world - Work activities within real context Work activities as part of interrelated web of actions - Embedded in organisation, coordination with others Embedded in societal context - Work as part of societal division of labour and culturally shaped artefacts and knowledge Important concepts: complete task - Complete tasks include all components of the psychological process: goal setting, orientation, planning, executing and evaluating Sequentially complete: not only execution but also preparation: goal setting and deciding on measures to be taken Hierarchically complete: mental regulation not limited to automated processes but involves knowledge- based and intellectual control Incomplete tasks are more likely to lead to monotony, fatigue, affective aversion, stress Important concepts: Redefinition of task - - Different people perceive and interpret identical work assignments differently - different answers to same exam question - different design submission for the same architectural commission Redefinition involves how people anticipate what a task will be like: e.g. boring, tiring, stimulating Relational concept: depends on objective demands, resources, knowledge, experience, aspiration levels, values of individuals Assessing quality of work: VERA and RHIA methods Assessing levels of action regulation: VERA method VERA level 1: bodily regulation, applying rules - Carrying out this task requires bodily movements - Occasional change of tools - Tasks always carried out the same way - E.g. repetitive tasks -> assembly line VERA level 2: Action planning, deciding about steps - Sequence of steps need to be planned Sequence is determined ahead but require mental rehearsal before getting started E.g. preparing meal according to recipe VERA level 3: Decisions about strategy and sub- goals - Rough overall planning Each activity requires decision on how to approach it and its own detailed planning - E.g. design tutorial with overall assignment but freedom to decide how to do it VERA level 4: Coordination of several subtasks - Several interdependent parts have to be coordinated and planned jointly Decisions about strategy need to consider several aspects E.g. Event organisations, Operating theatre, Coordinating several logistics operations VERA level 5: Developing new tasks - Creating new, to be developed activities or work processes Their coordination and material conditions have to be planned E.g. new product, course redesign, New type of synergy activity RHIA: Assessment of regulation hindrances 1. Hindrances - Missing or inaccurate information, restricted movement, wrong tools, unreliable system 2. Disruptions - Through people, system failure, delays Can lead to extra workload, risk taking and stress 3. Work that requires constant attention 4. Constant time pressure - Not be able to catch up if you do break 5. Environmental conditions - That impair peoples ability to regulate their action - Noise - Heat, cold - Emissions, vibration Applying assessment methods in practice Observation & interview during normal work hours - Standardized method for data collection, recording and assessment Triangulation of several independent measurement - Different investigators - Different times - Different subtasks of a job - Different employees Standardized questionnaires - Should never replace observations and expert judgement VERA analysis should be embedded in organisational analysis e.g. MTO analysis = human technology organisation 1. Organisational goals & structure 2. Analysis of orders 3. Analysis of work system 4. Analysis of work groups: potential for collective regulation 5. Objective task assessment: potential for action action regulation 6. Subjective task analysis 7. Socio- technical history Introduction to Organisation Design Lecture 12: Human Centred Work Design Hand- got system: responsible autonomy - A man and his mate Responsible for complete task Full range coal face skills Members chose work mates -> trust, reliability The longwall method - Work broken into standard series - Led to unrest, psychological disorders and strikes Three shift, interdependent task - Cutting - Ripping - Filling - Seven occupational roles - Moving towards mass production “Bad work”: magnification of local disturbances - “Bad conditions” tend to instigate “bad work” - Small disturbances enlarged - Bye work not paid -> end up problems caused by others - Atmosphere of uncertainty - 3rd shift characterised by isolated dependence Four types of group defence informal organisation - Private agreements, help each other out reactive individualism - Competition for better places, bribing, mistrust mutual scapegoating - No direct contact between shifts lead to scapegoating -> nothing resolved/ no guilty self- compensatory absenteeism - Bad conditions require extra work -> one takes day off others have to work more Work oriented vs technology- oriented job design Integrated design of human, technical and organisational aspects Job design as mirror of underlying assumptions - underlying assumptions mostly taylorist or system X - ppl unpredictable, eliminate completely system based on expert knowledge with elaborate control McGregor: Theory X Conventional management McGregor: Theory Y Alternative view Empowerment predicts performance - Integrated manufacturing approach - advanced manufacturing technology. JIT, total quality control Positively associated with empowerment - job enrichment and skill enhancement Little direct effect on company performance But empowerment predicted performance - controlling for prior performance Job design and technology - See slides Operator vs specialist control Specialist control - engineers maintain technology - computer specialists write & edit programs - operators load & monitor Operator control - operator maintain local control - trained to fix all minor problems themselves Operator control works Baseline training intervention and change of job design, post- test 1. Operator control reduced downtime 2. Enhanced well- being Companies should reserve their strategy on technology Technology mediated work Example of task analysis in context of technology implementation Data collection for task analysis - Observation of morning calls, handover meetings Semi- structured interviews Documents Task analysis of drilling support staff Work design and automation Bainbridge (1983): Ironies of Automation - Views that humans are unreliable a should therefore be eliminated” produces two ironies: 1. Designer who tries to eliminate the operator still relies on the operator to do the task that the designer cannot think how to automate 2. If humans are unreliable, then so are designer Effects of Ironies of Automation - The more advanced the control system, the more crucial the human operator Manual control skill needed for emergency take- over but never practised Present technology relies on former manual workers skill that next generation won’t have Humans required to monitor whether automated monitoring works Deskilled work produces stress and errors Überlingen mid- air collision Who is to blame? - TCAS: alerting & resolution advisory systems Limitations for consistent implementation Culpability difficult to pin down: no system architect Implications of automation - Risk society -> technology granted but do not accept risk granted to it Needs to be designed at system level Need broader level of system level design if we add technology Implication of digital technology Technological developments in digital era - Technology: reprogram ability, increased data availability, machine learning and data analytics Implications of technology - Replacement of dull dirty a dangerous work can make work safer but also deskilling Can add people great distance but also social isolation Sensor technology -> create awareness but also reduce situational awareness Big data -> support decentralised decision making but also replace humans Algorithms -> more objective but also inherit human biases Virtual/ remote work -> create flexibility but also constant availability Automation -> reduce work load but also increase surveillance Intervention strategies Tutorial 5 - Macro level 2 flows standard a. complex system Buy another sawing machine -> concentrate on A a. F Keep each flow in every plan together Introduction to Organisation Design Lecture 13: Buur & Zo Introduction - Demographic change Fewer people provide the care Developments in Dutch healthcare - Home caring - Prevention of care need Living at home longer, deal with labor shortage, reduce cost Prevention of care, but also for wellbeing - In order to live at home longer - Need for social interaction, activities, building on new existing relationships = social infrastructure Leveraging logistics in the healthcare sector - Adopting logistics around home care -> restructuring a. goods deliveries Reduce carbon emission Combining home care, wellbeing and logistics - Integrated approach As close as possible to elderly Buur & Zo - Multiple value creation Prevention & integrating Introduction: neighbourhood concierge Neighbourhood concierge - Eyes and ears Deliver meals, medicine Familiar face Home care or wellbeing needs Strong relations with local social infrastructure Buur&Zo organisation - Two hubs IT system Buur&Zo app routigo - Aid the work Measuring impact of concept & identify opportunities for improvement RoutiGo app -> most efficient routing Burtons fit approach Introduction to Organisation Design Lecture 14: Organisation Design as Change Process Exam - Differentiate between approaches Apply all of them to cases Organisation design as change process Organisation design as transition Effective change management needs - Understanding current state - Clear vision of future state - Guiding organisation carefully through transition period Structure as vehicle for change Structure as starting point for change - New culture requires new conditions - Individual change is unlikely to change structural conditions that have shaped previous - Maintain vision of ideal design -> be pragmatic in the implementation - At least one central person that supports reorganisation Redesign requires change management - More than 50% fail -> poor implementation process If people do not know what change is -> resist Burton et al 3rd edition -> plan it properly as a project- based change - What: define steps and activities, workout details - Who: assign responsibilities - When: define milestones and follow up process Burton et al 4th edition: implementing a new design Step by step framework - Diagnostic framework - Be aware of interdependence Sequence of change - Step- by- step approach is analytical framework WHAT needs to be changed, not same as order of implementing it - Fix underlying issues first - Start with easy problems if you need quick wins Change is not linear - Fixing one misfit can highlight new ones Prototyping an experimentation: Design thinking Applying the way designers think to business problems - Empathy: what is the human need behind the business need - Ideation: using creative tools to generate many possible ideas, push past obvious solutions Experimentation: testing ideas with prototyping, making ideas tangible Iterative approach: learning from mistakes Designing as future oriented activity Example of planned approach: Electronic Patient Records - See slides! Problems inherent in change - Triggers political activity -> major shift in power/ see values threatened - Uncertainty -> anxiety, people act irrational More difficult maintain management control Lewin & Schein model of mechanism for change - Psychological explanation -> people think it is difficult to change behaviour or attitudes Step 1 Unfreezing: - making sth. fluid, creating awareness for the need for change - Disconfirmation -> thought its good, but competition takes over - Creating psychological safety -> if motivated to change, show them it is possible Step 2 transition Step 3 refreezing: - stabilizing new state Example Nijmegen case Triggers for change External triggers: - Loss market share - Customer frustrated -> long delivery times Internal trigger - Young CEO Transition change through structure - Creation of product groups rather than functional departments Redesign of factory layout and reallocation of machines Introduction of cellular production Reduced work in progress -> financial healthier Shortened delivery times -> customer satisfaction More coherent work, problems solved locally -> employee satisfaction Training for employees/ middle management Initiating organisational redesign Dealing with paradox: lifting yourself from the mud - How can org lift itself up from the mud by pulling on its own hair? Transforming bureaucracy into flexible organisation cannot be done by bureaucratic means – change is not predictable But also not completely from the bottom Dutch approach: Participation - Every employee must get the chance to influence the change from their position to get commitment and draw on local knowledge - but you need to teach them how to design Organisation design implies change: necessary but not easy - Implementation is crucial: the best design can be derailed by ill- planned, poorly executed implementation Do not surprise people with your great solution make them part of the journey - leads to better solutions - reduces risk of resitance
