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9 - 1

Chapter

9 The ResponsiveOrganization

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9 - 3

Elements Of Organic Structure

Expertise is

highly valued

Greater reliance

on judgement

than rules

Broad,

changing job

responsibilities

Organic

Structure

Communication

is advisory

Employees relate

more informally

and personally

Commitment to

organizational

goals

Decentralized

and informal

decision making

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9 - 5

Church

Swinney

Lee

Fiola

Wilson

Carlson

Hoberman

Harris

Calder (SVP)

Fleming

Martin

Benson

Blair

Ruiz

OHara (SVP)

Stewart

Leers (Ceo)

Atkins

Stern (SVP)

Huttle

Kibler

BakerJules Zanado

Daven

Thomas

Long (SVP)

Muller

Advice Network Reveals Knowledge

Flow

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9 - 6

Organizing For Optimal Size

Large organizations

typically less organic and more bureaucratic

tend to have more specialized jobs and distinct groups of

specialists

add more levels to keep spans of control from becoming too

large

are more difficult to control

adopt bureaucratic controls such as rules, procedures, andpaperwork

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9 - 7

Organizing For Optimal Size (cont.)

The case for big

scale economies- lower costs per unit of production

lowered operating costs, easier access to capital, greater

purchasing power

economies of scope- materials and processes used with one

product can be used for other, related products

Disadvantages of big

diseconomies of scale- cost of being too big administrative difficulties may inhibit efficient performance

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9 - 8

Organizing For Optimal Size (cont.)

The case for small

smaller companies can:

move fast

provide quality goods and services to targeted market niches inspire greater involvement from their people

today, premium exists for flexibility and responsiveness

Being big and small

small is beautiful for unleashing energy and speed

large size offers market power

challenge is to be both big and small to capitalize on the

advantages of each

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9 - 9

Organizing For Optimal Size (cont.)

Downsizing the planned elimination of positions or jobs

common approaches include eliminating functions,

hierarchical levels, or units

rightsizing- a successful effort to achieve an appropriate

size at which the company performs most effectively

survivors syndrome - loss of productivity and morale in

employees who remain after a downsizing

struggle with heavier workloads

wonder who will be the next to go

try to figure out how to survive

become narrow-minded, self-absorbed, and risk averse

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9 - 10

Easing The Pain Of Downsizing

Positive

practices

Carefully choose

positions to be

eliminated

Communicate

constantly

Attend to those

who have lost

their jobs

Train people

how to cope

Emphasize a

positive future

Protect talented

people

O i i F E i l

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9 - 11Organizing For Environmental

Response

Organizing for customer responsiveness no other aspect of the environment has had a more profound

impact on organizing recently than the focus on customers

strategic tr iangle- managers must balance this triangle

Customers

CompetitorsCorporation

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9 - 12

Organizing for customer responsiveness (cont.) Customer Relationship Management(CRM)-multifaceted

process that creates two-way exchanges with customers in

order to learn their needs and buying patterns

traditional thinking - customers wanted high quality orlow

costs

world-class companies know that customers want it all

kaizen- attain and retain competitive advantage by

continuing to improve

customer- refers to the next processor wherever work goes

next

highlights interdependence among related functions

Organizing For Environmental

Response (cont.)

9 13O i i i l

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9 - 13Organizing For Environmental

Response (cont.)

Organizing for customer responsiveness (cont.)

Total Quali ty Management(TQM)- comprehensive approach

to improving quality and customer satisfaction

characterized by a strong orientation toward internal and external

customers

involves people across departments in improving all aspects of

the business

requires integrative mechanisms that facilitate group problem

solving, information sharing, and cooperation across businessfunctions

Baldrige award- given to U.S. companies that achieve quality

excellence

9 14W Ed d D i 14 P i

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9 - 14W. Edwards Demings 14 Points

Of Quality

Create constancy of purposeDont tolerate delays or mistakes

Cease dependencies on mass inspection

Dont award business on price tag alone

Constantly and forever improve the system of production or service

Institute training and retraining

Institute leadership

Drive out fear

Breakdown barriers among departments

Eliminate slogans, exhortations, and arbitrary targetsEliminate numerical quotas

Remove barriers to pride in workmanship

Educate your people who should be viewed as assets, not commodities

Provide a structure that enables quality

9 15

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9 - 15

The Baldrige Criteria

Human resource

development and

management

Management of

process quality

Leadership

Quality

excellence

Information

and analysis

Customer focus

and satisfaction

Quality and

operational

results

Strategic

quality planning

9 16O i i F E i t l

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9 - 16Organizing For Environmental

Response (cont.)

Organizing for customer responsiveness (cont.)

I SO 9000- a series of quality standards developed by a

committee working under the International Organization for

Standardization

intended to improve total quality in all businesses

companies that comply with standards entitled to certification

reengineering- revolutionizes key organizational systems and

processes

based on a vision for how the organization should run

completely overhauls the operation in revolutionary ways

9 17O i i F T h l i l

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9 - 17Organizing For Technological

Response

Technology systematic application of scientific knowledge to a new

product, process, or service

refers to the methods, processes, systems, and skills used to

transform resources (inputs) into products (outputs)

Types of technology configurations

small batch technologies- produce goods and services in

low volume

job shops

structure tends to be organic

few rules and formal procedures

decentralized decision making

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9 - 18Organizing For Technological

Response (cont.)

Types of technology configurations (cont.) large batch technologies- produce goods and services in

high volume (mass production)

structure tends to be more mechanistic

many more rules and formal procedures

centralized decision making with higher spans of control

more formal communication

continuous process technologies- highly automated

continuous production flow structure can be more organic

less monitoring and supervision required

more informal communication

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9 - 19Organizing For Technological

Response (cont.)

Organizing for flexible manufacturingproduce both high-volume and high-variety products at the

same time

mass customization- the production of varied, individually

customized products at the low cost of standardized, mass-produced products

a dynamic network of relatively independent operating units

module- a specific process or task performed by a unit

some modules performed by outside suppliers or vendors

different modules joined to make a good or service

combination of modules dictated by unique customer requests

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9 20Organizing For Technological

Response (cont.)

Organizing for flexible manufacturing (cont.)

Computer-integrated manufactur ing(CIM)- use of

computer-aided design and computer-aided manufacturing to

sequence and optimize a number of production processes

host of computerized production efforts linked together

team members work on the network from remote sites

potentially affords greater control and predictability of production

processes, reduced waste, faster throughput times, and higher

quality

requires good strategy and qualified people

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9 21Organizing For Technological

Response (cont.)

Organizing for flexible manufacturing (cont.)

f lexible factories- differ from traditional factories

have much shorter production runs with different products

organized around products in work cells or teams

use local or decentralized scheduling

lean manufactur ing- operation that strives to achieve the

highest possible productivity and total quality, cost effectively,

by eliminating unnecessary steps in the production process and

continually strives for improvement

9 - 22Conditions For Effectiveness Of Lean

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9 22Conditions For Effectiveness Of Lean

Manufacturing

Effective

operation of

lean

manufacturing

Broad training

of people

Long-term

supplier

relationships

Work is

organized in

teams (cells)

Informal and

horizontal

communication

Concurrent

product

development

General-purpose

equipment

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Organizing For Technological

Response (cont.)

Organizing for speed: Time-based competition (TBC)

timeis emerging as a key competitive advantage that can

separate market leaders from also-rans

TBC- strategies aimed at reducing the total time it takes to

deliver a product or service

logistics- the movement of resources into the organization

(inbound) and products from the organization (outbound)

movement of the right goods in the right amount to the right place

at the right time

an extension of the organizations technology configuration

a great mass of parts, materials, and products moving via trucks,

trains, planes, and ships

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Organizing for speed: Time-based competition (cont.)

Just-In-Time(JIT)- system that calls for subassemblies and

components to be manufactured in very small lots and

delivered to the next stage of the production process just as

they are needed

a company-wide philosophy oriented toward eliminating waste

throughout all operations and improving materials throughout

excess inventory is eliminated

costs are reduced

Organizing For Technological

Response (cont.)

9 - 25

P d ti C t I l d d I JIT

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Production Concepts Included In JIT

JIT

Elimination

of waste

Value-added

manufacturing

Employee

involvement

Perfect

quality

Problem

discovery and

prevention

Reduced

cycle times

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Organizing For Technological

Response (cont.)

Organizing for speed: Time-based competition (cont.)

simul taneous engineer ing- a design approach in which all

relevant functions cooperate jointly and continually in

maximum effort aimed at producing high-quality products that

meet customers requests

departure from old development process in which tasks were

assigned to various functions in sequence

incorporates the issues and perspectives of all functions - and

customers and suppliers - from the beginning of the process

9 - 27

O i i F St t i R

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Organizing For Strategic Response

Organizing around core competencies companies compete on the basis of their core strengths and

expertise

core competence- the capability - knowledge, expertise, skill -

that underlies a companys ability to be a leader

company viewed as a portfolio of competencies

company should strive for core competence leadership by:

identifying existing core competencies

acquiring or building core competencies that will be important in

the future

investing in competencies in order to remain world-class

extending competencies

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Organizing For Strategic Response

(cont.)

The network organization a collection of independent, mostly single-function firms

not one firm but a web of interrelationships among many firms

dynamic network(modular/virtualcorporation) - temporary

arrangement among partners that can be assembled and

reassembled to adapt to the environment

contracts stipulate expected results

poorly performing firms can be removed and replaced

offers flexibility, innovation, quick responses, and reduced costsand risks

managers become brokers

play several important boundary roles

9 - 29

A Dynamic Network

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A Dynamic Network

DistributorsSuppliers

Brokers

ProducersDesigners

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Organizing For Strategic Response

(cont.)

Strategic alliances

a formal relationship created among independent organizations

with the purpose of joint pursuit of mutual goals

individual organizations:

share administrative authority

form social links

accept joint ownership

may lead to the creation of additional, unforeseen

opportunities

managers must foster and develop the human relationships in

the partnership

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How Is Can Become Wes

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How I s Can Become We s

Characteristics

of the best

alliancesIntegration Interdependence

Information Investment

Institutionalization Importance

IntegrityIndividual

excellence

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O i i F St t i R

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Organizing For Strategic Response

(cont.)

Strategic Alliances

Advantages

Quick market entry

Access to materials and technology

Disadvantages

Shared ownership limits control and profits

May lose control of proprietary technology

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O i i F St t i R

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Organizing For Strategic Response

(cont.)

Strategic Alliances

Mutually strengthens partners

Exploit economies of scale

Fills gaps in technology and expertise

Share distribution facilities

Must overcome issues of

Language, cultural barriers and trust

Differences on how to proceed

Effective and efficient decision making

Sharing competitively sensitive information

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O i i F St t i R

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Organizing For Strategic Response

(cont.)

Strategic Alliances

Pick good partners

Be sensitive to cultural differences

Alliance must benefit both sides

Ensure parties honor their commitments

Initiate structure for fast and effective decision making

Keep the alliance flexible

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g g g p

(cont.)

The learning organization an organization skilled at creating, acquiring, and

transferring knowledge

modifies its behavior to reflect new knowledge and insights

characteristics of learning organizations

people engage in disciplined thinking and attention to detail

constant search for new knowledge in order to expand horizons

careful review of successes and failures

benchmark and implement the best business practices

share ideas throughout the organization

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High-involvement organization

top management ensures that there is consensus about the

direction of the business

seeks input from lower-levels of the company

techniques used to foster participation in decision making

continual feedback to participants

flat, decentralized structure built around customer, product, or

service

g g g p

(cont.)