Manufacturing and Service Technologies

1
Manufacturing and Service Technologies
2
Chapter Six

• Manufacturing and Service Technologies

3
refers to the tools, techniques, machines,
processes and actions used to transform inputs
into outputs
Technology
4
refers to the tools, techniques, machines,
processes and actions used to transform inputs
into outputs
Technology
Organizational Woodward Service Departmental
Perrow InterdependenceThompson
5
Organizational Departments Differentiate to Meet
Needs of Sub-environments
President
R D Division
Sales Division
Manufacturing Division
Market Sub-environment Customers
Advertising Competitors agencies Distribution sys
tem
Manufacturing Sub-environment Labor Raw
Suppliers materials Production equipment
Scientific Sub-environment Scientific
Research journals centers Professional a
ssociations
6
Transformation Process for a Manufacturing Company
ENVIRONMENT
Organization
Technology
Raw Material Inputs
Product or Service Outputs
Transformation Process
Materials Handling
Assembly
Milling
Inspection
Departments
7
Woodwards Classification Based on System of
Production

• Group I
• Small-batch and unit production
• Group II
• Large-batch and mass production
• Group III
• Continuous process production

8
Woodwards Classification Based on System of
Production
Organic, with personal supervision used for
control

• Small-batch and unit production

• Large-batch and mass production

Mechanistic with both impersonal controls and
supervision

• Continuous process production

Organic, with impersonal control of process
9
Thompsons Classification of Interdependence and
Management Implications
Client
Client
Client
10
Relationships Among Interdependence and Other
Characteristics of Team Play
Source Based on William Passmore, Carol E.
Francis, and Jeffrey Halderman, Sociotechnical
Systems A North American Reflection On the
Empirical Studies of the 70s, Human Relations
35 (1982) 1179-1204.
11
Computer-Integrated Manufacturing

• Computer-aided design
• (CAD)
• Computer-aided manufacturing
• (CAM)
• Integrated Information Network

12
Relationship of Computer-Integrated Manufacturing
Technology to Traditional Technologies
Flexible Manufacturing
NEW CHOICES
Customized
PRODUCT FLEXIBILITY
TRADITIONAL

CHOICES
Standardized
BATCH SIZE
Small
Unlimited
Source Based on Jack Meredith, The Strategic
Advantages of New Manufacturing Technologies For
Small Firms. Strategic Management Journal 8
(1987) 249-58 Paul Adler, Managing Flexible
Automation, California Management Review (Spring
1988) 34-56 and Otis Port, Custom-made Direct
from the Plant. Business Week/21st Century
Capitalism, 18 November 1994, 158-59.
13
Comparison of Organizational Characteristics
Associated with Mass Production andComputer
Integrated Manufacturing
Major changes in org. design and structure are
needed
14
Differences Between Manufacturing and Service
Technologies

• Manufacturing Technology
• Tangible product
• Products can be inventoried for later consumption
  
• Capital asset intensive
• Little direct customer interaction
• Human element may be less important
• Quality is directly measured
• Longer response time is acceptable
• Site of facility is moderately important

• Service Technology
• Intangible product
• Production and consumption take place
  simultaneously
• Labor knowledge intensive
• Customer interaction generally high
• Human element very important
• Quality is perceived and difficult to measure
• Rapid response time is usually necessary
• Site of facility is extremely important

Service Airlines, Hotels,
Consultants, Healthcare, Law firms
Product and Service Fast-food outlets,
Cosmetics, Real estate, Stockbrokers, Retail
stores
Product Soft drink companies, Steel
Companies, Auto manufacturers, Food processing
plants
15
Comparison of Organizational Characteristics
Associated with Mass Production andComputer
Integrated Manufacturing
Source Based on Patricia L. Nemetz and Louis W.
Fry, Flexible Manufacturing Organizations
Implications for Strategy Formulation and
Organization Design. Academy of Management
Review 13 (1988) 627-38 Paul S. Adler,
Managing Flexible Automation, California
Management Review (Spring 1988) 34-56 Jeremy
Main, Manufacturing the Right Way, Fortune, 21
May 1990, 54-64.
16
Comparison of Organizational Characteristics
Associated with Mass Production andComputer
Integrated Manufacturing
Source Based on Patricia L. Nemetz and Louis W.
Fry, Flexible Manufacturing Organizations
Implications for Strategy Formulation and
Organization Design. Academy of Management
Review 13 (1988) 627-38 Paul S. Adler,
Managing Flexible Automation, California
Management Review (Spring 1988) 34-56 Jeremy
Main, Manufacturing the Right Way, Fortune, 21
May 1990, 54-64.
17
Configuration and Characteristics of Service
Organizations vs. Product Organizations
18
Departmental Technologies
Variety Frequency of unexpected
and novel events
Perrow
Analyzability Reduced to
predetermined steps

• CRAFT
• Low analyzability
• Low variety
• Examples
• Performing arts
• Trades
• Fine goods manufacturing

• ROUTINE
• High analyzability
• Low variety
• Examples
• Sales
• Clerical
• Drafting
• Auditing

19
Departmental Technologies

• ENGINEERING
• High analyzability
• High variety
• Examples
• Legal
• Engineering
• Tax accounting
• General accounting

• NONROUTINE
• Low analyzability
• High variety
• Examples
• Strategic planning
• Social science research
• Applied research

20
Relationship of Department Technology to
Structural and Management Characteristics
Mostly Organic Structure 1. Moderate
formalization 2. Moderate centralization 3.
Work experience 4. Moderate to wide span 5.
Horizontal, verbal communications
CRAFT
Organic Structure 1. Low
formalization 2. Low centralization 3.
Training plus experience 4. Moderate to narrow
span 5. Horizontal communications
meetings NONROUTINE
Mechanistic Structure 1. High
formalization 2. High centralization 3. Little
training or experience 4. Wide span 5.
Vertical, written communications
ROUTINE
Mostly Mechanistic Structure 1. Moderate
formalization 2. Moderate centralization 3.
Formal training 4. Moderate span 5. Written and
verbal communications
ENGINEERING
21
Workflow interdependence
Thompson
low
high
TECHNOLOGY
Long linked
Mediating
Intensive
INTERDEPENDENCE
Reciprocal (new product development)
Pooled (product delivery)
Sequential (product manufacture)
Banks
Assembly Lines
RD Planning Design
COORDINATION
Standardization Rules Planning Schedules
Standardization Rules/Planning Schedules Mutual
adjustment
Standardization Rules
22
Technology Comparison
Workbook Activity
23
Primary Means to Achieve Coordination for
Different Levels of Task Interdependence in a
Manufacturing Firm
COORDINATION
INTERDEPENDENCE
High
Reciprocal (new product development)
Horizontal structure, cross-functional
teams Face-to-face communication, Unscheduled
meetings, Full-time integrators Scheduled
meetings, task forces Vertical
communication Plans Rules
Mutual Adjustment
Planning
Standardization
Low
24
Sociotechnical Systems Model
Job Design
The Social System Individual and
team behaviors Organizational/team culture Manag
ement practices Leadership style Degree of
communication and openness Individual needs and
desires
The Technical System Type of production
technology (small batch, mass production, CIM,
etc.) Level of interdependence (pooled,
sequential, reciprocal) Physical work
setting Complexity of production process
(variety and analyzability) Nature of raw
materials Time pressure
Design for Joint Optimization Work roles,
tasks, workflow Goals and values Skills and
abilities
25
Kieff
Sue
4
1
3
4
4
4
4
5
4
5
3
26
(No Transcript)
27
Organizational Life Cycle
Streamlining, small-company thinking
Large
Development of teamwork
Continued maturity
S I Z E
Addition of internal systems
Decline
Crisis Need for revitalization
Provision of clear direction
Crisis Need to deal with too much red tape
Creativity
Crisis Need for delegation with control
Crisis Need for leadership
1. Entrepreneurial Stage
2. Collectivity Stage
3. Formalization Stage
4. Elaboration Stage
Small
ORGANIZATION STAGES OF DEVELOPMENT
28
Organizational Life Cycle

• Little or no Structure
• Direct Supervision
• Get Customers 1 key
• Deliver Product
• Owner does it all
• Start up capital
• 24 hrs a day

Large
S I Z E
Creativity
Small
1. Entrepreneurial Stage
ORGANIZATION STAGES OF DEVELOPMENT
29
Organizational Life Cycle
Large
S I Z E
Provision of clear direction
Creativity
Crisis Need for delegation with control
Crisis Need for leadership
Small
1. Entrepreneurial Stage
2. Collectivity Stage
ORGANIZATION STAGES OF DEVELOPMENT
30
Organizational Life Cycle

• Super of Super
• Survival
• Owner makes all decisions
• Cash flow
• Break even
• Planning
• Earn Marginal returns
• Begin to develop departments
• Begin of functional
• Mom Pop

Large
S I Z E
Creativity
Small
1. Entrepreneurial Stage
2. Collectivity Stage
ORGANIZATION STAGES OF DEVELOPMENT
31
Organizational Life Cycle
Large
S I Z E
Addition of internal systems
Provision of clear direction
Crisis Need to deal with too much red tape
Creativity
Crisis Need for delegation with control
Crisis Need for leadership
Small
1. Entrepreneurial Stage
2. Collectivity Stage
3. Formalization Stage
ORGANIZATION STAGES OF DEVELOPMENT
32
Organizational Life Cycle

• Functional
• Delegation
• Cash management
• Professional staff
• Cash plentiful
• Put basic systems in place
• Serious budgets
• Line Staff
• Growth
• Efficiency and control
• Often sold

Large
S I Z E
Provision of clear direction
Creativity
Crisis Need for delegation with control
Crisis Need for leadership
Small
1. Entrepreneurial Stage
2. Collectivity Stage
3. Formalization Stage
ORGANIZATION STAGES OF DEVELOPMENT
33
Organizational Life Cycle
Development of teamwork
Large
S I Z E
Addition of internal systems
Crisis Need for revitalization
Provision of clear direction
Crisis Need to deal with too much red tape
Creativity
Crisis Need for delegation with control
Crisis Need for leadership
Small
1. Entrepreneurial Stage
2. Collectivity Stage
3. Formalization Stage
4. Elaboration Stage
ORGANIZATION STAGES OF DEVELOPMENT
34
Organizational Life Cycle

• How to maintain control with out stifling
  entrepreneurial qualities

• Divisional
• Maturity
• Decentralization
• Cost control
• Strategic Planning
• Extensive systems formal controls
• Return on Investment
• SBUs
• Professional

Large
S I Z E
Addition of internal systems
Provision of clear direction
Crisis Need to deal with too much red tape
Creativity
Crisis Need for delegation with control
Crisis Need for leadership
Small
1. Entrepreneurial Stage
2. Collectivity Stage
3. Formalization Stage
4. Elaboration Stage
ORGANIZATION STAGES OF DEVELOPMENT
35
Organizational Life Cycle
Formalized functional ridged process procedures
Development of teamwork
Large
Beginnings of functional structure
S I Z E
Addition of internal systems
Crisis Need for revitalization
One person show
Divisional
Provision of clear direction
Crisis Need to deal with too much red tape
Creativity
Crisis Need for delegation with control
Move to Organic and Self Organizing Teams
Learning
Crisis Need for leadership
Small
1. Entrepreneurial Stage
2. Collectivity Stage
3. Formalization Stage
4. Elaboration Stage
ORGANIZATION STAGES OF DEVELOPMENT
36
Organizational Life Cycle
Streamlining, small-company thinking
Large
Development of teamwork
Continued maturity
S I Z E
Addition of internal systems
Decline
Crisis Need for revitalization
Provision of clear direction
Crisis Need to deal with too much red tape
Creativity
Crisis Need for delegation with control
Crisis Need for leadership
1. Entrepreneurial Stage
2. Collectivity Stage
3. Formalization Stage
4. Elaboration Stage
Small
ORGANIZATION STAGES OF DEVELOPMENT
37
Organization Characteristics During Four Stages
of Life Cycle
38
Organizational Control

• The systematic process through which managers
  regulate activities to make them consistent with
  the expectations established in plans, targets,
  and performance standards.

39
Environmental Discontinuity

• A large change in the organization's environment
  over a short period.
• As organizations adapt to these changes with
  modifications in strategy, the control system
  must reflect the changes.

Org.changes require changes in controls
40
Organizational Control Systems
Clan
Flexible
Formal Control Orientation
Bureaucratic
Market
Stable
Internal
External
Forms of Attention
41
Organizational Control Systems
Clan
Flexible
Formal Control Orientation
Bureaucratic
Market
Stable
Internal
External
Focus of Attention
42
Traditional Bureaucratic Control

• Rules and procedures
• Management control systems
• Hierarchy of authority
• Quality control department
• Selection and training
• Technology.

43
Organizational Control Systems
Clan
Flexible
Formal Control Orientation
Bureaucratic
Market
Stable
Internal
External
Focus of Attention
44
Organizational Control Systems
Clan
Flexible
Formal Control Orientation
Bureaucratic
Market
Stable
Internal
External
Focus of Attention
45
Market Control

• Price
• Efficiency
• Sales in relation to costs
• Competition
• Exchange

46
Organizational Control Systems
Clan
Flexible
Formal Control Orientation
Bureaucratic
Market
Stable
Internal
External
Focus of Attention
47
Organizational Control Systems
Clan
Flexible
Formal Control Orientation
Bureaucratic
Market
Stable
Internal
External
Focus of Attention
48
Clan Control

• Social values, traditions, common beliefs, and
  trust to generate compliance with organizational
  goals
• Implemented by
• - Corporate culture
• - Peer groups
• - Self-control
• - Employee selection and socialization.

49
Organizational Control Systems
Clan
Entrepreneurial
Flexible
Formal Control Orientation
Bureaucratic
Market
Stable
Internal
External
Focus of Attention
50
Balanced Scorecard
Kaplan Norton
Financial Do actions contribute to improving
financial performance? Examples of measures
profits, return on investment
Internal Business Processes Does the chain of
internal activities and processes add value for
customers and shareholders? Examples of
measures order-rate fulfillment, cost-per-order
Customers How well do we serve our
customers? Examples of measures customer
satisfaction, customer loyalty
Mission Strategy Goals
Learning and Growth Are we learning and
changing? Examples of measures continuous
process improvement, employee retention, new
product introductions
51
(No Transcript)
52
(No Transcript)
53
(No Transcript)
54
(No Transcript)
55
(No Transcript)
56
(No Transcript)
57
(No Transcript)
58
Evolution of Organizational Applications of
Information Technology
TOP (strategy, plans, non-programmed)
3. Strategic Weapon
INTERNAL
EXTERNAL

• Extranets
• E-Commerce
• Network
• structure

• Networking
• Intranets
• Enterprise resource
• planning

2. Business Resource
LOW MANAGEMENT LEVEV HIGH

• Management Information
• systems
• Decision Support Systems
• Executive information
• systems

Direction of Information System Evolution
1. Operations

• Transaction
• processing systems
• Data warehousing

FIRST-LINE (operational, past, programmed)
LOW SYSTEM COMPLEXITY HIGH
59
Strategic Advantages from Information Technology

• Low-Cost Leadership
• Operational efficiency
• Interdepartmental coordination
• Rapid re-supply

• Differentiation
• Lock in customers
• Customer service
• Product development, market niches

60
Electronic Data Interchange for International
Transactions
Manufacturers Bank
Customers Bank
Customer
MANUFACTURER
Suppliers
Export Freight Forwarder
Import Clearing Agent
Export Customs
Import Customs
61
Two Approaches to Knowledge Management
Learning Organization
Explicit Provide high-quality, reliable, and
fast information systems for access of codified
reusable knowledge
Tacit Channel individual expertise to provide
creative advice on strategic problems
People-to-documents
Person-to-person
Develop networks for linking people so that tacit
knowledge can be shared
Knowledge Management Strategy
Develop an electronic document system
that codifies, stores, disseminates, and
allows reuse of knowledge
Invest heavily in information technology, with a
goal of connecting people with reusable codified
knowledge
Invest moderately in information technology, with
a goal of facilitating conversations and the
ex- change of tacit knowledge
Data warehousing Knowledge mapping Electronic
libraries Intranets, networks
Dialogue Learning histories and
storytelling Communities of practice
62
The Dynamic Network Organization Structure
Manufacturing
Distribution
Health Products, Inc. (Central Hub)
Marketing
Accounts Receivable
Public Relations
63
Thats it for today
On to groups
64
(No Transcript)
65
Decision Making
BUSINESS

• the art of making irrevocable decisions based on
  insufficient knowledge

66
BUSINESS

• the art of making irrevocable decisions based on
  insufficient knowledge

67
Decisions Made Within the Organization

• Complex, emotionally charged issues
• Quick
• Less certain environment
• Less clarity about means/outcomes
• Requires more cooperation

68
Todays Business Environment

• New strategies
• Reengineering
• Restructuring
• Mergers/Acquisitions
• Downsizing
• New product/market development
• . . . Etc.

Enron Trust Transparency
Role of corporation
69
Types of Decisions
Programmed Decisions
Nonprogrammed Decisions
Situation in which specific procedures have been
developed for repetitive and routine problems.
Decisions required for unique and complex
management problems.
70
Decision Process
Evaluation
Ignore
Symptoms
Recognize
Who What Where When Verify
Action Plan
Change
WHO
Goals
Consistency, Specific, Measurable, Attainable
Criteria
Quantity
Diagnosis and fact gathering
Dont evaluate
71
Behavioral Influence on Decision Making

• Perception A person's view of the world
• Stereotyping - projecting characteristics of a
  small number of people as characteristics of
  the entire group
• Halo Effect - one characteristic overshadows
  all other characteristics or aspects of the
  decision
• Subjective Rationality - Thinking logically but
  within one's own framework
• Bounded Rationality - personal, environmental,
  time, and organizational constraints
  which place limits on decisions

72
Behavioral Influence on Decision Making

• Recency - tendency to ascribe more importance to
  things that happened most recently
• Satisficing - tendency to accept "adequate"
  decision instead of the best
• Values
• Personality
• Propensity For Risk

73
Behavioral Influence on Decision Making

• Potential for Dissonance
• Decision makers often experience cognitive
  dissonance, which is a lack of harmony among the
  decision makers various cognitions after a
  decision has been made.
• Escalation of Commitment
• Refers to an increasing commitment to a previous
  decision when a rational decision maker would
  withdraw.

74
The Carnegie Model
Simple What is available
Uncertainty
Coalition Formation
Search
Hold joint discussion and interpret goals and
problems Share opinions Establish problem
priorities Obtain social support for problem,
solution
Conduct a simple, local search Use established
procedures if appropriate Create a solution if
needed
Information is limited Managers have many
constraints
Conflict
Managers have diverse goals, opinions,
values, experience
Satisficing
Adopt the first alternative that is
acceptable to the coalition
75
The Incremental Decision Process Model

• Every step characterized by decision interrupts
• Identification Phase
• Recognition
• Diagnosis
• Development Phase
• Search
• Screen
• Design
• Selection Phase
• Judgment (evaluation choice)
• Analysis (evaluation)
• Bargaining (evaluation choice)
• Authorization

Series of nibbles Small choices One leads to
another Continual recycling
76
Learning Organization Decision Process When
Problem Identification and Problem Solution Are
Uncertain
PROBLEM IDENTIFICATION
PROBLEM SOLUTION
When problem identification is Uncertain,
Carnegie model applies Political and social
process is Needed Build coalition, seek
agreement, And resolve conflict about goals And
problem priorities
When problem solution is uncertain, Incremental
process model applies Incremental,
trial-and-error Process Is needed Solve big
problems in little steps Recycle and try again
when blocked
77
The Garbage Can Model of Decision-Making
Organized Anarchy
Streams of events Compose of problems, solutions,
participants, choices When they connect a
decision gets made
Problems
Solutions
Middle Management
Causes Goals unclear Cause and effect
undefined High turnover
Problems Solutions Choice Opportunities Participa
nts
Participants
Participants
Choice Opportunities
Choice Opportunities
Solutions
Department A
Department B
Problems Solutions Choice Opportunities Participa
nts
Problems Solutions Choice Opportunities Participa
nts
Choice Opportunities
Problems
Participants
Solutions
Problems
Problems
Solutions
Participants
Participants
78
Special Decision Circumstances

• High-Velocity Environments
• Decision Mistakes and Learning
• Escalating Commitment

79
Decision Styles
Workbook Activity
80
Contingency Framework for Using Decision Models
Problem Consensus
2
1
Certain
Individual Rational Approach
Computation Organization Management Science
Individual Bargaining, Coalition
Formation Organization Carnegie Model
Solution Knowledge
Individual Judgment Trial-and-error Organiza
tion Incremental Decision Process Model
Individual Bargaining and Judgment
Inspiration and Imitation Organization
Carnegie and Incremental Decision Process
Models, evolving to Garbage Can
4
3
Uncertain
81
Constraints and Trade-offs During Non-programmed
Decision-Making
Bounded Rationality Limited time,
information, resources to deal with
complex, multidimensional issues
Decision/ Choice search for a high-quality decisi
on alternative
Trade-off
Personal Constraints Desire for prestige,
success personal decision style and the need
to satisfy emotional needs, cope with pressure,
maintain self-concept
Trade-off
Trade-off
Trade-off
Organizational Constraints Need for agreement,
shared perspective, cooperation, support,
corporate culture and structure, ethical values
Trade-off
82
Constraints and Trade-offs During Non-programmed
Decision-Making
Bounded Rationality Limited time,
information, resources to deal with
complex, multidimensional issues
Decision/ Choice search for a high-quality decisi
on alternative
Trade-off
Personal Constraints Desire for prestige,
success personal decision style and the need
to satisfy emotional needs, cope with pressure,
maintain self-concept
Trade-off
Trade-off
Trade-off
Organizational Constraints Need for agreement,
shared perspective, cooperation, support,
corporate culture and structure, ethical values
Trade-off
83
Organizational Constraints Need for agreement,
shared perspective, cooperation, support,
corporate culture and structure, ethical values
84
A New Decision-Making Process

• Required because
• no one person has enough info to make all major
  decisions
• No one person has enough time and credibility to
  convince many
• Relies less on hard data
• Guided by powerful coalition
• Permits trial and error approach

85
(No Transcript)
86

• POWER
• Ability to influence others to bring about
  desired outcomes

Politics The exercise of power to influence
decisions
Good Human Relations
87

• A good idea, analysis, or solution is interesting
  

But of little value until someone makes it happen
Making it happen often involves politics
88
Sources of Conflict and Use of Rational vs.
Political Model
When Conflict Is Low, Rational Model
describes organization
When Conflict Is High, Political Model
describes organization
Organization Variables
Sources of Potential Inter-group Conflict
Goal Incompatibility Differentiation Task
Interdependence Limited Resources
Consistent across participants Centralized Ord
erly, logical, rational Norm of
efficiency Extensive, systematic, accurate
Inconsistent, pluralistic within the
organization Decentralized, shifting coalitions
and interest groups Disorderly, result of
bargaining and interplay among interests Free
play of market forces, conflict is legitimate
and expected Ambiguous, information used and
withheld strategically
Goals
Power and Control
Decision Process
Rules and Norms
Information
89
Marketing Manufacturing Areas of Potential
Goal Conflict

MARKETING VS. MANUFACTURING

Operative goal is Operative
goal is Goal Conflict customer
satisfaction production efficiency
Conflict Area Typical
Comment Typical Comment
Breadth of product line Our
customers The product line is
too demand variety.
broad, all we get are
short, uneconomical runs. New product
introduction New products are our
Unnecessary design changes
lifeblood. are prohibitively
expensive. Production scheduling
We need faster response. We need
realistic customer Lead times
are too long. commitments that
dont change like the wind
direction Physical distribution
Why dont we ever have We cant
afford to keep huge
the right merchandise
inventories. in
inventory? Quality Why cant
we have Why must we always
offer reasonable quality
options that are too
at low cost? expensive and offer
little customer utility?

Sources Based on Benson S. Shapiro, Can
Marketing and Manufacturing Coexist? Harvard
Business Review 55 (September-October 1977)
104-14 and Victoria L. Crittenden, Lorraine R.
Gardiner, and Antonie Stam, Reducing Conflict
Between Marketing and Manufacturing, Industrial
Marketing Management 22 (1993) 299-309.
90
Interpersonal
Sources of Power
position
Legitimate
reward
Reward
punishment
Coercive
expertise or knowledge
Expert
Referent
identification with
91
Individual vs. Organizational Power

• Legitimate Power power coming from a formal
  management position.
• Reward Power stems from the authority to bestow
  rewards on other people.
• Coercive Power the authority to punish or
  recommend punishment.
• Expert Power leaders special knowledge or skill
  regarding the tasks performed by followers.
• Referent Power personality characteristics that
  command subordinates identification, respect,
  and admiration so they wish to emulate the leader.

92
Power vs. Authority

• POWER
• Ability to influence others to bring about
  desired outcomes
• AUTHORITY
• Flows down the vertical hierarchy
• Prescribed by the formal hierarchy
• Vested in the position held

93
Organizational Sources of Power

• Formal Position
• Resources
• Control of Decision Premises and Information
• Network Centrality

94
Horizontal Sources of Power
High Power
Low Power
Source Charles Perrow, Departmental Power and
Perspective in Industrial Firms, in Mayer N.
Zald, ed., Power in Organizations (Nashville,
Tenn. Vanderbilt University Press, 1970), 64.
95
Power and Political Tactics in Organizations
5. Enter areas of high uncertainty
96
Tactics for Increasing Power Base
Dependency
Resources
Department/Personal Power
Centrality
Nonsubstitutability
Coping with Uncertainty

97
Tactics for Using Power
Build Coalitions
Expand Networks
Department/Personal Power
Control Decision Premise
Enhance Expertise
Preferences Explicit Power Implicit

98
Tactics for Increasing Power with Other Dept.
Create Integration Devices
Confrontation Negotiation
Department/Personal Power
Inter-group Consultation
Rotate Members
Superordinate Goals

99
Negotiating Strategies

• Win-Win Strategy
• Define the conflict as a mutual problem
• Pursue joint outcomes
• Find creative agreements that satisfy both groups
• Use open, honest, and accurate communication
• Avoid threats
• Communicate flexibility

• Win-Lose Strategy
• Define the conflict as a win-lose situation
• Pursue self outcomes
• Force other group into submission
• Use deceitful, inaccurate communication
• Use threats
• Communicate rigidity

Source Adapted from David W. Johnson and Frank
P. Johnson, Joining Together Group Theory and
Group Skills (Englewood Cliffs, N. J.
Prentice-Hall, 1975), 182-83.
100
Thats it for today
On to groups
101
Managing Organizational Change and Innovation
102
Forces Driving the Need for Major Organizational
Change

• Global Changes, Competition and Markets
• Technological Change
• International Economic Integration
• Maturation of Markets in Developed Countries
• Fall of Communist and Socialist Regimes

More Threats More domestic
competition Increased Speed International
competition
More Opportunities Bigger markets Fewer
barriers More international markets
More Large-Scale Change
in Organizations Structure change
Mergers, joint ventures,
consortia Strategic change

Horizontal organizing, teams, networks Culture
change
New technologies,
products Knowledge management, enterprise
New business processes Resource
planning
E-commerce Quality programs

Learning organizations
103
Forces Driving the Need for Major Organizational
Change

• Global Changes, Competition and Markets
• Technological Change
• International Economic Integration
• Maturation of Markets in Developed Countries
• Fall of Communist and Socialist Regimes

• Global Changes, Competition and Markets
• Technological Change
• International Economic Integration
• Maturation of Markets in Developed Countries
• Fall of Communist and Socialist Regimes

More Threats More domestic
competition Increased Speed International
competition
More Opportunities Bigger markets Fewer
barriers More international markets
More Large-Scale Change
in Organizations Structure change
Mergers, joint ventures,
consortia Strategic change

Horizontal organizing, teams, networks Culture
change
New technologies,
products Knowledge management, enterprise
New business processes Resource
planning
E-commerce Quality programs

Learning organizations
India China
104
Forces Driving the Need for Major Organizational
Change

• Global Changes, Competition and Markets
• Technological Change
• International Economic Integration
• Maturation of Markets in Developed Countries
• Fall of Communist and Socialist Regimes

More Threats More domestic
competition Increased Speed International
competition
More Opportunities Bigger markets Fewer
barriers More international markets
More Large-Scale Change
in Organizations Structure change
Mergers, joint ventures,
consortia Strategic change

Horizontal organizing, teams, networks Culture
change
New technologies,
products Knowledge management, enterprise
New business processes Resource
planning
E-commerce Quality programs

Learning organizations
105
Forces Driving the Need for Major Organizational
Change

• Global Changes, Competition and Markets
• Technological Change
• International Economic Integration
• Maturation of Markets in Developed Countries
• Fall of Communist and Socialist Regimes

More Threats More domestic
competition Increased Speed International
competition
More Opportunities Bigger markets Fewer
barriers More international markets
More Large-Scale Change
in Organizations Structure change
Mergers, joint ventures, consortia Strategic
change
Horizontal organizing, teams, networks Culture
change New
technologies, products Knowledge management,
New business processes Resource planning
E-commerce Quality
programs
Learning organizations
More Threats More domestic
competition Increased Speed International
competition
More Opportunities Bigger markets Fewer
barriers More international markets
More Large-Scale Change
in Organizations Structure change
Mergers, joint ventures,
consortia Strategic change

Horizontal organizing, teams, networks Culture
change
New technologies,
products Knowledge management, enterprise
New business processes Resource
planning
E-commerce Quality programs

Learning organizations
Outsourcing
Rush to the bottom
106
Forces for Change
Internal
External

• Customers
• Competitors
• Technology
• Economic
• International.

• Management
• Employees
• Labor unions
• Production inefficiencies.

107
Two Types of Planned Change

• Operational Change
• based on efforts to improve basic work and
  organizational processes.

• Transformational Change
• involves redesign and renewal of the total
  organization.

Incremental
Continuous progression
Paradigm-breaking burst
Radical
Affect organizational part
Transform entire organization
Through normal structure and management processe
s
Create new structure and management
Technology improvements
Breakthrough technology
Product improvement
New products, new markets
108
Types of Organizational Change

• Authority Goals
• Structural characteristics
• Administrative procedures
• Management systems
• Successful structural change is through a
  top-down approach.

• Refer to managerial actions to improve
  effectiveness by introducing change through
  formal policies and procedures.

Time-based Competition A strategy of competition
based on the ability to deliver products
and services faster than competitors.

• A task focus emphasizes job design change.
• A technological approaches emphasizes change in
  the work flow.

• Understand customer needs
• Aware technology
• Departments cooperate
• Ideas often lower levels
• Requires expertise from several departments

• New strategy and may define new market

• Values
• Norms
• Attitudes
• Beliefs
• Behavior.

109
Model of Change Sequence of Events
Environmental Forces
Monitor global competition, customers,
competitors, and other factors.
Implement Change
Initiate Change
Need for Change
Evaluate problems and opportunities,
define needed changes in technology,
products, structure, and culture.
Facilitate search, creativity, idea champions,
and venture teams.
Use force field analysis, tactics
for overcoming resistance.
Internal Forces
Consider plans, goals, company problems,
and needs.
110
Sequence of Elements for Successful Change
Environment
Internal Creativity and Inventions
Suppliers Professional associations Consultants Re
search literature
Organization
1. Ideas
3. Adoption
4.Implementation
2. Needs
Customers Competition Legislation Regulation Labor
force
5. Resources
Perceived Problems or Opportunities
111
Division of Labor Between Departments to Achieve
Changes in Technology
General Manager
Creative Department (Organic Structure)
Using Department (Mechanistic Structure)
112
Probability of New Product Success

• 
  PROBABILITY
• Technical completion
• (technical objectives achieved) .57
• Commercialization
• (full-scale marketing) .31
• Market Success
• (earns economic returns) .12

Source Based on Edwin Mansfield, J. Rapaport,
J. Schnee, S. Wagner, and M. Hamburger, Research
and Innovation in Modern Corporations (New York
Norton, 1971), 57.
113
Horizontal Linkage Model for New Product
Innovations
General Manager
Technical Developments
Customer Needs
RD Department
Marketing Department
Linkage
Linkage
Linkage
Linkage
Linkage
Production Department
114
Dual-Core Approach Change
Administrative Structure
Technology
Administrative Core
Technical Core
Top-Down Bottom-Up
Examples of Change Strategy
Production
Downsizing Techniques
Structure
Workflow
Best Organizational Design for Change
Mechanistic Organic
115
Resistance to Change
Managers and employees often seem to prefer the
status quo.

• Self-Interest the fear of personal loss is
  perhaps the biggest obstacle to organizational
  change.
• Lack of Understanding and Trust do not
  understand the intended purpose of a change, or
  distrust the intentions.
• Uncertainty the lack of information about future
  events.
• Different Assessments and Goals people who will
  be affected by innovation may assess the
  situation differently.

116
Three Distinct Steps for Achieving Behavioral and
Attitudinal Change

• Unfreezing
• diagnosis stage
• participants are made aware of problems in order
  to increase their willingness to change their
  behavior
• Changing
• intervention stage
• individuals experiment with new workplace
  behavior
• Re-freezing
• reinforcement stage
• individuals acquire a desired new skill or
  attitude and are rewarded for it by the
  organization

Unlearning
Relearning
Re-freezing
117
Force Field Analysis
Level of behavior
Kurt Lewin
DR I V I NG FORCES
RESTRAINING FORCES
E Q U I L I B R I U M
Key is reducing restraining forces
118
Using Force Field Analysis to Change from
Traditional to JIT Inventory System
119
Organizational Development

• Application of behavioral science knowledge to
• Improve an organization's health and
  effectiveness
• Cope with environmental changes
• Improve internal relationships
• Increase problem-solving capabilities.

120
OD Activities

• Team Building enhances the cohesiveness and
  success of organizational groups and teams.
• Survey Feedback begins with a questionnaire
  distributed to employees on values, climate,
  participation, leadership, and group cohesion
  within their organization.
• Large-group Intervention brings together
  participants from all parts of the organization
  to discuss problems or opportunities and plan for
  change.
• Process-consultation
• Intergroup activities
• Symbolic leadership

121
Stages of Commitment to Change

• Preparation
• Initial contact
• Awareness
• Acceptance
• Understanding
• Decision to implement
• Commitment
• Installation
• Institutionalization

122
Barriers to Change

• Excessive focus on costs
• Failure to perceive benefits
• Lack of coordination and cooperation
• Uncertainty avoidance
• Fear of loss

123
Implementation Tactics

• Communication and education
• Participation
• Negotiation
• Coercion
• Top management support.

124
Techniques for Change Implementation

• Identify a true need for change.
• Find an idea that fits the need.
• Obtain top management support.
• Design the change for easy implementation (in
  stages/steps).
• Develop plans to overcome resistance.
• Create change teams.
• Foster idea champions.

125
Innovation Measures
126
Factors Associated with Organizational Excellence
Corporate Culture

• Climate of
• trust
• Sharing
• information
• Productivity
• through
• people
• Long-term
• view
• Valuing
• adaptation
• and learning

Organization Design

• Simple form,
• lean staff
• Empowerment
• to increase
• entrepreneurship
• Horizontal
• structure and
• collaboration
• Electronic
• technology,
• e-commerce
• Balanced
• measurement
• and control

Top Management

• Leadership
• vision
• Bias toward action/
• change/learning
• Foundation of core
• values
• Facilitating
• knowledge
• management

Strategic Orientation

• Close to the customer
• Fast response
• Clear business focus
• and goals
• Establishing
• inter-organizational
• linkages

127
Culture Change

• Reengineering and Horizontal Organization
• Total Quality Management
• The Learning Organization

128
Cycle of Continuous Improvement
Shewhart Cycle (PDCA) TQM
a test or change in a specific process
improve the process based on what you learn.
1. Plan
4. Act
2. Do
3. Check
the test or carry out the change
Check the results
129
The Learning Organization

• An organization in which everyone is engaged in
  identifying and solving problems, enabling the
  organization to continuously improve and increase
  its capability.

130
OD Culture Change Interventions

• Large group intervention
• Team building
• Interdepartmental activities

131
Empowerment

• Liberates employees
• Gives employees more responsibility
• Employees must work collaboratively
• Employees accept more leadership
• Employees participate in strategy.

Empowerment
Accountability
132
Leadership

• Provides vision for strategy development
• Supports empowerment
• Supports organizational design
• Supports information sharing.

133
The Empowerment Continuum
Mini-Enterprise Units
Self-Directed Teams
High
Cross- functional Teams
Responsible For Decision Process and Strategy
Quality Circles
Make Decisions
Participation Groups
Degree of Empowerment
Suggestion Programs
Participate In Decisions
Job Redesign/ Enrichment
Give Input
Have no Decision Discretion
Low
Employee Skills Required
Many and Complex
Few
Sources Based on Robert C. Ford and Myron D.
Fottler, Empowerment A Matter of Degree,
Academy of Management Executive 9, no. 3 (1995)
21-31 Lawrence Holpp, Applied Empowerment,
Training (February 1994) 39-44 and David P.
McCaffrey, Sue R. Faerman, and David W. Hart,
The Appeal and Difficulties of Participative
Systems, Organization Science 6, no. 6
(November-December 1995) 603-27.
134
Creating a Learning Organization
Workbook Activity
135
Information Sharing

• Must change culture to include employees,
  suppliers, and customers.

136
Approaches and Techniques That Facilitate
Organizational Change

• Human Asset Approaches
• Refers to a category of change methods designed
  to result in a far less specific and much broader
  outcome of helping individuals learn and grow
  professionally, and perhaps personally.
• Team Building
• Refers to exercises designed to help work groups
  improve their performance.

137
Approaches and Techniques that Facilitate
Organizational Change

• The Managerial Grid
• Refers to an approach to change based on a theory
  of leader behavior. According to the managerial
  grid approach, a balanced concern for production
  and people is the most effective leadership
  style.
• Ethics Training
• Programs designed to (1) develop employee
  awareness of business ethics, and (2) focus on
  firm specific ethics issues.

138
Approaches and Techniques that Facilitate
Organizational Change

• Mentorship Programs
• Mentoring programs help individuals develop by
  providing specific job instruction, disseminating
  organizational cultural norms and values,
  dispelling organizational myths, and generally
  transferring knowledge gained through years of
  being part of the organization.
• Introspection Development
• Refers to any number of approaches to taking time
  to reflect on the impact of change.

139
Approaches and Techniques that Facilitate
Organizational Change

• Multifacted Approaches
• Not all organizational change interventions fit
  neatly into one of the three categories of
  approaches.
• Sometimes techniques from different categories
  may be used together in a multifaceted approach
  to development.

140
Matching Organizational Structure to
International Advantage
141

• GOOD LUCK WITH THE
• FINAL WORK
• TEST