case study

Chapter 11

LEARNING OBJECTIVES 1. Identify five traditional organizational structures and pros

and cons of each 2. Describe the product-team structure and explain why it is

a prototype for a more open, agile organizational structure

3. Explain five ways improvements have been sought in traditional organizational structures

4. Describe what is meant by agile, virtual organizations, how outsourcing can support this, and pros and cons

5. Describe boundaryless organizations and why they are important

6. Explain why organizations of the future need to be ambidextrous learning organizations

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Organizational Structure

Formalized arrangement of interaction and responsibility for the tasks, people, and resources in an organization. o Simple o Functional o Divisional / Strategic Business Unit / Holding company o Matrix o Product-team

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Simple Organizational Structure

• Owner + a few employees

• Informal arrangement of tasks, responsibilities, and communication, accomplished through direct supervision

• Can be very demanding on the owner-manager

• Most common type (includes franchises – owner- operated etc)

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Functional Organizational Structure Tasks, people, and technologies necessary are divided into separate “functional” groups (e.g. marketing, HR, finance) with formal procedures for coordinating their activities to provide the firm’s products and services.

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Divisional Structure • Relatively autonomous units, or divisions, are governed by a central

corporate office but each is usually given profit responsibility and has its own functional specialists who provide products or services different from those of other divisions

• Expedites decision making in response to varied competitive environments

• The strategic business unit (SBU) is an adaptation whereby various divisions or parts of divisions are grouped together based on some common strategic elements, usually linked to distinct product/market differences

• Another adaptation is the holding company structure, where the corporate entity is a broad collection of often unrelated businesses and divisions such that it (the corporate entity) acts as financial overseer “holding” the ownership interest in the various parts of the company but has little direct managerial involvement

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Ex. 11.4 Divisional Organization Structure

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Matrix Organizational Structure • Functional and staff personnel are assigned to both a

functional area and a project or product manager • Intended to make the best use of talented people by

combining the advantages of functional specialization and product-project specialization

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Product-Team Structure • Seeks to simplify and amplify resources onto a narrow but

strategically important product, project, market, customer, or innovation

• Assigns functional managers and specialists to the project/process team that is empowered to make major decisions about the product

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Virtual / Agile / Ambidextrous Organizations • Virtual organization: a temporary network of independent

companies—suppliers, customers, subcontractors, even competitors—linked primarily by IT to share skills, access to markets, and costs

• Agile organization: identifies a set of business capabilities central to high-profitability operations and then builds a virtual organization around those capabilities

• Ambidextrous organization: emphasizes coordination and flexibility rather than just control oEvolution of the virtual organizational structure has brought

recognition of the central role knowledge plays in implementation oShift from exploitation to exploration (Subramanian Rangan, HBR)

indicates the growing importance of organizational structures that enable a learning organization (e.g. globalizing to learn, not just look for raw materials) to allow firms to build competitive advantage

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Outsourcing and Alliances

• Outsourcing: obtaining work previously done by employees from sources outside the company o A modular organization provides products or services using

different, self-contained specialists or companies brought together—outsourced—to contribute their primary or support activity to result in a successful outcome

o Business process outsourcing (BPO) is the most rapidly growing outsourcing worldwide (e.g. legal research, admin functions, HR, finance etc)

• Strategic alliances with suppliers, partners, contractors, and other providers allow those in the alliance to focus on what they do best, farm out everything else, and quickly provide value to the customer.

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Outsourcing Functional Activities Transferring work previously done by employees

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Examples? Which tasks might have most

outsourcing potential and why?

Ex. 10.7: Outsourcing is increasing

Becoming Boundaryless

• Jack Welch coined the term “boundaryless” to illustrate his vision for GE

• Outsourcing, strategic alliances, product-team structures, reengineering, restructuring—all are ways to move toward boundaryless organization

• Technology, particularly driven by the Internet, has been a major driver of the boundaryless organization

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Key Terms • Agile organization

• Ambidextrous organization

• Boundaryless organization

• Business process outsourcing

• Business process reengineering

• Corporate lattice

• Divisional organizational structure

• Downsizing

• External interface boundaries

• Functional organizational structure

• Geographic boundaries

• Holding company structure

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Key Terms (contd.)

• Horizontal boundaries • Lattice • Learning organization • Matrix organizational

structure • Modular organization • Simple organizational

structure • Strategic alliances

• Organizational structure • Outsourcing • Product-team structure • Restructuring • Self-management • Strategic business unit • Vertical boundaries • Virtual organization

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Leadership and Culture

Chapter 12

LEARNING OBJECTIVES 1. Describe what good organizational leadership involves

2. Explain how vision and performance help leaders clarify strategic intent

3. Explain the value of passion and selection/development of new leaders in shaping an organization’s culture

4. Briefly explain seven sources of power and influence available to every manager

5. Define and explain what is meant by organizational culture, and how it is created, influenced, and changed

6. Describe four ways leaders influence culture

7. Explain four strategy-culture situations 17

Organizational Leadership • The process and practice of

shepherding people toward a vision over time and developing that organization’s future leadership and culture.

• Leadership development: develop future leaders and familiarize them with the skills important to the company

• A leader’s challenge now is to prepare their organization for the faster pace of change

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Building an Organization • Strategic intent of a leader

o Vision of where they want to take their company, results sought

• Role of a leader o Personification / ongoing embodiment of the culture, or the new

example of what it should become o How the leader behaves, what they emphasize become what the

organization sees as “the important things to do and value.”

• Perseverance of a leader o Capacity to see a commitment through to completion long after

most people would have stopped trying.

• Principles of a leader o A leader’s fundamental personal standards that guide the sense of

honesty, integrity, and ethical behavior (think: Travis Kalanick) 19

Shaping Organizational Culture • Organizational culture is the set of key assumptions (often unstated) that

members of an organization share in common

• Leaders look to managers they need to execute strategy as another source of leadership to accept risk, and cope with the complexity of change

• Every organization has its own culture; leaders also use, e.g., reward systems, symbols, and structure to shape the culture (Publix: ‘Rolling out the Green Carpet’ introductory course)

• Supporting culture through o Emphasizing key themes or dominant values o Disseminating stories and legends about core values o Institutionalizing practices that systematically reinforce desired beliefs and values

• More complex to manage organizational culture in a global organization: o Different social norms (e.g. personal space – western vs eastern) o Values and attitudes o Religion o Education

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Competencies Leaders Should Possess (According to Ronald Riggio)

Three broad levels:

• Self/personal leadership o Self awareness o Strong and positive character o Sense of purpose

• Interpersonal leadership o Ability to communicate o Building and maintaining relationships o Influence and motivation

• Leading teams and organizations o Understanding and facilitating group/team processes o Understanding organizational processes and dynamics o Global mindset

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SOURCES OF POWER AND INFLUENCE

Organizational Power

• Position power

• Reward power

• Information power

• Punitive power

Personal Influence

• Expert influence

• Referent influence

• Peer influence

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Sources of Power Defined • Position Power

o Ability and right to direct others based on your formal position

• Reward Power o Ability to influence and direct others that comes from being

able to confer rewards in return for desired actions or outcomes.

• Information Power o Access to, and control of, information that is important to others

yet not easily obtained (admin assistant, spokesperson, etc)

• Punitive Power o Ability to coerce and deliver punishment for mistakes or

undesired actions by others, particularly subordinates.

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Personal Influence Defined • Expert Influence

o Others defer to you based on your specialized knowledge related to the task in question

• Referent Influence o Based on strong desire to be associated with you –

admiration, gain prestige or sense of purpose, or believe in your motivations

• Peer Influence o Ability to influence individual behavior based on group

norms, a group sense of what is the right way to do things, and the need to be valued and accepted by the group.

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Key Terms • Ethical standards • Expert influence • Referent influence • Information power • Leadership development • Leader’s vision • Organizational culture • Punitive / reward power

• Organizational leadership • Passion (of a leader) • Peer influence • Perseverance (of a leader) • Position power • Principles (of a leader) • Strategic intent

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