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502 C H A P T E R 1 5 Organizational Structure

coL27660_ch15_479-507.indd 502 10/17/17 11:43 AM

15.1 Is it possible to be a great leader of employees in a highly mechanistic organization? What special talents or abilities might be required?

15.2 Why do the elements of structure, such as work specialization, formalization, span of con- trol, chain of command, and centralization, have a tendency to change together? Which of the five do you feel is the most important?

15.3 Which is more important for an organization: the ability to be efficient or the ability to adapt to its environment? What does this say about how an organization’s structure should be set up?

15.4 Which of the organizational forms described in this chapter do you think leads to the high- est levels of motivation among workers? Why?

15.5 If you worked in a matrix organization, what would be some of the career development challenges that you might face? Does the idea of working in a matrix structure appeal to you? Why or why not?

D I S C U S S I O N Q U E S T I O N S

After five years under Apple CEO Tim Cook’s leadership, Apple’s revenue has tripled, it has doubled the number employees working for the company to over 115,000, and its cash reserves have grown to a record $246 billion. Cook says, “Our reason for being is the same as it’s always been. To make the world’s best products that really enrich people’s lives.” Apple’s functional structure has helped that product development to be wildly successful through collaboration, beating out a number of competitors like Sony whose multi-divisional structures keep them from sharing information, expertise, and technology in the most effective way. However, it causes problems for them as well. Apple desktop users are frustrated with a lack of updates (over three years running) and iPhone/iPad users get frustrated that Apple waits to provide major updates to its software systems until it has a new product on the market. Apple shareholders are upset that Apple isn’t making more money off of their services (iTunes and other apps). These kinds of issues arise partly because nobody is “in charge” of those products or services.

One of the reasons companies eschew functional (expertise) structures is that it makes it more difficult to hold managers accountable for things when they go wrong. In a multi- divisional structure, if a product fails or a region or unit doesn’t make a certain amount of profit—there is someone to point to. When an issue arises with Windows or Office or Microsoft Cloud, Microsoft knows where to go and whom to hold responsible because someone is in charge of those products. Apple’s philosophy is different. Apple CEO Tim Cook said, “They’re not things where we run separate [profits and losses] on, because we don’t do that—we don’t believe in that. We manage the company at the top and just have one [profit and loss] and don’t worry about the iCloud team making money and the Siri team making money. We want to have a great customer experience, and we think measuring all these things at that level would never achieve such a thing.”

As Apple becomes even larger though, their structure is going to be harder to maintain. The fact is that they could be making updates much more frequently to a wide range of products, upgrading software, and providing services that could allow them to be much more profitable if they were to adopt a different structure. They have also been blessed with great leadership given their very centralized approach to decision making. The question is where do they go from here?

C A S E : A P P L E

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503C H A P T E R 1 5 Organizational Structure

coL27660_ch15_479-507.indd 503 10/17/17 11:43 AM

15.1 Why do you think Apple’s functional structure has been so important for their products?

15.2 What are the outside forces that might make Apple change their organizational structure in the future?

15.3 How might Apple change their structure in a way that allows them to have the best of both worlds?

Sources: A. Lashinsky. “Inside Apple,” Fortune, May 23, 2011, pp. 125–34; R. Tetzeli. “Playing the Long Game Inside Tim Cook’s Apple,” Fast Company, August 8, 2016: https://www.fastcompany.com/3062090/playing-the-long-game-inside- tim-cooks-apple; B. Thompson. “Apple’s Organizational Crossroads,” Stratechery.com, April 19, 2016: https://stratechery .com/2016/apples-organizational-crossroads/; C. Wang. “Apple’s Cash Hoard Swells to Record $246.09 Billion,” cnbc .com, January 31, 2017: http://www.cnbc.com/2017/01/31/apples-cash-hoard-swells-to-record-24609-billion.html; and M. Yglesias. “Apple May Have Finally Gotten Too Big for its Unusual Corporate Structure,” vox.com, April 4, 2017: http:// www.vox.com/new-money/2016/11/27/13706776/apple-functional-divisional.

E X E R C I S E : C R E AT I V E C A R D S , I N C .

The purpose of this exercise is to demonstrate the effects of structure on organizational effi- ciency. This exercise uses groups, so your instructor will either assign you to a group or ask you to create your own group. The exercise has the following steps:

15.1 Creative Cards, Inc., is a small but growing company, started 10 years ago by Angela Naom, a graphic designer. The company has added many employees over the years but without a master plan. Now Angela wants to reorganize the company. The current structure of Creative Cards, Inc., is shown in the figure below. Review the organizational chart, and identify at least 10 prob- lems with the design of Creative Cards, Inc. Be sure to consider work specialization, chain of command, span of control, centralization, and formalization in developing your answer.

West Coast Operations V.P.

H.R. V.P.

East Coast Sales Mgr.

Legal 4 emp.

Quality Control Mgr.

Buyer I Inks

Press Operator

Sanitation Engineer

Distribution Manager. Northern Region

Sales Reps. 8 emps.

Janitors 4 emp.

Sales V.P. Creative Dir. Exec. V.P.

Art Design Mgr. Verse Writer Printing Sup.

Payroll Mgr. Finance Dir. Admin. Asst.

President

Sympathy Card Sup.

Birthday Card Sup.

E-Card Sup.

Card Cutting Sup.

4 emps. 60 emps. 25 emps. 10 emps. 14 emps.

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