Final Take exam.
csht
Section2OrganizationalAnalysisSV.pptxChanging Organizational Modules
Objective
Examine old and new organizational structures
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Organizational Theory
An organization is a collection of people working together under a defined structure for the purpose of achieving predetermined outcomes through the use of financial, human, and material resources.
*Organizations are created to fulfill some purpose or objective
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How We Got to Today’s Management Outlook
Evidence based management
translating principles based on best evidence into organizational practice, bringing rationality to the decision making process
Pfeffer and Sutton
Discussion Point
Why do you think managers get “stuck in a rut,” and are unwilling to try new approaches?
Discussion Point
When do you think organizations are more likely to be creative and flexible, when organizational performance is high or low?
Discussion Point
Why does low performance so often trigger inflexibility?
Young, innovative, or high-tech firms often adopt the strategy of ignoring history or attempting to do something radically new. In what ways will this strategy help them? In what ways will this strategy hinder them?
Major Question: If the name of the game is to manage work effectively and efficiently, what can the study of different viewpoints teach me?
The Importance of Theory and History
Why Use Theories/Models?
Theory: a conceptual framework for organizing knowledge and providing a blueprint for action.
Management theories are grounded in reality.
Managers develop their own theories about how they should run their organizations.
Why History?
Understanding historical developments in management aids managers in the development of management practices and in avoiding the mistakes of others.
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What are the reasons for President Trump’s popularity?
Five Practical Reasons for Studying Past Theories
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Understanding of the present
Guide to action
Source of new ideas
Clues to meaning of your managers’ decisions
Clues to meaning of outside events
Two Overarching Perspectives about Management
Historical perspective
classical, behavioral, and quantitative
Contemporary perspective
systems, contingency, and quality-management
Classical Viewpoint: Scientific & Administrative Management
Scientific Management: Pioneered by Taylor & the Gilbreths
Scientific management
emphasized the scientific study of work methods to improve the productivity of individual workers
Frederick W. Taylor, Frank and Lillian Gilbreth
Scientific Management: Pioneered by Taylor & the Gilbreths
4 Principles of Scientific Management
Scientifically study each part of the task
Carefully select workers with the right abilities
Give workers the training and incentives to do the task
Use scientific principles to plan the work methods
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Administrative Management: Pioneered by Fayol & Weber
Max Weber believed that a bureaucracy was a rational, efficient, ideal organization based on the principles of logic
Five Positive Bureaucratic Features
A well-defined hierarchy of authority
Formal rules and procedures
A clear division of labor
Impersonality
Careers based on merit
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Bureaucratic Structures
Positive consequences
Discipline
Efficiency
Quality
Timeliness
Protection
Stability
Negative consequences
Rigidity
Alienation
Restrict change/diversity
Low commitment
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The Problem with the Classical Viewpoint
Too Mechanistic - Tends to view humans as cogs within a machine, not taking into account the importance of human needs
INFLEXIBLE!
Slow to change!
Why the Classical Viewpoint is Important?
Work activity is often amenable to a rational approach
Through the application of scientific methods, time and motion studies, and job specialization, it was possible to boost productivity
The Classical Management Perspective Today
Limitations
More appropriate approach for use in traditional, stable, simple organizations.
Prescribed universal procedures that are not appropriate in some settings.
Employees viewed as interchangeable tools rather than as resources.
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Behavioral Viewpoint: Behaviorism, Human Relations, & Behavioral Science
Behavioral viewpoint
Emphasized the importance of understanding human behavior (attitudes, behaviors, and group processes) and of motivating employees toward achievement
Behavioral Viewpoint: Behaviorism, Human Relations, & Behavioral Science
The behavioral viewpoint developed over three phases:
Early behaviorism
The human relations movement
Behavioral science.
Early Behaviorism: Pioneered by Munsterberg, Follett, and Mayo
Hugo Munsterberg – father of industrial psychology, the study of human behavior in the work place.
Study jobs and determine which people are best suited to specific jobs.
Identify the psychological conditions under which employees do their best work.
Devise management strategies to influence employees to follow management interests.
Early Behaviorism: Mary Parker Follett
Mary Parker Follett – social worker and social philosopher. She proposed that managers should allow employees to participate in a work-development process.
Early Behaviorism: Mary Parker Follett
Mary Parker Follett – social worker and social philosopher – believed in power sharing among employees and managers
Organizations should be operated as “communities”
Conflicts should be resolved by having managers and workers talk over differences and find solutions that would satisfy both parties
The work process should be under control of workers with relevant knowledge, rather than of managers, who should act as facilitators.
Early Behaviorism: Pioneered by Munsterberg, Follett, & Mayo
Hawthorne effect
employees worked harder if they received added attention, thought that managers cared about their welfare and that supervisors paid special attention to them
Elton Mayo
The Human Relations Movement: Pioneered by Maslow & McGregor
Human relations movement
proposed that better human relations could increase worker productivity
Abraham Maslow and Douglas McGregor
Behavioral Management Evolves
The Human Relations Movement
Grew out of the Hawthorne studies.
Proposed that workers respond primarily to the social context of work, including social conditioning, group norms, and interpersonal dynamics.
Assumed that the manager’s concern for workers would lead to increased worker satisfaction and improved worker performance.
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Maslow’s Hierarchy of Needs
Self-actualization
Esteem
Social
Safety
Physiological
Douglas McGregor – Theory X versus Theory Y
Theory X
represents a pessimistic, negative view of workers
workers are irresponsible, resistant to change, lack ambition, hate work, and want to be led
Theory Y
represents an optimistic, positive view of workers
Workers are considered capable of accepting responsibility, self-direction, self control and being creative
https://www.youtube.com/watch?v=u2LNeWsQOgQ
| Theory X Assumptions | People do not like work and try to avoid it. People do not like work, so managers have to control, direct, coerce, and threaten employees to get them to work toward organizational goals. People prefer to be directed, to avoid responsibility, and to want security; they have little ambition. |
| Theory Y Assumptions | People do not naturally dislike work; work is a natural part of their lives. People are internally motivated to reach objectives to which they are committed. People are committed to goals to the degree that they receive personal rewards when they reach their objectives. People will both seek and accept responsibility under favorable conditions. People have the capacity to be innovative in solving organizational problems. People are bright, but under most organizational conditions their potential is underutilized. |
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Why Theory X/Theory Y Is Important
Helps managers understand how their beliefs affect their behavior.
Managers can be more effective by considering how their behavior is shaped by their expectations about human behavior – the self-fulfilling prophecy
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Other Founding studies in Human Relations
Lewin, et al. (1930s)
-effect of leadership style
1) Democratic
2) Autocratic
3) Laizee-fair
-highest performance and job satisfaction were in the group with democratic leader
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Other Founding studies in Human Relations
Coch & French (1940s)
-Change of Production methods
1) Nonparticipation
2) Participation through representation
3) Total participation
-Greatest improvement in production was achieved in total participation group
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The Behavioral Science Approach
Behavioral science
relies on scientific research for developing theories about human behavior that can be used to provide practical tools for managers
The Emergence of Organizational Behavior
A contemporary field focusing on behavioral perspectives on management.
Draws on psychology, sociology, anthropology, economics, and medicine.
Important organizational behavior topics:
Job satisfaction and job stress
Motivation and leadership
Group dynamics and organizational politics
Interpersonal conflict
The design of organizations
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The Behavioral Management Perspective Today
Limitations
Complexity of individuals makes behavior difficult to predict.
Many concepts not put to use because managers are reluctant to adopt them.
Contemporary research findings are not often communicated to practicing managers in an understandable form.
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Quantitative Viewpoints: Management Science & Operations Research
Quantitative management
application to management of quantitative techniques, such as statistics and computer simulations
Management science, operations management
Management Science: Using Mathematics to Solve Management Problems
Management science
stresses the use of rational, science-based techniques and mathematical models to improve decision making, strategic planning, and problem solving
believes it can help managers locate the best way to do things and save money and time
sometimes called operations research
Operations Management: Helping Organizations Deliver Products or Services More Effectively
Operations management
focuses on managing the production and delivery of an organization’s products or services more effectively
work scheduling, production planning, facilities location and design
The Quantitative Management Perspective Today
Contributions
Developed sophisticated quantitative techniques to assist in decision making.
Application of models has increased our awareness and understanding of complex processes and situations.
Has been useful in the planning and controlling processes.
Limitations
Quantitative management cannot fully explain or predict the behavior of people in organizations.
Mathematical sophistication may come at the expense of other managerial skills.
Quantitative models may require unrealistic or unfounded assumptions, limiting their general applicability.
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The Contemporary Perspective
Systems Viewpoint
Systems viewpoint
regards the organization as a system of interrelated parts
collection of subsystems
part of the larger environment
The Four Parts of a System
Systems Viewpoint
Open system
continually interacts with its environment
Closed system
has little interaction with its environment
All systems have these basic characteristics:
Internal interdependence
Capacity for feedback
Equilibrium – state of balance
Equifinality
Adaptation
Synergy
Entropy
Systems Perspective
Synergy
Subsystems are more successful working together in a cooperative and coordinated fashion than working alone.
The whole system (subsystems working together as one system) is more productive and efficient than the sum of its parts.
Entropy
A normal process in which an organizational system declines due to failing to adjust to change in its environment
Entropy can be avoided and the organization re-energized through organizational change and renewal.
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Major Question: In the end, is there one best way to manage in all situations?
Contingency Viewpoint
Contingency viewpoint
emphasizes that a manager’s approach should vary according to the individual and the environmental situation
Most practical because it addresses problems on a case-by-case basis
Contingency Viewpoint: How to Be “Mindful”
Asking the “right” questions:
1. Is this a belief worth challenging? Is it debilitating? Does it get in the way of an important organizational attribute that we’d like to strengthen?
2. Is this belief universally valid? Are there counterexamples, and if so what do we learn from those cases?
Contingency Viewpoint
3. How does this belief serve the interests of its adherents? Are there people who draw reassurance and comfort from this belief?
4. Have our choices and assumptions conspired to make this belief self fulfilling? Is this belief true simply because we have made it true – and, if so, can we imagine alternatives?
Comments on congruence/contingency approach
Focuses specifically on property of interdependence and hence fit of different parts.
Focuses on the behavioral system of the organization.
The congruence between two components is defined as “The degree to which the needs, demands, goals, objectives and/or structures of one component are consistent with the needs, demands, goals, objectives, and/or structures of another component.
Notion of fit provides for problem analysis or diagnosis identification of problems, and analysis of fits to determine the causes of problems.
Contingency notion suggests that not all models or behaviors will work well in all situations
One important implication of the congruence hypothesis is that organizational problem analysis (or diagnosis) involves description of the system, identification of problems, and analysis of fits to determine the causes of problems.
Some examples of fits: individual/organization, individual/task, individual/informal organization, organization/information in organization.
Modern Management Today
An Integrative Framework
Is a complementary way of thinking about theories of management.
Involves recognition of current system and subsystem interdependencies, environmental influences, and the situational nature of management.
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Quality Control & Quality Assurance
Quality
total ability of a product or service to meet customer needs
Quality control
the strategy for minimizing errors by managing each stage of production
Quality assurance
focuses on the performance of workers, urging employees to strive for “zero defects”
Quality-Management Viewpoint
Total quality management (TQM)
comprehensive approach-led by top management and supported throughout the organization-dedicated to continuous quality improvement, training, and customer satisfaction
Deming, Juran
Total Quality Management
Make continuous improvement a priority
Get every employee involved
Listen to and learn from customers and employees
Use accurate standards to identify and eliminate problems
Major Question: Organizations Must Learn or Perish. How do I build a learning Organization?
The Learning Organization: Handling Knowledge & Modifying Behavior
Learning organization
organization that actively creates, acquires, and transfers knowledge within itself and is able to modify its behavior to reflect new knowledge
How to Build a Learning Organization: Three Roles Managers Play
Managers Must:
Build a commitment to learning
Work to generate ideas with impact
Work to generalize ideas with impact
Not do STUPID STUFF!
Reading #3 Developing a Learning Organization
Authors Dr. Clinton Longenecker and Dr. Laurence Fink, Effective Executive, July 2008
Organizational Learning
“Organizational learning can be described as the practice of continually generating, sharing and leveraging individual and collective learning experiences to improve organizational performance.” (1)
Leadership is the Key
Leaders need to:
impact rate of learning
learn and develop or get canned
Make sure their sources of learning must have variety
The Research
Observations based on a decade of research in two areas – organizational change/ improvement and executive development.
Observations on The Top Management Leadership Factor
Observation #1
Top managers accelerate or decelerate organizational learning and performance by their actions.
Observation #2
Top managers must realize that their own long-term survival is predicated on their ability to learn and develop as leaders.
Observations on The Top Management Leadership Factor
Observation #3
Top managers learn from a wide variety of different development experiences/practices
Practices
#1: Seeking out honest/accurate performance
feedback from a wide variety of sources
#2: Reading relevant material
#3: Self-reflection/self-appraisal
#4: Recruiting, hiring, and promoting talented
people. “You win with people.”
Practices
#5: Attending formal continuing education
programs, workshops and/or seminars
#6: Membership in professional/trade
organization associations
#7: Mentoring and coaching others
#8: Benchmarking and observing the practices of
other leaders/organizations
#9: Working on knowing the current needs of
your own organization and the demands of
your job
#10: Having a mentor and/or coach
Observations on The Top Management Leadership Factor
Observation #4
The onus for top management learning and development is placed almost exclusively on their own shoulders
Observation #5
Organizational learning is enhanced when top mangers develop their management team
“You win with people”
Observation #6
Top management must remove barriers to learning fast and reward organizational learning
Conclusion
In order to properly utilize the effects of a learning organization
Implement learning activities throughout the organization
Activities and goals must be effectively communicated within the organization
When your best people leave, their knowledge doesn’t leave with them
“Those slow to adapt are the quickest to die”
How to Build a Learning Organization: Three Roles Managers Play
1. Build a commitment to learning—to lead the
way by investing in learning, publicly promoting it,
and creating rewards for it.
2. Work to generate ideas with impact—ideas that
add value for customers, employees, and
shareholders.
3. Work to generalize ideas with impact.
a. The manager can reduce the barriers to learning among employees and within the organization.
b. This involves creating a psychologically safe and comforting environment that increases the sharing of successes, failures, and best
practices.
Other Comments
A learning organization has three parts:
A. Creating and acquiring knowledge
(1) Managers try to actively infuse their organizations with new ideas and information.
(2) Such knowledge comes from constantly scanning their external environments and employee training and development.
B. Transferring knowledge - Managers actively work at transferring knowledge throughout the organization, reducing barriers to sharing information and ideas.
C. Modifying behavior – Managers encourage employees to use the new knowledge to change their behavior and help achieve organizational goals
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Organizational decline
Three Causes
Organizational Atrophy – org becomes inefficient and overly bureaucratized (excess staff, lack of communication…)
Vulnerability – inability to prosper in it’s environment (e.g., a small new company has to deal with a drastic shift in consumer tastes)
Environmental Decline/Competition – reduced energy and resources
Some drivers for change in organizations
Flexible manufacturing technology
Increased competition
nationally
internationally
Changing economic structure to service-based, knowledge-intensive industries
Explosion of new information technologies
Others?
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Changing Organization of Twenty-First Century
The Only Constant is Change . . .
Modern organizations are becoming more…
Flat
Flexible
Networked
Diverse
Global
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The Five Dimensions
Flat organizations
Usually connotes few layers of management
ABB, a multinational firm with more than 200,000 employees worldwide, has only one layer of managers between executive board and operating managers
Can have additional meanings:
As a design element—in terms of number of layers
As a political element—in terms of power and authority
As a cultural element—in terms of visible status symbols and perceptions of “power distance”
The Five Dimensions
Flexible organizations are characterized by:
Organizational systems and processes that can respond differently to different situations
Lower levels of “formalization” with fewer detailed rules and standard operating procedures
Greater encouragement of initiative on the part of employees
Empowerment
The Five Dimensions
Networked
Indicators of internal networking :
Growing importance of teams and task forces
Direct communications across formal subunit boundaries without going through the “chain of command”
Dense communications (frequent e-mails, etc.)
Difficulty of acting without involving other people and other units
Indicators of external networking:
“Strategic alliances” with suppliers, customers, and even competitors involve close communication and coordination
Links with local stakeholders and community organizations
Extensive outsourcing
The Five Dimensions
Diverse
Indicators of diversity:
Value placed on bringing a variety of perspectives and viewpoints to a problem
Visible variety in the company, in terms of people and of presentation (in terms of dress, for example, or the physical appearance of offices)
The Five Dimensions
Global
Indicators of being global:
Frequent travel outside the home country by key employees
Networks with suppliers and customers in other countries
Communications networks that link employees around the world in frequent consultation and communications
Training programs that bring together employees from various countries
Older Organizational Forms
Strengths
Reliability
Replicability
Fairness
Predictability
Clear lines of responsibility
Security
Clear lines of career progression
Weaknesses
Slow to respond to new demands
Lacks flexibility
Tends to focus inward and not outward
Poor at developing new capabilities
Tends to resist taking initiative
Fosters red tape procedures
Newer Organizational Forms
Strengths
Rapidly responds to problems or changes in the environment
Differentiates activities based on differing needs
Accommodates diverse employee needs
Flexible to develop relationships with outside organizations, clients, suppliers
Good at innovation
Weaknesses
Multiple solutions to problems can lead to lack of coherence
Localized learning may not be shared with the rest of the organization
Challenges in maintaining horizontal networks
Problems with new silos developing within work units/teams
High demands on individuals to problem-solve and innovate
Small Group Discussion
What KSAs (knowledge, skills, and abilities) are essential for doing business in a new organization: flat, flexible, networked, diverse, global?
Think about this from an individual manager perspective – so what do you need to lead, coordinate, organize, plan, staff, control, etc. in a new organization?
Schemas (A little social psychology . . . )
Beliefs that guide our self-perceptions
Notice some things, ignore others
Guide processing of self-relevant information
Tend to seek out information consistent with our schemas
Problems:
Inaccurate! Hard to change! Generalizing! Incomplete!
Often guide our views about organizational issues
3 Perspectives on Organizations
Strategic Design Lens
Sees organizations as social systems designed to achieve strategic goals
Political Lens
Sees organizations as arenas for competition and conflict
Cultural Lens
Sees organizations as places where there are social and personal identities carried by people
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Organization as Strategic Design
Key Concepts: Formal structure, system (information systems, human resource management systems, etc.)
Key Processes: Grouping (differentiation), linking (integration)
View of Environment: Opportunities and threats, resources
Role of Manager: “Organizational architect,” strategist
Stimuli for Change: Lack of “fit” between environment and strategy, between organization and strategy, lack of internal congruence
Barriers to Change: Inadequate analysis
Strategic Design Lens
How the flow of tasks and information is designed
How people are sorted into roles
How these roles are related
How the organization can be rationally optimized to achieve its goals
Strategic Design Lens
When strategic changes need to be made, managers must also make design changes.
Oftentimes managers announce a shift in strategy, but the organization as a whole can’t quickly adjust to carry it out.
Organizational design is a complex system.
Redesigning organizations is much more difficult than changing the strategy itself.
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Strategic Design Lens
The strategic design lens sees the organization as a system designed to carry out a strategy.
When the external environment changes and the strategy changes to meet the emerging challenges, the organization is usually faced with the need to make design changes.
Managers who fail to recognize the constraints that organization put on strategy, at least in the short-term, often suffer humiliating failures.
As future executives, you need to understand the barriers to successful strategy execution.
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Contingencies Affecting Organizational Design
Organizational
Design
Organization’s
Environment
People and HR Functions
Organization’s
Technology
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Examples of Organizational Designs (AKA strategic grouping, AKA differentiation)
Expert/Functional
Divisional/Output/Product
Market/Geography/Customer
Hybrid
Matrix
Front/Back
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Dell’s Functional Structure
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Advantages
Coordination
Communication
Skill Improvement
Motivation
Controlling
Disadvantages
Limited growth under existing structure
Limits to number of products and services
Coordination difficulties at larger size
CEO
Michael Dell
Manufacturing
Sales
Product
Development
Customer
Service
Product Structure
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Market Structure
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Geographic Structure
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A Matrix Structure
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Advantages and Disadvantages of the Matrix Structure
Advantages
Coordination
Fast new product development
Communication
Cooperation
Innovation
Creativity
Autonomy
Disadvantages
Role conflict
Role ambiguity
Stress
Unclear individual contributions to team performance
Strategic Linking (AKA integration)
Examples:
Reporting Structures
Liaison Roles
Integrator Roles
Cross Unit Groups
IT
Teams and Task Forces
Alignment (AKA – HR)
MOTIVATION
Performance management
Rewards/incentives
Resource allocation
Training
Mentorship
Human capital investment
Political Lens
How power and influence are distributed and wielded
How multiple stakeholders express their different preferences and get involved in (or excluded from) decisions
How conflicts can be resolved
Political Lens
The words “political” and “power” often have negative connotations.
All results-based action in organizations is political.
All effective action requires mobilizing support and getting people who have the resources you need to provide them.
Mobilizing support requires understanding interests and power.
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Power and Influence
Suggests leadership is an exercise of power
French and Raven (1960)
Reward Power – power through incentives
Coercive Power – power through threat
Legitimate Power – authority
Expert Power – perceived experience, knowledge etc…
Referent Power – admiration, desire to be like the leader
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Organization as a Political System
Key Concepts: ”Power and influence, interests, dominant coalition
Key Processes: Conflict, negotiation
View of Environment: Stakeholders
Role of Manager: Forging coalitions, identifying and leveraging interests, negotiation
Stimuli for Change: Shifts in dominant coalition, in power of stakeholders
Barriers to Change: “Entrenched Interests”
Cultural Lens
How history has shaped the assumptions and meanings of different people
How certain practices take on special meaningfulness and even become rituals
How stories and other artifacts shape the feel of an organization
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Culture (Definition)
Culture (def.):
Shared assumptions a given group has developed to deal with the problems of external adaptation and internal integration
Historical (passes across generations)
Moral face (normative not utilitarian)
Associated with stability of group
“The way we do things around here.”
Differentiating/identity device (relative to other groups)
Associated with the intensity of common problems faced by the group
Changes across time (usually small and slow)
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Cultural Lens
Culture change is not tinkering with the organizational chart.
Culture change involves replacing old assumptions with new assumptions.
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Organization as a Cultural System
Key Concepts: Shared mental maps, cultural artifacts, values, assumptions
Key Processes: Meaning and interpretation, legitimation, rhetoric, vision
View of Environment: Social and cultural network, institutional
Role of Manager: Articulating vision, symbol of culture, managing the culture
Stimuli for Change: Challenges to basic assumptions, contested interpretations
Barriers to Change: Dominant culture
Real Business Examples
1. What is the political climate in your organization? Give examples.
How has this climate helped/hurt organizational change?
2. What is the culture in your organization? Give examples.
How had this culture helped/hurt organizational change?
Three Lenses on the “New” Organization
Strategic Design:
New architecture
Political:
Empower the “front line” of organization, recognize multiple stakeholders
Cultural:
New vision/rhetoric, different framework for identity
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Reading #1: Why Trafalgar Was Won Before It Was Fought:
Lessons From Resource-Based Theory
The Battle of Trafalgar
Napoleon Bonaparte wants to conquer the world
Needs to Invade England to Complete His Mission
England an Island – Must Get Past Royal Navy
Combined the French and Spanish Naval Fleets
Met for Battle at Cape Trafalgar
Lord Nelson Used Unorthodox Strategies in Leading the English Royal Navy
English (warships outnumbered 33-27) Destroyed/Captured 18 Enemy Ships While Losing 0
The Battle of Trafalgar
French / Spanish Fleet in Typical Battle Formation
The Battle of Trafalgar
Royal Navy in Surprise Formation
Why Did The British Win?
Resource Based Theory*
The Resource Must Be Valuable
The Resource Must Be Rare
*RBT emphasizes how a firm’s unique resources may allow the organization to develop a sustained competitive advantage
Trafalgar Parallel
British seafaring tradition
The British attractiveness of a naval career
Royal Navy’s apprenticeship
Training and Advancement programs
Nation’s stable government
Common culture and goals shared by the sailors
Royal Navy’s past successes and resulting self-confidence
Experience, genius and leadership skills of their Commander
Why Did The British Win?
Resource Based Theory
Imperfectly Imitable Resources
-Acquired through unique historical conditions
Trafalgar Parallel
England had stable government
France did not
England is an Island Nation
Must protect its shores. Had skilled seamen
England emphasized ocean dominance
France emphasized army and land battles
Therefore, France would be unlikely to produce naval commanders as skilled as Lord Nelson
Each naval victory brought more confidence for the Royal Navy
Would take decades for the French to duplicate this and gain this competitive advantage
Why Did The British Win?
Lord Nelson
Great Leader willing to depart from the norms of the day
Reading #2 The 10 Greatest CEOs of All Time
Author Jim Collins, Fortune Magazine July 21, 2003
Draw at least one lesson from each case
10) David Packard
Hewlett-Packard Co-Founder
Believe that “A company had greater responsibility than making money for its stockholders”
“We have the responsibility to our employees to recognize their dignity as human beings”
In a culture when bosses only dealt with large ideas and powerful people, he had an open-door policy with his engineers. He also created the practice of “management by walking around”
He did not fit into the CEO club because of these ideas.
Because he set himself apart from other CEO’s he was a CEO that was not set apart from his people.
His culture created 40 consecutive years of positive growth.
9) Katherine Graham
Her father passed away and left the regional newspaper, “The Washington Post” to her husband.
Her husband took his own life and she was forced to make a decision; sell the firm or run “The Washington Post.”
Even though she has insecurity issues ,she went to the board and ran the company.
In 1971 she was confronted with leaked Pentagon papers. Also, if this information was published she would face risk of persecution under the Espionage Act.
She published the story and it is well known now as “Watergate.”
8) William McKnight
Walt Disney was an individual innovator. John Rockefeller was a systems builder.
William McKnight created a company that turned innovation into a systematic, repeatable process.
3M is a company that “creates.”
He said “Without creative tension - freedom vs. discipline, innovation vs. control – all you have is chaos or worse.
7) David Maxwell
He took over a very troubled Fannie Mae in 1981 and retired in the early 1990’s.
Took over the same time Lee Iacocca took over Chrysler and David had results in the market 2x the very popular CEO of Chrysler.
He built Fannie Mae around a mission “strengthening America’s social fabric by democratizing home ownership. If Fannie Mae did its job well, people traditionally excluded from homeownership (minorities, immigrants, single parent families) could more easily claim their part of the American dream”
This article was written in 2003. Any issues with this thought process?
6) James Burke
CEO of Johnson and Johnson
He pulled a product off the shelves that may have contained cyanide poisoning costing the firm $100 million in earnings.
He did this 3 years before the industry knew it was a problem and made his executives live and breath under the J and J credo.
Did not debate whether customer safety outweighed short term financial concerns and he led in the absence of a crisis by preventing one.
5) Darwin Smith
CEO of Kimberly Clark, one of America’s largest paper manufacturers in the country.
Kleenex was a sideline product to the larger, non profitable paper manufacturing side of the corporation.
Realize the paper portion was the business and the cancer to the organization, sold the paper mills and reinvented the company as a soft tissue manufacturer (Kleenex).
It dominates their rival Scott Paper today in the paper-based consumer products company.
4) George Merck
CEO of the Merck Co., a Chemical and Drug Company.
He believed the purpose of a corporation is to do something useful, and do it very well.
His firm was testing a compound to battle parasites in animals, when he realized the compound might fight against another parasite that causes blindness and itching in humans so horrific that some victims commit suicide.
The drug would be needed for tribal people in tropical areas were they had no money.
Today 30 million people use this drug, largely free of charge!
Also, his profits increased 50x while the CEO.
3) Sam Walton
Started Wal-Mart the current largest US retailer.
He had a large hunger for learning and had a very charismatic personality.
One of his goals in life was to make “better things more affordable to people of lesser means.”
Realized that many founders of many organizations die then the company they started dies shortly after.
Before his death he gave Wal-Mart 2 goals.
Set a goal he could not achieve of annual sales from less than 30 million when he died to 125 billion in 2000.
No personality would become a bigger than the idea, he picked a predecessor who had seemingly undergone a charisma bypass.
2) Bill Allen
In 1945, after WWII demand for Bomber Aircraft dropped more than 90%.
He transformed Boeing from a bomber plane corporation to a commercial airplane corporation.
Invested most of the company’s assets into their 1st commercial airline plane the 707.
After the 707 success he invested heavily in the 727, 737 and 747, these would be noted by many to be the 4 most successful bets in industrial history.
He dared to dream BIG, when most people can’t.
1) Charles Coffin
His predecessor held patents on the electric light bulb, the phonograph, the motion picture, the alkaline battery and the dissemination of electricity.
Unlike Thomas Edison’s’ inventions that held patents, Charles Coffin invented a business called General Electric.
It was America’s first research laboratory and the idea of systematic management development.
Many people credit Jack Welch with creating GE, in reality, Jack only inherited it decades later.
He made GE into a great company, creating the machine that created a succession for giants.
Discussion Question
What were the key similarities across these cited CEO’s?
Do not look ahead until you have come up with answers in your group.
“The 10 Greatest CEO’s of All Time”
Key similarities the 10 CEO’s have in common:
They built great organizations that thrived long after they’re gone.
These decisions are based on CEO’s after at least 10 years after they left office.
They presided over innovations either technical or managerial that changed things outside the company walls.
They all lead their companies through major transformation or crisis.
Many of them didn’t consider themselves CEO material.
All had over industry average stock returns while in office.
Other Ideas
These CEO’s all have different strengths and in some cases weaknesses
They share the commonality of being people of vision, the ability to execute, and the ability to look ahead and find the best thing in situations that in many cases were troubling.
Additional Information:
Managerial Functions:
Plan
Organize
Control
Lead
Additional Information:
Managerial Skills:
Conceptual- used to analyze the situation
Human- ability to work and communicate managerial functions with people
Technical- job specific knowledge and techniques
Additional Information:
Organizational Learning: important for rapidly changing organizations
Five Principles:
Encourage personal mastery or high self-efficacy
Develop complex schemas to understand work activities
Encourage learning in groups or teams
Communicate a shared vision
Encourage systems thinking
Additional Information:
Tall vs. Flat Hierarchy
Tall:
Flat Organizational Structure
Additional Information:
Minimum Chain of Command
An organization should operate within the fewest levels necessary to organize and control activities
Decentralization:
Giving authority to lower-level managers and non-managerial employees to make decisions— Flexibility
Can increase motivation
Fewer managers become needed
Key is to create a balance of centralized and decentralized authority that is best for the organization
Additional Information:
On integration mechanism: Cross-Functional Teams
People from different functions or divisions working together
Team Leader
Manufacture
Personnel
Engineering
Personnel
Product Design Personnel
Materials Personnel
Additional Information:
Employees learn organizational culture:
Employees learn values and norms:
Formal socialization practices
Signs, symbols and stories
Organizational rites and ceremonies
Organization's language
Additional Information:
Summary: organizational culture comes from:
Organizational Culture:
Characteristics of people within organization
Design of Structure
Ethics
Nature of the Employment Relationship
Questions???
