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(5) Both Mechanistic and Organic Structures Have Their Places
(a) Not all organizations can or should be organic.
(b) McDonald’s could not achieve its admired quality and service
standards without extremely mechanistic restaurant operations, even
though a mechanistic structure can alienate some employees because
it erodes their sense of self-control.
iii) Getting the Right Fit See Slides 17–30, 17–31, 17–32
(1) Each organization structure has advantages that make it the most
appropriate one to use in some cases.
(2) The clear roles and strict hierarchy of an extremely mechanistic
organization are beneficial when careful routines and a set of checks and
balances are important.
(3) In a fast-changing environment with a great deal of uncertainty, an
organization would benefit from a more organic structure that lowers
boundaries between functions and organizations.
(4) The benefits of a functional structure are easiest to realize in a stable
environment, where the organization doesn’t depend on employees to
coordinate their efforts to solve varied problems.
(5) Divisional structures increase employees’ focus on customers and
products, but the duplication of functions in each division adds to costs
and the focus on the company’s overall mission could get lost.
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(6) The matrix organization requires superior managers who communicate
extensively, foster commitment and collaboration, manage conflict, and
negotiate effectively to establish goals and priorities consistent with the
organization’s strategy.
(7) Horizontal designs are a good fit when specialization is less important
than the ability to respond to varied or changing customer needs.
(8) Organizations that open their boundaries to become hollow, modular, or
virtual:
(a) Can generate superior returns by focusing on what they do best,
despite the fact they give up expertise and control in the functions or
operations that are outsourced.
(b) Depend on managers’ ability to get results from people over whom
they do not have direct formal authority by virtue of their position in the
organization.
(c) Work best when the organizations have suitable partners they trust;
efficiency is very important; the organization can identify functions,
processes, or product components to outsource profitably; and in the
case of a virtual organization, when the need to be met is temporary.
IV. Organizational Effectiveness (and the Threat of Decline)
i) Generic Organizational-Effectiveness Criteria See Slides 17-35, 17-
37
(1) Generic Effectiveness Criteria Overview
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(a) Figure 17-4: Four Ways to Assess Organizational Effectiveness
identifies the four generic approaches to assessing an organization’s
effectiveness. See Slide 17-34
(b) These effectiveness criteria apply equally well to large or small and
profit or not-for-profit organizations and can be used in various
combinations.
(c) No single approach to the evaluation of effectiveness is appropriate in
all circumstances or for all organization types.
(2) Goal Accomplishment
(a) Goal accomplishment is the extent to which the organization achieves
its stated goals and it is the most widely used effectiveness criterion for
organizations.
(b) It is measured by comparing key organizational results or outputs with
previously stated goals or objectives.
(c) Deviations, either plus or minus, require corrective action to adjust the
goals or the performance.
(d) Productivity improvement, innovation, and speed are very important
organizational goals for many organizations.
(3) Resource Acquisition
(a) Resource acquisition is the extent to which the organization acquires
the resources that it needs.
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(b) An organization is deemed effective in this regard if it acquires
necessary factors of production such as raw materials, labor, capital,
and managerial and technical expertise.
(4) Internal Processes
(a) Internal processes refer to what the organization must excel at to
effectively meet its financial objectives and customers’ expectations.
(b) This dimension of effectiveness focuses on organizational activities
associated with (1) innovation, (2) customer service and satisfaction,
(3) operational excellence, and (4) being a good corporate citizen.
(5) Strategic Constituencies Satisfaction
(a) Strategic constituencies satisfaction is the extent to which the
demands and expectations of key interest groups are at least minimally
satisfied.
(b) Strategic constituency: any group of individuals who have some
stake in the organization.
(c) This perspective considers the satisfaction of strategic constituencies
to be an important criterion of organizational effectiveness.
(d) Strategic constituencies generally have competing or conflicting
interests.
(e) Stakeholder audit: systematic identification of all parties likely to be
affected by the organization.
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(f) Figure 17-5: A Sample Stakeholder Audit Identifying Strategic
Constituencies provides examples of key constituencies.
ii) Multiple Effectiveness Criteria: Some Practical Guidelines
(1) Experts recommend a multidimensional approach to assessing the
effectiveness of modern organizations.
(2) Managers should derive an appropriate combination of effectiveness
criteria.
(3) Guidelines for determining criteria:
(a) The goal accomplishment approach is appropriate when “goals are
clear, consensual, time-bounded, and measurable.”
(b) The resource acquisition approach is appropriate when inputs have a
traceable effect on results or output.
(c) The internal processes approach is appropriate when organizational
performance is strongly influenced by specific processes.
(d) The strategic constituencies approach is appropriate when powerful
stakeholders can significantly benefit or harm the organization.
iii) What Are the Warning Signs of Ineffectiveness?
(1) Managers may need to look for indicators of ineffectiveness that show up
long before poor performance shows up in measures of effectiveness.
(2) Short of illegal conduct, there are 16 early warning signs of organizational
decline:
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(a) Excess personnel.
(b) Tolerance of incompetence.
(c) Cumbersome administrative procedures.
(d) Disproportionate staff power.
(e) Replacement of substance with form.
(f) Scarcity of clear goals and decision benchmarks.
(g) Fear of embarrassment and conflict.
(h) Loss of effective communication.
(i) Outdated organizational structure.
(j) Increased scapegoating by leaders.
(k) Resistance to change.
(l) Low morale.
(m) Special interest groups are more vocal.
(n) Decreased innovation.
(o) Unwillingness to experiment with new ideas.
(p) Poor track record of execution.
(3) Managers who monitor these early warning signs of organizational decline
are better able to take corrective action in a timely and effective manner.
(4) Organizational problems may be attributed to external causes when there
has been little turnover among top executives, while internal attributions
tend to be made by top management teams with many new members.
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V. Organizational Innovation
i) Innovation Overview
(1) Innovation: creation of something new that is used by consumers.
(2) Innovation is different from invention, which entails the creation of
something new, and creativity, which is a process of developing
something new or unique.
(3) Innovation also is different from integration, which involves actions
associated with getting multiple people, units, departments, functions, or
sites to work together in pursuit of a goal, idea, or project.
(4) Successful innovation relies on invention, creativity, and integration.
ii) Myths about Innovation
(1) One myth about innovation is the notion that innovation involves an
epiphany or eureka moment; innovation is a time-consuming activity that
takes hard work and dedication.
(2) The Real World/Real People: IBM Is a Model of Innovation profiles one
firm’s efforts to foster innovation.
(3) A second myth about innovation is innovation can be systematized; the
success of innovation is unpredictable.
iii) A Model of Innovation
(1) A Model of Innovation Overview
(a) The process of growing a tree is a useful metaphor for understanding
how organizations can become more innovative—seeds are the
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starting point for growing tress, but the seeds need a proper
environment and proper nutrients to become a tree.
(b) There are six seeds of innovation in companies, but organizations
must effectively manage a set of challenges for the seeds of innovation
to flourish.
(c) Figure 17-6: A Model of Innovation illustrates that the seeds,
challenges, and nutrients of innovation are the three components that
influence the benefits of innovation. See Slide 17–38
(2) Seeds of Innovation See Slide 17–39
(a) Seeds of innovation: starting point of organizational innovation.
(b) There are six seeds of innovation:
(i) Hard work in a specific direction.
(ii) Hard work with direction change.
(iii)Curiosity and experimentation.
(iv)Wealth and money.
(v) Necessity.
(vi)Combination of seeds.
(3) Challenges of Innovation
(a) The challenges of innovation and the seeds of innovation are
interwoven in a dynamic relationship that unfolds over time.
(b) The challenges of innovation include:
(i) Find an idea.
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(ii) Develop a solution.
(iii)Sponsorship and funding.
(iv)Reproduction.
(v) Reach your potential customer.
(vi)Beat your competitors.
(vii) Timing.
(viii) Keep the lights on.
(4) Nutrients of Innovation
(a) Organizations are more likely to experience the benefits of innovation
when the dynamic interplay between the seeds and challenges of
innovation are supported and reinforced by the nutrients of innovation:
an organization’s culture, leadership, people, and ability to execute.
(i) A meta-analysis revealed that innovation was positively associated
with market, adhocracy, and clan cultures.
(ii) Research showed that transformational leadership was helpful in
creating innovative alliances between companies and in
encouraging employees’ creativity.
(iii)Research identified several employee characteristics that can help
organizations innovate, including individual characteristics
associated with creativity, the level of skills and abilities possessed
by people, employees’ self-efficacy for innovation, and the quality of
the relationship between managers and employees.
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(iv)The ability to execute ultimately makes or breaks an organization’s
attempts at bringing new products and services to market.
(b) Execution: process of discussing hows and whats, questioning,
following through, and ensuring accountability.
(c) Execution requires organizations to effectively manage people, groups,
and organizational processes and systems in the pursuit of innovation.
BACK TO THE CHAPTER-OPENING CASE
1. Assume you are working on a project within a matrix structure and that some of
the project team members are working virtually. Explain how you might use the
types of technology discussed in the case to improve planning sessions between
project team members.
a. A matrix structure combines a vertical structure with an equally strong
horizontal overlay. They are used to foster communication, integration
and collaboration between different units of the firm. Information
2. Will Dixon Schwabl Advertising’s approach toward running meetings result in a
more mechanistic or organic organization? Explain your rationale.
a. Mechanistic organizations use rigid, command-and-control bureaucracies
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3. Would a mechanistic or organic organization be more likely to foster innovation?
a. Table 17-2 presents the characteristics of organic organizations. Given
the broad definition of task definition and the emphasis on task flexibility,
4. Which of the seeds of innovation were used by the companies featured in the
case? Provide examples.
a. There are six seeds of innovation: hard work in a specific direction; hard
work with direction change; curiosity and experimentation; wealth and
money; necessity; and combination of seeds. The fact that employees at
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OB IN ACTION CASE STUDY: Experts Propose a Process for Increasing
Innovation
1. How do innovation communities promote an open system?
a. Open systems are highly dependent on their environment for survival.
2. How would the use of innovation communities help companies to learn from both
success and failure? Discuss.
a. Three barriers to learning from success are the self-serving bias, the
decision-making bias of overconfidence, and the natural tendency of “not
asking why” we succeeded at something. By bringing together people
3. What type of organizational structure is represented by the use of innovation
communities? Explain your rationale.
a. There are seven basic ways organizations are structured. Innovation
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4. To what extent does the process to create innovative communities rely on the
characteristics of organic organizations? Provide examples.
a. Innovation communities are closely related to the characteristics of
organic organizations, as profiled in Table 17-2. Innovation communities
5. To what extent is the process of creating innovative communities consistent with
the model of innovation?
a. The process of creating an innovation community can be likened to
providing a seed for innovation under the model of innovation presented in
Figure 17-6. Innovation communities are often started by senior
6. How does the process of creating innovative communities overcome the
challenges of innovation? Explain.
a. Eight challenges to innovation are profiled in the chapter: finding an idea;
developing a solution; sponsorship and funding; reproduction; reaching
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upper-level management sponsorship and funding of new endeavors. The
cross-functional aspect of an innovation community may allow it to figure
LEGAL/ETHICAL CHALLENGE: One of the Fastest Growing Businesses Involves
Spying on Consumers: Is This Ethical?
How do you feel about the practice of someone tracking your Internet behavior
without your approval or awareness?
1. Give me a break, this is the Internet age. Tracking is fair game and it provides
useful information to companies so they can target products that meet our needs.
Besides, you can get off Latame’s system if you don’t want to be tracked.
Further, tracking can be used to catch pedophiles and other types of criminal
behavior.
2. I can accept the idea of tracking, but companies like Latame should get our
approval before they start collecting data.
3. This is an invasion of my privacy and it should be disallowed by the courts.
4. I am against any attempts to police what goes on when we use the Internet.
Discussion:
There is little question that gathering information about web users and their online
activity is big business. Businesses are increasingly using tracking technology that is
installed on a person’s computer after accessing a webpage to track what sites people
visit and what keystrokes they enter. A Wall Street Journal investigation in the summer
of 2010 found that online tracking is far more pervasive and far more intrusive than most
people realize. The Wall Street Journal study found that the nation’s 50 top websites
installed on average 64 pieces of tracking technology onto the computers of visitors,
usually with no warning. A dozen sites each installed more than a hundred. Even if
most consumers are aware that cookies might be installed on their computer when they
visit certain sites, many consumers may not realize that some firms use “supercookies”
which are capable of re-creating users’ profiles after the users delete regular cookies.
Thus, it may be difficult for even computer-savvy users to permanently remove tracking
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technology, and even more difficult for those users who don’t understand tracking
technology or how to remove it. It is understandable why some would support
legislative action to protect users’ privacy expectations. Many would also contend that it
should be easier and more transparent for users to opt out of tracking technology than it
currently is.
Firms that engage in online tracking can provide a valuable service. Many of the firms
that buy this type of data are only interested in using the information to present the user
with relevant online ads. Their argument is that it is better for consumers to see ads
that are linked to products and services that they actually have a high likelihood of
purchasing than for them to be bombarded with irrelevant ads. Such targeted marketing
probably allows specialty retailers or niche websites to reach consumers they otherwise
would not be able to reach, allowing the businesses to be profitable, on-going concerns.
Others argue that the installation of tracking devices allows websites to provide content
for free that they otherwise would have to charge money for. For instance, the Wall
Street Journal study found that the website http://www.dictionary.com installed
numerous tracking devices, but the website may not be able to survive were it not for
the money that it receives from these tracking firms. Consumers would likely have
access to fewer businesses and fewer websites if all tracking technology were to be
prohibited. Given the need for online tracking, it is likely in the best interest of tracking
technology firms to create and follow best practices for tracking. If firms continue to
disguise tracking files or hide them within other ads, the government would be more
likely to intervene and create new legal restrictions.
The debate over online tracking becomes even more contentious when you consider
the type of information being generated by the tracking companies and how the
information could be used for questionable purposes. If you had gone online to learn
more about a cancer diagnosis you had just received, you may not want your employer
to know that you had this terrible disease to avoid the risk of the company using the
information against you. Gathering data is largely unregulated and there is not general
consensus as to if information on sensitive issues such as employment searches,
financial information or medical data should be considered off-limits. You would likely
find it unnerving if on your next trip to the mall, a “secret shopping detective” hired by
the mall followed you from store to store and observed every item that you looked at
while in the bookstore, took note of every article of clothing that you bought at your
favorite clothing shop, sat at the table next to you at your favorite restaurant recording
your lunch conversation and taking note of the foods that you ordered, and then
followed you to the movies to see the same matinee as you. The fact that online
trackers don’t have to actually follow you from store to store does not change the fact
that the level and type of data these firms are able to gather is rater unnerving. As with
social media, online users might want to use caution as to the type of information they
reveal about themselves because you never know who is going to see what information.