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Case 4
Boundaryless Organizations
Learning Goals
The multinational organization is an increasingly common and important part of the
economy. This case takes you into the world of a cutting-edge music
software business seeking success across three very di”erent national and
organizational cultures. Its managers need to make important decisions about how to
structure work processes so employees can be satistied and productive doing very
di”erent tasks.
Major Topic Areas
Organizational structure and boundaryless organizations
Organizational culture
Human resources
Organizational socialization
The Scenario
Newskool Grooves is a transnational company developing music software. The
software is used to compose music, play recordings in clubs, and produce
albums. Founder and CEO Gerd Finger is, understandably, the company’s biggest fan.
“I started this company from nothing, from just me, my ideas, and my computer.
I love music—love playing music, love writing programs for making music, love
listening to music—and the money is nice, too.” Finger says he never wanted to work
for someone else, to give away his ideas and let someone else profit from them. He
wanted to keep control over them, and their image. “Newskool Grooves is
always ahead of the pack. In this business, if you can’t keep up, you’re out. And we
are the company everyone else must keep up with. Everyone knows when they
get something from us, they’re getting only the best and the newest.”
The company headquarters are in Berlin, the nerve center for the organization, where
new products are developed and the organizational strategy is established. Newskool
require the very high rates of compensation you’d $nd in German or U.S. o4ces.
The combination of high-tech software, rapid reorganization, and outsourcing makes
Newskool the very definition of a boundaryless organization.
Finger also makes the final decision on hiring every employee for the company and
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to believe in what we’re doing here, really understand our direction and be able to go
with it. I’m not the babysitter, I’m not the school master handing out homework.
The Work Culture
Employees want to work at this company because it’s cutting edge. Newskool’s
software is used by a number of dance musicians and DJs, who have been the
firm’s core market, seeing it as a relatively expensive but very high-quality and
innovative brand. Whenever the rest of the market for music software goes in one
competition.
Unfortunately, computer piracy has eroded Newskool’s ability to make money with
just software-based music tools, and it has had to move into the production of
hardware, such as drum machines and ampli$ers that incorporate its computer
technology. Making this massive market change might be challenging for some
wants to do what you’re told at work, you’re in trouble. Most times, they can’t tell you
what they want you to do next—they don’t even know what comes next! That’s why
they hire employees who are creative, people who can try to make the next thing
happen. It’s challenging, but a lot of us think it’s very much an
exciting environment.”
The Boundaryless Environment
drop of a hat. Project discussions often happen via social networking on
the company’s intranet.
The Kiev o4ces have been less eager to work with the boundaryless model.
Managers say their computer programmers $nd working with so little structure rather
well-defined work processes.
“When I started,” says one manager, “Finger said getting in touch with him would be
no problem, getting in touch with L.A. would be no problem. We’re small, we’re
family, he said. Well, it is a problem. When I call L.A., they say to wait until their
meeting day. I can’t always wait until they decide to get together. I call Finger— he
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If he just told me in the first place, we would have done it.”
Some recent events have also shaken up the company’s usual way of doing business.
within the organization about how to move forward in this new environment.
The o4ces are experiencing additional di4culties. Since the shift to newer products,
Sandra Pelham in the Los Angeles o4ce has been more critical of the company. “With
the software, we were more limited in the kinds of advertising media we could
things his way.”
Although the organization is not without problems, there is little question Newskool
has been a standout success in the computer music software industry. While many
are shuttering their operations, Newskool is using its market power to push forward
the next generation of electronic music-making tools. As Finger puts it, “Once the rest
down the road to the future.”
Your Assignment
Gerd has asked for your advice on how to keep his organization successful. He wants
to have some sort of benchmark for how other boundaryless organizations in the tech
sector stay competitive despite the challenges of so many workers heading in so
1. Identify some of the problems likely to occur in a boundaryless organization
organizations?
2. Consider some of the cultural issues that will a”ect a company operating in
3. Based on what you know about motivation and personality, what types of
employee satisfaction in all areas.
4. What types of human resources practices need to be implemented in this sort
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to use for selection?
5. What kind of performance measures might you want to see for each o4ce?
6. How can the company establish a socialization program that will maximize
employee creativity and independence? Do employees in all its locations
need equal levels of creativity?
Case Discussion
Issues for discussion:
CC-24.Identify some of the problems likely to occur in a boundaryless organization
like Newskool Grooves. What are the advantages of boundaryless
organizations?
Suggested discussion: General Electric’s former chairman, Jack Welch,
coined the term boundaryless organization to describe what he wanted GE
to become: a “family grocery store.” That is, in spite of GE’s monstrous size
(2016 revenues were $123 billion), Welch wanted to eliminate vertical and
horizontal boundaries within it and break down external barriers between the
company and its customers and suppliers. The boundaryless organization
seeks to eliminate the chain of command, have limitless spans of control, and
replace departments with empowered teams. Although GE has not yet
achieved this boundaryless state—and probably never will—it has made
signiticant progress toward that end. So have other companies, such as
Hewlett-Packard, AT&T, Motorola, and 3M. Let’s see what a boundaryless
organization looks like and what some firm are doing to make it a reality.
By removing vertical boundaries, management Hattens the hierarchy and
minimizes status and rank. Cross-hierarchical teams (which include top
executives, middle managers, supervisors, and operative employees),
participative decision-making practices, and the use of 360-degree
performance appraisals (in which peers and others above and below the
employee evaluate performance) are examples of what GE is doing to break
down vertical boundaries. At Oticon A/S, a $160-million-per-year Danish
hearing aid manufacturer, all traces of hierarchy have disappeared. Everyone
works at uniform mobile workstations, and project teams, not functions or
departments, coordinate work.
Functional departments create horizontal boundaries that stiHe interaction
among functions, product lines, and units. The way to reduce them is to
replace functional departments with cross-functional teams and organize
activities around processes. Xerox now develops new products through
multidisciplinary teams that work in a single process instead of around narrow
functional tasks. Some AT&T units are now doing annual budgets based not on
functions or departments but on processes, such as the maintenance of a
worldwide telecommunications network. Another way management can cut
through horizontal barriers is to use lateral transfers, rotating people into and
out of di”erent functional areas. This approach turns specialists into
generalists.
CC-25. Consider some of the cultural issues that will a”ect a company operating in
such di”erent parts of the world and whose employees may not be
representative of the national cultures of each country. Are the conHicts you
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production ad product development. Los Angeles’ culture is based on
creativity in delivering messages to customers and potential customers. Kiev’s
people interact.
CC-26. Based on what you know about motivation and personality, what types of
people are likely to be satistied in each area of the company? Use
concepts from job characteristics theory and the emerging social relationships
perspective on work to describe what might need to change to increase
employee satisfaction in all areas.
The Job Characteristics Model:
Some components can be addressed to improve collaboration among the
company’s o4ces. Employee selection and training can focus on similar
characteristics under the core job dimensions. Although the work required in
each location is di”erent, the people in each location can be trained to be
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action should be modi$ed to be based on cooperation and teamwork to
accomplish challenging goals for the firm.
to use for selection?
Suggested discussion: Consistency of selection process and criteria can
provide a basis for employees’ attitudes about cooperation and collaboration.
Training process would be an important human resources concept to apply to
ensure all current employees were on board with the new cultural direction of
the firm.
The Big Five traits are:
agreeableness are cold, disagreeable, and antagonistic.
c. Conscientiousness. The conscientiousness dimension is a measure of
reliability. A highly conscientious person is responsible, organized,
dependable, and persistent. Those who score low on this dimension are
easily distracted, disorganized, and unreliable.
nervous, anxious, depressed, and insecure.
e. Openness to experience. The openness to experience dimension
addresses range of interests and fascination with novelty. Extremely
open people are creative, curious, and artistically sensitive. Those at
the other end of the openness category are conventional and $nd
comfort in the familiar.
traits.
CC-28. What kind of performance measures might you want to see for each o4ce?
Suggested discussion: Again, the responses to this issue will vary. Measures
that could be put into place could be measures such as outcomes of team
activity including design and implementation of software to make it more
product design and production outcomes.
CC-29. How can the company establish a socialization program that will maximize
employee creativity and independence? Do employees in all its locations
need equal levels of creativity?
Suggested discussion:
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with a strong market position will make their own assumptions about what it
must be like to work there. Most new recruits will expect Nike to be dynamic
and exciting, a prestigious law firm to be high in pressure and rewards, and
the Marine Corps to require both discipline and courage. No matter how well
We’ve also seen how the selection process ensures the inclusion of the “right
type”—those who will $t in. “Indeed, the ability of the individual to present the
appropriate face during the selection process determines his ability to move
into the organization in the first place. Thus, success depends on the degree
However, this is often not the case. At the extreme, a new member may
become disillusioned enough with the reality to resign. Proper recruiting and
selection should signiticantly reduce that outcome, along with encouraging
friendship ties in the organization—newcomers are more committed when
collective, sequential, fixed, and serial socialization programs and emphasize
divestiture, the more likely newcomers’ di”erences will be stripped away and
replaced by standardized predictable behaviors. These institutional practices
are common in police departments, $re departments, and other organizations
levels of commitment, whereas individual practices produce more role
innovation.
The three-part entry socialization process is complete when new members
have become comfortable with the organization and their job. They have
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They understand the system—not only their own tasks but the rules,
procedures, and informally accepted practices as well. Finally, they know what
their work.
Students’ opinions may vary in regard to analysis of the equality of the need
for creativity. In today’s turbulent environments, creativity and innovation are
key skills and abilities at all levels and in all segments of a firm’s operation.
Application of these skills will be di”erent depending on the outcomes defined
the ultimate measure of success.
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