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Chapter 15 : Designing Effective Organizations Jeff Schanze and Khanh Truong
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Article Introduction Avoiding the Guillotine by Gary Hamel
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What is an Organization? Organization – System of consciously coordinated activities of two or more people Unity of Command Principle – Each employee should report to a single manager Lowe’s, Sysco, Sprint Nextel
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Information on Organizational Charts Span of Control – The number of people reporting directly to a given manager Staff Personnel – Provide research, advice, and recommendations to line managers Line Managers – Have authority to make organizational decisions Organizational Chart – Boxes-and-lines illustration showing chain of formal authority and division of labor
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Organizational Chart Board of Directors Chief Executive Officer Strategic Planning Advisor Legal Counsel President Executive Administrative Director Executive Medical Director
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Myth #1…Variety is Bad Industrial-era managers valued replication, predictability, and “conformance to requirements” Overemphasis on military-style discipline This thinking can cause missed opportunities Managers should celebrate variety
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Myth #2…Experience Counts Traditional thoughts and ideas stunt growth New employees often bring innovative thoughts and ideas that can enhance a company Every committee, task force, project team, etc. should be heavily weighted with young people
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Myth #3…Size Matters In the past CEOs often felt size mattered No correlation between size and profitability Porsche vs. Daimler Chrysler Mega mergers are not the way
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Myth #4…Your Company is its Business Model Often a company’s fortunes decline as its initial business model runs out of steam Diversify and adapt
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Myth #5…The Business Unit Rules Companies tend to put all of their eggs in one basket Spread talent and resources across the company
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Myth #6…Resources Get Allocated Generally an idea must survive numerous skeptical executives as it works its way up the management hierarchy Focus on resource attraction and not resource allocation Fresh ideas should not be overlooked
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Myth #7…Innovation is an Exception Companies say they innovate, in reality they do not Companies do not put as much effort into innovation as they do efficiency
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Final Thought “You can’t simply pull the old beliefs and values up by the roots; rather, you must carefully prune them so you create enough space for the seeds of tomorrow’s opportunities to take root.” Gary Hamel
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