Organizational Behavior, 9/E Schermerhorn, Hunt, and Osborn Prepared by Michael K. McCuddy Valparaiso University John Wiley & Sons, Inc.

Organizational Behavior: Chapter 182 Chapter 18 Study Questions  What is organizational design and how is it linked to strategy?  What is information technology and how is it used?  Can the design of the firm co-evolve with the environment?  How does a firm learn and continue to learn over time?

Organizational Behavior: Chapter 183 Study question 1: What is organizational design and how is it linked to strategy?  Organizational design. – The process of choosing and implementing a structural configuration. – The choice of an appropriate organizational design depends on the firm’s: Size. Operations and information technology. Environment. Strategy for growth and survival.

Organizational Behavior: Chapter 184 Study question 1: What is organizational design and how is it linked to strategy?  The structural configuration of organizations should: – Enable senior executives to emphasize the skills and abilities that their firms need to compete, and to remain agile and dynamic in a rapidly changing world. – Allow individuals to experiment, grow, and develop competencies so that the strategy of the firm can evolve.

Organizational Behavior: Chapter 185 Study question 1: What is organizational design and how is it linked to strategy?  Co-evolution. – The firm can adjust to external changes even as it shapes some of the challenges facing it. – Shaping capabilities via the organization’s design is a dynamic aspect of co-evolution. – Even with co-evolution, managers must maintain a recognizable pattern of choices in organizational design.

Organizational Behavior: Chapter 186 Study question 1: What is organizational design and how is it linked to strategy?  Organizational size. – As the number of employees increase, the possible interconnections among them increase even more. – The design of small firms is directly influenced by core operations technology. – Larger firms have many core operations technologies in a variety of specialized units.

Organizational Behavior: Chapter 187 Study question 1: What is organizational design and how is it linked to strategy?  The simple design for smaller units and firms. – A configuration involving one or two ways of specializing individuals and units. – Vertical specialization and control emphasize levels of supervision without elaborate formal mechanisms. – Appropriate for many smaller firms because of simplicity, flexibility, and responsiveness to a central manager.

Organizational Behavior: Chapter 188 Study question 1: What is organizational design and how is it linked to strategy?  Organizational design must be adjusted to fit technological opportunities and requirements. – Operations technology. The combination of resources, knowledge, and techniques that creates a product or service output. – Information technology. The combination of machines, artifacts, procedures, and systems used to gather, store, analyze, and disseminate information for translating it into knowledge.

Organizational Behavior: Chapter 189 Study question 1: What is organizational design and how is it linked to strategy?  Thomson’s view of technology. – Technologies classified according to the degree of specification and degree of interdependence of work units. – Intensive technology. Uncertainty as to how to produce desired outcomes.

Organizational Behavior: Chapter 1810 Study question 1: What is organizational design and how is it linked to strategy?  Thomson’s view of technology (cont.). – Mediating technology. Links parties that want to become interdependent. – Long-linked technology. The way to produce desired outcomes is known and broken down into a number of sequential steps.

Organizational Behavior: Chapter 1811 Study question 1: What is organizational design and how is it linked to strategy?  Woodward’s view of technology. – Small-batch production. The organization tailor makes a variety of custom products to fit customer specifications. – Mass production. The organization produces one or a few products through an assembly line system. – Continuous-process technology. The organization produces a few products using considerable automation.

Organizational Behavior: Chapter 1812 Study question 1: What is organizational design and how is it linked to strategy?  Woodward’s view of technology (cont.). – The proper matching of structure and technology is critical to organizational success. Successful small-batch and continuous-process plants have flexible structures with small work groups at the bottom. Successful mass production operations are rigidly structured and have large work groups at the bottom.

Organizational Behavior: Chapter 1813 Study question 1: What is organizational design and how is it linked to strategy?  Adhocracy. – An appropriate structural design when managers and employees do not know the appropriate way to service a client or produce a particular product.

Organizational Behavior: Chapter 1814 Study question 1: What is organizational design and how is it linked to strategy?  An adhocracy is characterized by: – Few rules, policies, and procedures. – Substantial decentralization. – Shared decision making among members. – Extreme horizontal specialization. – Few levels of management. – Virtually no formal controls.

Organizational Behavior: Chapter 1815 Study question 1: What is organizational design and how is it linked to strategy?  An adhocracy is useful when: – The tasks facing the firm vary considerably and provide many exceptions. – Problems are difficult to define and solve.

Organizational Behavior: Chapter 1816 Study Question 2:What is information technology and how is it used?  Why IT makes a difference. – IT provides a partial substitute for: Some operations. Some process controls. Some impersonal methods of coordination. – IT provides a strategic capability. – IT provides a capability for transforming information to knowledge for learning.

Organizational Behavior: Chapter 1817 Study Question 2:What is information technology and how is it used?  Information technology as a substitute. – Initial implementation of IT often displaced routine, highly specified, and repetitious jobs. Did not alter fundamental character or design of the organization. – A second wave of substitution replaced process controls and informal coordination mechanisms with IT. Brought some marginal changes in organizational design.

Organizational Behavior: Chapter 1818 Study Question 2:What is information technology and how is it used?  Information technology as a strategic capability. – IT has been used to improve the efficiency, speed of responsiveness, and effectiveness of operations. – IT provides individuals the information they need to plan, make choices, coordinate with others, and control their own operations. – This new strategic IT capability resulted from IT being broadly available to everyone.

Organizational Behavior: Chapter 1819 Study Question 2:What is information technology and how is it used?  IT and learning. – IT systems empower individuals and expand their jobs. – IT encourages the development of a “virtual” network. – IT transforms how people manage.

Organizational Behavior: Chapter 1820 Study Question 2:What is information technology and how is it used?  IT and e-business. – Many dot-com firms adopted some variation of adhocracy. – As the dot-coms grew, the adhocracy design became problematic. Limits on the size of an effective adhocracy. Actual delivery of products and services rested more on responsiveness to clients and maintaining efficiency than on continual innovation.

Organizational Behavior: Chapter 1821 Study Question 3: Can the design of the firm co-evolve with the environment?  Understanding the environment is important because an organization is an open system.  General environment. – The set of cultural, economic, legal-political, and educational conditions found in the areas in which the organization operates.  Specific environment. – The owners, suppliers, distributors, government agencies, and competitors with which an organization must interact to grow and survive.

Organizational Behavior: Chapter 1822 Study Question 3: Can the design of the firm co-evolve with the environment?  Environmental complexity. – The magnitude of problems and opportunities in the organization’s environment, as reflected in: Degree of richness. Degree of interdependence. Degree of uncertainty. – More complex environments provide more problems and opportunities.

Organizational Behavior: Chapter 1823 Study Question 3: Can the design of the firm co-evolve with the environment?  Environmental richness. – The environment is richer when: The economy is growing. Individuals are improving their education. Those on whom the organization relies are prospering. – A rich environment has more opportunities and dynamism. – The opposite of richness is decline.

Organizational Behavior: Chapter 1824 Study Question 3: Can the design of the firm co-evolve with the environment?  Environmental interdependence. – Linkage between environmental independence and organization design may be subtle and indirect. Organization may co-opt powerful outsiders. Organization may absorb or buffer demands of powerful external elements.

Organizational Behavior: Chapter 1825 Study Question 3: Can the design of the firm co-evolve with the environment?  Environmental uncertainty. – Uncertainty and volatility can be particularly damaging to large bureaucracies. – A more organic form is the appropriate organizational design response to uncertainty and volatility. – Adhocracy may be needed extreme uncertainty and volatility.

Organizational Behavior: Chapter 1826 Study Question 3: Can the design of the firm co-evolve with the environment?  In a complex global economy, firms must learn to co-evolve by altering their environment.  Two important ways of co-evolution: – Management of networks. – Development of alliances.

Organizational Behavior: Chapter 1827 Study Question 3: Can the design of the firm co-evolve with the environment?  Networks and alliances around the world. – Informal combines or cartels exist in Europe but are illegal in the United States except in rare cases. – Networks are called keiretsu in Japan. Bank-centered keiretsu. Vertical keiretsu. – In the United States, outsourcing is developing as a specialized form of network organization.

Organizational Behavior: Chapter 1828 Study Question 3: Can the design of the firm co-evolve with the environment?  Interfirm alliances. – Announced cooperative agreements or joint ventures between two independent firms. – Alliances are quite common in high technology industries. – Since firms cooperate rather than compete; consequently, both the alliance managers and sponsoring executives must be patient, flexible, and creative in pursuing goals.

Organizational Behavior: Chapter 1829 Study Question 3: Can the design of the firm co-evolve with the environment?  Virtual organization. – An ever-shifting constellation of firms, with a lead corporation, that pool skills, resources, and experiences to thrive jointly. – A design option when internal and external contingencies are changing quickly.

Organizational Behavior: Chapter 1830 Study Question 3: Can the design of the firm co-evolve with the environment?  Key to making a virtual organization work. – The production system needs to be in a partner network bound together by mutual trust and survival. – The partner network needs to develop and maintain an advanced IT, trust and cross-owning of problems and solutions, and a common shared culture. – The lead firm must take responsibility for the whole network and coordinate member firm actions. – The lead corporation and the partners need to rethink how they are internally organized and managed.

Organizational Behavior: Chapter 1831 Study Question 3: Can the design of the firm co-evolve with the environment?  Boundaryless organization. – A design option that eliminates vertical, horizontal, external, and geographic barriers that block desired action. – Actions to create a boundaryless organization. Executives should systematically examine the organization and its processes. Organization members should initiate a process of improving their cooperation.

Organizational Behavior: Chapter 1832 Study Question 4: How does a firm learn and continue to learn over time?  Organizational learning. – Process of knowledge acquisition, information distribution, information interpretation, and information retention in adapting successfully to changing circumstances. – Adjustment of organization’s and individual’s actions based on experience. – The key to successful co-evolution.

Organizational Behavior: Chapter 1833 Study Question 4: How does a firm learn and continue to learn over time?  Mimicry. – Occurs when managers copy what they believe are the successful practices of others – Is important to new firms. Provides workable, if not ideal, solutions to many problems. Reduces the number of decisions that need to be analyzed separately. Establishes legitimacy or acceptance and narrows the choices requiring detailed explanation.

Organizational Behavior: Chapter 1834 Study Question 4: How does a firm learn and continue to learn over time?  Experience. – A primary way to acquire knowledge. – Besides learning by doing, managers can also systematically embark on structured programs to capture the lessons to be learned. – The major problem with emphasizing learning by doing is the inability to precisely forecast changes.

Organizational Behavior: Chapter 1835 Study Question 4: How does a firm learn and continue to learn over time?

Organizational Behavior: Chapter 1836 Study Question 4: How does a firm learn and continue to learn over time?  Scanning. – Involves looking outside the firm and bringing back useful solutions.  Grafting. – The process of acquiring individuals, units, or firms to bring in useful knowledge.

Organizational Behavior: Chapter 1837 Study Question 4: How does a firm learn and continue to learn over time?  Common problems in information interpretation. – Self-serving interpretations. People seeing what they want to see, rather than seeing what is. – Managerial scripts. A series of well-known routines for problem identification and alternative generation and analysis that are commonly used by a firm’s managers.

Organizational Behavior: Chapter 1838 Study Question 4: How does a firm learn and continue to learn over time?  Organizational myths. – Commonly held cause-effect relationships or assertions that cannot be empirically supported. – Common myths.  Single organizational truth.  Presumption of competence.  Denial of tradeoffs.

Organizational Behavior: Chapter 1839 Study Question 4: How does a firm learn and continue to learn over time?  Information retention mechanisms. – Individuals. – Organizational culture. – Transformation mechanisms. – Formal organizational structures. – Ecology. – External archives. – Internal information technologies.

Organizational Behavior: Chapter 1840 Study Question 4: How does a firm learn and continue to learn over time?  Deficit cycles. – A pattern of deteriorating performance that is followed by even further deterioration. – Factors associated with deficit cycles. Organizational inertia. Hubris. Detachment.

Organizational Behavior: Chapter 1841 Study Question 4: How does a firm learn and continue to learn over time?  Benefit cycles. – A pattern of successful adjustment followed by further improvements. – Firms can successfully co-evolve by initiating a benefit cycle. – The firm develops adequate mechanisms for learning.

Organizational Behavior: Chapter 1842 COPYRIGHT Copyright 2005 © John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Copyright Act without the express written permission of the copyright owner is unlawful. Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.