Organizational Organizational AgilityAgility

Chapter 09Chapter 09

Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Learning ObjectivesLearning Objectives

LO 1 Discuss why it is critical for organizations to be responsive.

LO 2 Describe the qualities of an organic organization structure

LO 3 Identify strategies and dynamic organizational concepts that can improve and organization’s responsiveness

LO 4 Explain how a firm can be both big and smallLO 5 Summarize how firms organize to meet customer

requirementsLO 6 Identify ways that firms organize around different types

of technology

9-2

The Responsive OrganizationThe Responsive Organization

Mechanistic organization A form of organization

that seeks to maximize internal efficiency.

Organic structure An organizational form

that emphasizes flexibility

9-3

Organic StructureOrganic Structure

1. Jobholders have broader responsibilities that change as the need arises.

2. Communication occurs through advice and information rather than through orders and instructions.

3. Decision making and influence are more decentralized and informal.

4. Expertise is highly valued.

9-4

Organic Structure (cont.)Organic Structure (cont.)

5. Jobholders rely more heavily on judgment than on rules.

6. Obedience to authority is less important than commitment to the organization’s goals.

7. Employees depend more on one another and relate more informally and personally.

9-5

Organization Chart Shows Who’s on TopOrganization Chart Shows Who’s on Top

9-6Figure 9.1(a)

Advice Network RevealsAdvice Network RevealsKnowledge FlowKnowledge Flow

9-7Figure 9.1(b)

Organizing around Core CompetenciesOrganizing around Core Competencies

Identify existing core competencies. Acquire or build core competencies that will be

important for the future. Keep investing in competencies so that the firm

remains world class and better than competitors. Extend competencies to find new applications and

opportunities for the markets of tomorrow

9-8

QuestionQuestion

What is a formal relationship created among independent organizations with the purpose of joint pursuit of mutual goals?

A.Knowledge organizationB.Learning organizationC. Strategic allianceD.Wholly-owned subsidiary

9-9

Strategic AlliancesStrategic Alliances

Strategic alliance A formal relationship

created among independent organizations with the purpose of joint pursuit of mutual goals.

9-10

How I’s Can Become We’sHow I’s Can Become We’s

9-11Table 9.1

The Learning OrganizationThe Learning Organization

Learning organization An organization skilled at creating, acquiring, and

transferring knowledge, and at modifying its behavior to reflect new knowledge and insights.

9-12

How do Firms Become Learning How do Firms Become Learning Organizations? Organizations?

Engage in disciplined thinking and attention to details, making decisions based on data and evidence rather than guesswork and assumptions Search for new knowledge and ways to apply it

Review successes and failures looking for lessons and deeper understanding

Benchmark--identify and implement best practices Share ideas throughout the organization

9-13

The High-Involvement OrganizationThe High-Involvement Organization

High-involvement organization A type of organization in which top management

ensures that there is consensus about the direction in which the business is heading

9-14

Organizational Size and AgilityOrganizational Size and Agility

Large organizations are typically less organic and more bureaucratic

Jobs tend to become more specialized in large organizations

With size comes greater complexity and a need for increased control

Organizations can still find ways to remain agile despite these challenges

9-15

The Case for BigThe Case for Big

Larger size helps create economies of scale

Larger size helps develop economies of scope Economies in which

materials and processes employed in one product can be used to make other related products

9-16

The Case for SmallThe Case for Small

Large organizations can have difficulty managing relationships with customers and among its own units

Large organizations are more difficult to coordinate and control

Smaller organizations can: Move fast Provide quality goods

and services to targeted market niches

Inspire greater involvement from their people

Being small can avoid diseconomies of scale

9-17

Being Big and SmallBeing Big and Small

Downsizing The planned

elimination of positions or jobs

Rightsizing A successful effort to

achieve an appropriate size at which the company performs most effectively

9-18

DownsizingDownsizing

Survivor’s syndrome Loss of productivity

and morale in employees who remain after a downsizing.

9-19

Customers and the Responsive Customers and the Responsive OrganizationOrganization

The point of structuring a responsive, agile organization lies in enabling it to meet and exceed the expectations of its customers

Managers must stay focused in three key ingredients - the strategic triangle The company itself Competition The customer

9-20

The Strategy TriangleThe Strategy Triangle

9-21Figure 9.2

Customer Relationship ManagementCustomer Relationship Management

Customer relationship management (CRM) A multifaceted process focusing on creating two-

way exchanges with customers to foster intimate knowledge of their needs, wants, and buying patterns.

9-22

Customer Relationship ManagementCustomer Relationship Management

Value chain The sequence of activities that flow from raw

materials to the delivery of a good or service, with additional value created at each step.

9-23

Generic Value ChainGeneric Value Chain

9-24Figure 9.3

Total Quality ManagementTotal Quality Management

Total quality management (TQM) An integrative approach to management that

supports the attainment of customer satisfaction through a wide variety of tools and techniques that result in high-quality goods and services.

9-25

ISO 9001ISO 9001

ISO 9001 A series of quality standards developed by a

committee working under the International Organization for Standardization to improve total quality in all businesses for the benefit of producers and consumers.

9-26

ReengineeringReengineering

Reengineering Revolutionizing key organizational systems and

processes to answer the question: “If you were the customer, how would you like us to operate?”

Processes are designed from scratch as if the organization was just starting out

9-27

Types of Technology ConfigurationsTypes of Technology Configurations

Small batch Technologies that produce goods and services in

low volume. Large batch

Technologies that produce goods and services in high volume.

Continuous process A process that is highly automated and has a

continuous production flow.9-28

Organizing for Flexible ManufacturingOrganizing for Flexible Manufacturing

Mass customization The production of

varied, individually customized products at the low cost of standardized, mass-produced products.

9-29

Key Features in Key Features in MassMass

CustomizationCustomization

9-30

Table 9.2

Computer-Integrated ManufacturingComputer-Integrated Manufacturing

Computer-integrated manufacturing (CIM) The use of computer-aided design and computer-

aided manufacturing to sequence and optimize a number of production processes.

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Flexible FactoriesFlexible Factories

Flexible factories Manufacturing plants that have short production

runs, are organized around products, and use decentralized scheduling.

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Lean ManufacturingLean Manufacturing

Lean manufacturing An operation that strives to achieve the highest

possible productivity and total quality, cost effectively, by eliminating unnecessary steps in the production process and continually striving for improvement.

9-33

Organizing for Speed: Time-Based Organizing for Speed: Time-Based CompetitionCompetition

Time-based competition (TBC) Strategies aimed at

reducing the total time needed to deliver a good or service.

9-34

QuestionQuestion

___________ is the movement of the right goods in the right amount to the right place at the right time.

A.Logistics B.Supply chain managementC.Value chain analysisD.Customer Service

9-35

Time-Based CompetitionTime-Based Competition

Logistics The movement of

the right goods in the right amount to the right place at the right time

9-36

Time-Based CompetitionTime-Based Competition

Just-in-time (JIT) A system that calls for subassemblies and

components to be manufactured in very small lots and delivered to the next stage of the production process just as they are needed.

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Just-in-time (JIT) Just-in-time (JIT)

Elimination of waste Perfect quality. Reduced cycle times. Employee involvement Value-added manufacturing Discovery of problems and prevention of

recurrence

9-38

Time-Based CompetitionTime-Based Competition

Simultaneous engineering A design approach in which all relevant functions

cooperate jointly and continually in a maximum effort aimed at producing high-quality products that meet customers’ needs.

9-39

Destination CEO: Royal Phillips ElectronicsDestination CEO: Royal Phillips Electronics

Discuss Philips’ approach to remaining a competitive and responsive global organization.

9-40