session 5 managing structure
TRANSCRIPT
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Food for thought
Corporate revitalization often includes shifts instrategy or process or structure, butrevitalization means a good deal more it
means a permanent rekindling of individualcreativity and responsibility, a lastingtransformation of the companys internal andexternal relationships, an honest-to-God change
in human behavior on the job
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Where We Are
EIS Simulation:
The change process
Leadership& Initiation of change
Individual level:
Change agent
Organization level:
Culture & structure
Interpersonal level:Social capital
Introduction& overview
Strategies of change& conclusion
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Session 5
Managing Change at theOrganizational Level
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Topics for Today
Theme 1: Organizational change through empowerment Strategic consideration: top-down vs. bottom-up Empowerment as a strategy
Theme 2: Organizational change through structuraldesign The role of structural designs in organizational change Case study: Appex Corporation Debate: structural change vs. cultural change Summary and takeaways
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Theme 1: Organizational change throughthe management of culture
The need to get people involved The key is to change the mental model
Organizational culture values and norms that are shared by people/groups
that control the way they act internally andexternally.
Values = beliefs about goals and appropriatestandards for achievement (behaviors)
Norms = expectations about behavior in specificsituations and toward one another.
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Organizational Culture
Espoused Values individual values (CEO, managers) that the group
adopts through validation (cognitive transformation
to shared value) conscious and explicit - serve a normative or moralfunction to guide members in certain situations andin socializing members.
Strategies - goals - philosophies
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Organizational Culture
Basic underlying assumptions: a solution to a problem that works repeatedly &becomes taken for granted
cannot be confronted or debated and are difficult
(if not impossible) to change. can only be changed through re-examination and
re-evaluation of the cognitive structure. individuals will distort or deny rather than adopt -
thus culture at this level is a defense mechanism somajor change means managing at this level.
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Organizational Culture
Socialization - how people learn the culture Consists of stories, myths, legends, etc.
influence of the founder organizational structure composition of TMT
Adaptive cultures - encourage and rewardinitiative/innovativeness - easiest to change
Inert cultures - cautious and conservative, does notvalue initiative & may discourage
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Organizational Culture
Strong Adaptive Cultures characterized by: Bias for action - autonomy, risk-taking,
entrepreneurship
Coherent mission - sticks to knitting, close tocustomers Structured for flexibility
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Changing organizational culture(Pascale et al. 2000)
Incorporating employees in the process Not communicating, motivating It is resocialization changes the way people think
Leading from a different place Out of the comfort zone Generate a sense of urgency, maintain healthy levels of stress,
resist coming to the rescue with ready answers.
Instilling mental disciplines Let employees see the larger picture Manage from the future Cerate relentless discomfort with the status quo.
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Empowerment(Quinn and Spreitzer 1997)
Empowered people have a sense of Self-determination Meaning Competence ImpactBecause empowerment includes risk -taking, it opens the
possibility of making mistakes. If those mistakes werepunished, then individuals became disenchanted with their newways of thinking, and regressed to past behaviors. If theyreceived no support or reinforcement, then the cycle ofempowerment was halted and individuals actually felt moredisempowered than before.
Quinn and Spreitzer (1997, p. 45)
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Are you empowered?(Quinn and Spreitzer 1997)
To what extent do I have a sense of meaning and taskalignment, and what can I do to increase it?
To what extent do I have a sense of impact, influence,and power, and what can I do to increase it?
To what extent do I have a sense of competence andconfidence to execute my work, and what can I do toincrease it?
To what extent do I have a sense of self-determinationand choice, and what can I do to increase it?
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Theme 2: Organizational change throughstructural design
Strategic design and organizational control
The role of structure in organizational change Structure and organizational alignment Structure power, resources Structure vested interests Structure generates stability, predictability
Types of organizational structures
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Organizational Structure
Functional structure - groups people on thebasis of common expertise & resources
Pro: learning (transfer of knowledge within function)monitoring is easierprocesses become more efficientgreater managerial control
Con: control becomes a problem as company growscommunication and coordination (between functions)
measurement (contribution of function)loss of strategic focus by TMT
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Multi-Divisional Structure
Product lines or business unit is self-contained -corporate HQ established for support & control Divisional unit = operating authority HQ = strategic authority
Adv: Financial control - easier to monitorStrategic control - time for TMT to focus on strategyGrowth - add businesses or productsInternal efficiency - allows clearer varianceidentification
Disadvantages: Division/Corporate relationship Interdivisional competition - resources, parent attention Short-term focus Bureaucratic costs
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Multi-Divisional Structures
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Matrix Organization
Based on two forms of horizontal differentiation:functional and project/product Advantages:
Employees tend to be highly qualified, professional, &perform best in autonomous, flexible working conditions
Employees can be moved from project to project leaves TMT to focus on strategy
Disadvantages: high bureaucratic costs
constant movement of employees means $ two boss role can create conflict
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Matrix Structure
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Team Structure
Many companies use permanent cross-functional teams
formed at the beginning of product development process andcontinued throughout implementation
speeds innovation and customer responsiveness stronger in highly dynamic industries
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Team Structure
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Network Organizations
Core group of experts manages the outsourcingprocess closely
This forms a hub & spoke type of organization
consisting of many contracts Could create a control problem with contract
organizations
Example: Nike
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Network Structure
.
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Case study: Appex Corporation
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Background
Shikhar Ghosh expertise in structural design Appex before Shikhar:
Small size: 20 employees, $2mil.
Entrepreneurial Technology-driven, project-based Loosely structured Organizational culture: informal
Challenges: Growing pains: consider Greiners 5 stages of growth From innovation to sustainable growth
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The Five Phases of Growth Larry Greiner
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The search for structural fit
Circular structure What kinds of problems does it run into?
Horizontal structure Why does it not work for Appex at this stage?
Hierarchical, functional structure Does it address the challenges? Why?
Divisional structure What is the rationale? Does it work?
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Questions for discussion
Is structure and control the most important aspectfor organizational change at this stage of Appexsdevelopment?
How do you evaluate the effectiveness of the differentstructures adopted at Appex over time?
Would you do anything differently?
What is the relationship between organizationalstructure and culture?
The lessons from Citibank practice in Taiwan
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Strategic choice in knowledge management(Hansen, Nohria, and Tierney 1999)
Two strategies: codification vs. personalization Examples: IBM versus 3M Codification: Provide high-quality, reliable and fast information
implementation. Personalization: Provide creative, analytically rigorous advice
on high-level strategic problems.
The trade-off between professionalization andbureaucratization
Implications: structure vs. culture as control device Strategic design in culture, strategy, HRM
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Summary and takeaways
Strategic choices for change: Top-down versus bottom-up Leadership and the initiation of change Empowerment: Organizational changes need bottom-up
processes that involve employees and change their mindsets.
Strategic choices for change: Cultural vs. structuralchanges Complementality between the two
The need for a systematic change program What is your priority?