52836914-mgt300instructornotes

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Interdependence

Independence

Dependence

Seek first toUnderstand

then to beunderstood

5

Synergize6

PUBLIC

VICTORY

Think Win/Win

4

3Put First

Things First

1Be

Proactive

2Begin

with the Endin Mind

PRIVATE

VICTORY

Book Summary Management and Organizational Behavior Cook, C. W. & Hunsaker, P. L. (2001). Management and Organizational Behavior (3 rd edition) .

Chapter 1 Managing People and OrganizationsTOPIC: Personal Effectiveness / 7 Habits of Highly Effective People

Covey, S. (1990). The 7 Habits of Highly Effective People .

The Seven Habits1. Be Proactive More than simply

taking initiative. As humanbeings we are responsiblefor our own lives. Ourbehavior is a functionof our decisions, notour conditions.

2. Begin with theEnd in Mind Tostart with a clearunderstanding of your destination. Itmeans to know

where youre goingso that you betterunderstand where youare now and so that thesteps you take arealways in the rightdirection. A personal missionstatement.

3. Put First Things First Organize and execute around priorities.Urgent/Importance Matrix Planning.

4. Think Win/Win A frame of mind & heart that constantly seeksmutual benefit in all human interactions.

5. Seek First to Understand then to be Understood Listenwith the intent to understand, not to reply.

6. Synergize The whole is greater than the sum of its parts. The relationship is themost important part.


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7. Sharpen the Saw Preserving and enhancing the greatest assetyou have you. Renewing the four dimensions of your nature physical, spiritual, mental, and social/emotional.

TOPIC: Discuss history of management Until the late 1800s, organizations were very small or individual. With the industrial revolution (trains, assembly line/automobiles, oil),

business organizations became very large and very complex.TOPIC: What large organizations existed prior to 1900?

These early, large organizations were based on the only largeorganizational form that existed at the time the military.

Early management theory was centered around scientific management(Frederick Taylor). Efficiency, people were extensions of machines. No

one was expected to like their jobs. Mid 1900s behavior psychology / Carl Jung influenced managementthinking. People started to study human behavior and motivation.

Hawthorne studies (Eldon Mayo) at Western Electric influencedthinking.

Today: still influences of military organization in business, andmanagement. Additional thinking about why we work, what we shouldexpect out of work. Coaching, communication, open-bookmanagement,

TOPIC: Managers dont design, make, sell, or deliver anything. What?

Managers are responsible for working with and through others to achieveobjectives by influencing people and systems in a changing environment.Some managers are also leaders and visionaries, the qualities of whichbecome necessary as managers take on central decision-making roles withinan organization.

Why Study Management and Organizational Behavior? TOPIC: What is organizational behavior?

Organizational behavior (OB) refers to the behaviors of individuals and

groups within an organization, and the interactions between the organizationand environmental forces.Students of organizational behavior seek to improve the effectiveness of organizations (and their lives in organizations) through the application of behavioral science concepts and research. The assumption thatorganizational behavior can be improved by study and analysis is based onthe premise that behavior is not completely random. Rather, it representsmutual dependencies or cause-and-effect links that can be anticipated,


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sometimes predicted, and often influenced to varying degrees.

TOPIC: What is management?

Management is the practice of organizing, directing, and developingpeople, technology, and financial resources to provide products and services

through organizational systems.Organization is a group of people working in a network of relationships andsystems toward a common objective.

What Purpose Do Organizations Serve? TOPIC: Pick a company, list stakeholders, what do they want/conflict?

Formulating a purpose and goals in an organization is complicated by theneed to balance the interests of various groups who have a stake in itsactions and outcomes. Stakeholders are members of identifiable clusters of people who have economic and/or social interests in the behaviors andperformance of a specific organization. (e.g. Managers, Employees, Unions,Customers, Governments, Watchdog Groups, Universities, Suppliers,Alliances, Investors.) To link the role of employee/investor, many firms withrapid growth prospects use stock options as financial incentives foremployees. An important challenge for managers is to identify the relevantstakeholders and to operate the organization in ways that optimize thereturns to each group. Sometimes the interests of these stakeholders are inconflict.

TOPIC: Is the mission of business to make money?

Mission is an organizations fundamental purpose, articulated to define thenature of the business and unify human and other resources. A well-framedmission provides a sense of purpose and establishes parameters that focuseffort and resources.

TOPIC: What is Your Personal Mission? Write one (picture end of life).

Beyond defining its mission, founders and top managers are responsible forarticulating the organizations fundamental values, goals, and guidingconcepts. Such statements provide a sense of direction, conveying how thegame of business is to be played by organization members. Superordinategoals are the highest goals of an organization; fundamental desired

outcomes that enable managers to assess performance relative to itsmission. According to Peter Drucker, there is only one valid definition of business purpose: to create a customer.

Simplistic goals and strategies that contribute to performance early in thelife of an organization may become detrimental as the firm grows. Oncesuccess for the emerging firm takes hold and growth takes off, managersoften branch out to offer products and services beyond those thatestablished the original business. The firm then runs the risk of becoming


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unfocused, of trying to be too many things to too many people.Many employees are more motivated to work diligently for organizations thatfulfill socially desirable purposes than for firms whose managers define theirprincipal objective as profit taking or engaging in practices that questionethical norms.Organizational behavior is usually not random. The law of effect is thebehavioral tendency where people tend to behave in ways that enable themto attain the goals for which they are rewarded.

How Do Organizations Behave as Systems? A system is an integrated whole formed by a set of interrelated elementsand interacting subsystems.Organizations are complex forms of social systems comprised of people,other resources, and subsystems integrated for the purpose of transforminginputs into mission-relevant outputs. Any business is an input-transformation-output system that takes in resources, converts them intogoods and services, and passes along these outputs to customers andothers.Closed systems operate without environmental or outside disturbance.Open systems are influenced by external pressures and inputs, makingthem more complex and difficult to control than closed systems.Dynamic systems change over time as structures and functions adapt toexternal disturbances and conditions.All business organizations are thus open dynamic systems . As an

open system, firms are subject to outside forces by competitors, customers,suppliers, and regulators. As a dynamic system, a business can change itsproduct mix, enter new markets, restructure its sources of financing, hirenew managers, or redesign its compensation policy in anticipation of or inresponse to outside forces.

TOPIC: Pick a business, what are the inputs, subsystems & outputs?

InputsPeople,materials

,supplies,

capital

OutputsSales of goods

andservices,

waste,jobs

Organizational Subsystems

Procurement &

Production

OrderFulfillment

MoneyManagemen

t

Imports Exports

MoneyInformation Feedback


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The management of open dynamic systems requires careful attention toimportant boundary spanning transactions. Boundary-spanningtransactions are actions that link an organization to specific externalsectors; exchanges that make the system dynamic and open.

What Do Successful Managers Do? TOPIC: Who have been managers (or managed)? What did mgrs do?

Managers are people responsible for working with and through others toachieve objectives by influencing people and systems in a changingenvironment. Managers do not have total control over that part of theorganization for which they are responsible. No manager can absolutelypredict and control environmental forces. Even internal forces that involvehuman behavior are often unpredictable and people will thwart attempts bymanagers to influence them.

TOPIC: The Rational Heroic View

The rational heroic view is a legacy of early descriptions and prescriptionof the nature of a managers job. This view characterizes the manager as onewho engages in reflective planning, takes time to carefully organizestructures and systems, directs and coordinates an orchestrated flow of activities, and then exercises control to keep critical elements in harmony.The manager is expected to have an overall feel for where the organizationis going, know what is going on, and accept responsibility for problem solvingand the departments success or failure. All forces considered, the rationalheroic model places too much emphasis and responsibility on the managerand not enough on teams and followers within the organization. Whenmanagers act as if they should be the only ones in control, they deprivefollowers of job challenges and create delays in decisions.

TOPIC: The Chaotic View

The chaotic view is that managerial life is intense, fragmented, andcomplex. Henry Mintzberg found that instead of being the reflective andsystematic planners described in tradional books on management, mostmanagers are actually caught up in a variety of intense, brief, disconnectedactivities. Managers prefer action to reflection, according to both Mintzberg

and Kotter. The plans of managers often exist largely in their heads; Theyprefer oral mediums over written information. Verbal contacts with othersare the managers principal source of information gossip, ideas, opinions,and facts.All managers share common work characteristics. Writes Mintzberg, Allthese managers are vested with formal authority over an organizational unit.From formal authority comes status, which leads to various interpersonalrelations, and from these comes access to information. Information, in turn,


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Organization Organization as used here refers to a structuralnetwork and the processes that define and link key subsystems withinthe enterprise. Organization structure is simplistically symbolized by achart, drawing, or map that depicts the decision authority andcommunication relationships among people and the ways in which

tasks are grouped into departments or subunits. In a realistic sense,managers view structure in a broader way to include all thoseelements that help govern peoples behavior at work. These includegoals, plans, policies, and rules, as well as the authority andcommunication networks.

Organizational Culture All the foregoing elements combine to forma network of social systems, and from these evolve an organizationalculture. By culture we mean the beliefs, values, and assumptionspeople have about their particular organization and the expectedbehavior within it.

Management The Integrating Responsibility In the center of thistransformation network, we show managers and leaders.

The planned changes managers make in a system to achieve intendedresults commonly lead to unintended second-order consequences.In diagnosing how and where to influence an organizational system,managers typically start with outputs because they are important to allorganizations. All organizations try to produce outputs that meet the quality,quantity, timeliness, and price expectations of customers. To do so, theyneed to set specific goals that address three output criteria: productivity,satisfaction, and revitalization.

TOPIC: Important Definitions ASKProductivity is the ratio of acceptable quality outputs to inputs consumed;a measure of how well the organization achieves its goals. Efficiency meansdoing something right or getting the most output for the least input.Effectiveness means producing the right output or doing things right tocreate value for stakeholders.It is possible to have efficiency without effectiveness or vice versa. The idealis to achieve a balance of effectiveness and efficiency, althougheffectiveness is usually more critical.Satisfaction is another key goal of organizations. Satisfaction refers topositive feelings people have about an organization, whether as anemployee, customer, supplier, or regulator.Revitalization refers to the ability to take care of tomorrows problems aswell as todays by renewing strategies, resources, technology and skills.Rather than deplete the resource base to get immediate results, companiesmust periodically or continually reinvest, renew, and reinvent. Revitalizationalso involves people, for without training and professional development of


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human resources, an organization slips in its capacity to compete.Therefore, the overall job of any manager is:

To identify clearly the output requirements of his or her system To devise measures of efficiency and effectiveness To develop core skills and capabilities within the organization to do thejob well To promote improvement and innovation To make changes when results fail to measure up

What Are the Organizational Context Challenges for Managers? Four thematic issues emerge: managing technology , global business ,human diversity and ethical behavior .In managing diversity, differences in gender, race, language, size, physicalimpairments, and age are clearly visible. Less visible are differences in

education, religion, nationality, economic status, sexual orientation, andlearning disabilities. Affirmative action and managing diversity are not thesame. The goal of affirmative action is to ensure that people are given fairopportunities to be hired or admitted to organizations.

TOPIC: Discuss the impact of globalization on local/national economy?

Summary Organizations are open dynamic systems for transforming resource inputsinto outputs of useful products and services that satisfy the needs of customers and provide value to stakeholders. But the interests of various

stakeholders are not always aligned. This places conflicting pressures anddemands on managers.At the highest organizational level, managers seek to navigate competitiveenvironmental forces by developing a mission to define the firms uniquebusiness purpose and crafting superordinate goals to challenge and guideemployees. At all levels, managers diagnose and influence systems byworking with people and allocating resources to carry out tasks and achievegoals within an environment of change. In performing their jobs, managersbehave in different roles, frequently shifting emphasis among interpersonal,information, and decision-making roles.

To maintain organizational viability, managers work to achieve goals in theareas of productivity, satisfaction, and revitalization. One of the realities of life in organizations is that todays effective practices are not likely to sufficetomorrow. Whether pulled by the success of growth or jolted by crisis anddownturn, managers must periodically transform the system to adapt toenvironmental realities. In the process of transformation, managers cantarget changes in the key internal resources such as tasks, technology,organization, people, and culture. Maintaining a dynamic balance among


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these resources is what organizational behavior (OB) is all about.The study of organizational behavior is important because of the growingcomplexity and turbulence of the business environment and the relatedgrowth in research knowledge about behavior within and betweenorganizations.


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Chapter 2 Strategic Thinking, Planning & ContinuousImprovement

It is not just the tangible plans that are important. Also important is theprocess by which plans are developed.

How Does a Manager Begin to Think Strategically? TOPIC: What is strategic thinking?

Strategic thinking is a process of envisioning and planning to create aworkable match between organizational competencies (and limitations) andexternal opportunities (and threats) with the goal of better servingcustomers. Thinking strategically means anticipating what actions andbehaviors are most likely to help the organization prosper in a changingenvironment.Key objectives are articulated as mission-consistent measurable results tobe achieved by specific times in the future. Objectives help frame thechoices for crafting strategy that charts a course for the future makeup of products and services and targeted customer bases.

Every organization has a mission, or cause, intended to unite and providedirection to its members.

The Strategic Cycle

TOPIC: Discuss football coach analogy. Most businesses jump in.

1. A Craft a Mission to Define a Common Purpose

The mission of a firm is the fundamental purpose of an enterprise thatdefines the nature of its business and provides strategic direction to unify

1A. Mission1B. Vision

2. Settingobjectives

3. Craftingstrategy4.

Organizingand

financing

5.Implementing &

executing

6.Controlling

&Improving


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the use of human and other resources. A well-conceived mission answersthe questions: Why do we exist and what do we do? Who are we andwhere are we headed? With the passage of time, mission statementshave to be reassessed and even reformulated. Missions becomecomplicated when an organization branches beyond its original line of

business. A mission is normally expected to provide direction thatstretches beyond the foreseeable future.To be useful, a statement of mission should: Articulate the vision that defines the business, what it is, what it is not,

and what it should be in the future. Communicate to internal members and external constituencies a clear

sense of meaning and direction that is motivating and energizing Convey which customer wants and needs it will seek to satisfy, and the

target markets it will serve Identify the value-adding functions it will perform, realizing its specific

enabling actions will change over time while the purpose endures. Be of bumper-sticker length brief enough to be incorporated into

corporate communications and easily remembered

TOPIC: Example Mission Statements

Worldcoms MissionTo be the preeminent global communications company for the digitalgeneration, generation d.

Consecos Three-Pronged MissionTo be more efficient than other insurance companies. To actively manageour investments to generate greater returns with no additional risk. Todevelop products that meet real market needsand find more effectivechannels for distributing them.

Enrons MissionNot found.

IBMs MissionAt IBM, we strive to lead in the creation, development and manufacture of the industrys most advanced information technologies, including computersystems, software, networking systems, storage devices andmicroelectronics.

Microsofts MissionTo enable people and businesses throughout the world to realize their fullpotential


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Apples MissionApple is committed to bringing the best personal computing experience tostudents, educators, creative professionals and consumers around the worldthrough its innovative hardware, software and Internet offerings.

Peace Corps Mission To help the people of interested countries in meeting their need fortrained men and women; To help promote a better understanding of Americans on the part of the peoples served; To help promote a better understanding of other peoples on the part of Americans.

Ball States MissionBall State University is committed to being a premier teaching institution andproviding excellent programs of instruction. Consistent with thiscommitment, the mission of the College of Business is to provide high-qualitybusiness and economic education and other related services to our students,to the organizations (business, governmental, educational, and not-for-profit)that employ or admit our graduates, and to the citizens of our state.

Eli Lilly ValuesAs we implement our strategies and pursue our objectives, long-establishedcore values guide us in all that we do: Respect for people that includes our concern for the interests of all people

worldwide who touch or are touched by our company: customers,employees, shareholders, partners and communities; Integrity that embraces the very highest standards of honesty, ethical

behavior and exemplary moral character; Excellence that is reflected in our continuous search for new ways to

improve the performance of our business to become the best at what wedo.

TOPIC: Discuss Tylenol experience, J&J used mission as guide.

Johnson & Johnsons Credo

We believe our first responsibility is to the doctors, nurses and patients, tomothers and fathers and all others who use our products and services. Inmeeting their needs everything we do must be of high quality. We mustconstantly strive to reduce our costs in order to maintain reasonable prices.Customers' orders must be serviced promptly and accurately. Our suppliersand distributors must have an opportunity to make a fair profit.We are responsible to our employees, the men and women who work with usthroughout the world. Everyone must be considered as an individual. We


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must respect their dignity and recognize their merit. They must have a senseof security in their jobs. Compensation must be fair and adequate, andworking conditions clean, orderly and safe. We must be mindful of ways tohelp our employees fulfill their family responsibilities. Employees must feelfree to make suggestions and complaints. There must be equal opportunity

for employment, development and advancement for those qualified. Wemust provide competent management, and their actions must be just andethical.We are responsible to the communities in which we live and work and to theworld community as well. We must be good citizens support good worksand charities and bear our fair share of taxes. We must encourage civicimprovements and better health and education. We must maintain in goodorder the property we are privileged to use, protecting the environment andnatural resources.

Our final responsibility is to our stockholders. Business must make a sound

profit. We must experiment with new ideas. Research must be carried on,innovative programs developed and mistakes paid for. New equipment mustbe purchased, new facilities provided and new products launched. Reservesmust be created to provide for adverse times. When we operate according tothese principles, the stockholders should realize a fair return.

TOPIC: Where there is no vision the people perish. But, what aboutcorporate cults?

1. B Use a Vision to Set Direction for a Desired Future

Visions change more frequently, are often more detailed, and can bespecific to a product, program or project. A vision is a desired futureimage of the organization and its processes and products that integratescurrent realities and expected future conditions within a specific timeframe.Three elements are fundamental to a comprehensive, meaningful vision: A statement of purpose it should inspire and motivate insiders A tangible goal framing a clear, specific and compelling goal that

focuses peoples efforts. A well-framed goal has a target and a timeframe for its attainment.

An image of results the image should paint a compelling picture

using crisp languageTOPIC: How is vision different than a mission?

2. Set Objectives to Define Measurable Results

Objectives convert visionary intentions into specific performance targetsthat can be measured at designated points in time. Benchmarking canbe used to compare a units performance to outcomes achieved in otheroutstanding organizations.


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Any type of organization needs to specify objectives focusing on twotypes of performance outcomes: financial and strategic. Financial objectives are critical to guiding the long-term viability of the enterprise.Strategic objectives are used to assess performance against thespecific design of a strategy.

TOPIC: Balanced Scorecard

A balanced scorecard is a strategic management system that encouragescompanies to set objectives in four perspectives: Financial Customer Business Process Learning & Growth (Employee)

TOPIC: Strategy fairly recent in business. Sun Tsu, The Art of War.

3. Craft Strategy to Fulfill the Mission and Vision

A strategy is a plan of actions to achieve a favorable position within thecompetitive marketplace by strengthening the relationship between anorganizations capabilities and its changing environment. Strategiespertain to those destiny-shaping decisions concerning: The choice of technologies on which products and services are based The development and release of new products and services The processes for producing products and services The way products and services are marketed, distributed, and priced

The ways in which the organization responds to rivalsTOPIC: More about strategies later

4. Organizing and Financing to Support Strategy

Two planning processes are close companions to crafting strategy, andthey must be resolved before (or at least concurrently with)implementation.The organizing function plans supportive structures and systems thatalign people to the strategy. In organizing, structure provides a way of grouping people and tasks into departments or work units to promote

coordination of communication, decisions, and action. Also in organizing,systems provide guidelines or structured processes for handlingrecurring transactions and events in a standardized or consistent way.

The financing function involves budget preparation and finding ordetermining sources of funding to meet requirements for capitalinvestments and operating expenses.

5. Implementing and Executing Strategy


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The greatest concentration of management and non-management effortoccurs with implementation (or execution) of strategy. Above all,implementation requires leadership, the formation of teams, and thenurturing of a supportive organizational culture.

TOPIC: Project management must be used to implement strategy

A project is a temporary endeavor undertaken to achieve a particular aim.Every project has a definite beginning and a definite end. While projects aresimilar to operations in that both are performed by people, both aregenerally constrained by limited resources, and both are planned, executedand controlled, projects differ from operations in that operations are ongoingand repetitive while projects are temporary and unique. The ProjectManagement Institute (PMI)Project management is the application of knowledge, skills, tools andtechniques to a broad range of activities in order to meet the requirementsof the particular project. Project management knowledge and practices arebest described in terms of their component processes. These processes canbe placed into five Process Groups: Initiating, Planning, Executing,Controlling and Closing and nine Knowledge Areas Project IntegrationManagement, Project Scope Management, Project Time Management, ProjectCost Management, Project Quality Management, Project Human ResourceManagement, Project Communications Management, Project RiskManagement, and Project Procurement Management. The ProjectManagement Institute (PMI)This is the most common area where strategy falls down.

6. Controlling Results to Sustain Continuous Improvement

But profits are the result , or the derivative, of doing several things well.While a certain level of profitability may be one objective, other objectivesand measures are needed to assure that people are focusing effort andresources on the things they have to do to bring about favorable results,to create customer satisfaction, and the like.Continuous improvement is ongoing assessment and problem solvingaimed at improving designs, processes, and outcomes.Assessment , thus, completes the strategic cycle, and in the processgenerates new visions just as it promotes organizational learning of new

skills and knowledge bases.The Teachable Point of View The teachable point of view puts the leader in front of her people by writingabout and interactively teaching her personal beliefs, assumptions, andmodels of change.1. What Business Are We In?


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The most basic question any organization must answer is: What productor service should we market? A related question is: Who is our customerand how can we provide value to that customer? Experience and researchsubstantiates that organizations do best if they remain focused on a corebusiness that takes advantage of the unique capabilities that give them

competitive advantage over rivals.Every unit must serve a customer, regardless of the departments orunits level, function, or size. In effect, all managers of work units shouldthink of themselves as entrepreneurs serving customer markets and if they dont serve them well, other customers (whether external orinternal) should be free to buy where they find the best deal.

2. What Are Our Internal Strengths and Weaknesses?

A firm (or a line of business within it) should be aware of its corecapabilities and sources of competitive advantage. A sustainablecompetitive advantage is created if a firms core capabilities cannot bereadily copied by competitors.Core capabilities are the critical skills and processes that anorganization executes so well in carrying out its intended strategy that itsreputation builds around them.In addition to knowing its strengths, an organization must recognize itslimitations.

TOPIC: What are your core capabilities? Reputation is key in business.

3. What External Opportunities and Threats Do We Face?

External and internal environments present both driving and restrainingforces. A SWOT analysis is an assessment of internal resources andcompetence ( S trengths and W eaknesses) in relation to conditions in anorganizations external environment ( O pportunities and Threats).

TOPIC: Michael Porters Five Forces Model


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4. What Business Should We Be In?

With this question, managers seek to control their organizations destiny.First, the traditional interpretation focuses on lines of business productand market combinations.

Second, management might probe the internal business processes usedto bring products and services to the market. Three basic processnetworks or businesses are found in most organizations: a productinnovation business, a customer relationship business, and aninfrastructure business that builds and manages facilities for the high-volume repetitive tasks.By outsourcing noncore capabilities, the organization concentrates onwhat it can do better than others.

5. How Do We Get There? (This is called a Gap Analysis)

Responses to the preceding questions cascade down into planning how tostrategically position or reposition resources and actions to achieve thedesired business objectives.

6. How Do We Know Were Still on the Right Course?

Plans need to have milestones and controls to ensure that actionscorrespond to plans, or to evaluate whether intended actions and goalsare still feasible. A firm uses milestones , future dates by which certainevents are planned to occur, to track progress.A control system works if it prevents deviations from a well-conceivedplan. If a deviation does occur, the control process should trigger actionsto bring out-of-control elements back in line with the plans goals andmilestones.


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Results Are the PayoffAll the plans, actions, milestones, goal, and controls managers use to shapebusiness strategy culminate in performance results.Results are external acceptance or rejection of what an organization does

satisfied customers are the hallmark of positive results.TOPIC: LOVE this quote by Peter Drucker!

The single most important thing to remember about any enterprise is that results exist only on the outside. The result of a business is a satisfied customer. The result of a hospital is a healed patient. The result of a schoolis a student who has learned something and puts it to work ten years later.Inside an enterprise, there are only costs . (Peter Drucker)

The previous six questions, or variations of them, should not be asked onlywhen an organization is in trouble. Such questions serve as the focus formanagement retreats, meetings, and conversations with peers.

How Do Organizations Develop Competitive Advantage? TOPIC: How is Dell different than Gateway? Burger King from McDs?

In a practical sense, strategy begins by making decisions about whichmarkets to compete in and what products and services to provide so thatcustomers needs are met and expectations are exceeded. Strategy thenincludes decisions about:

How much of the product the firm should make, and how much itshould buy from other firms

Whether to be technology or labor intensive Whether to distribute through independent dealers, wholesale trade

channels, a business-owned dealer network, or the Internet Whether to aim for high-volume economies of scale, or flexibility with

short product life-cycles and greater customized production Whether to price products to gain market share or to improve gross

marginCompetitive advantage occurs whenever a business is able to sustain anedge over its rivals by attracting customers and defending itself againstcompetitive forces.

To achieve a strategic competitive advantage, all enterprises build theirstrategies around a core of physical assets, business processes, and theskills and talents of its people. Core capabilities provide the keys to long-term success by enabling the firm to combine assets and skills to do certainthings better than competitors.Corporate strategy for multi-business firms, are the highest-level decisionsand actions about what lines of business to be in and how to manage them.


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Professor Michael Porters research on diversified firms found thatcompetition occurs only at the business-unit level, which in a diversified firminvolves a plant or division targeting a focused product line at a specificmarket.

TOPIC: Five Generic Competitive Strategies

When one strips away the details to get at the real substance the biggestand most important differences among competitive strategies boil down to(1) whether a companys market target is broad or narrow and (2) whether itis pursuing a competitive advantage linked to low costs or productdifferentiation. Five distinct approaches stand out: A low-cost leadership strategy Appealing to a broad spectrum of

customers based on being the overall low cost provider of a product orservice.

A broad differentiation strategy Seeking to differentiate the

companys product offering from rivals in ways that will appeal to a broadspectrum of buyers. A best-cost provider strategy Giving customers more value for the

money by combining an emphasis on low cost with an emphasis onupscale differentiation; the target is to have the best (lowest) costs andprices relative to producers of products with comparable quality andfeatures.

A focused or market niche strategy based on lower cost Concentrating on a narrow buyer segment and outcompeting rivals byserving niche members at a lower cost than rivals.

A focused or market niche strategy based on differentiation Concentrating on a narrow buyer segment and outcompeting rivals byoffering niche members a customized product or service that meets theirtastes and requirements better than rivals offering.

O v e r a l l L o w - C o s tL e a d e r s h i p

S t r a t e g y

B r o a dD i f f e r e n t i a

S t r a t e g y

F o c u s e dD i f f e r e n t i a

S t r a t e g y

F o c u s e d L o w -C o s t S t r a t e g y

B e s t - C o s t

P r o v i d e r S t r a t e g y

L o w e r C o s tD i f f e r e n t i a

A Broad

Cross-

Section of

Buyers

A Narrow

Buyer

Segment

T y p e o f C o m p e t i t i v e A d

Market Target

TOPIC: Important Definitions (and some not so important things)

Diversification in complex organizations, is a corporate strategy of branching out beyond the core business by offering different combinations of


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products and markets that establish new lines of business. (Can be pushedby growth needs of stock companies when they hit an upper limit).Outsourcing is the strategy of purchasing services or components fromsuppliers to prevent overextending the firm beyond its core capabilities.

Managers realize that they must not lose strength in their core businesses;otherwise their relative quality will be degraded. Relative quality degradation occurs when an enterprises rate of improvement falls behindthat of competitors, which relegates it to second-class performance.Competitive strategy is possible only within specific lines of business,where competitive advantage can be created through making choices aboutwhere to compete (the markets and segments, the type of rivals one goes upagainst) and how to compete (on the basis of product features,manufacturing, pricing, distribution, and so on). Competitive strategy isactions at the level of a specific line of business intended to create acompetitive advantage by planned actions about where to compete and howto compete.Clusters are geographic concentrations of interconnected organizations in aparticular field.Every manager, regardless of level within the organization, needs to thinkstrategically before initiating major actions.

In reality, planning is more about organizational learning than aboutprogramming a series of activities to attain an objective. When managersplan, the emphasis is on strategic thinking, not on strategic planning.Most organizations encounter periods of crisis in which the winning formula

that created success under one set of conditions no longer propels growth success breeds failure.Planning is the process of establishing objectives and specifying how theyare to be accomplished in a future that is uncertain. When it works well,planning helps individuals and groups visualize desired outcomes andanticipate the behaviors and resources necessary to make them a reality.Controlling is the process of evaluating the degree to which outcomesmatch objectives; and when they do not, analyzing why and taking correctiveaction.Ideology are beliefs and values held by a manager about how to succeed inbusiness; encompasses economic assumptions and ethical ideals.

TOPIC: Not sure how useful these two systems of management are?

Two systems of management have been identified by Professor LarryCummings, one based on information and the other on ideology.Management by information is a structured system of informationmanagement based on developing clear, specific goals, and plans for all


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managers to use in analyzing problems by studying cause-effectrelationships.Management by ideology is a system of information management basedon trust in individual managers to be sensitive to the attitudes andperceptions of all participants in a decision situation and to do what is bestfor all by applying appropriate values and beliefs.Trust and credibility begin to center more on ideology, values, and basicbeliefs, as opposed to . . . the accuracy and completeness of information. If one cannot trust others information because of environmental change andturbulence, then one must trust others values.The combination of increased environmental turbulence and better-educatedmanagement has made management by ideology more common. Inmanagement by ideology, innovation is sought and positions are advocatedthat, in fact, reward innovative policies and structures. Contrary to the usualassumption, on the other hand, in management by information realinnovation is to be avoided . . . Technological and information systems aredesigned to ensure the status quo or, at most, the gradual and incrementalmodification of organizational policies and designs.Environmental scanning is the monitoring of current and anticipatedtrends and events in the external environment through quantitative data andqualitative perceptions. Active environmental scanning opens managers to abroader array of possibilities, especially if they evaluate data guided byideology.

How Can Group Techniques Promote Innovative Visions?

TOPIC: Good series of steps to use in your group project!1. Identify Stakeholder Needs and Requirements

Brainstorm a list of possible stakeholders affected by the project Brainstorm lists of the specific needs or requirements of any

stakeholders with whom the group has experience From these overall impressions, participants are collectively asked

to categorize (a) the strength of these needs and (b) the degree towhich they are satisfied by the organizations current offerings (or inthe case of potential new products, the extent to which they aresatisfied by whatever is currently available). ( =strong,

=medium, =weak). A comparison of needs and their fulfillment usually reveals unfilled

needs. Strong needs that are weakly satisfied at present arecandidates for visioning new offerings or initiating correctiveactions.

Stakeholders Strength of Need

Degree of Satisfaction


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Employees StockholdersCommunityCustomers

2. Initiate Visioning through an Affinity Diagram Define what the group wants the business or product/service

offering to look like at some time in the future. Participants proceed by (1) viewing the stakeholder analysis as a

picture of the present state, (2) creating a vision of the future, and(3) working out details of the plan as the bridge between thepresent and future.

Ask the participants what the characteristics of a successfulbusiness in the future will be. Have them think about internalcapabilities, customer needs, competition, the economicenvironment, obstacles to overcome, technology trends andopportunities to exploit. Participants individual write theirresponses.

Move all the statements around the wall to create thematic clusters.This creates an affinity diagram , which is an output from a quasi-structured group process created by arranging individual responsesto a focusing question into groupings in which individual statementsappear to have an affinity relationship to each other. This affinitymapping often results in 6 to 10 clusters for most visioning tasks.

The group then decides on a thematic title for each affinity set and

draws a border around the individual items in the cluster.3. Convert Cause Effect Diagram to a Vision Statement Evaluate the relationships (if any) between the items in the circle,

looking for cause-effect linkages. Connecting arrows are drawn toshow cause-effect relationships.

Once the network of cause-effect arrows has been completed, thegroup counts the number of incoming and outgoing arrows for eachtheme and tabulates scores beside the label (C=number of causalelements and E=number of effects).

The group then labels the two or three thematic elements that have

the largest number of outgoing arrows as PC for primary cause. Thesame is done for the PE, or primary effect, themes. For planning purposes, the PC elements are the ones that focus

attention. If primary cause elements are acted upon andstrengthened, the primary effects will likely occur. From this cause-effect diagram, the group then collectively articulates a writtenvision statement of what the future should look like.


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4. Use a Radar Chart to Show Vision-Reality Gaps Starting with a hub and circle, with a spoke for each thematic

group. The hub represents a score of zero (0) on a theme (the complete

absence of performance or lack of any value added). The point atthe circle represents a perfect score of ten (10) the future statedesired three years from now (or whatever the time horizon is).

Each person then pastes an adhesive dot on each spoke at the pointwhere he or she judges the organization to be currently performingon that thematic element.

The facilitator asks the group to visually estimate the centraltendency of dots on each thematic spoke. The average value andnumber approximating its value is written beside the mark.

Connecting lines are drawn between the midpoints of pairs of spokes. The facilitator then shades in the inner portion of the webto represent the distance already traveled in crossing the bridge tothe future. The non-shaded area represents the gap, where futureprogress must be accomplished.

Participants than have a shared sense of where they mustconcentrate their planning efforts. Most important, this interactiveprocess usually energizes participants and gives them a broadershared vision of the project, which is difficult to accomplish whenjust one or two people sit down to plan. Such a group approach toplanning emphasizes four Ps: participation of people in a series of processes that collectively produce a variety of visualizationproducts that guide action to achieve performance results.

PC

ThemeC

ThemeB

ThemeA Theme

D

ThemeE

ThemeF

PC

PCPE

PE

PE

A B

C

DE

F


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How Do Control Systems Impact Continuous Improvement? Although negative connotations persist, evaluation and control systems are amust in organizations.

A control is any process to help align actions of people and systems with thegoals and interests of the organization.A control system is evaluative and feedback processes to let people knowtheir managers are paying attention to what they do and can tell whenundesired deviations occur. Control systems can be formalized andstructured. However, as defined above, control systems also includebehavioral sources of control, such as organizational culture and leadership.For social system controls to work, people need to know that someone inauthority knows what they are doing and is willing to call attention to gapsbetween performance and objectives.

TOPIC: What control systems are we using in the classroom?

Measurement is preferred when outcomes can be quantified. To be effective,any evaluation or measurement needs to assess outcomes or behaviors thatare affected by the actions of the unit or individual.One paradox of management is that social expectations conveyed within an

organizations culture provide better controls over people than do formalmeasurement systems. The purpose of social controls is to get people tocommit themselves to the organization.Many leaders engage their people in a Baldrige-type evaluation processbecause it is broad-based and provides an eye-opening experience forparticipants that typically dramatizes the gaps between current performanceand desired results. The Malcolm Baldrige National Quality Award frameworkfor evaluating the qualities and processes of organizations dedicated toquality performance as measured by seven dimensions of organizational liferanging from leadership practices to performance results:

1. Leadership senior leaders are involved in creating and sustainingconsensus regarding the organizations mission, values, plans, andgoals; and focus on the stakeholder groups being served.

2. Planning the process for short-, intermediate-, and long-range plansare communicated and aligned throughout the organization.

3. Service orientation processes are provided for learning about theneeds and expectations of the groups for which services are provided,and satisfaction for these groups is monitored and improved


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(especially relative to peer and benchmark institutions).4. Information and analysis information is assessed and managed to

track and improve overall organizational effectiveness and serviceexcellence.

5. Employees and workplace climate employees at all levels are

encouraged to develop their full potential relative to the organizationalmission and goals, supported by an environment conducive toexcellence, participation, appreciation of diversity, andpersonal/organizational growth.

6. Process management key processes are developed, managed, andimproved to achieve superior organizational performance and a serviceorientation.

7. Excellence levels and trends achievements and improvements aredocuments in key excellence areas, relative to past performance andto peer and benchmark organizations.

Six-sigma is a high-performance, data driven approach to analyzing the rootcauses of business problems and solving them after first lining the outputs of a business directly to marketplace requirements. Organizations that embracesix sigma analyze their customers requirements, and then build theirinternal processes in a highly disciplined manner to fulfill these customerrequirements by driving out variances from the standard. They do this bymeasuring and tracking performance, sharing data with those involved in theprocess, analyzing why deviations occur, and then working to eliminatecauses of unacceptable performance. Critical to all this working is closeattention to employee training in statistical methods and the techniques forprocess improvements. In this regard it is more an intervention to affectorganizational behavior than it is a statistical tool.Three different managerial control orientations (depend on values andcommitments):

A competitive team orientation focuses on adding value to themarket, with controls used to enhance the organizations corecompetence and strategic competitiveness. Information flow laterallyand informally throughout the organization to help people make timelydecisions.

The classic command and control orientation is used most often infirms that rely on a chain-of-command structure to emphasize

operating efficiency and conservation of corporate resources. Controlsfocus on internal events, with vertical flows of information up thehierarchy for top management review and oversight.

The conformance orientation of control is found most often inorganizations doing business with the government. Work is organizedaround a bureaucracy, with fixed control routines for processinginformation and externally reporting it in compliance with government


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regulations. The IRS is the archetype of an organization focused onconformance control.

TOPIC: What examples of these control orientations have you seen?

The more stereotypical view of control is seen in the core values of

managers who view their roles more to police activities and people. Theyemphasize oversight and surveillance and administration of rules andprocedures.Team-oriented leadership is typical of organizations operating in dynamic,fast-changing, high-tech environments. The team-centered manager is morelikely to use social expectations combined with quality-oriented methods tofoster commitment and self-accepted responsibility than the manager whopolices the behavior of others.


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Chapter 3 Organizing Work and PeopleOrganization is the architectural alignment of people and processes aroundwhich enterprises are designed.Electronic business makes corporate boundaries transparent by enablingtransactions that enables instant and simultaneous access to the same dataand information. Where work is carried out through (information) networks,an organizations structure changes whether you want it to or not.

The Organizational Star (Change Points)

Technology is the scientific knowledge, processes, systems and equipmentused to create products and services and to help people carry out their

tasks.Jobs have shifted to new knowledge-based technologies. In the Third-Wave,Alvin Toffler saw work-related changes transforming civilization. The threewaves were agricultural, industrial and informational.

The Basic Organizational Design Structures Organizational structure is the networked arrangement of positions and

Regulators

Vendors Customers

People

Tasks Technology

Organization &

Systems

Organization Culture

Competitors


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departments through which the essential tasks of an enterprise aresubdivided and grouped to create the systems, decision centers, andbehavioral linkages that carry out business strategies.

Organizational charts are the symbolic structures of boxed titles and linesthat represent positions and reporting relationships.Organizational design is the process managers go through to createmeaningful structures, decision and information networks, and governancesystems. Organizational design provides for:

The dividing and grouping of tasks Networks to convey information A structure for locating decision centers or authority Processes for coordination, control and conflict resolution The means to link key work units with appropriate external

stakeholders such as customers and suppliers

Designing an organization involves deciding how the enterprise should bemanaged and led as much as it does creating structures to subdivide andallocate tasks.

The Four Basic Structures Design by Function grouping people into departments or subunits

based on similar skills, expertise, and functions performed such asproduct design, production, and marketing.

o Advantages : Works best when a company has a single line of business and/or is relatively small. Ideally suited to encouragespecialization and prompt people to keep up with the latesttechnical developments in their specialty field. If departmentaltasks are relatively independent, a high level of functionalefficiency is possible. Because of departmental specialization,the functional form relies on pushing decisions to a higher levelof management for control and coordination, which may not bean efficient use of managerial time.

o Disadvantages : Extreme specialization creates tunnel vision.People tend to perceive multifunctional problems from thevantage point of their narrow area of expertise. This leads toconflict and turf protecting, which can strain the process of communication and coordination in the absence of a decisiveleader. Decisions that are complex, or span two or morefunctions tend to get pushed to the top for resolution, slowingdecision responsiveness as the organization becomes larger andmore layered. Maintaining quality becomes difficult, since fewpeople genuinely feel responsible for customer satisfaction or theacceptance of decisions. A functional design also complicates theprocess of developing broad-based general managerial skills,


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because functional managers have a limited range of specializedexperiences.

Design by Geography with organizational growth, this designcreates units focused on serving the needs of a region or territory,which could include organizing by country or hemisphere.

o Advantages : Emphasizes local adaptation to market and/orsupplier conditions. Especially well suited to retain chains, theU.S. Postal Service, public accounting partnerships, urban policedepartments, and fast-food restaurants. For organizationsengaged in customer service, a regional structure allows localpersonnel and managers to be responsive to pressures andopportunities in their region. It promotes competitiveness andquality. Geographic design also makes it possible to create manyprofit centers where local general managers are responsible forboth revenues and expenses.

o Disadvantages : Maintaining consistency of image and service

can be compromised by a geographic design. The dilemma facedby headquarters managers is how much freedom to allow localmanagers versus how much control to exercise centrally. Thisdecision typically depends on the size and complexity of theterritory to be managed locally. A multi-national firm will grantgreater autonomy to its business unit managers in foreigncountries than national (or regional) firms within a single region.

Design by Product Line A structural grouping on the basis of theunique product or service each activity center provides.

o Advantages : Promotes entrepreneurial behavior. Product-lineexecutives typically have profit center responsibility to reinforceaccountability.

o Disadvantages : The difficulty of coordinating related activitiesacross business units. Rivalry is likely to exist rivalry not onlyfor customers for also for corporate resources. If several businessunits separately draw on similar core technologies for theresearch and design of products, they likely forgo economy of scale savings and may be slow to share with other units thetechnological breakthroughs discovered in one unit. Someduplication of function specialization is almost inevitable.

Design by Customer/Market Channel Clustering human talentand resources so that each organizational unit focuses on the uniquesales/service requirements for each type of customer or channel of distribution such as the home market, commercial accounts, orresellers.

o Advantages : Usually used in combination with one or moreother designs. They serve well the needs of the business whenproduct lines can be marketed to very distinct customersegments. Their advantage is that special customer needs can


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focus quality service throughout each organizational unit. Tocreate high employee involvement, Edward Lawler believes thatcustomer-based design is optimum. Focusing on the customerenables the competitive market not hierarchical controls orsupervisor whims to affirm or modify employee behavior.

o Disadvantages : The challenge for companies offering severallines of products to the same customer is to balance productexpertise (a benefit of product-focused designs) with thesimplicity of having one voice speak to the customer. Marketfocused designs also tends to require duplication of sales andmarketing staff, with two or more groups selling the sameproduct line.

As firms age and grow in size, firms pass through an organizational life cyclein which they move from simple to progressively more complex structuresand systems. The ultimate design for a firm diversified into several lines of business is to take on characteristics of a network, loosely coupled by centralresource allocations. The focus of most reorganizations is to better alignorganization design with business strategies and competitive forces,although at times reorganization is simply a euphemism for reducingheadcount by layoffs.

A Hybrid Combination The Matrix OrganizationA matrix organization is a structure that incorporates dual responsibilitiesand reporting relationships connecting selected functions with specificproducts or projects. The matrix structure originated in aerospace and is

used where people with functional expertise need to be temporarily assignedto a project, but where it is expected people will be reassigned to anotherproject once a designed milestone (timetable or accomplishment) is reached.The project manager is typically given the overall responsibility for bringingthe project in on time, on budget, and meeting the product requirements.The project manager is dependent on pulling temporary talent fromspecialized functions and paying the salaries of those functional teammembers. The functional manager is responsible for assuring the assignedpersonnel are keeping up with their professional development, such as stateof the art technical knowledge and skills. Individual specialists thus have tocontribute to the needs of the project, and yet continue to interface withtheir functional manager. Managers in the matrix organization need tobecome skilled at managing conflict, for at times there will be differences inperspective and priority.

EXERCISE: Hand out group exercise 3. About 30 minutes.


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Fundamental Trade-Offs for Balancing Organizational Design

Centralization and DecentralizationThe central trade-off pits pressures for centralization against the need fordecentralization. Centralization is the concentration of authority anddecision-making toward the top of an organization. Decentralization is thedispersion of authority and decision making to operating units throughout anorganization. Most medium-to-large organizations have a degree of bothcentralization and decentralization in their structures.Larger enterprises with highly competent and skilled employees tend todiffuse decision-making, allowing greater participation and lesscentralization. Large firms that perpetuate centralized management tend tobe slower in recognizing how their hierarchical structure restrainsorganizational effectiveness over time. Central structures work reasonablywell in slow-changing industries but are less adaptable in complex, fast-

changing environments.As environmental uncertainty and complexity increase, senior managersmove incrementally toward decentralized control to promote localadaptability and decision-making. In particular, implementation of strategiesand operating policies are decision areas normally delegated to local orlower-level managers. However, major resource allocation decisions, such asacquisitions or investments in new plants are typically retained by the topmanagement team.

Autonomy and Control

An emphasis on control limits the authority given managers to shapedecisions and resource allocations by specifying parameters and providingfor higher-level reviews, often with approvals prior to proceeding.Organizations that emphasize control and concerned with consistency of action.In contrast, autonomy means granting power and responsibility to followersto initiate innovative action that improves processes and performance withresults assessed against general goals. An organization that emphasizesautonomy is more concerned with promoting creativity and freedom of action in the belief that people will do what is right. Autonomy pushesdecisions to those who are closest to the action, who have information, withthe expectation that people will accept responsibility for producing favorableresults.

The control-autonomy conflict is often framed in terms of maintainingconsistency and predictability versus promoting innovation and flexibility.

Differentiation and IntegrationDifferentiation distinguishes the congnitive-emotional orientations people


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hold toward a subpart of an organization (department, discipline or function).Integration reflects the quality and form of collaboration between workunits to shift expectations to a big picture perspective of the largerorganization.

Differentiation promotes specialization and functional expertise, whereasintegration promotes synergy and coordination.With increased globalization and use of information technology, integrationhas become a stronger need where the whole, not just the sum of the parts,is important for success.

Bureaucracy and Organic, Postmodern StructuresA mechanistic organization is an organization with a traditional look andfeel that is highly structured and formalized, desiring conformancebehaviors to handle routine functions appropriate to stable environments.An organic organization is an organization with a looser look and feel thatrelies on the adaptive capacities of individuals to cope with dynamic internaland external forces, facilitated by empowerment and a collaborativenetwork.A bureaucracy is a classic pyramid-shaped structure created as a rational-legal system of authority emphasizing formal roles and rules with the intentof being efficiency oriented.

Alternative structures go by names such as networks, clusters, cross-functional teams, temporary systems, ad hoc task forces, lattices, modules,and matrices. Organic organizations empower individuals and teams topursue continuous improvement through flexible adaptation. Task roles areexpected to continually change or are ambiguously defined, andorganizational design is fluid and features frequent structuralreorganizations. Goals are diverse, complex, less measurable, and morelikely to change than in the mechanistic organization. Planning flows up,down and across organizational units rather than being passed up and down.Structurally, the organization is flatter.

Organic organizations are designed to promote effectiveness in complex,fast-changing environments, especially when technology is a driving force forchange. The organic organization promotes high involvement, which helpspeople provide high-quality products and services at competitive costs and

respond quickly to opportunities or threats.

How Do Organizations Become Leaner, Flatter, More Integrated?

Widen the Span of ControlSpan of control denotes the number of people supervised by one manager,or the ratio of managers to persons managed.


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The only way a large organization (100,000 or more) can maintain flexibilitywithout becoming overly hierarchical is to increase the average span of control and reduce the number of management levels (and thus the numberof managers). Executives today generally aim to have 7 or fewer levels.

In organizations that hold to the old principle of narrow span of control,people are undermotivated and underutilized. As the number of people in amanagers unit increases, the opportunity for the manager to directly controltheir behavior decreases while the empowerment potential increases.Ultimately, a managers span of control is constrained by his or herinformation processing capabilities.

Flatten Levels of ManagementPower firmly held at the top transmits the message that people lower in theorganization are not to be trusted to think and act independently. Bystructuring to eliminate layers of management, an organization pushes

power to lower levels and encourages employee involvement.Information technology provides a tremendous boost to the concept of pushing decisions to lower levels.

Shift Control from Staff to LineLine positions are job assignments that directly contribute to creatingcustomer value by either designing products, producing them, financingneeded resources, marketing to create demand, and/or selling and servicingthe product.Staff positions are jobs that support the line positions through carrying out

advisement and internal overhead support activities such as accounting,purchasing, and human resource functions.

Expanding the scope of staff control carries two costs: the cost of employingstaff and the added cost (especially in time requirements) to line people whohave to comply with staff procedures.

Reengineer from Vertical Flows to Horizontal Work ProcessesShift from emphasizing vertical relationships to focusing on horizontal workflows. This shift feeds on changes in high-involvement work teams , theelectronic distribution of information , and managing business processesrather than functional departments.Reengineering is the radical redesign of business processes to achievedramatic improvements in measures such as cost, quality, service andspeed. Reengineering seeks to make two changes:

At the personal level, it aims to shift the mindsets of people caused byworking within the silos of vertical, functionally alignedorganizations.


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Not all decisions are equally participative. Once management moves beyondtraditional management practices, in which decisions reside with managers,the intermediate step is usually joint decisions, where performers can makerecommendations (as usually practiced by quality circles, consultativeparticipation, and task forces). Only when decisions are completely

delegated to the performers (as with self-managed teams and cross-functional teams) is participation at its highest level.Self-managed teams are work units whose members are grantedresponsibility and authority to take the decisions and actions necessary toproduce a product or service. Teams are given the right to be largely self-governing, to make decisions about scheduling and assigning tasks, todecide on work methods and who gets hired, and even in some cases toadjust rates of pay. Teams are intended to create high rates of memberinvolvement and commitment.

Cross-functional teams are a way of organizing that pulls people together

from several different functions or disciplines to emphasize coordination of separate but interrelated tasks in achieving product and service quality.They often take the form of development teams who band together only longenough to complete a particular project and then disband.


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Chapter 4 Creating and Modifying Organizational CultureTOPIC: Discuss group dynamics: Form Storm Norm - Perform

Culture is the configuration of learned behavior and results of behaviorwhose component elements are shared and transmitted to the members of aparticular society.

TOPIC: What is American culture? List words that come to your mind.

Organizational culture is the fundamental assumptions people shareabout an organizations values, beliefs, norms, symbols, language, rituals,

and myths all the expressive elements that give meaning to organizationalmembership and are accepted as guides to behavior. Most organizationsdevelop patterns of cultural assumptions that answer such fundamentalquestions as: How does our organization relate to its environment? How dowe learn and communicate? What do we expect of people and relationships?What constitutes successful results? At what do we excel?Strong culture is achieved when most members accept the interrelatedassumptions that form an internally consistent cultural system.

Assumptions define relationships to the environment . Firmsgenerally fit four natural environmental profiles: reactive, defensive,

accommodative, and proactive. Most often these assumptions refer tothe industry environment, related to assumptions concerningcustomers, markets and competitors.

Assumptions promote learning and communicating . Someorganizations seek to learn empirically through experimenting andgathering feedback. Others believe truth is revealed intuitively orcomes only from higher management. These issues frame assumptionsabout managements planning timeframe (short or long-term),concepts of space and equity (open cubicles or private offices), andbeliefs about how to achieve innovation (driven by management orteams throughout the organization). Language and communicationnorms also define organizational reality.

Assumptions tell about people and relationships . Organizationstend to develop common assumptions about human nature and howpeople are to be treated. The culture also reflects assumptions aboutwho is to have power and how power is to be used, which affectsrelationships among people.


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Assumptions link competencies to mission . Common assumptionsabout the competencies with give them advantage in the marketenvironment are held by employees and managers. Assumptions aboutwhat constitutes technological competencies and how to enableknowledge workers to create innovation differs across organizational

cultures. Organizations that develop technology-sharing relationshipsor networks in collaboration with other organizations are more likely toproduce a sustained competitive advantage.

Organizational Value Systems The assumptions most critical to organizational behavior are those sharedvalues that lie at the heart of human character and societal behavior.Values are the enduring beliefs and expectations that a person or grouphold to be important guides to behavior.

TOPIC: What do you think the top five company values are?

The top five organizational values are:1. Provide excellent service to customers.2. Operate in a highly ethical manner at all times.3. Provide products and/or services of excellent quality.4. Consistently make a fair and reasonable profit (not maximize profits).5. Staff the organization with high-caliber employees from top to bottom.

An organizations values convey what behaviors and beliefs are important toits success. A set of values becomes an organizational value systemwhen those core values are shared by the majority of organizationalmembers, typically differentiated by the origin and content of those enduringvalues. Organizational values originate from either charismatic leadership ororganizational traditions.Charismatic-based values originate from a strong leader, usually thefounder, which tend to be internalized by members as long as they look tothe leader for guidance and inspiration.Alternatively, values can emerge out of organizational traditions that aremore anonymous in origin. Tradition-based values are values deeplyrooted in historical practices, which provide stability as they are passed fromgeneration to generation.

The content or interpreted meaning of values is based on either functional orelitist ideals. Functional values express a normative mode of conduct thattells members what they should pay attention to (e.g., customer service,innovation, quality). Elitist values focus more on the perceived superiorityof the organization in comparison to others. Elitist values attempt to instillpride in membership, creating a were number one mentality. Elitist valuescan create an aloofness that weakens members abilities to confrontchanging realities.


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Functional Content

Functional / Charismatic Functional / Traditional

Elitist Content

Elitist / Charismatic Elitist / Traditional

Charismatic Origin Tradition Origin

When organizational values are strong, one of these four systems typicallyemerges as the dominant pattern. Since charismatic types are inherentlymore unstable, the arrows show possible movements toward greaterorganizational effectiveness (with solid arrows stronger than dashed). Valuesembedded in tradition with a functional focus are thus more effective inbringing about behaviors necessary for long-term success.

Functional-Traditional Values - Most likely to contribute to thedevelopment of environmentally viable values and, consequently, toorganizational effectiveness.Elitist-Charismatic Values At the opposite end of long-termeffectiveness. Values usually comes from the flamboyant, eccentricpersonality of a founder who creates a product or service that meets earlymarket success.Functional-Charismatic Values This system has the potential for longer-term effectiveness and probably represents a transitional phase along thepath toward functional-traditional values. Dedication to functional valuesputs the focus on doing what is right rather than on elitist pride.Elitist-Traditional Values Finally some organizations use tradition as away of intentionally sustaining long-term elitism. Usually these are smaller,niche marketers who appeal to clients attracted by snob appeal or the longtradition of being perceived as superior or exclusive.

Core IdeologyCompanies that others sought to emulate built their organizations on afoundation core ideology. An organizations core ideology combinesessential and enduring core values as a set of guiding principles with apurpose that uniquely defines the fundamental reasons for the organizationsexistence (beyond making money). Ideology provides for stability overgenerations of management; it is a set of precepts around which theorganization functions irrespective of its leaders, its strategies, its lines of business, and its practices as they change over time.

Purpose more than profits . Emulated organizations build theirorganizations around an ideology that had more than an economic


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purpose. HIGHLIGHT THIS! Ideologies vary across organizations. There was not a consistency of

themes or values embedded in the core ideologies of sustainablevisionary companies. What was central to all, was the authenticity of the ideology. Behavior and actions that are consistently aligned withthe stated ideology are more critical than the content of the ideologyper se.

Functions of Organizational Cultures Less overt than the traditional managerial tools, organizational culturecontributes as a guide to consistent behavior by reinforcing capabilities andstrengthening sources of competitive advantage.

Organizational epitomizes the expressive character of organizations; it iscommunicated less through objective realism and more through symbolism,feelings, and the meanings behind language, behaviors, and physicalsettings.


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more entrepreneurial organizations is less formal.

Culture Promotes Expected BehaviorsCulture works best when strong. Culture works best when people forget whythey are doing certain things, but keep on doing them. But the strong culturethat promotes consistent behavior also makes it difficult to adapt when oldways no longer fit new realities.

Subcultures Facilitate Organizational DiversitySubcultures are localized subsystems of values and assumptions that givemeaning to the common interests of smaller clusters of people within theoverall organization. Subcultures have three possible impacts on theorganization: They can (1) serve to enhance the dominant culture; (2)promote an independence from it, as commonly occurs among divisions of diversified firms; or (3) function as countercultures when they are at oddswith it.Countercultures reject the values and assumptions of the host organizationand develop opposing beliefs, often based on elitist notions that may bepromulgated by a charismatic leader.

Reading Organizational Culture Managers need to learn how to read cultural clues, for often there areinconsistencies between what is said and what is done, or betweensubcultures and the overall culture.

Observation of Physical Settings and Artifacts Facilities Physical facilities tell a tale of what is important, and not

so important. They reflect values and performance expectations.Organizations that function around elitist values tend to convey statusdifferentials in the location and sizes of offices.

o Bricks and MortarWhat is the physical appearance of the facility? Is it wellmaintained, with an aesthetically pleasing sense of dcor,or unkept, dingy, and rundown?Do work areas show individual flair (with artwork or awardsand other artifacts on display), or does everything appearto be stock issues and monotonously uniform?

o Use of SpaceDo space allocations seem equitable and well used, or dosome departments seem to have more than they needwhile others are shoehorned into a corner?In office settings, does an open layout invite spontaneousconversations, or are people protected by private offices


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(behind closed doors)?Does the allocation of space clearly reinforce statusdifferences among people in different positions, or does itappear that most people have about the same amount of space?

o Equipment, Symbols, and ArtifactsHow ostentatious or Spartan are the furnishings and dcor?Are the walls painted? Wallpapered? Paneled withinexpensive veneer or solid hardwood?What adorns the walls in the reception area, gallery-qualitypaintings or mass-produced prints? Award plaques andtrophies?Are the computers, fax machines, and other technologicalequipment state of the art?

Dress What people wear says a lot about the organization. Such clues

offer insights into the degree of formality expected of people.Find Meaning in Organizational RitesA rite is a planned public performance where other forms of culturalexpression, such as recounting company legends, are woven into a singleevent. Stories and legends are often told at rites. Meetings are the mostfrequent rites practiced in organizations. Are they formal, planned andpredictable, or scheduled as needed, and less formal? An off-site meeting isa daylong or multi-day forum intended to bring key players together toquestion basic assumptions, raise critical issues, and plan responses tochallenges.

Ask Questions and Observe ResponsesAsking questions is more efficient and direct, even though responses cantalways be taken at face value. As questions, then listen and act on whatothers say and learn more about the culture.

How Do Leaders Build Flexible, Responsive Cultures? Once established, an organizations culture takes on a life of its own,resisting pressures to change even if feedback confirms that the firmsrelationship to its environment has deteriorated.

First Generation Managers Develop a CultureDuring the formative period culture emerges from two sources: the foundersbehaviors and from direct experience. Founders manifest three importantbehaviors:

1. The behaviors they deliberately use to role model, teach, and coach.2. What they pay attention to in the organization or its environment


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Ethnic Diversity Sensitizes Organizational CultureWhat you are learning about managing peoples organizational behaviorgives you an Americanized view of the world. The managerial approachesthat work for us do not necessarily stand up well in other countries.

How Do National Cultures Impact Global Business? While business people may share some commonality of values acrossnational cultures, a countrys culture and business environment can causevalue elements to differ significantly across national borders.Values, beliefs and behaviors have patterned differences. Ethnic differencesgive people different predispositions toward work and business practices.Cultural differences influence management styles.The essence of country culture is national mental preprogramming ,which is that part of a countrys collective learning that is shared with othermembers of that nation, region, or group, but not with members of othernations, regions or groups.Values tend to be stable across nationally groups, where attitudes differ.Attitudes are temporal beliefs based on evaluative interpretations of current conditions.

Four patterns of enduring values provide the framework for describingnational cultures:

Individualism versus Collectivism . In highly individualisticsocieties, the individual is expected to look out for his or her own self-interest, and maybe that of the immediate family. At the other

extreme, collectivist societies assume that close ties exist amongpeople and the interests of the individual are subordinated to thegroup, be it extended family, tribe, village, and/or employer.Individualistic nations are loosely integrated (do your own thing),collectivist tightly integrated (honor thy group heritage).

Centralized versus Diffused Power . Centralized power societiespermit unequal intellectual or physical capabilities to grow into blatantinequalities in the distribution of power and wealth. Diffused powersocieties play down individual differences by sharing or decentralizingpower.

Strong versus Weak Uncertainty Avoidance . Societies acceptingof uncertainty use organized creativity to reduce the risk of uncertainty. Nations with a strong need for uncertainty avoidanceusually claim that absolute truth originates from a dominant religion.

Masculinity versus Femininity . Some nations make sharpdistinctions between roles based on sex. Nations with such clear sexrole divisions are called masculine. Masculine values permeate


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societies where the hero is the successful achiever, where showing off and displaying wealth is accepted. Other societies are more tolerant of a wider distribution of roles almost independent of sex and are calledfeminine. Feminine values include respecting the underdog, puttingrelationships before wealth, and tending to the quality of life and the

environment.TOPIC: Utilize American Culture quiz from ice breaker section.

The key to effective management practices or quality organizationalresearch is to understand the cultural contexts in which firms andindividuals function and operate. Organizations that choose to operateon a transnational basis, especially business, must obviously build insome capacity of adaptiveness to function harmoniously within hosenational cultures.


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Chapter 5 Perception, Learning & PersonalityPerson-job fit is the degree of fit between a persons abilities and motivesand a jobs demands and rewards.

Druckers Five Skills for Improving the Person-Job Match First, ask What is the task? What are we trying to accomplish? What

do it at all? In any industry, the most profound route for improvingperformance and the person-job match is often to eliminate tasksaltogether-to stop doing that which really does not need to be done.

Second, take a hard look at the ways in

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