ob - organization design & development

Krietner/Kinicki, 2009Krietner/Kinicki, 2009

Organizational Design (OD), Development and Innovation

BUSA 220 - Wallace

Krietner/Kinicki, 2009

OD Background


Common Characteristics

Hierarchy of authority

Division of labor

Common goal

Coordination of effort


Typical Org ChartExam ple of H ospital's Organization Chart

Director ofH um an

R esources

D irector ofAdm issions

D irector ofAccounting

D irector ofN utritionand FoodServices

ExecutiveAdm in istrative

D irector

D irector ofX-R ay andLaboratory

Services

D irector ofSurgery

D irector ofPharm acy

Ch iefPhysician

ExecutiveM edicalD irector

President

Ch ief ExecutiveO ffi cer

Board of D irectors

Strategic Planning Officer

Legal Counsel

Cost-Containment

Staff

Director of Patient and

Public Relations

Director of Outpatient Services


Basic Terminology

Span of control• The number of people reporting

directly to a given manager Staff Personnel – (dotted lines)• Provide research, advice, and

recommendations to line managers Line managers – (solid lines)• Have authority to make

organizational decisions


What Do You Think?

True or False?

1. The ideal span of control is 10.

2. Wider spans of control complement employee empowerment trends.

3. Narrower spans of control save costs and are administratively efficient.

4. With wider spans of control, inadequate supervision and less coordination may result


Closed vs. Open Systems

Closed Systems Open Systems


Open System Organization

Goals and Values

Subsystem

Technical Subsystem

Psychological Subsystem

Structural Subsystem

Managerial Subsystem

Feedback

Inputs

Material

Money

Human effort

Information

Outputs• Products• Services• Human

satisfaction• Organization

survival and growth

• Social benefit


Learning Organizations?

Organizations need to develop and become adaptable

The concept of a “learning organization” was made popular in the ‘90’s but many organizations have yet to reach their potential

A new measure assesses the three building blocks:

• A supportive learning environment• Concrete learning processes and practices• Leadership that reinforces learning

Companies can be strong in some areas and weak in others


Organizational Learning

Experience Knowledge Purpose


Org Learning Building Blocks

Supportive Learning Environment

• Psychological safety• Appreciation of differences• Openness to new ideas• Time for reflection

Concrete Learning Processes and Practices

• Experimentation• Information Collection• Analysis• Education and Training

Leadership that Reinforces Learning


Common Structures

Functional

• Organized according to business function (marketing, finance, etc.)

Divisional Structure

• Organized by activities related to outputs (e.g., product or service type)

Matrix Structure

• Horizontal cooperation necessary as is functional knowledge• Typically organized by function vertically and product/service horizontally


OD Background

Wealth of Nations, 1776

The Nature of the Firm, 1937

OD, 1974


Galbraith, 1974


Organization Designs

Vertical

Lateral(with Vertical tendencies)



80’s - Teams 90’s – Communities of Practice



2000’s – Networked Organizations



2000’s – Complex Global Structures


Holacracy



Complexity – Economies of Scope, NOT Scale


Collaboration

Source: http://www.aiim.org/What-is-Collaboration


Collaborative Horizontal Designs

Organize around

complete workflow processes

rather than tasks

Flatten hierarchy and use teams to manage

everything

Appoint process

team leaders to manage internal

team processes.

Let supplier

and customer contact drive

performance.

Provide required expertise

from outside

the team as

required.


The White Spaces (Rummler/Brache)

CEO

Assistant

VP

Line Manager

Individual Contributor



VP

Line Manager




VP

Line Manager




“A primary contribution of a manager at the second level

or above is to manage interfaces. The boxes

already have managers; the Senior manager adds value

by managing the white space between the boxes.”


Open Boundaries

Hollow

• Outsourcing non-core processes to those more able

Modular

• Outsources parts of a product rather than processes

Virtual

• Temporary company created to respond to an exceptional market opportunity


Mechanistic vs. Organic

Characteristic Mechanistic OrganicTask definition & knowledge

required Narrow: Technical Broad: General

Linkage between individual’s contribution & organization’s

purposeVague or Indirect Clear or Direct

Task flexibility Rigid; Routine Flexible, VariedSpecification of techniques,

obligations, & rights Specific General

Degree of hierarchal control High LowPrimary communication pattern Top-Down LateralPrimary decision-making style Authoritative Participative

Emphasis on obedience and loyalty High Low


What Do You Think?

1. Which decision-making approach tends to be used in mechanistic organizations?a. Decentralized

b. Centralized

2. Which decision-making approach tends to be used in unstable and uncertain environments?a. Decentralized

b. Centralized


Assessing Org Effectiveness

Goal Accomplishment

Resource Acquisition

Strategic Constituencies

Satisfaction

Internal Processes


Signs of Decline

8. Loss of effective communication

9. Outdated organizational structure

10. Increased scapegoating by leaders

11. Resistance to change

12. Low morale

13. Special interest groups are more vocal

14. Decreased innovation

1. Excess personnel

2. Tolerance of incompetence

3. Cumbersome administrative procedures

4. Disproportionate staff power

5. Replacement of substance with form

6. Scarcity of clear goals and decision benchmarks

7. Fear of embarrassment and conflict


InnovationCreati

vity

Invention

Integration

Innovation


Seeds of Innovation

1. Hard work in a specific direction

2. Hard work with direction change

3. Curiosity

4. Wealth and money

5. Necessity

6. Combination of seeds

7. Collaboration


Breakthrough Innovators

More than 2/3rds of directors at leading global companies cite innovation as critical for long-term success

How can we

sustain innovatio

n?

Innovative talent is rare

5-10% of high

potential managers

Be aware of organizational processes and practices that squelch innovation

Don’t base promotions on ability to mimic incumbents


Breakthrough Innovators

What innovators look like

Strong cognitive abilities

Strong analytic skills, can focus on most important points

Don’t rely on past successes

Keenly aware of others’ motivations and interests when “selling” their idea


Innovative Hotspots

The Focused Factory• Invest in a

handful of industries or research fields

• Singapore, Denmark

Brute Force• Apply

massive amounts of low-cost labor to different innovative projects

• Microsoft in Beijing

Hollyworld• “Global

creative class”

• Silicon Valley

Large-Scale Ecosystems• End-to-end

innovation systems with government as steward

• Finland


The Design of Business (Martin)


What’s Your Objective?