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Organiza(onal Analysis
Sessions 11-20

How Does an Organization Create

Value?
Value creation takes place at three stages:
input, conversion, and output
Inputs: include human resources,
information and knowledge, raw materials,
money and capital
Conversion: the way the organization uses
human resources and technology to transform
inputs into outputs
Output: finished products and services that
the organization releases to its environment
2

Technology Environment

Uncertainty open system survival

Certainty closed system goal achievement

Role of a Manager
Ensuring buering of core ac(vi(es to control
the transforma(on process

Measuring Effectiveness
What parameters should be used?

Ways to Organizational Effectiveness

Goal
Accomplishment

Resource
Acquisition

Internal
Processes

Strategic
Constituencies
Satisfaction

Structure-Context Alignment
ENVIRONMENT
Compe((ve Dynamics

STRATEGY
Key success factors

PEOPLE
Iden(ty
Personali(es

STRUCTURE

TASK
Technology
processes

CHARACTERISTICS
Age & Size
Culture
Growth/ decline

Technology
Combina(on of skills, knowledge, abili(es,
techniques, materials, machines, computers,
tools, and other equipment that people use to
convert or change raw materials (material,
informa(on or people) into valuable goods
and services

Technical Complexity
Technical complexity: the extent to which a
produc(on process can be programmed so
that it can be controlled and made
predictable
High technical complexity: exists when conversion
processes can be programmed in advance and fully
automated
Low technical complexity: exists when conversion
processes depend primarily on people and their
skills and knowledge and not on machines
9

Classification of Technology
Woodward
Unit small batch manufacturing technology
Mass large-batch manufacturing
Process production continuous-production
process

Perrow
Task variability number of excep(ons, problems or
novel events that occur in the department's work
Task analyzability - extent to which the work is
mechanical, clear cut, and follows an objec(ve,
computa(onal procedure

Analyzability

Technology Classica(on
CRAFT

NONROUTINE

ROUTINE

ENGINEERING

Variability

Classification of Technology
Thompson
Long linked technology (sequen(al
interdependence)
Media(ng technology (pooled interdependence)
Intensive technology (reciprocal interdependence)

Technology Analysis
Technical complexity
Rou(neness of work
Standardiza(on of inputs/ outputs
Standardiza(on of transforma(on processes
Task variability
Task analyzability

To maximize the informa(on available and reduce
uncertainty

The Organiza(onal Environment

14

Environment
Task Environment the elements of an
organizations environment that are related
to its goal attainment
Environmental Uncertainty the amount
and rate of change in the organizations
environment

15

Sources of Uncertainty in the

Environment

Environmental complexity: the strength,

number, and interconnectedness of the specic
and general forces that an organiza(on has to
manage, the heterogeneity/ range of ac(vi(es
an organiza(on has to manage
Environmental dynamism: stability-instability,
absence of pa`ern, unpredictability in the
environment
Environmental richness/ municence/
capacity: Extent to which environment can
support sustained growth
16

Size
Measured in number of employees
Formaliza(on, specializa(on and
standardiza(on greater in larger organiza(ons
As size increases, complexity increases

Strategy and the Environment

Organiza;onal strategy: pa`ern of decisions

and ac(ons taken to use core competences
Core competences: the skills and abili(es in
value crea(on ac(vi(es

18

Strategy and Structure

Innova(on Strategy - requires exibility of
organic structure
Cost-Minimiza(on Strategy - seeks eciency
and stability of mechanis(c structure
Imita(on Strategy - combines the two
structures to maintain (ght control and low
cost while crea(ng organic subunits

19

Miles and Snows

Strategy Typology
Prospector
Values crea(vity, risk-taking, and innova(on

Defender
Eciency orienta(on; centralized authority and (ght cost
control

Analyzer
Balances eciency and learning; (ght cost control with
exibility and adaptability

Reactor
No clear organiza(onal approach; design characteris(cs
may shih abruptly depending on current needs
20

Interorganiza(onal Strategies for Managing

Resource Dependencies

Two basic types of interdependencies cause

uncertainty

Symbio;c interdependencies: interdependencies that

exist between an organiza(on and its suppliers and
distributors
Compe;;ve interdependencies: interdependencies that
exist among organiza(ons that compete for scarce
inputs and outputs

21

Interorganiza(onal Strategies
Managing Symbiotic Interdependencies

Managing Competitive Interdependencies

22

Organiza(onal Analysis:
Structural Lens

Differentiation and Integration are

Opposing Structural Forces
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Differentiation

Fragments the organization

through specialization of
labor

Integration
Pulls the organization together
through the coordination of
specialties

Dieren(a(on
Horizontal differentiation
Degree of differentiation between organizational subunits.

Vertical differentiation
The difference in authority and responsibility
in the organizational hierarchy

Spatial differentiation
Geographic dispersion of an organizations offices,
plants and personnel

Integration
Vertical integration
Hierarchical referral
Rules and procedures
Plans and schedules
Positions added to the
organization structure
Management information systems
Horizontal differentiation

Liaison roles
Task forces
Integrator positions
Teams

Structural Op(ons

Func(onal
Product
Divisional
Amorphous etc..

The Five Phases of Growth

Organiza(onal Design Principles

Enacted
Environment
Environment

FIT
Organization
Response

Ensure that
Allocation and
Aligning
Coordination
Works

Ensuring
Cross-Unit
Linking
Coordination

Identifying
Key Activities

Allocating
Activities
Groupingto
Units

Grouping

boundaries of subunits around activities within

the organization

Linking

b u i l d i n g i n f o r m a t i o n f l o w s b e t w e e n
interdependent units within the organization,
and with key external organizations

Aligning

ensuring that subunits and people have the

resources and motivation to carry out the
activities assigned them in linking and grouping

Common Grouping Options Self Contained

Organizational Designs (Era 1)
Options:
Function (Activity)
Business Unit (Product or technology)
Customer (Market, geography, or segment)
Hybrid Structures:
Matrix
Front end/Back end (Customer interface/R&D,
ManufacturingSupport Staffs)

Common Grouping Options Eras 2 &

3
Era 2 - Horizontal Organizations with Team
and Process Based Emphasis
Era 3 Organizational boundaries open up
Hollow organization (amorphous organization)
Modular organization
Virtual organization

9 Tests
Fit tests
( provide ini;al screening alterna;ve
designs , structure support towards
organiza;on)

Good Design
(help to rene company design,
balancing empowerment & Control)
Helps to establish hierarchy, helps to
design work smoothly

The market advantage test

The specialist culture test

The paren(ng advantage test

The dicult link tests

The peoples test

The redundant hierarchy test

The feasibility test

The accountability test

The exibility test

Organizational Culture

35

What is Culture?
a pattern of basic assumptions that are considered
valid and that are taught to new members as the
way to perceive, think, and feel in the organization

36

Vacuous
Cultures

Strong Cultures

Weak Cultures

Warring Factions

Low

Level of Agreement

High

Four-Culture Typology

Low

Level of Intensity
37

High

How Organizational Cultures Form

Top
management
Philosophy
of
organizations
founders

Organizational
culture

Selection
criteria
Socialization

38

How employees Learn Culture

Personal Enactment
Ceremonies and Rites
Stories

About the boss

About getting fired
About relocating
About promotions
About crisis situations
About status considerations

Rituals
Symbols

Learning Organiza(ons

The Nature of Organizational Learning

(cont.)
Types of organizational learning
Exploration: organizational members
search for and experiment with new kinds or
forms of organizational activities and
procedures
Demonstration projects knowing why

Exploitation: organizational members learn

ways to refine and improve existing
organizational activities and procedures
Small experiments knowing how
41

Levels of Organizational Learning

42

Knowledge Management

Knowledge management: a type of ITenabled organizational relationship that has

important implications for both organizational
learning and decision making

Involves sharing and integrating of expertise within

and between functions and divisions through realtime, interconnected IT

43

Knowledge Management (cont.)

Codification approach: knowledge is

carefully collected, analyzed, and stored in
databases where it can be retrieved easily by
users who input organization-specific
commands and keywords

Suitable for standardized product or service

Personalization approach: IT designed to

identify who in the organization might possess
the information required for a custom job

More reliance on know-how, insight, and judgment to make

decisions

44


Organiza(onal Change

45

Types of Changes
Planned Vs Unplanned
Incremental/ Evolu(onary Vs Radical/
Revolu(onary
Individual/Group/ Organiza(onal Change

46

Types of Change in Organizations

Evolutionary change: change that is

gradual, incremental, and narrowly
focused
Revolutionary change: change that is
sudden, drastic, and broadly focused

47

Levin's Three-Step Change Process

48

Lewins Change Model

Unfreezing
Creates the motivation to change
Encourages the replacement of old behaviors and attitudes with
those desired by management
Entails devising ways to reduce barriers to change
Creates psychological safety
Changing
Provides new information, new behavioral models, or new ways
of looking at things
Helps employees learn new concepts or points of view
Role models, mentors, experts, benchmarking results, and
training are useful mechanisms to facilitate change
Refreezing
Helps employees integrate the changed behavior or
attitude into their normal way of doing things
Positive reinforcement is used to reinforce the desired change
Coaching and modeling help reinforce the stability of
49
change

Unfreezing
Two forces
Driving forces
Restraining forces

Push for status quo

50

Freezing Ins(tu(onalize Change

Turn students into teachers
Build human capital
Iden(fy metrics, measures, and milestones

Kotters Eight Steps for Leading

Organizational Change
Step
1) Establish a sense of
urgency
2)

Create the guiding

coalition

3)

Develop a vision and

strategy
Communicate the
change-vision

4)

Description
Unfreeze the organization by
creating a compelling reason for
why change is needed
Create a cross-functional, crosslevel group of people with enough
power to lead the change
Create a vision and strategic plan
to guide the change process
Create and implement a
communication strategy that
consistently communicates the new
vision and strategic plan

52

Kotters Eight Steps for Leading

Organizational Change
Step
5) Empower broadbased action

Description

6)

Generate short-term
wins
Consolidate gains and
produce more change

Plan for and create short-term

wins or improvements
The guiding coalition uses
credibility from short-term wins to
create change. Additional people
are brought into the change
process as change cascades
throughout the organization

Anchor new
approaches in the
culture

Reinforce the changes by

highlighting connections between
new behaviors and processes and
organizational success

7)

8)

Eliminate barriers to change, use

target elements of change to
transform the organization

53

Dealing with
Resistance to Change
Communica(on
details
ra(onale
Par(cipa(on in the
process
ownership
commitment
Empathy and support

Characteris(cs of a Change Manager

Are accepted by others as trustworthy and
competent
Can mo(vate others to achieve the change
vision, able to align and engage
Have a big-picture perspec(ve
Have a clear, compelling vision of the change
they want, Can ar(culate it
Can iden(fy other change agents
Able to eliminate barriers that interfere with the
change ini(a(ve
55