Office: BA1015 Office Phone: (806) 742-1514

Email: tyge.payne@ttu.edu

Managing InnovationManaging Innovationand Change and Change

Managing Dynamic Processes (5)

Dr. Tyge Payne

Key Issues / Concerns Technology & Task Design

– Innovation Type

– Sequential vs. Pooled vs. Reciprocal

– Service vs. Manufacturing

Size– Size & Structure Relationship

Culture Coordination and Control Systems Power & Decision Making

Consider Fit / Misfit of ALL of these Factors

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Technology

Definition: (1) “the work performed by an organization,” and (2) “the knowledge, tools, machines, information, skills, and materials used to complete tasks within organizations, as well as the nature of the outputs of the organization.”

Technology’s link to the environment is paramount. – The environment is not only the source of inputs and

the recipient of outputs, but also the major source of technical knowledge, work techniques, and tools employed by the organization.

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Incremental vs. Radical Change

Continuousprogression

Paradigm-breakingburst

Through normal structure and management

processes

Transform entireorganization

Affect organizational

part

Create new structureand management

Technologyimprovements

Breakthroughtechnology

Productimprovement

New products,new markets

Incremental Change Radical Change

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Tech Dimensions Complexity or Diversity

– The number of different items or elements that must be dealt with simultaneously. Specific measures include:

The variety of inputs, and Multiplicity and customization of outputs.

Uncertainty or Unpredictability– The variability of the items or elements upon which work is performed or

to the extent to which it is possible to predict their behavior in advance. Specific measures of uncertainty include:

Uniformity or variability of inputs, The number of exceptions encountered in the work process, and The number of major product changes.

Interdependence– The extent to which the items of elements up on which work is performed

or the work processes themselves are interrelated so that changes in the state of one element affect the state of the others. There is pooled, sequential and reciprocal interdependence.

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Pooled – the work performed is interrelated only in that each element or process contributes to the overall goal.

Sequential – when some activities must be performed before others.

Reciprocal – when elements relate as both inputs and outputs.

Technology InterdependencePaint

Selection

EngineAssembly

AircraftProduction

EngineDesign

PartsManuf.

EngineAssembly

AircraftDesign

EngineDesign

WingDesign

Task Design Types

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Form of Interdependence

Demands on Horizontal

Communications, Decision

Making

Type of Coordination

Required

Priority for Locating

Units Close Together

Pooled (financial planning) Low

communication

Standardization, rules, procedures

Divisional StructureLow

Sequential (assembly line) Medium

communication

Plans, schedules, feedback

Task ForcesMedium

Reciprocal (hospital)High

communication

Mutual adjustment, cross-departmental meetings, teamwork

Horizontal Structure

HighClient

Client

Client

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BaseballBaseball FootballFootball BasketballBasketball

Interdependence:(pooled, sequential, reciprocal)

Physical dispersion (diversity) of players:(high, medium, low)

Coordination:(what forces the play?)

Key management job:(coaches job?)

Task Design Example

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Service / Manufacturing

Manufacturing Technology1. Tangible product2. Products can be

inventoried for later consumption

3. Capital asset intensive4. Little direct customer

interaction5. Human element may be

less important6. Quality is directly

measured7. Longer response time is

acceptable8. Site of facility is

moderately important

Service Technology1. Intangible product2. Production and

consumption take place simultaneously

3. Labor and knowledge intensive

4. Customer interaction generally high

5. Human element very important

6. Quality is perceived and difficult to measure

7. Rapid response time is usually necessary

8. Site of facility is extremely important

Service: Airlines, Hotels, Consultants,

Healthcare, Law firms

Product and Service: Fast-food outlets, Cosmetics,

Real estate, Stockbrokers,Retail stores

Product: Soft drink companies,

Steel companies, Auto manufacturers,

Food processing plants

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Size

Size: Various ways to define, but depends largely on what is the purpose of the definition.

– Sales– Profits– Asset Value– Number of Employees (most commonly employed)– Market Share– Concentration Ratios

Size is also typically important when discussed relative to other firms in an industry; the industry itself has an impact (for instance non-profit organizations).

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Organizational Life Cycle

ORGANIZATION STAGES OF DEVELOPMENT

1.Entrepreneurial

Stage

2.Collectivity

Stage

3.Formalization

Stage

4.Elaboration

Stage

Crisis:Need to dealwith too much

red tapeCrisis:Need for

delegationwith control

Crisis:Need for

leadership

Creativity

Provision of clear direction

Addition of internal systems

Development of teamwork

Crisis:Need for

revitalization

Decline

Continuedmaturity

Streamlining,small-company

thinking

SIZE

Large

Small

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Size & Structure

SIZE

Complexity

Bureaucracy

Scale of Operations

Formalization

Centralization

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Size: Positives & Negatives Positives:

– Better competitive position in the industry.– Gain better power over suppliers, buyers, regulators,

and other environmental components.– Economies of Scale

Negatives:– Diminishing returns from economies.– Learning and communication restrictions.– Limited flexibility and change capabilities.

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Organizational Culture – (1) A set of broad, tacitly understood rules that tell members what to do under a wide variety of circumstances, (2) It is the patterns or configurations of interpretations—the shared meanings, beliefs, and assumptions giving consistency and predictability within the organization.

Two parts to culture:– Unobservable Components: Shared values, norms, and beliefs. – Observable Traces or Symbols:

Architecture Artwork Dress Language Stories Appearance

Organizational Culture

Myths Behavior Rules Rituals Ceremonies

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Physical Manifestations of Culture Rites, Rituals and Ceremonies

– Public social events that mark the passage of some event or milestone. – Examples: orientation days, graduation ceremonies, department or

company parties, retirement parties Symbols and Slogans

– HP: “invent” ; Wal-Mart: “Always low prices, always” ; UPS: “brown” ; Mickey Mouse ears; Nike swoosh; etc.

Language– Jargon or common languages that serve as shorthand to members is based

on personal characteristics and devotion to a particular power holder. Myths and Stories

– History of operations or events that revolve around elements of truth, but are often distorted or exaggerated.

Physical Environment– Buildings, factories and grounds that develop meaning to the culture.– (1) Physical Structure; (2) Physical Stimuli; (3) Symbolic Artifacts

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Effects on Organizations Direction – culture affects goal attainment (gives identity & purpose) Strength – the impact of culture on members individual actions Pervasiveness – the degree to which members share culture;

pervasiveness is key to a “thick” culture (e.g., widespread and accepted). Flexibility – adaptability to changing conditions, established by:

– Setting up a “devil’s advocate” to question actions of the organization.– Recruiting an outsider to bring in fresh ideas, although this may

weaken morale.– Cross-training and job reassignments to reduce divisional alliances and

encourage intra-organizational relationships. Commitment – members of a group give their efforts, abilities, and

loyalties to the organization and its pursuit of its goals in return for satisfaction. Proper missions and values promote this “emotional” investment in the organization.

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Negative Effects ofGoing Against Culture

Culture can strongly affect the ability of an organization to change directions.

Changes that do not align properly to the established culture, or that seek to alter it can have negative repercussions:– Sabotage– Foot-dragging– Shirking– Negative Conflict

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Controlling Organizations Major Questions:

– How do owners create control systems that maximize the effectiveness and efficiency of the organization?

– How do owners make certain that employees do not loaf, steal, or engage in other counterproductive behaviors?

– How do you ensure high quality output?

Organizational Economics Inform these Questions: Transaction Cost Economics – views the

organization as a series of transactions. Agency Theory – regards the organization as a

series of contractual relationships between owners and workers.

Cultural Control Types

TYPE

Bureaucratic

(Machine)

Market

Clan

REQUIREMENTS

Rules, standards, hierarchy, legitimate authority

Prices, competition, exchange relationship

Tradition, shared values and beliefs, trust

Management Control Systems

“If you can’t measure it, you can’t control it.” – Meg Whitman, CEO of eBay.

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SubsystemSubsystem ContentContent FrequencyFrequency

Budget, Financial Reports Resource Expenditures, Profit and Loss Monthly

Statistical Reports Nonfinancial Outputs Weekly or Monthly

Reward Systems Evaluation of Managers and Employees based on Goals / Performance

Yearly

Quality Control Systems Participation, Benchmarking Guidelines Continuous

The Balanced Scorecard

LeadingLagging

Soft

Hard

Vision &

Strategy

Vision &

Strategy

CUSTOMERCUSTOMER

“To achieve our vision, how should we appear to our customers?”

Objectives Measures Targets Initiatives

FINANCIALFINANCIAL

“To succeed financially, how should we appear to our shareholders?”

Objectives Measures Targets Initiatives

INTERNAL BUSINESS PROCESSES

INTERNAL BUSINESS PROCESSES

“To satisfy our shareholders and customers, what business processes must we excel at?”

Objectives Measures Targets Initiatives

INNOVATION AND LEARNINGINNOVATION AND LEARNING

“To achieve our vision, how will we sustain our ability to change and improve?”

Objectives Measures Targets Initiatives

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Power

Power – “A” has power over “B” to the extent that “A” can get “B” to do something “B” would not otherwise do.– Remember that “A” and “B” can be organizations or groups or individuals.– Power is thus a relational term (it requires a relationship to exist) and entails

mutual dependency (the two parties need each other)

Power arrangements are affected by informal patterns, even if the power relationships are tightly prescribed and followed.

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Sources of Power Power comes from various bases in and around

organizations, these sources include:1. Rational or Legal Power – stems from some set of rules or procedures

that are considered legitimate by both parties. 2. Reward Power – from the ability to control and dispense benefits to

others. The size of the reward and the belief that it will actually be dispensed both impact this power.

3. Coercive Power – based on the ability to coerce or punish another. Viewed as the obverse of reward power.

4. Referent Power – based on one identifying with another, beyond the recognition of power itself. (e.g., hero worship, groupies)

5. Charismatic Power – based on personality and other personal characteristics.

6. Expert Power – based on knowledge or special skills that may be critical to the organization. Academic credentials are often used as independent base of power…PhD, MBA, MD, etc.

Decision-Making Rational Decision-Making (linear)

– Acting in own self-interest– Possessing full information about the decision problem– Knowing all possible solutions– Knowing the consequences of each solution

Bounded Rational Decision-Making (attempted linearity)– Limitations in everything Rational Decision-Making is based on…

cognitive limitations, information.– Habits, Emotions, and Values guide behavior

Garbage Can Decision-Making (non-linear)– Organizations (and individuals) have a repertoire of responses to

problems…located in garbage cans. If a proposed solution to a problem appears to be satisfactory or appropriate, it is applied to the problem.

– Organizations tend to turn to previous decisions, generally to avoid failure rather than succeed.

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Trade-off

Trade-off

Trade-off

Decision-Making:Constraints and Trade-offs

Personal Constraints:Desire for prestige, success;personal decision style; and

the need to satisfy emotional needs, cope with pressure,

maintain self-concept

Organizational Constraints:Need for agreement, sharedperspective, cooperation,

support, corporate culture and structure, ethical values

Bounded Rationality:Limited time, information,

resources to deal with complex,multidimensional issues

Decision/Choice:

Search fora high-quality

decisionalternative

Trade-off

Trade-off

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Goal Conflict:An Example of Marketing vs Manufacturing

MARKETING VS. MANUFACTURING Operative goal is Operative goal isGoal Conflict customer satisfaction production efficiency

Conflict Area Typical Comment Typical Comment

Breadth of product line: “Our customers “The product line is too demand variety.” broad, all we get are

short, uneconomical runs.”

New product introduction: “New products are our “Unnecessary design changes lifeblood.” are prohibitively expensive.”

Production scheduling: “We need faster response. “We need realistic customer Lead times are too long.” commitments that don’t

change like the wind direction

Physical distribution: “Why don’t we ever have “We can’t afford to keep huge the right merchandise inventories.”

in inventory?”

Quality: “Why can’t we have “Why must we always offer reasonable quality options that are too at low cost?” expensive and offer little

customer utility?”

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