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Today’s Lecture
Organizing Principles The Learning Organization Processes Rather Than Functions Communities Rather Than Groups Virtual Rather Than Physical Self-Organizing Rather Than Designed Adaptable Rather Than Stable Distributed Rather Than Centralized
The Challenges Ahead
The computer’s capability to leverage people’s brain power allows companies to not only communicate in new ways, but to compete in new ways
It looks at the challenges facing IS organizations worldwide by assembling a collage of opinions about possible principles underlying the e-world Acknowledging our transformation into a networked
world, it describes three viewpoints of the differences between non-networked and networked and their importance
The Challenges Ahead
Case examples include NYNEX, a football team, National Semiconductor, Sun Microsystems, Cemex, Semco S.A., Capital One, MIT’s IT for the Non-IT Executive Program and SIM’s Strategic Business Leaders Program
Introduction
Despite all the ‘bad news’ of the dot-com crash etc.
Enterprises around the world are quietly redefining their strategy, work environment, and skills to move into the e-world
In this Lecture we address the challenges faced by IS organizations worldwide by assembling a collage of possible principles underlying the ‘e-world’
Introduction..
The computer is an amazing machine
Leverages people’s brain power, not just muscle power
This capability is being used to process data & communicate in new ways
This communication in turn allows companies to compete in new ways
Organizing Principles
EXCITING TIMES!We are in a time of grand exploration – a new economy is
being born (perhaps in fits and starts)
Equally frustrating though – is that the tenets of this evolving economy are so different that the rules are just now being formulated, reformulated and reformulated again!
As the economy matures – some principles will prove to be true, while others will fall by the wayside
The following opinions offer promising new thinking on organizing principles
They point to areas enterprises need to focus on to succeed in an ‘e-economy’
Organizing Principles The Learning Organization
Most organizations live only 40yrs – 1/2 the life of a person, because they have ‘learning disabilities’
Organizational Learning Disabilities
1. Enterprises move forward by looking backward in that they rely on learning from experience = companies solve the same problem over & over
Organizing Principles The Learning Organization..
2. Organizations fix on events – yet the real threat comes from processes that move so slowly, no one notices them
3. Teamwork is not optimal, contrary to current belief. Team based organizations operate below the lowest IQ on the team = skilled incompetence
Organizing Principles The Learning Organization cont.
Organizations that can learn faster than their competitors will survive In fact, it is the only sustainable advantage
To become a learning organization, an enterprise must create new learning & thinking behaviors on its people
Organizing Principles The Learning Organization cont.
An organization and its people must master the following five basic learning disciplines:
1. Personal mastery: lifelong learning
People reach a special level of proficiency when they live creatively
This personal mastery forms the spiritual foundation for the learning organization, so organizations need to foster these aspirations
Organizing Principles The Learning Organization cont.
2. Mental models: deeply ingrained assumptions, generalizations, and images that influence how people see the world and what actions they take
Organizations can accelerate their organizational learning by spurring executives to surface their assumptions and test them for relevancy
Organizing Principles The Learning Organization cont.
3. Shared vision: organization’s view of its purpose, its calling It provides the common identity by which its
employees and others view it A shared vision is vital to a learning
organization because it provides the rudder for the learning process
Organizing Principles The Learning Organization cont.
4. Team learning: “dialog”: where people essentially think together, occur when people explore their own and others’ ideas, in order to arrive at the best solution; “discussions”: occur when people try to convince others of their point of viewFew teams dialog; most discuss, so they do not learn.
5. Systems thinking: to understand systems, people need to understand the underlying patterns Systems thinking is a conceptual framework for
making complete patterns clearer
Organizing Principles The Learning Organization cont.
Of these 5 disciplines – systems thinking is the cornerstone
Until organizations look inwardly at the basic kinds of thinking and interacting they foster, they will not be able to learn faster than their competitors
Organizing PrinciplesProcesses Rather Than Functions
Key point in the re-engineering movement wasn’t that changes needed to be dramatic – but that they needed to be made from a process centered rather than task centered view
Tasks - about individualsProcesses – about groups, we are now in a ‘group economy’
The shift to processes ramifications include:
Need for new position, such as process owners
Organizing PrinciplesProcesses Rather Than Functions..
In one process virtually all departments are involved
One person needs to have end-to-end responsibility
Process owners provide the knowledge of the process – not just manage people (still important!)
Sense of urgency & intensity as teams are more intense & allow less slack time
Organizing PrinciplesProcesses Rather Than Functions cont.
Requires measuring a process: How long it takes to complete Accuracy rate Cost, etc.
Process centered structure requires: Measures of processes which are different from
measures of tasks Measuring a process means measuring an outcome
from the customers’ point of view
Organizing PrinciplesProcesses Rather Than Functions cont.
Process Centering:
Turns people into professionals rather than workers If you define a professional as someone who is
responsible for achieving results rather than performing a task
The professional is responsible to customers, solving their problems by producing results
NYNEXCase Example: Process centered organization (1)
Targeted 12 major processes for redesign in a company wide business process redesign initiative 11 used the traditional approach. The 12th group used participative design & involved
the Work Systems Design group, along with 8 employees from across one provisioning process
This project was the only one of the 12 implemented, and = excellent results
NYNEXCase Example: Process centered organization (1)
It followed a socio-technical approach to design a new process for handling customer orders. Rather than pass a customer among specialized groups, all the people in the process worked together, in one area, as a multifunctional team — with engineers working alongside salespeople.
A major difficulty with an innovative new process was under-rating how difficult it would be to keep it going when it is counter cultural
A (U.S.) FOOTBALL TEAMCase Example: Process centered organization (2)
Has 2 processes: Offensive Defensive
Process owners: Offense co-ordinators Defense co-ordinators
A (U.S.) FOOTBALL TEAMCase Example: Process centered organization (2)
Team has: Position coaches Head coach
Once on the field – the team is self-directed.
It adapts to the unfolding play
Organizing Principles Communities Rather Than Groups
Communities – form of their own volitionGroups – formed by design, their members are
designated a priori Communities:
Perform the same job, or collaborate on a shared task/product
They have complementary talents & expertise They are held together by a common purpose & a
need to know what the others know
Organizing Principles Communities Rather Than Groups cont.
Most people belong to several communities of practice, and most important work in companies is done through them
Note: not necessarily ‘defined’
Communities are the critical building blocks of a knowledge-based document
Organizing Principles Communities Rather Than Groups cont.
Three reasons:
People, not processes, do the work
Learning is about work, work is about learning, and both are social
Organizations are webs of participation
NATIONAL SEMICONDUCTORCase Example: Community of Practice
Company began encouraging communities after its business model that built low margin commodity chips collapsed
Community of practice: Energize & mobilize the firms engineers Shape strategy & then enact it
A community of practice on signal processing grew slowly over 18 months & now includes engineers from numerous product lines & has been influential in strategy decisions
NATIONAL SEMICONDUCTORCase Example: Community of Practice
cont.
National is extending communities of practice by:Formally recognizing themOffering funding for their projectsHanding out a toolkit to help people form
their own communities of practice
Organizing Principles Virtual Rather Than Physical
A virtual organization doesn’t exist in one place or time – it exists whenever & wherever the participants happen to
be
The virtual organization is a popular description of new organizational form
Underlying principle = time & space are no longer the main organizing foundations
SUN MICROSYSTEMSCase Example: Virtual rather than physical
organization
Chief Scientist – John Gage The network creates the company
“Your e-mail flow determines whether you’re really part of the organization: the mailing lists you’re on say a lot about the power you have.”
Organizing Principles Self-Organizing Rather Than Designed
Form of future organizations – chaos theory, ecology, biology, and look at nature & how it organizes itself
The basic tenet is that nature provides a good model for future organizations that must deal with: Complexity Share information & knowledge Cope with change
The message is about being to adapt, it’s like imitating structures found in nature
CEMEXCase Example: ‘Self organized’
organization
Cemex (Cementos Mexicanos) delivers ready mix cement in Monterey Mexico
Delivering mix on time difficult – traffic jams, poor road conditions, contractors not ready for their order
Delivery rate = 35%
CEMEXCase Example: ‘Self organized’ organization
Deal with problem of unpredictability:
No reservations required
Deliver faster than pizza
Turned attention to managing information rather than assets
CEMEXCase Example: Self designed organization
cont. To do so:
They installed a GPS system for all the trucks & full information to all employees
Drivers to schedule themselves in real time as calls came in, rather than dispatchers
Result = 98% delivery rates = delivery time 20mins, (rather than
3hrs) = less wasted, hardened cement = 35% fewer trucks = lower fuel costs = happier customers
Organizing Principles Self-Organizing Rather Than Designed cont.
The self-organization point-of-view
• Requires taking the perspective of “organizing-as-a-process” rather than “organization-as-an-object”
• Self-organizing systems create their own structure, patterns of behavior, and processes to accomplish their work
SEMCO S.ACase Example: An organization with a self
organizing principle
Maverick the success story behind the worlds most unusual work place – CEO Semco Richard Semler
Company – a Brazilian manufacturer of industrial equipment moved from 56th to 4th place in its industry by breaking all the rules to get costs down & productivity up
SEMCO S.ACase Example: An organization with a self
organizing principle cont.Result = Factory workers:
At times set up their own production quotas Help redesign products Formulate marketing plans Choose their own bosses
Bosses: Set their own salaries – yet everyone knows what
they are as workers have unlimited access to Semco’s one set of books
SEMCO S.ACase Example: An organization with a self
organizing principle cont.
The changes have been rough & not undertaken in an orderly or cohert manner
BUT the radical changes to a far more democratic workplace allowed the company to grow 600% at the same time that the Brazilian economy was faltering
A dramatic story & illustrative of the benefits of self-organization
Organizing Principles Adaptable Rather Than Stable
Speculation on future organizations
Successful organizations will be structured to naturally support (perhaps even foster) volatility and continual surprises
Today’s organizations are structured to maintain stability; change is minimised
Change costs a lotFirms built for stability are not adaptable
Organizing Principles Adaptable Rather Than Stable
IT is causing the world to become more connected Connectivity increases volatility To keep pace companies will need to adapt more
quickly The only way to achieve adaptability = through
distributed intelligence and action
Thus organizational models will be built around networks and will be designed to evolve
CAPITAL ONE Case Example: Adaptable Rather Than Stable
Credit company that believes in “the law of large numbers”
Conducts ‘000s of tests to read the marketplace
Strategy = dreaming up credit programs that might have value to customers
Then = testing numerous variations of each program to see which yield the best results
Example = discovered from its first test that “balance transfer” was a winning offer
CAPITAL ONE Case Example: Adaptable Rather Than Stable
Strategy goes with its bottom-up culture where decisions are made at the bottom based on the market tests
Management controls funds for rolling out new products but not for conducting the testing
Has the lowest charge-off rate and the highest risk adjusted margin in the industry
Grew 45% in one year!
Organizing Principles Distributed Rather Than Centralized
Organizations of the future could become more distributed. Two views:
1. Distributed Capitalism
– Commercial purpose of organizations is changing, hence structures will change
– Managerial capitalism will not really satisfy today’s consumers due to the huge gap between consumer desires and the good and services for sale
– Will possibly lead to federations
Organizing Principles Distributed Rather Than Centralized
2. Market-Based Organizations– Cost of communications has influenced the
structure of organizations• High = centralize• Reducing (like now) = more decentralized
– Organizations will structure more like democracies or markets
– Job of management will move from command and control to coordination and cultivation
Summary
We have Covered Today Organizing Principles
The Learning Organization Processes Rather Than Functions Communities Rather Than Groups Virtual Rather Than Physical Self-Organizing Rather Than Designed Adaptable Rather Than Stable Distributed Rather Than Centralized