In your opinion, what are the top 3 challenges to employees during times of "planned" change?
Validate your opinions with scholarly research.
Decision Making, Power
and Politics
Chapter Outline:
8-1
Decision Making in
Organizations
8-2
Power in Organizations
8-3
Politics in Organizations
W
I
L
L
I
S
,
Summary
Review Questions
Glossary
Endnotes
K
A
S
S
A
N
D
R
A
Key Terms
2
1
6
1
T
S
8-4
Conflict in Organizations
bounded rationality
Carnegie model
coalition
incremental decision model
intuitive decision making
nonprogrammed decisions
organizational conflict
organizational decision making
organizational politics
power
programmed decisions
rational model of decision making
satisficing
unstructured model of decision making
8
This book has emphasized the importance of strategically managing organizations,
whether they are operating in the for-profit sector or the not-for-profit sector. The
challenge of competitive forces, discussed in chapter 2 on strategy, is reaching
a zenith. This fact particularly impacts the first topic of this chapter, which is
decision making. Because competition for resources and customers has reached
the hypercompetitive level, decisions by organizations must be made quickly and
accurately.
8-1 Decision Making in Organizations
W
I are required because
Why do organizations make decisions? Primarily, decisions
organizations represent the merger of people, systems, L
and technology. Such a
L beg solving or creates
complicated conflagration inevitably leads to problems that
opportunities that need courses of action. Hence, organizational
decision making
I
is the process of identifying problems or opportunities and
S finding solutions or
courses of action that further the goals of the organization.
,
When firms are small, such as those usually found in the existence stage of the
organizational life cycle, all important decisions and most
K minor decisions are
made by one person or a small group of people. However,
A as organizations add
capacity to produce, employees, and markets, the need
S for decision making
increases exponentially. Modern organizations are pushing this decision making
S
responsibility to the lowest possible levels to increase speed and efficiency. This
concept, known as empowerment, puts the responsibility A
for solving a problem or
N
acting on an opportunity in the hands of those closest to the situation.1
organizational
decision making
the process of identifying
problems or opportunities
and finding solutions or
courses of action that
further the goals of the
organization
D
As technology continues to permeate our organizations, markets and competition
R
become global, and productivity increases accelerate, the time available for mulling
A
over important matters in the decision making process shrinks. Fortunately, most
decisions faced by organizations are somewhat routine. Decisions made on a
2 procedures are known
routine, repetitive basis addressed by company policy and
as programmed decisions.
1
6
Nonprogrammed decisions involve nonroutine, out of the ordinary situations
1
and are generally not covered by existing policy or procedure. An example of a
T where an organization
nonprogrammed decision would be a competitive situation
S about the difficulty
is faced with a serious threat from a substitute product. Think
faced by steel producers when automobile manufacturers began to utilize plastic
on a widespread basis in their new cars. This is an example of a strategic threat
from the external environment that resulted in a loss of revenue. That is a serious
enough issue. However, this substitution led to the utilization of plastic into other
products, replacing glass, steel, and even paper.
programmed decisions
decisions made on a
routine, repetitive basis
that are addressed by
company policy and
procedures
nonprogrammed
decisions
decisions that involve
nonroutine, out-of-the
ordinary situations and
are generally not covered
by existing policy or
procedure
Organizational Theory
8-2
8-1a The Rational Decision Making Model
Regardless of whether decisions are programmed or nonprogrammed, everyone
has a process that they follow when confronted with the need for a decision. As
organization theory has evolved over the years, a clear need has been recognized
by researchers and practitioners alike for a model for decision makers to adopt.
Too many organizational managers were making decisions based only on past
experience, or expediency, or whatever might make them look good to their
superiors.
Allowing organizational decision-makers to “fly by the seat
W of their pants” works
against the goals and objectives set by most firms. To overcome this problem, a
I
rational or classical model of decision making has been developed. The rational
L
model is a decision making process that relies on a step-by-step systematic
L as anywhere from
approach to solving a problem. This model has been portrayed
a three-step2 to a six-step3 to an eight-step4 process. FigureI 8.1 depicts a version of
the rational model based on a strategic management
S
,
rational model of
decision-making
a decision making process
that relies on a step-bystep systematic approach
to solving a problem
K
A
S
Figure 8.1 The Rational Decision Making Model
S
A
Each step in Figure 8.1 will be explained using a practical example from the Coca
Nthe early 1980’s Coke
Cola Company headquartered in Atlanta, Georgia. During
D newly-introduced
began losing market share in supermarkets to Pepsi. Although
Diet Coke had recently become the No. 1 diet soft drink,
RCoke executives were
concerned with their competitive position in relation to Pepsi’s.
To make matters
A
worse, Pepsi had been running taste test advertisements on television for several
years where blindfolded consumers picked Pepsi over Coke based on taste.
2
1 project to tinker with
Robert Goizeuta, chairman of Coca Cola, initiated a secret
Coke’s formula, developed in 1886 by Georgia pharmacist
John Pemberton,
6
believing that the sweeter taste of Pepsi was leading to1Coke’s loss of market
share. By 1984 the company was ready to try the new formula in consumer trials in
T
over 30 cities in America. With the aid of a market research firm, Coke conducted
its own taste tests, with close to 40,000 people choosingS
New Coke over the old
classic by 55 to 45 %. The also chose it over Pepsi.
The introduction of New Coke, and the withdrawal of Old Coke, came in April of
1985. To Coke’s surprise, the outcry over the new formula and the pulling of the
old Coke was met with outrage. Less than 90 days later, the old formula was reOrganizational Theory
8-3
introduced to the market as Coca-Cola Classic. Coke’s stock price went up over $5 in one week after bringing
back the old formula.5 This example is not an illustration of a successful initial decision, as Coke’s decision to
introduce New Coke could only be described as a failure. However, it very clearly demonstrates how difficult
important strategic decisions can be, and it reveals one firm’s ability to recognize when it had made a mistake.
Step 1: Recognize and confront the situation – do not sit on a situation that is a potential
problem or opportunity for your organization hoping that it will take care of itself. Coca-Cola
executives became concerned with a drop in market share in the early 1980’s as Pepsi began
outselling Coke in supermarkets. The company decided the problem was the taste of their
product, in that Pepsi was sweeter than Coke.
W
Step 2: Develop the solution options – strategic managers base decision-making options
I
on their compatibility with the organization’s strategy to accomplish its goals and objectives.
L
Anything else is counterproductive. Coca-Cola owned the most recognizable brand in the
world. To protect its market share andLits name, Coke looked at introducing new products (like
I
Diet Coke), changing advertising strategies
(conducting its own taste tests), or actually altering
the formula of its main product (introducing
New Coke).
S
,
Step 3: Evaluate the possible outcomes of each option – Sometimes a possible solution to
a situation sounds very good until it is evaluated based on the possible outcomes. As they
K knew they already had six brands on the shelves of
evaluated each option, Coke executives
stores, they believed their marketingAcampaign was already one of the best in the world, and
they were concerned that tinkering with
S their tried and true formula was risky.
S
Step 4: Choose the best option and implement – Once the best option is identified based on
an evaluation of possible outcomes,A
implement the option. After analyzing this situation for
N
some time, CEO Robert Goizueta, with support from Robert Woodruff, the 95 year-old former
chairman of Coca-Cola, put the wheels
D in motion for the introduction of New Coke.
R
The example of decision making at Coca-Cola by its top management team demonstrates that even a rational,
A
objective, research-based decision can be wrong. In the end, after spending over $4 million to taste test its
new formula, Coca-Cola failed in its introduction of New Coke. Some say an intangible, e.g., the consumer’s
2 failure.6 Yet, Coca-Cola survived and prospered under
emotional tie to the brand, was to blame for New Coke’s
Goizueta’s leadership as its stock price increased 3800%
1 during his tenure. Since his death in October of 1997,
7
however, Coca-Cola has struggled to find the right leader
6 at the right time.
1
Critics are quick to point out that the rational model has several flaws. For example, managers do not have
T do not know all possible alternatives, and they do not
complete, perfect information most of the time. They
understand nor can they predict all possible outcomesSof those alternatives. Decision makers also have limited
mental capability, something that is not recognized by this model. The rational model is a prescriptive model
in that it lays out a process for how decisions should be made. A second model will be discussed below that is
more descriptive, demonstrating how decisions actually are made in organizations.
Organizational Theory
8-4
8-1b The Carnegie Model
A second model of decision making is the administrative model, or the Carnegie
Model. Developed by organizational researchers James March and Herbert Simon
from Carnegie-Mellon University, this model tries to explain how organizational
decision makers actually make decisions. The result is a realistic snapshot
of the limitations decision makers bring to the process, particularly in light of
the tremendous number of variables involved in decision making in today’s
organizations.
The Carnegie model reflects a descriptive decision-makingW
process in organizations
where coalitions determine a final choice based on incomplete information, social
I
and psychological processes, limited abilities of decision makers, and the need
L
to find quick, satisficing solutions.8 The Carnegie Model is a good example of
what happens to a behavioral theory in management whenLit is actually studied in
practice. Rarely does one single top manager make all ofI the important decisions
in an organization without input and buy-in from many
S other key managers.
Although an organization may have clearly defined goals,
, conflict as to how to
obtain those goals or whether they are actually the proper goals often develops. In
these situations, coalitions can form within the organization between employees,
K
managers, and/or shareholders to push forward a solution.9 In contrast, the rational
A in organizations and
model of decision making tends to assume no conflict exists
S
that organizational goals are all commonly shared by immediate
stakeholders.
Carnegie model
reflects a descriptive
decision-making process
in organizations where
coalitions determine a
final choice based on
incomplete information,
social and psychological
processes, limited abilities
of decision makers, and
the need to find quick,
satisficing solutions
S
Mintzberg categorizes the possible reasons for coalitions in an organization and
A
identifies the actual groups, both external and internal, that might result. He defines
N
a coalition as “a group of people who band together to win some issue.”10 Below
D
is a list of these possible coalitions.
External Coalitions:
R
A
coalition
a group of people who
band together to win some
issue
Owners
– those who have legal control of the organization
2
Associates
1
– Suppliers and buyers of organizational resources
6
and products/services
Employee Associations
– Unions and professional associations
1
T
S
Publics
– this term refers to general groups such as families and
opinion leaders, special interests groups, and government
Directors
– board members
Organizational Theory
8-5
Internal Coalitions:
Top Management Team
– also referred to by some as the dominant coalition
Operators
– describes the workers who actually produce the firm’s
product or service
Line Managers
– all managers from the CEO down to first-line supervisors;
Analysts of the Technostructure
– systems planning and control personnel;
W
I
Support Staff
L relations, etc.
– specialists who work on matters of law, public
L
Ideology Supporters
I the
– those who share a set of beliefs that distinguish
S
organization from others.11
,
This list emphasizes the fact that coalitions are powerful, yet fundamental forces to
be reckoned with in any organization. The vast number of special interests, causes,
K
needs, and other considerations that can be conjured up by this list confirms the
A
practical approach to decision making that coalition building represents. This is
S but it does make one
not to say that coalitions are only concerned with self-interest,
aware of the importance of coalition building in managingSan organization.
A
A second major difference between the rational model and the Carnegie model has
N
to do with choosing the optimal solution in the decision-making process. March
and Simon have described that, in many cases, solutionsD
to problems are arrived
R
at through a process of satisficing. The concept of satisficing is choosing a course
A of people involved or
of action that is the most acceptable to the greatest number
affected. In a perfect world, this would not be the case. Decision makers would
always choose whatever solution was best for the organization.
Remember,
2
organizations are groups of people who must work together to accomplish
1
anything. Unfortunately, optimal solutions are not always going to be supported
6
by organizational stakeholders.
1
Another factor involved in decision making that the rational
T model overlooks is the
sheer limitations of human decision makers based on their
S bounded rationality.
Although organizational decision makers are usually well-versed in their industry,
trained in their jobs, and networked to opportunities and threats in the external
environment, they are also limited by their own cognitive ability. So, bounded
rationality refers to the limitations of the mind that restrict the ability of decision
makers to solve problems or take advantage of opportunities. Operating within this
limited framework, decision makers can make a quick list of alternatives based on
satisficing
choosing a course of
action that is the most
acceptable to the greatest
number of people involved
or affected
bounded rationality
refers to the limitations of
the mind that restrict the
ability of decision makers
to solve problems or take
advantage of opportunities
Organizational Theory
8-6
past experience and personal knowledge of the situation at hand, prioritize them
based on importance, and move on with a solution. Are all relevant alternatives
likely to be included? The answer is probably not. However, the need not to
spend too long deliberating a situation, the tendency to satisfice, and the personal
preferences of the primary decision maker usually overrule any inclination to try
to be exhaustive in identifying alternatives.
W
I
L
L
I
S
,
Input and buy-in
from key managers
aid and strengthen
the decision making
process.
K
A
8-1c Incremental Decision Making
S
A different model of decision making is the incremental decision
model. The name
S
incremental is quite descriptive, as managers make decisions
A that are only slightly
different than the ones made by their predecessors or the ones they themselves
N
made in the past.12 The idea behind the incremental model is that managers are
D
only “muddling through” as they are confronted with important decision-making
R style because the
opportunities. Many managers practice this decision making
A change what has been
chance for failure is reduced when you only incrementally
incremental decision
model
managers make
decisions that are only
slightly different than
the ones made by their
predecessors or the ones
they themselves made in
the past
happening for a long time. Although new courses of action may eventually develop
when the incremental model is practiced, they take a long2time to come about due
to the small step-by-small step process.
1
6
8-1d The Unstructured Model
1
While the Carnegie model emphasizes the need toTrecognize social and
psychological processes, the unstructured model, based on the observance of actual
S
decision makers in operating organizations, focuses more on the actual steps taken
by decision makers. The unstructured model of decision making, developed by
Henry Mintzberg, sometimes referred to as the Father of Strategic Management,
describes decision making in uncertain environments as a sequence of activities
that require smaller decisions throughout the process. 13
unstructured model
of decision making
describes decision making
in uncertain environments
as a structured sequence
of activities that require
smaller decisions
throughout the process
Organizational Theory
8-7
Mintzberg and his colleagues studied twenty-five organizational decisions as a
process from beginning to end. They outlined three major phases common to the
firms studied: the identification phase, the development phase, and the selection
phase. The identification stage involved recognizing the problem or opportunity
and gathering more information, or diagnosing. The development phase was
focused on searching for alternatives or designing a solution that was customized
to fit the situation. In the selection phase a judgment is made, followed by analysis,
bargaining, and eventual authorization. In their research, Mintzberg and his coauthors noted that sometimes major barriers would be bumped into, requiring
decision makers to go back and repeat steps they had already taken.
W
What is important to remember in any decision model is the
I fact that most critical
decisions are made over a period of time. And, as we have emphasized in this book,
L
the environment for most businesses changes over time, sometimes drastically.
L
Mintzberg’s model is realistic in that regard, particularly when an organization is
I since it accounts for
operating in an uncertain internal or external environment,
S
barriers that can arise.
8-1e Intuition in Decision Making
,
K literature looks at the
A somewhat recent school of thought in the decision making
A decision making,
importance of intuition. Using intuition, or practicing intuitive
involves relying on judgment and feel for a situation based
S on past experience.14
Intuition is invaluable because it represents an informed gut
S reaction to a problem
or opportunity, it allows decisions to be made faster as the reaction intuitively
A
is fairly immediate, and it relies on information that has been burned into the
N
subconscious over a long period of time.15
intutive decision
making
involves relying on
judgment and feelings
for a situation based on
experience
D
Intuition plays an important role in the decision making
R of Meg Whitman,
president and CEO of eBay who is featured in our Best
A Practices box in this
chapter. Whitman must make decisions on critical business issues like expansion,
acquisitions, personnel and so forth. However, she has other decisions to make that
2
involve social and cultural issues that can become quite complicated.
For example,
1 sell Jeffrey Dahmer’s
eBay will let you sell Lizzie Borden’s ax, but you can’t
16
refrigerator. Whitman finds that she must monitor chat
6 rooms and customer
e-mails almost daily to stay in touch with where her online
1 market is going. Some
items she has banned from sale on eBay include firearms,
T tobacco, alcohol, and
Nazi items. Some of these decisions have been controversial since free market
S
advocates can make an argument for selling anything legal as long as there is
a market willing to purchase the product. Whitman has had to rely on her own
intuition and gut feeling to try to do what is socially responsible without severely
damaging her firm’s ability to prosper.
Organizational Theory
8-8
Best Practices
Meg Whitman, eBay
According to Fortune magazine, the most powerful woman in business for the year 2004 was Meg
Whitman, president and CEO of eBay. Carly Fiorina of Hewlett-Packard had been named number
one for six years in a row prior to 2004. Why did Meg Whitman move up from second in 2003 to
first? Part of the reason was that eBay was arguably the hottest company in the world in 2004.
But perhaps even more important was the fact that Meg Whitman was the most respected woman
manager in the world. And, one reason for that awesome reputation is her ability to manage a fastgrowing business garnering world wide attention without going on a power trip.
Whitman amassed a tremendous base of power by trying not to act powerfully. She has grown eBay
W
from $5.7 million in revenue to just over $3 billion in about seven years. This makes eBay the fastest
I Microsoft, Cisco, Oracle, or even Wal-Mart for
growing company in history, faster than FedEx,
L no responsibility for the unprecedented success of
its first eight years of existence. Whitman takes
eBay, choosing instead to constantly heap praise
L on her employees and loyal customers. Yet fellow
executives at eBay are quick to remark that no
I one could have kept everything on course at the
company except Meg.
S
at ,eBay
The key to Whitman’s tremendous tenure
is rooted in her approach to power. She was
quoted as saying: “Ask anyone about me, and they would never think of power.” Instead, Whitman
would point to her unconventional power, a more
K subtle kind of power that continues to garner her
a legion of admirers. Her credibility is key. Whitman does what she says she will do. She is also a
A
counterintuitive strategist, a rare ability in today’s uncertain environment. In a very unpowerful way,
Whitman practices the art of enabling others toSgo out and accomplish great things for eBay. Yet, in
S the most powerful woman in business.
the end, this art of enabling has made Meg Whitman
A
N
D
8-2 Power in Organizations
R
Power is an elusive concept to grasp and formulate
A a formal definition for because it tends to be
associated with authority, control, influence and other similar kinds of things. Yet, power is also one
of those organizational characteristics that most people know when they see it. For example, Salancik
2
and Pfeffer,17 researching strategic-contingency theory, asked ten managers in an insurance company
1
to rank twenty-one people in the organization based on their influence. Only one person hesitated,
6 he was told ‘power’ he immediately joined the
asking “What do you mean by influence?” When
1 similar lists.
other nine in compiling what turned out to be very
T
Mintzberg wrote about power being ‘in and around organizations’ due to the growing body of
S
literature on power between firms, as well as, within firms.18 This discussion of power will focus
on power as it relates to the internal workings of an organization. Power is one’s ability to achieve
desired outcomes by exerting influence over others. Sometimes this influence is exerted in the form
of orders or instructions to be carried out,19 while other times it is subtly understood. A.G. Lafley of
Proctor & Gamble was recently quoted as saying, “The measure of a powerful person is that their
circle of influence is greater than their circle of control.”20
Organizational Theory
8-9
Career Point
Position Power
When young, up-and-coming executives are given their first official titled jobs, at least some position
(or legitimate) power comes into play. Being named to a particular spot on the organization chart
automatically puts a person higher on the pecking order than some others. May who fall into that
“others” category are more experienced in the industry and know more about the company than the
newly-titled up-and-comer.
As you prepare for your first titled position in an organization, thank about how you will manage your
new-found position power. Meg Whitman, CEO and president of eBay (See Best Practices), agrees
with this statement made by Rajiv Dutta, eBay’s CFO: “To have power, you must be willing not to
W
have any of it.” This is difficult for new executives to grasp since obtaining and exercising power is
something they think they’re working for in theI first place.
L
Exercising position power requires a deft hand for a young executive. You should not abdicate your
L
power just because there are others in your workgroup who know much more about the business than
I
you know. Conversely, you don’t ignore the valuable
contributions these coworkers can make. Just
S
like the green second lieutenant who comes to rely on his seasoned first sergeant, learn how to manage the knowledgeable folks you work with while
, continuing, where appropriate, to interject your
own fresh thoughts that are not colored by years of doing the same old thing in the same old way.
K
Top management teams are looking for new managers
who understand the core competencies of the
firm, yet bring fresh new ideas to the table. TheyAare not looking for new managers who want to be respected so badly that they impose their ideas onSothers, even when they are bad for the organization.
Remember, in any organization, managers areS
respected for doing what they say they will and for
advancing the goals and objectives of the firm, or, in other words, being credible and having integrity.
8-2a Individual Sources of Power
A
N
D
R
A
Power originates from several sources. These sources are covered in most organizational behavior
courses at the collegiate level, but they are worth mentioning again here. Some of these power
2
sources are based on a person’s position in an organization, and some are based on person’s individual
1
characteristics or personality. Most of these power
sources, legitimate, coercive, reward, expert,
6
referent, and charismatic, were identified and described by French and Raven.21
1
The first source of formal power is legitimate power. Legitimate power is obtained by virtue of the
T
position one holds in an organization. It is sometimes referred to as position power. Having a title or
S a certain amount of power based solely on the
being designated a manager usually allows a person
position. A second type of formal power is known as coercive power. Coercion means you have the
ability to force someone to act in a certain way based on a fear of negative consequences if that action
isn’t taken. For example, one may be demoted or even fired for not following orders or doing as one
was told. See the Career Points section for a practical perspective on position power.
A somewhat more pleasant type of formal power is reward power, just the opposite of coercive
Organizational Theory
8-10
power. Managers who have the ability to reward performance will usually get the results they need based on
subordinates desire to achieve the rewards. These rewards can be either financial, such as salary increases or
bonuses, or they can be nonfinancial, including options such as better working conditions, a nicer office, more
time off, plum assignments, or promotions.
Individual sources of power include the notion of being an expert. Expert power refers to one’s knowledge or
skill that is greater than that of others in the workgroup. This expertise about something specific to the needs
of the organization brings a degree of respect and dependence from coworkers. For example, a technician from
the IT department at your company would be better suited to help you with a pc problem than your coworker
in the marketing department. Eventually, if the pc’s at your firm break down or lock up regularly, the computer
technician may become one of the most powerful people
W in the organization. An example of this involved
maintenance engineers at French tobacco-processing plants studied by researcher Michael Crozier. Crozier
I
discovered that these maintenance engineers, although low on the organizational chart, were actually some
L
of the most powerful people in the corporation due to the machinery frequently breaking down. Without the
L These engineers exploited this situation by refusing to
machinery operating properly, there was no production.
I all repair work be done by the engineering maintenance
show operators how to make minor repairs, insisting that
22
department.
S
, power. Referent power is based on someone having
The last personal source of power is known as referent
admirable personality traits, so much so that others allow that person to exercise power over them because they
want to please him. Referent power is a very strong kind
K of influence. We see its personification in advertising
where sports heroes or music personalities are contracted
to sell and promote products because companies
A
understand that many people look up to these celebrities
S and want to be like them. Politicians will even solicit
the assistance of rock and roll stars to campaign on their behalf, persuading fans to vote for the endorsed
S
candidate.
A
Referent power can be taken to another level if someone
N possesses charisma. Charismatic power is a person’s
gift of being able to influence others by transforming their attitudes and beliefs, even in the face of contradicting
D
information. A charismatic person may become a leader without a formal leadership position. This sometimes
R
happens when a person does something heroic, like the FedEx employee that could not open a drop box. Instead
of just moving on to the next one, he physically liftedAthe box and put it in his truck to be opened at the hub so
that none of the documents or packages would be late.
2
1
We began the discussion on power with a reference 6
to Pfeffer and Salancik’s work on strategic contingency
theory. The concept of environmental uncertainty is relevant to the idea of strategic contingencies for, over a
1
period of time, what is strategically critical to the organization my change. The department or division that
T
controls the critical resources or performs whatever task is most relevant will receive the most power. Pfeffer
S can exert tremendous influence. 23
and Salancik identified five situations where a department
8-2b Departmental Sources of Power
Organizational Theory
8-11
Dependency refers to a department needing or an output from another department
in order to successfully do its work. An example might be that the flight scheduling
department cannot complete its schedule without a status report on each pilot from
personnel. This makes flight scheduling dependent on personnel.
Financial Resources are more prized everyday in organizations, and the departments
that generate them are usually very powerful. Many times this role is played by the
sales department. When times are good and above-average returns are generated,
other departments may make extra demands for more funds. In a university, the
college, school, or department where enrollment is growing very fast will demand
more resources to keep up with demand but also becauseW
it has amassed a certain
amount of power based on its growth
I
Nonsubstitutability is a source of power when the roleLplayed by a particular
department cannot be performed by any other. Due to theLknowledge of people in
the department, their expertise due to education or training,
I substitutes are rare or
nonexistent.
S
Coping with Uncertainty is a strong base of power in today’s
hypercompetitive
,
environment. Emery and Trist described a situation they labeled turbulent fields
where competition was so fierce that the organization believed the ground was
K
actually moving under them.24 A department can diffuse that uncertainty with
A
accurate predictions, or obtaining prior information. For example a new product
could be developed that was designed take advantage of S
environmental changes.
S
Or power can be garnered through prevention, somehow stopping
the organization
from committing an error. The third uncertainty copingAmethod is absorption,
moving in after a bad situation has developed and diffusing
N the overall effect on
the organization.
8-3 Politics in Organizations
D
R
A
This chapter has discussed decision making and power because they are closely
2
related in any organization. Those with power have influence, and those with
1 a third force that must
influence tend to be involved in decision making. There is
6 to be fully understood,
be added to these first two if power and decision making are
and that force is politics.
1
T politics is literally a
To some people who work in organizations on a daily basis,
dirty word. They view politically astute managers or staffSmembers as scheming,
conniving, and self-serving. Yet, while some people do abuse the political process
in organizations, politics is essential to progress. This is especially true for larger
organizations.
Jeffrey Pfeffer has provided a good working definition of politics in organizations.
According to Pfeffer, organizational politics are, “activities taken within
organizational politics
activities taken within
organizations to acquire,
develop, and use power
and other resources to
obtain one’s preferred
outcomes in a situation in
which there is uncertainty
or disagreement about
choices
Organizational Theory
8-12
organizations to acquire, develop, and use power and other
resources to obtain one’s preferred outcomes in a situation in
which there is uncertainty or disagreement about choices.”25
This definition reveals several interesting points about politics
in today’s modern organizations.
First, politics are directly related to power. Pfeffer says political
activities are specifically undertaken to acquire, develop, and
use power. Second, politics is about obtaining preferred outcomes, which requires overcoming obstacles and differences of
opinion
Wamong organizational members as to the best course of
action. Third, political activities are particularly conspicuous in
I
situations where there is uncertainty. Earlier we discussed enL
vironmental uncertainty’s effect on decision making and how
L tend to wield much power. This definition of politics
organizational departments that can predict future events
I
in organizations further explains that many times uncertainty
and disagreement of choices lead to a situation
where coalition building is usually required for a solution
S to be determined or a decision to be made.
, thing. Yes, some political activity is self-serving and
So, politics in organizations is not always a negative
perhaps even subversive. Remember, organizations are composed of people, so society’s problems and ills
will probably be mirrored in our organizations. However,
K most organizational goals would never be met if it
weren’t for the political astuteness of key organizational
A leaders and power brokers. Some disputes are so great
and some environments are so uncertain, without political
S behavior very little would be accomplished. Imagine
a decision process, for example, where an organization is trying to decide which foreign country in which
S
to pursue expansion. There are so many countries with so many diverse populations and standards of living,
Acoalition would have to be developed to push for one
the choices are overwhelming. Some type of political
N
particular country over another to get the process moving.
D
Politics is a difficult behavior to define because, like power, it is one of those things that we know it when we
R
see it. And, it is directly related to power, since it is the use of power to get something done. Most people dislike
A such activity, but we need political activity whenever
negative, self-serving politics and the people who practice
our organizations are faced with uncertainty and disagreement.
2
1
8-4 Conflict in Organizations
6
Organizational conflict occurs when two groups clash1over competing goals. To understand why disagreement
T sources of conflict. Borrowing from the work of Louis
surfaces in organizations we need to take a look at the
Pondy, the sources of conflict in organizations include
S interdependence, differences in goals and priorities,
bureaucratic factors, incompatible performance criteria, and competition for resources.26
Interdependence is a term that describes how some subunits of the organization seek autonomy and pursue
its own agenda of goals and objectives. This phenomenon occurs most often when the organization has
diversified over a period of time. The need for interdependence identified by upper management to accomplish
organizational goals can come into conflict with the desire for autonomy by subunits.
Organizational Theory
8-13
Differences in goals and priorities develop among
subunits because each is engaged in a different
pursuit, some with close ties to the external
environment and some shielded by the internal core
of the organization. A customer service center in
direct contact with end users on a daily basis might
have different priorities than an internal engineering
department that is charged with lowering production
and process costs. An example at the university level
would be professors desiring reduced class sizes and
teaching loads to facilitate the pursuit of academic W
research while the upper-level administrators sought larger
I class sizes and heavier teaching loads to reduce costs.
L
Bureaucratic factors can become a source of conflict in very large organizations due to the status afforded
L such as General Electric, known as a proven training
different groups according to their importance. In a firm
I would have a difficult time of rising to the position of
ground for top managers, a human resources vice president
CEO or president. Staff jobs in human resources are considered
important, but staff functions are not considered
S
as relevant for training top managers as line positions,, such as division head or director of operations.
Incompatible performance criteria are a source of conflict between subunits because they may be evaluated
in different ways, leading to incongruent performance
K outcomes. Subunits that are dependent on each other
indirectly may develop become at odds. For example,Aif engineering is working to lower production costs but
sales is hearing from customers that they want products
S with more features, conflict is likely to occur. In order
to increase sales and keep customers from seeking other vendors, sales may need research and development
S
to design new features to enhance its products. Engineering will then find itself working to redesign the
A
manufacturing process to include the new features, probably
adding costs in the long run. Performance in the
N
sales department goes up, while cost containment programs by engineering are lost.
D
Competition for scarce resources is a ready source of conflict in most every organization operating in our
R
modern global environment. Depending on how an organization is structured this conflict can have several
A
sources. If the structure is functional, as described in chapter 5, marketing will compete with finance or
research and development for scarce resources. If the structure is divisional, large operating divisions will
2 Resources are critical because organizations cannot
find themselves lobbying the home office for resources.
grow without investment, and, unfortunately there are1never enough resources to meet everyone’s expectations.
When General Motors decided to from the Saturn automobile
division in the mid-1980s, they knew significant
6
financial resources would be necessary to design and build a new, world-class car. The eventual price tag was
1
approximately $5 billion. Other divisions at General Motors suffered during this period, particularly Chevrolet.
T
Chevrolet went from selling one-fifth of all cars in America in 1970 to 12.1% in 1992. Much of this lost market
share was attributed to lack of new designs for its carsSand continued erosion to Japanese car makers.27
Not all conflict is bad for organizations. Most organizational researchers would agree that some conflict is
quite constructive, as differences of opinion are gotten out in the open and each side in a dispute is made aware
of the other’s position. In chapter 11 we will examine how organizational learning, a critical component of
competitiveness in the future, is facilitated by conflict.
Organizational Theory
8-14
Summary
Organizational decision making is the process of identifying problems or opportunities and finding
solutions or courses of action that further the goals of the organization. Decisions made on a routine,
repetitive basis addressed by company policy and procedures are known as programmed decisions.
Nonprogrammed decisions involve nonroutine, out of the ordinary situations and are generally not
covered by existing policy or procedure.
The rational model is a decision making process that relies on a step-by-step systematic approach to
solving a problem. The Carnegie model reflects a descriptive decision-making process in organizations
where coalitions determine a final choice based
W on incomplete information, social and psychological
processes, limited abilities of decision makers,
I and the need to find quick, satisficing solutions. The
concept of satisficing is choosing a course ofLaction that is the most acceptable to the greatest number
of people involved or affected. Another factor involved in decision making that the rational model
L
overlooks is the sheer limitations of human decision makers based on their bounded rationality.
I the mind that restrict the ability of decision-makers to
Bounded rationality refers to the limitations of
S
solve problems or take advantage of opportunities.
,
A different model of decision making is the incremental decision model. The idea behind the incremental
model is that managers are only “muddling through” as they are confronted with important decisionK
making opportunities, improving on former decisions incrementally.
The unstructured model
A
of decision making describes decision making in uncertain environments as a structured sequence of
S the process. Using intuition, or practicing intuitive
activities that require smaller decisions throughout
decision making, involves relying on judgment
S and feel for a situation based on past experience.
A
Power is one’s ability to achieve desired outcomes by exerting influence over others. Power is derived
N
from a legitimate position, the ability to be coercive, the ability to reward, being an expert, appealing to
D charismatic personality. The department or division
others’ desire for referent affiliation, and/or a strong
that controls the critical resources or performs R
whatever task is most relevant will receive the most power.
A
Organizational politics comprise activities taken within organizations to acquire, develop, and use power
and other resources to obtain preferred outcomes in a situation in which there is uncertainty or disagreement
2
about choices. Organizational conflict occurs when two groups clash over competing goals.
1
6
Review Questions and Exercises1
T
1. Rational decision making appears to be the
Soptimal process for solving problems. Discuss.
2. Compare and contrast the rational model with the Carnegie model. In your opinion, which is better?
3. Explain the term satisficing.
4. Someone referred to power as a golden rule. What is meant by the statement, “He who has the gold,
makes the rules.”
Organizational Theory
8-15
5. Why is intuition important in decision making?
6. Is organizational politics good or bad? Defend your answer.
Glossary
•
Bounded rationality refers to the limitations of the mind that restrict the ability of decision
makers to solve problems or take advantage of opportunities.
•
W
Carnegie Model reflects a descriptive decision-making
process in organizations where coalitions
I
determine a final choice based on incomplete
information, social and psychological processes,
limited abilities of decision makers, and the
L need to find quick, satisficing solutions.
•
Coalition a group of people who band together to win some issue.
•
•
•
•
•
•
L
I
Incremental decision model managersSmake decisions that are only slightly different than the
ones made by their predecessors or the ones they themselves made in the past.
,
Intuitive decision making
experience.
involves relying on judgment and feel for a situation based on
K
A involve nonroutine, out of the ordinary situations and
Nonprogrammed decisions decisions that
S or procedure.
are generally not covered by existing policy
S
Organizational conflict occurs when two groups clash over competing goals.
A
Organizational decision making the process
N of identifying problems or opportunities and finding
solutions or courses of action that further the goals of the organization.
D
Organizational politics activities takenRwithin organizations to acquire, develop, and use power
and other resources to obtain one’s preferred
A outcomes in a situation in which there is uncertainty
or disagreement about choices.
•
2
Power one’s ability to achieve desired outcomes
by exerting influence over others.
•
Programmed decisions decisions made on a routine, repetitive basis that are addressed by
6
company policy and procedures.
•
Rational model of decision making T
a decision making process that relies on a step-by-step
systematic approach to solving a problem.
1
1
S
•
Satisficing choosing a course of action that is the most acceptable to the greatest number of people
involved or affected
•
Unstructured model of decision making describes decision making in uncertain environments
as a structured sequence of activities that require smaller decisions throughout the process.
Organizational Theory
8-16
(Endnotes)
1.
J. Conger, & R. Kanungo, 1988. The empowerment process: Integrating theory and practice, Academy of Management Review,
13, 471-481.
2.
G. Jones, 2004. Organization Theory.
3.
S. Robbins 2003. Organizational Behavior, 10th edition. Upper Saddle River, NJ: Pearson, pg. 132.
4.
R. Daft, 2004. Organization Theory and Design, 8th edition. Mason, OH: South-Western, pg. 449.
5.
J. Fierman, 1985. How Coke decided a new taste was it, Fortune, May 27, pg. 80; A. Fisher, 1985. Coke’s brand-loyalty lesson.
Fortune, August 5, pg. 44-46.
6.
Fisher, 1985.
7.
W
B. Morris, 2004. The real story, Fortune, 149(11), pg. 84-98.
8.
I NY: Wiley; H. Simon, 1960. The New Science of Management
J. March, & H. Simon, 1958. Organizations, New York,
Decision, New York, NY: Harper and Row.
L
9.
W. Stevenson, J. Pearce, & L. Porter, 1985. The concept of ‘coalition’ in organization theory and research, Academy of
L
Management Review, 10(2), 256-268; R. Cyert & J. March, 1963. A Behavioral Theory of the Firm, Englewood-Cliffs, NJ:
I
Prentice-Hall.
10. H. Mintzberg, 1983. Power In and Around Organizations,SEnglewood-Cliffs, NJ: Prentice-Hall, pg. 27.
11. H. Mintzberg, 1983.
,
12. C. Lindbloom, 1959. The science of muddling through, Public Administration Review, 19, 79-88.
13. H. Mintzberg, D. Raisinghani, & A. Theoret, 1976. TheKstructure of unstructured decision making, Administrative Science
Quarterly, 21, 246-275.
A
S
L. Burke, & M. Miller, 1999. Taking the mystery out of intuitive decision making, Academy of Management Executive,
S Harvard Business Review, February, 59-65.
November, 91-99; A. Hayashi, 2001. When to trust your gut,
P. Sellers, 2004. eBay’s secret, Fortune, 150(8), 161-178.A
G. Salancik, & J. Pfeffer, 1977. Who gets power—andNhow they hold on to it: A strategic-contingency model of power,
Organizational Dynamics, Winter, 3-21.
D
H. Mintzberg, 1983.
R
R. Dahl, 1957. The concept of power, Behavioral Science, 2, 201-215.
A
14. O. Behling, & N. Eckel, 1991. Making sense out of intuition, Academy of Management Executive, February, 46-54.
15.
16.
17.
18.
19.
20. P. Sellers, 2004, pg. 162.
21. J. French, & B. Raven, 1959. The bases of social power, in D. Cartwright (ed.), Studies in Social Power: Origins and Recent
2 for Social Research, pg. 150-167.
Developments, Ann Arbor, MI: University of Michigan, Institute
1
6
G. Salancik & J. Pfeffer, 1977.
F. Emery, & E. Trist, 1965. The causal texture of organizational
1 environments, Human Relations, 18, 21-32.
J. Pfeffer, 1981. Power in Organizations, Boston, MA: Pitman,
T pg. 7.
L. Pondy, 1967. Organizational conflict: Concepts and models,
S Administrative Science Quarterly, 2, 296-320.
22. P. Sellers, 2004, pg. 161.
23.
24.
25.
26.
27. K. Kerwin, 1992. Meanwhile, Chevy is sulking in the garage, Business Week, August 17, 90-91.
Organizational Theory
8-17
Innovation and
Organizational Change
9
Chapter Outline:
9-1
What is Innovation?
W
I
L
L
I
S
,
9-2
Types of Innovation
9-3
Sources for
Innovative Opportunity
9-4
The Innovation Process
- A Life Cycle Approach
9-5
Promoting Innovation
9-6
Reasons for Not Innovating
9-7
Organizational Change
Summary
K
A
S
S
A
N
D
R
A
2
1
6
1
T
S
Review Questions
Glossary
Endnotes
Key Terms
action research
innovative process
planned change
reengineering
cooptation
intrapreneurship
process-oriented innovation
revolutionary change
evolutionary change
invention
product-oriented innovation
reward system
incremental innovation
learning organization
radical innovation
systematic innovation
innovation
organizational change
reactive change
venture teams
Entrepreneurial activity, both within existing organizations and in the creation of
new ones, has become vital in today’s competitive environments of for- and notfor-profits. Entrepreneurs create new markets, new customers, and new consumer
demand. The instrument used to implement entrepreneurship is innovation.1
9-1 What is Innovation?
Joseph Schumpeter, the German economist, heralded the work of the entrepreneur.
He describes the entrepreneur’s ability to transform an innovation into a viable
business as “creative destruction,” a process whereby current
Wmethods of production
2
are rendered obsolete. Consider the example of the personal
I computer, a product
that has rendered the typewriter unnecessary. And, how soon will pay telephones
L
become obsolete due to the proliferation of cellular phones?
However, just as
important as the ability of the entrepreneur to enact creative
destruction is the
L
instrument of innovation.
I
S ideas and concepts
Innovation can be defined as the transformation of creative
3
into products or services that meet the needs of customers.
The process of
,
innovation represents a managed-change effort by an organization that will be
discussed later in the chapter. Schumpeter distinguished between the types of
K
changes that organizations experience, including invention,
innovation, and
4
imitation. Invention involves the creation of a new product
A or process. When
an organization utilizes an invention to create a product or
Sservice for a customer
it becomes an innovation. And, the adoption of an innovation by a similar firm is
S
known as imitation.5
A
innovation
the transformation
of creative ideas and
concepts into products
or services that meet the
needs of customers
invention
involves the creation of a
new product or process
As an example, consider Thomas Edison, the famous inventor of the late nineteenth
N
and early twentieth centuries. Edison worked tirelessly to invent the incandescent
light bulb. He Dthen transformed this
invention into aRtrue innovation when,
in 1882, he flipped the switch and
A
produced light at his Pearl Street station
in New York City.6 Not long afterward,
George Westinghouse
imitated Edison’s
2
innovation by building very similar
1
electrical systems utilizing alternating
current instead 6of Edison’s choice of
direct current. 1
T
S
George Westinghouse
(1846 - 1914)
Source: Library of Congress, Prints and
Photographs Division, LC-B2-1049-12
Organizational Theory
9-2
The accelerated nature of competition in today’s global business environment has
made innovation a critical organizational activity. Other types of organizational
change have also moved to the forefront, including re-structuring and reengineering,
as firms attempt to become more efficient and effective in their operations. Yet it is
innovation, the managed effort of organizations to get new products and services
to market, that separates competitors earning above-average returns from those
earning less.
9-2 Types of Innovation
W
Most innovations can be categorized in one of two ways.I An innovation is either
product-oriented or process-oriented.7 Creating new products or services and
L is product-oriented
bringing them to market creating new consumer demand
innovation. This creation of a new product or service that
L replaces an existing
one is also referred to as radical innovation. Product-oriented
innovation also
I
applies to incremental innovation, the improvement of existing products or
services to enhance their marketability.8 Process-orientedSinnovation involves the
improvement of existing production processes or other organizational
processes
,
such as management, organizational reporting structures, or information processing
systems. Process-oriented innovations can also be radical, such as the creation of
K
an entirely new production process, or incremental.
A
Product-oriented innovations abound in today’s society,
S as individuals and
companies move into a wireless age of communication with cellular telephones
S innovations are less
that serve a wide variety of applications. Process-oriented
obvious to the public but not less novel as organizations find
A creative solutions to
combat waste and slack in the manufacture and delivery N
of goods and services to
remain competitive.
9-3 Sources for Innovative Opportunity
D
R
A
2 of an entrepreneur
There is a common perception that innovation is the result
having a magical moment where a bright idea ignites a1creative impulse to go
to work. In actuality, the process of innovation is usually a one-step-at-a-time
6
plodding that eventually results in the creation of something new and improved out
1
of existing knowledge. In fact, the key to organizations becoming
more innovative
is to practice systematic innovation. Organizations should
support
the search for
T
changes in the environment and identify how those changes can be systematically
S
analyzed as to their future innovative potential.
Two environments provide the backdrop for this purposeful search for change by
organizations. Within these two environments, Peter Drucker has identified seven
sources to monitor for potential innovative opportunities. The first environment is
the firm and the industry in which it operates. This environment is home to four of
the seven sources:
product-oriented
innovation
creating new products or
services and bringing them
to market creating new
consumer demand
radical innovation
creation of a new product
or service that replaces an
existing one
incremental innovation
the improvement of
existing products or
services to enhance their
marketability
process-oriented
innovation
the improvement of
existing production
processes or other
organizational processes
such as management,
organizational reporting
structures, or information
processing systems
systematic innovation
the search for changes
in the environment and
the identification of how
those changes can be
systematically analyzed as
to their future innovative
potential
Organizational Theory
9-3
• The unexpected—an event that has not been anticipated, such as the unexpected success or the unexpected
failure
• The incongruity—is something not quite as it is assumed to be or ought to be
• Innovation based on process need—the result of a problem within the organization that must be solved
• Changes in industry structure or market structure—are usually a surprise to everyone in the industry
The second environment that provides sources of innovative opportunity is the general environment, a
macroenvironment that is outside the scope of the firm and its industry. The remaining three sources are:
• Demographics—changes in population sizes, ageW
distributions, and so forth
I
L
L either through science or society9
• New knowledge—the discovery of something new,
I
To provide a clearer understanding of Drucker’s work, examples are included below of each source of innovation.
These examples were cited by Drucker in his work onSinnovation and entrepreneurship.
,
• Changes in perception, mood, and meaning—sociocultural changes within populations
• The unexpected – The computer was developed for the purpose of furthering science and facilitating the
work of scientist. Early on, however, businesses began to demand the use of computers for such functions
K not what the inventors of the computer had in mind.
as payroll and accounts receivable. This was clearly
A
• The incongruity – An incongruity is a discrepancySbetween what is and what ought to be. Large steel mills
seemed to only do well during times of war. When there was a need for incremental capacity expansion, the
S
expansion was so expensive it only allowed for short-term
profits. The answer was the concept of the minimill, a way to provide additional capacity to meetAexisting demand in an affordable manner.
N
• Process need – Early telephone service in America was manual, processed by operators. Around 1909 it
D the Bell company to employ every woman in America
was projected that population growth would require
between the ages of seventeen and sixty as an operator
R by 1930. Within two years of realizing this limitation
of manual calling, the Bell engineers had designed the automated dialing system.
A
• Changes in industry or market structure – In the 1960s, when the automobile industry went global, a
struggling small car company named Volvo decided
2 to become a world car company. It advertised its cars
as sensible, sturdy and safe transportation that was a better value than other more or less expensive models.
•
1
6 the Latin American region of the world led to a growth
Demographics – Improvements in public health in
in populations, due in large part to a drop in the1infant mortality rate. What followed was a tremendous
growth in the urbanization of the region. Former Sears’ chairman, Robert E. Wood, after reading about this
T region, studied the competition, and designed an entry
population explosion in the early 1950s, visited the
strategy to take advantage of this opportunity. S
• Changes in perception – Sometime during the early 1950s, Americans began to refer to themselves as being
part of a “middle class” rather than a “working class.” William Benton, owner of Encyclopedia Britannica,
discovered that middle class standing was achieved, in part, by attaining a high school education. In response
he enlisted the help of high school teachers to sell his product to parents of students. If you wanted your
child to do well in school, and achieve a middle class standing, you needed encyclopedias in your home.
Organizational Theory
9-4
• New knowledge – Lee de Forest, and American, invented the audion tube
in 1906. This invention was the key to developing the radio. Although new
knowledge many times precedes its actual application by thirty or more years,
the radio was introduced to the public in the early 1920s. Its introduction,
ahead of its time, was a result of the need during World War I for a wireless
transmission instrument.
Successful innovation by organizations is the result of exploiting these seven
sources of innovative opportunity from the general and industry/firm environments.
Viewed from this perspective, innovation is not a technical term. Rather, it is an
economic or social concept representing the process of transforming creative ideas
into something that satisfies customers’ needs.
W
I
L
9-4 The Innovation Process—A Life CycleLApproach
I
Each innovative process refers to how innovations are nurtured and facilitated
S This is known as
from the early development stage to an eventual decline.
a life cycle approach. The concept of life cycle has been
, borrowed from the
biological sciences, where organisms are born, grow, mature, and eventually die.10
Management researchers have utilized this model to study organizations, products,
K change.11
and the changing priorities of top managers as organizations
innovative process
a life cycle approach
concerned with how
innovations are facilitated
from development to
decline
A
S
S idea, evaluates its
Development – The organization takes a creative
potential, and modifies it
A
Application – From this modified, creative idea aNnew product or service
D
is produced
R
Launch – The new product or service is made available to the marketplace
A
The innovative process of organizations consists of six stages of life:
1.
2.
3.
4. Growth – The launch of the new product or service is successful, and
demand for it grows
5.
6.
2
1 imitate the product
Maturity – Demand levels off, as other organizations
or service
6
1
Decline – Demand declines as new substitute products
or services are
T
embraced by the market.12
S
In today’s hypercompetitive business environment, life cycles of innovations are
becoming shorter and shorter. Organizations can no longer rely on a new product
or service providing them with long-tem profits. This is why innovation needs
to be systematized through an organizational culture that promotes and rewards
innovative behavior.
Organizational Theory
9-5
9-5 Promoting Innovation
Organizational culture is the shared values and
patterns of belief that are accepted and practiced
by members of a particular organization. Culture
can play a large role in developing positive
or negative attitudes about innovation among
organizational members. If an organization values
innovative activity and behavior, that behavior
will be pursued by its associates. If, however,
an organization promotes a bureaucratic culture
with strict adherence to standardized policies and
procedures, innovation can be hindered.
W
I
L
Organizations that promote innovation through
their unique cultures include 3 M, Johnson &
L
Johnson, Apple Computer, and Merck. As a result,
I
these organizations lead their industries in new
S
and innovative product and service activity. They
promote innovation by communicating a sense to their associates
that innovation
,
is valued and rewarded. Risk taking is not punished or discouraged in these
organizations, giving employees an assurance that reaching for something new
K
and creative is not a contrary activity.
A
When large organizations promote innovative activity, they are said to be supporting
S
intrapreneurship. Intrapreneurship, also known as corporate entrepreneurship,
S a corporate structure.
is the term used to denote entrepreneurial activity within
Individual organizational members “buy in” to the culturalAbent toward innovation
by pursuing entrepreneurial ventures within the confines and for the benefit of their
N
large organization.
D
A company’s reward system is an overt mechanism of recognition
R and compensation
to promote intrapreneurship, or innovation within the firm. Employees engage in
A
actions that are encouraged and rewarded, and they tend to avoid actions that are
discouraged or punished. An important aspect of a reward system for innovation is
the provision of an actual financial or nonfinancial incentive2for innovative behavior.
The reward serves to reinforce the promotion of innovative idea generation within
1
the organization.
6
One non-financial method of promoting innovation is the1concept of skunk works
described by Peters and Waterman in their classic work, In Search of Excellence.13
T
Excellent companies separate small teams of associates, sometimes called venture
teams, into secluded or isolated quarters, away from theScorporate office, where
creative thinking and experimentation can be converted into innovative products or
services. Other organizations promote innovation through creative departments,14
such as research and development.
intrapreneurship
entrepreneurial activity
within a corporate
structure
reward system
an overt mechanism
of recognition and
compensation to promote
intrapreneurship or
innovation within the firm
venture terms
where companies
separate small teams of
associates into secluded
or isolated quarters where
creative thinking and
experimentation can be
converted into innovative
products or services
Organizational Theory
9-6
Best Practices
GM and Saturn
During the 1970’s, General Motors faced tremendous competition from smaller, more fuel-efficient
Japanese automobiles. Fueled by the gasoline crisis earlier in the decade, Toyota, Honda, and Nissan
had stolen significant market share from American automobile makers, particularly GM.
To combat this threat, GM’s CEO Roger Smith felt he had to develop an innovative group of designers
who could pursue the process of new-car building without the baggage traditionally present at the
firm. To accomplish this, Smith created a venture team to develop and bring to market the Saturn
model. Saturn was to be built in Tennessee, far from the rust-belt Midwest, the traditional home
of GM factories and unions. This seclusion enabled team members to work outside the normal
W
confines of a very bureaucratic organization, creating a freedom to pursue something new. The
I
Saturn automobile, cited for its quality and dependability,
was a worthy challenge to the Japanese
L
imports.
L
Firms must be careful not to encourage only successful innovative efforts. New product and
I much trial and error learning. Due to the hyperservice creation is a difficult undertaking, requiring
competitive environment in which most firms S
exist, ideas that seemed sound and marketable in the
early stages may not be viable by the time they,reach application.
K
A
S
9-6 Reasons For Not Innovating S
Some organizations never seem to introduce A
anything new or innovative, relying instead on the
imitation and duplication of others’ successes.NThese organizations fail to innovate due to lack of
resources, failure to recognize opportunities, or a built-in resistance to change.15
D
1) Lack of Resources – to be successful
R at innovation, an organization must be able to
devote financial resources to the process.
A Likewise, individual and collective talent must
be available within the organization to pursue innovative progress. These resources,
people and money, are limited in every organization. Some firms do not generate enough
profit to have the excess capital needed
2 to fund the innovation process. No organization
can finance the pursuit of all the creative
1 ideas or innovative concepts that its employees
might pursue. Discriminating decision makers must choose only those that promise the
6
greatest potential for success.
1
2) Failure to Recognize Opportunities – Firms that are unskilled in the art of recognizing
T
potentially profitable innovations lag behind others in the introduction of new products
S unwisely in projects that are mere ontinuations of,
and services. Capital may be invested
or minor improvements to, existing products and services, lacking innovative qualities
from the beginning.
3) Resistance to Change – Some organizations simply do not promote change. They have a
built-in resistance to trying anything new that completely stifles innovation. Old, triedand-true methods that worked in the past are considered to be intractable. And, some
Organizational Theory
9-7
firms choose not to change because the operational strategy they have
employed is working satisfactorily, producing profits and maintaining
market share. The only problem with this approach is that most firms
are trying to improve their products and/or services to their customers
in an effort to grow their market share. When firms choose to not
change, they tend to eventually get left behind by the competition.
9-7 Organizational Change
When firms innovate, organizational change is inevitable.
W The development of
new production techniques, the creation of new products,
I or the implementation
of new organizational structures are all innovations that demand organizational
L
change. Organizational change is the adoption by an organization
of any new
16
idea, behavior, or substantive modification.
L
9-7a Forces for Change
I
S
,
organizational change
the adoption by an
organization of any
new idea, behavior, or
substantive modification
Firms constantly impact and are impacted by the general and industry environments.
Change in these external environments is many times the force for change within
the organization. External forces that can have dramatic K
effects on organizations
include influences from sectors of the general environment,
A such as technology,
political-legal, sociocultural, demographic, economic, and global.17 Examples
S and societal changes
include widespread economic depression, aging populations,
in values. External forces are also found in the industry environment
that includes
S
the labor supply, competitors, customers, suppliers, regulators,
A and partners. These
organizational stakeholders are in a position to affect change in a much more direct
N
manner.
D
Internal forces for change exist within the organization’s internal environment.
R
These influences can come from owners, employees, shareholders, or directors,
A
someone or some group with a serious stake in the organization’s
future. Many
times the internal force for change is in response to an external environmental
influence. For example, changes in technology, specifically the development of
2
the personal computer and the Internet, have allowed some workers to perform
their jobs at home, working individually on their own1time. This has caused
organizational change as employers grapple with managing
6 the business through
e-mail rather than face-to-face communication.
1
9-7b Types of Change
T
S
Just as with innovation, organizational change can be either radical or incremental.
Evolutionary change involves a series of small progressive steps that do not
change the organization’s general equilibrium.18 Revolutionary change tends
to alter or transform the entire organization. Two other types of change include
planned and reactive.
evolutionary change
involves a series of
small progressive steps
that do not change the
organization’s general
equilibrium
revolutionary change
alters or transforms the
entire organization
planned change
a response that is
deliverately thought
out and implemented
in anticipation of future
opportunities and threats
Organizational Theory
9-8
Career Point
Organizational Change
Some people are deathly afraid of change. Others welcome change and embrace it. When organizations experience change, individual members are threatened because it takes them out of their comfort zone. And, in some cases, change costs them their jobs. In particular, corporate entities of large
size tend to undergo regular structural changes, commonly referred to as re-orgs. Reorganizations
can cause people to be moved from one position, department, or even division to another, sometimes
involving relocation.
If changes in your life tend to cause you great discomfort, look for a career in an organization that
experiences only gradual change. Older, larger, and more bureaucratic organizations tend to mainW
tain a similar operational style for decades at a time. Also, firms that are dependent on extensive
I economies of scale that are expensive to replace.
technology change slowly due to extremely large
L
Many people are very opposed to changes in location. If you do not want to leave a certain geoL
graphic area, try to find a position with a firm that only has local operations. Large multinational
I
organizations have global needs that require a global
workforce.
S
Remember, however, no matter what organization employs you, change is a natural occurrence,
,
driven many times by changes in the environment. When change is announced, find out everything
you can about it. The more you understand the change and the need for it, the easier it will be for you
K
to accept and even promote the
A
S
Evolutionary Change
S
Organizations regularly undergo evolutionary change.
It occurs over time, usually within the confines
of the existing structure, strategy, and decision-making
processes. This type of change sometimes
A
affects only parts of the organization and many times involves changes in technology or information
N
systems implementations. The limited reach of incremental or evolutionary change makes it simple
D
to manage, as the existing framework of the organization
is unaffected.
R
Revolutionary Change
A
Differing greatly from the slower-moving evolutionary
change, revolutionary change tends to
alter an organization’s essential core beliefs and structure.19 For example, organizations that once
lacked inertia and took years just to move slightly
2 in one direction or the other can be transformed
through revolutionary change, becoming nimble, responsive, and customer-driven. Bill Ford, in a
1
planned and organized manner, is trying to radically
change the Ford Motor Company from a firm
used to evolutionary change to one that accepts6and understands the need for revolutionary change.
Managing revolutionary periods of change is difficult
at best. The change is so drastic that it usually
1
catches everyone off-guard and meets stiff resistance, particularly from long-term employees.
T
S
Planned Change
Planned change is a response that is deliberately thought out and implemented in anticipation of
future opportunities and threats. Planned change can be facilitated through the efforts of a change
agent, a person from within or from outside of the organization who marshals the resources and leads
the other organizational members through the change process.20 Sam Palmisano’s recent initiative in
the area of business on demand for IBM is an example of a planned, organization-wide integration
of resources to provide a superior service to its customers.
Organizational Theory
9-9
Managing Planned Organizational Change
Planned change can be enacted in four general areas of an organization. They are:
• Technology—changes in the production process;
• Products and Services—involves output changes;
• Structure and Systems—focuses on administrative changes;
• People—changes in peoples’ values, attitudes, and beliefs.21 Organizations that value their members
choose not to release at will those who can contribute to its overall success, even if there needs to be some
W
change in their attitudes or beliefs.
I
Figure 9-1 reflects the four types of change that can provide
a stragegic advantage if properly implemented.
L
Organizational change is always viewed as difficultLand time consuming. The need for change in an everchanging business environment, however, is impossible
I to ignore. The strategic importance of successfully
implementing changes in technology, products and services, structure and systems, or people are discussed
S
below.
,
The first area of planned change, technology, encompasses a wide array of organizational alterations. Technology
changes are usually implemented to improve efficiency or effectiveness. Examples include information systems
K
improvements, machinery and equipment replacements, and the sequence of activities required to deliver
A changes can increase the speed at which customer
products and services to market. Successful technology
service is delivered, lower production
S
costs such as substituting robotics on
S
the automobile assembly line for human
A
labor, and raise the overall information
level of the organization as more people
N
have access to more information through
D
technological innovations.
R
A
2
1
6
1
T
S
Figure 9-1
Changes in products or services are
primarily undertaken to increase
market share. These changes can be
new products or services, alterations to
existing products or services, or both.
Nowhere is this more prevalent than
at 3 M where 30% of revenues each
year must come from new products
developed within the last four years.22
This new-product pipeline provides 3 M
with great public relations’ stories and
customer loyalty.
Changes in structure and systems refer
to how firms are administered. Each
organization has a distinct structure
that determines reporting relationships,
Organizational Theory
9-10
division of work, and primary responsibilities. Organizational strategy and how
it is implemented would also fall under this heading. Indeed, structural changes
are many times needed to support a new strategy. Too many times firms want
to reorganize to improve performance, when it actually is the strategic direction
that’s the problem. To avoid this common mistake, organizations should perform
an internal audit, commonly referred to as a SWOT analysis. This audit details
the firm’s strengths and weaknesses and matches those with its environmental
opportunities and threats.
Finally, changes in the people of organizations may be the most difficult to
implement, but, if successful, they can make a bigger difference in the organization
than any of the other three. The peoples’ beliefs and values
W are established from
the beginning of an organization’s existence by the founder(s). As more people are
I with the underlying
added to the staff over a period of time, each is indoctrinated
values and beliefs the company promotes. The phrase L
“That’s not how we do
things around here” has been spoken at businesses for centuries.
However, today’s
L
business environment rewards those firms that strive for constant innovation and
improvement. And, innovation and improvement have toI have a supportive and
S
rewarded corporate culture if they are to flourish.
,
As forces for change put pressure on the organization, managers can simply
react to each situation as it arises. Reactive change is usually piecemeal and in
direct response to a specific opportunity or threat from the
K external environment.
Strategically, reactive change is a clear indication that an
A organization has lost
its way, choosing to maintain a certain status quo, reacting to environmental
conditions only when they appear to directly challenge the S
organization’s existence.
When organizational managers realize they are in a reactive
S mode it is usually the
result of political infighting and power struggles that exist
A at the expense of the
overall health of the firm. A return to a strategic management approach to the
business that focuses on establishing goals and objectivesNand a process for their
D is the best way out of
accomplishment, based on the mission of the organization,
the reactive mode.
R
9-7c
The Change Process
reactive change
usually piecemeal and
in direct response to a
specific opportunity or
threat from the external
environment
A
Because organizational culture is established from the2beginning of a firm’s
existence, change is usually difficult to enact. Kurt Lewin has proposed a simple
1
model for change agents to adopt in attempting organizational
change. Lewin
suggests that organizational change is a three-step process.
6 23 Step one involves
unfreezing current behavior to reduce resistance to change.
1 This requires making
a strong case for the need for change and its importance to the long-term success
T
of the organization. The second step is moving, implementing
the change itself.
And, third, to ensure the change becomes part of the organizational
landscape, a
S
new refreezing process is necessary. New behavior that supports the change must
be reinforced and rewarded.
Rossabeth Moss Kanter contends that Lewin’s model is actually much too simple
for the modern complex organization. According to Kanter, Lewin’s model provides
managers with a straightforward manner of approaching a very complex task, and
Organizational Theory
9-11
that is why the model has survived for well over a half century.24 Kanter’s “Big
Three” model of change involves understanding an organization’s movement, the
forms change can take, and the action roles necessary for the change process. She
contends that organizations are never really frozen as depicted by Lewin’s ice cube
example. Rather, organizations are very fluid, moving through developmental
stages that overlap.
Another way to enact change is through action research. Action research relies on
initial organization research, followed by actions that are evaluated and serve as
the basis for future change. This model usually involves planned change experts in
organization development who work closely with organization managers, assisting
in the implementation of an on-site intervention.25 Some
Worganizational change
is very difficult to accomplish, and involving action research professionals from
I process.
outside the organization greatly facilitates the needed change
L
9-7d Resistance to Change
L
I
It is very difficult for managers to enact change in an organization
if they do not
understand why employees are so resistant to change. The
S primary reasons for
resistance to change are uncertainty, lack of understanding
, and trust, differing
26
action research
a model that usually
involves planned change
experts in organization
development who work
closely with organization
managers, assisting in the
implementation of an onsite intervention
perceptions, self- interest, and feelings of loss. Uncertainty refers to the fear of
the unknown experienced by a firm’s employees when confronted with the need for
change. They are concerned that they cannot perform under
K new rules or policies,
they may not be predisposed to change as far as their personality
is concerned, or
A
they may believe the change will lead to a loss of jobs.
S
Some workplaces have developed a lack of trust toward management.
This translates
S
to a resistance to any kind of change due to years of mistrust between management
A
and labor. Or they may simply not understand the need for change due to its being
poorly articulated by management. Some resistance is a N
lack of agreement as to
the true nature of a problem, or, put another way, a differing
D perception as to what
really is the need for change. This is especially prone to occur
R if one manager, or
a small handful of managers, makes a decision to enact change without input from
A
other sources.
The self-interest of managers, and sometimes
employees, is another barrier to change in
any organization. Power and status that take
years to acquire can be lost in one, sweeping
reorganization.27 Managers protect their ‘turf’ by
finding excuses as to why a particular change is
not going to work, even though it might actually
be very good for the organization. When old
2
1
6
1
T
S
Managers who are tasked with an internal change
project must overcome employees’ resistance to
change due to uncertainty and self-intrest
Organizational Theory
9-12
methods are held to be too sacred, organizational employees may find themselves
incapable of the change required to meet new external challenges.
Similar to this is the notion of sense of loss. Employees develop strong social
alliances over time, and many organizational changes directly impact those
alliances. People are asked to move from one city to another, one division to
another, or one continent to another, breaking up long-standing social networks.
Employees effectively become removed from their comfort zone and at-work
friends.
9-7e
Overcoming Resistance to Change
W
Empirical research has demonstrated that participation may
I be the most effective
mechanism for overcoming resistance to change. As people are invited to actively
L to take ownership of
assist in implementing an organizational change, they tend
the change to ensure its success. This is especially true when
L external leaders are
included directly in organizations, such as a local banker
I becoming a member
of the board of directors. This process, known as cooptation, fosters better
Sas the banker becomes
cooperation between the firm and its external environment
psychologically vested in the success of the firm once, he joins the board of
directors. Communication is another important requisite to successful change
efforts, as people need information about the specific need for change if they are to
K
be persuaded to help with its implementation. Another potential
change approach
is that of facilitation. If employees are having trouble adjusting,
facilitation is the
A
best approach, but it can be expensive and time-consuming.
S
cooptation
a process where leaders
from the environment
become active in the
organization; for example,
a banker might become
a member of the firm’s
board of directors
S
For organizations facing stiff resistance, three other approaches
are available,
all with negative drawbacks. The first is negotiation where
A management agrees
to give something up to accomplish the needed change.
NNegotiation can set a
negative precedent, leading others to try the same tactic when change is needed
D tactics will not work.
again. A second approach is manipulation, used only if other
Manipulation can create a feeling in employees of being
Rused by management.
And, third, is coercion, a speedy tactic designed to A
overcome any kind of
resistance. Coercion can leave employees angry with management, leading to
future problems.28
2
9-7f
Reengineering
1
6
One of the most difficult organizational change processes being undertaken today
1 Reengineering the
is business process reengineering. Made popular by the book,
Corporation by Michael Hammer and James Champy, reengineering
is defined as
T
“a radical redesign of business processes in a cross-functional
S manner to achieve
29
major gains in cost, service, or time.” Similar to zero-based budgeting, the concept
involves redesigning your organization’s processes as if they could be done over
completely from the beginning. Or, put another way, if the organization had a
blank sheet of paper and began designing its production and service processes,
what would they look like?
reengineering
a radical redesign of
business processes in a
cross-functional manner
to achieve major gains in
cost, service, or time
Reengineering is somewhat threatening to employees. Processes and steps in the
Organizational Theory
9-13
value chain that have been part of the organization for decades come under close scrutiny. Jobs can be eliminated
when it is discovered that value is no longer being added by a particular function or process. Reengineering has
been found to be most effective in large organizations, particularly those with needs in the area of new-product
development and customer service. Mature organizations that tend to operate as bureaucracies find ways to
reduce overhead costs and eliminate duplication of process through reengineering efforts. At Motorola, cellular
telephone production time was reduced from 14 hours to 2 through a reengineering project. Reengineering is
too costly, time consuming, and threatening to employees, however, to be undertaken for simple refinements or
quality improvements.
9-7g The Learning Organization
The final organizational change process is the movement
W to become a learning organization. Made popular
by Peter Senge, the concept of a learning organization refers to an organization continually and proactively
creating, acquiring, and enacting knowledge. Then, onIthe basis of this new knowledge, the organization changes
L be discussed in detail in Chapter 11.
to something different.30 The learning organization will
Summary
L
I
S
,
Most management researchers contend that organizations must innovate if they are to successfully
compete in the current global business arena.
KInnovation is the transformation of creative ideas into
products or services that fulfill customers’ needs. Systematic innovation is possible through the
A
establishment of an organizational culture that encourages and rewards innovative behavior without
S or venture teams can be vehicles by which organizations
punishing failed attempts. Creative departments
promote innovation.
S
A the need for change. Resistance to change is stiff due
To facilitate innovation, many organizations face
N of understanding and trust, differing perceptions, selfto a variety of reasons, such as uncertainty, lack
interest, and feelings of loss.
D
Review Questions & Exercises
1.
2.
3.
R
A
2
Discuss the difference between invention1and innovation.
6
Innovations are either process-oriented or product-oriented. Which would be more important in a
1
service business? Why?
T
Provide an example of, and explain how, S
a change in demographics can be perceived as a source of
innovation for an organization.
4. Why do you think the life cycle of innovations has become shorter than it was 40 or 50 years ago?
5. Explain the difference between evolutionary and revolutionary change.
6. Why are organizational members so resistant to change?
Organizational Theory
9-14
Glossary
•
Action Research a model that usually involves planned change experts in organization
development who work closely with organization managers, assisting in the implementation of an
on-site intervention
•
Cooptation a process where leaders from the environment become active in the organization. For
example, a banker might become a member of the firm’s board of directors
•
Evolutionary change
Involves a series of small progressive steps that do not change the
organization’s general equilibrium
W
•
Incremental innovation
marketability
•
I
L
L
Innovation The transformation of creative ideas and concepts into products or services that meet
I
the needs of customers
S
Innovative process How innovations ,are facilitated from development to decline, a life cycle
•
Intrapreneurship
•
Invention
•
•
•
•
The improvement of existing products or services to enhance their
approach
Entrepreneurial activity
K within a corporate structure
A
S
Learning organization Refers to an organization
continually and proactively creating, acquiring,
S
and enacting knowledge
A
Organizational change The adoption byNan organization of any new idea, behavior, or substantive
modification
D
R
Planned change A response that is deliberately
thought out and implemented in anticipation of
future opportunities and threats
A
Involves the creation of a new product or process
•
Product-oriented innovation Creating new products or services and bringing them to market
2
creating new consumer demand.
•
Process-oriented innovation
The improvement of existing production processes or other
6
organizational processes such as management, organizational reporting structures, or information
1
processing systems
•
Revolutionary change Alters or transforms the entire organization
•
Radical innovation
•
Reactive change is usually piecemeal and in direct response to a specific opportunity or threat from
the external environment
•
Reengineering
1
T
S
Creation of a new product or service that replaces an existing one.
A radical redesign of business processes in a cross-functional manner to achieve
Organizational Theory
9-15
major gains in cost, service, or time
•
Reward system An overt mechanism of recognition and compensation to promote intrapreneurship,
or innovation within the firm
•
Systematic innovation The search for changes in the environment and identify how those changes
can be systematically analyzed as to their future innovative potential
•
Venture teams Where companies separate small teams of associates into secluded or isolated
quarters where creative thinking and experimentation can be converted into innovative products or
services
W
I
L York, NY: Harper & Row.
P. Drucker, 1985. Innovation and Entrepreneurship, New
L
J. Schumpeter, 1934. The Theory of Economic Development,
Cambridge, MA: Harvard University Press.
I
Van de Ven, 1986. Central problems in the management of innovation, Management Science, 32, 590-607.
S
J. Schumpeter, 1934.
,
(Endnotes)
1.
2.
3.
4.
5.
P. Sharma & J. L. Chrisman, 1999. Toward a reconciliation of the definitional issues in the field of corporate entrepreneurship, Entrepreneurship Theory & Practice, 23 (3), 11-27.
6.
B. McCormick, 2001. At Work With Thomas Edison, Canada: Entrepreneur Press.
7.
8.
9.
10.
11.
K
A
E. B. Roberts, 2002. Innovation: Driving Product, Process,
S and Market Change. San Francisco, CA: Josey-Bass.
S Research Technology Management, January-February,
E. B. Roberts, 1988. Managing invention and innovation,
1-19.
A
P. Drucker, 1985.
N
D of organization life cycle, Journal of Applied Management
D. Lester & J.A. Parnell, 1999. A strategic interpretation
and Entrepreneurship, 5 (1), 14-32.
R
A business growth, Harvard Business Review, 61, May-June,
N. Churchill & V. Lewis, 1983. The five stages of small
30-50.
12. L. B. Mohr, 1969. Determinants of innovation in organizations,
American Political Science Review, 111-126; G. A.
2
Steiner, 1965. The Creative Organization. Chicago, IL: University of Chicago Press; J. E. Ettlie, 1980. Adequacy
1
of stage models for decisions on adoption of innovation, Psychological Reports, 28-36.
6
1
H. Mintzberg, 1979. The Structuring of Organizations.T Englewood-Cliffs, NJ: Prentice-Hall.
R. Griffin, 1999. Management, 6th ed. Boston, MA:SHoughton-Mifflin Company.
13. T. J. Peters and R.H. Waterman, In Search of Excellence (New York: Harper & Row Publishers 1982)
14.
15.
16. J.L. Pierce & A.L. Delbecq, 1997. Organizational structure, individual attitudes, and innovation, Academy of Management Review, 2, 27-37.
17. T. J. Dean, R. L. Brown, & C. E. Bamford, 1998. Differences in large and small firm responses to environmental
context: Strategic implications from a comparative analysis of business formations, Strategic Management Journal,
19, 709-728.
Organizational Theory
9-16
18. D. Miller, 1982. Evolution and revolution: A quantum view of structural change in organizations. Journal of Management Studies, 19, 111-151. D. Miller & P. Friesen, 1980. Momentum and revolution in organization adaptation.
Academy of Management Journal, 23, 591-614.
19. A. D. Meyer, J. B. Goes, & G. R. Brooks, 1992. Organizations in disequilibrium: Environmental jolts and industry revolutions, in G. Huber and W.H. Glick, eds., Organizational Change and Redesign, New York, NY: Oxford
University Press, 66-111; and M.L. Tushman, W.H. Newman, & E. Romanelli, 1986. Convergence and upheaval:
Managing the unsteady pace of organizational evolution California Management Review, 29(1), 29-44.
20. R. McLennan, 1989. Managing Organizational Change, Englewood Cliffs, NJ: Prentice-Hall.
21. J. E. McCann, 1991. Design principles for an innovating company, Academy of Management Executive, 5, May,
76-93.
W
22. L. D. DiSimone, 1995. How can big companies keep the entrepreneurial spirit alive?, Harvard Business Review,
I
November-December, 184-185.
L method, and reality in social science. Human Relations,
23. K. Lewin, 1947. Frontiers in group dynamics: Concept,
June, 5-41.
L
I
24. R.M. Kanter, B.A. Stein, & T.D. Jick, 1992. The Challenge
of Organizational Change. New York, NY: the Free
Press.
S
25. T.G. Cummings, & C.G. Worley, 1993. Organization ,Development and Change, 5th ed. St. Paul, MN: West Publishing Company/
26. A.S. Judson, 1991. Changing Behavior in Organizations:
K Minimizing Resistance to Change. Cambridge, MA:
Blackwell, Inc.
A
27. H. Mintzberg, 1983. Power In and Around Organizations.
S Englewood-Cliffs, NJ: Prentice-Hall, Inc.
S for change. Harvard Business Review, March-April,
28. J. P. Kotter, & L. A. Schlessinger, 1979. Choosing strategies
106-114.
29.
30.
A
T. A. Stewart, 1993. Reengineering: The hot new management
tool, Fortune, August 23, 41-48.
N
D Doubleday.
P. M. Senge, 1990. The Fifth Discipline, New York, NY:
R
A
2
1
6
1
T
S
Organizational Theory
9-17
Organizational Technology
Chapter Outline:
10-1
Introduction to Technology
10-2
Computer-Integrated
Manufacturing
10-3
Manufacturing Technology
and Technical Complexity
10-4
Management, Structure,
and the Technological
Imperative
10-5
Departmental Technology
and Charles Perrow
10-6
The Interdependence
of Work
10-7
People and Technology
in Harmony
Summary
Review Questions
Glossary
Endnotes
Key Terms
computer-integrated manufacturing
continuous process production
craft technologies
engineering technologies
intensive technology
job design
job enlargement
job enrichment
joint optimization
job rotation
W
I
L
L
I
S
,
K
A
S
S
A
N
D
R
A
2
1
6
1
T
S
large-batch technology
long-linked technology
mass customization
mechanistic structure
mediating technology
nonroutine technologies
organic structure
pooled interdependence
routine technologies
sequential interdependence
slack
small-batch and unit production
sociotechnical systems approach
task analyzability
task interdependence
task variety
technical complexity
technological imperative
technology
10
10-1 Introduction to Technology
New employees coming into today’s modern workplace are faced with a myriad
of challenges that demand specific skills and abilities. In 1991, the United States
Secretary of Labor issued a report known as the Secretary’s Commission on
Achieving Necessary Skills (SCANS) that outlined the basic skills required to be
successful in the technologically challenging organizations of the future.
Today we are seeing those organizations in full bloom throughout developed
countries. Gone are the smelly, hot, hazardous factories of the past. Modern
factories are clean, highly technical, and, in many cases, even air conditioned.
Safety is a priority, and automatic, computer-managed production lines are the
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norm. The skills and abilities articulated in the SCANS report (See Career Points
I
later in the chapter) over fifteen years ago are minimum requirements
in the current
organizational work environment. The backbreaking manual
L labor force of the past
has been replaced by thinking, communicating, problem-solving individuals who
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understand computers as well as they do the products they make.
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Modern production facilities, like the Porter-Cable plant in Jackson, Tennessee,
S
that produces electric tools through the use of computer-integrated manufacturing
techniques, thrive on technology. Technology is a term ,that describes the ways
that organizations find to do something. It may include the use of machinery
and equipment, production materials, computers, or practically any skills and
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techniques necessary to take inputs and transform them into outputs. In chapter
1 we presented the Business System model in Figure A
1 that demonstrates the
transformation process. None of the three steps, inputs, transformation,
or outputs,
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would be ...
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