Organisational Theory, Structure and Design

Answer 1.

Henry Fayol, referred to as the father of the classical approach, had a notable contribution to the foundation of
Organizational theory. His contributions helped in establishing principles that would later become the
cornerstone of organisational studies.

Earlier, the organizations were simpler but today, the organizations are looking at shifts and transformations in
the way they operate and function in a volatile environment. As the workplace transforms with technological
advances, digitalization, remote working environments, freelancing and the gig economy, there is an underlying
essence of Fayol’s principles that echoes in contemporary organizational structures and designs.

While Henry Fayol propounded 14 principles of management, the focus will be on the 4 major principles that
are truly relevant in organizations today. These are:

1. Division of Work (Specialization)

2. Authority and Responsibility
3. Unity of Command
4. Esprit de Corps (Unity and Team Spirit)

Let’s understand each in more detail:

1. Division of Work: According to this principle, Fayol focus on dividing the work into smaller tasks
between individuals such that allowing them to understand and master them. This allows for greater
speed and accuracy, thus allowing for increased efficiency and specialization.

In organizations today, both core and support functions have transformed to create generalist and
specialist role. Core functions like designers, software developers, AI and Machine learning engineers
etc. demonstrate specialization in niche skills. Even in the HR field, the streams have been divided to
allow for specialization in Compensation & Benefits, Talent Acquisition and Talent Management etc.
Today many organizations are focusing on developing, hiring and honing specialists within the
organization to drive innovation.

For example: Taking an example of Apple Inc. To bring an innovative and technology advanced
product with a best-in-class customer experience, the company hires and develops specialists. the end
product is a seamless integration of superior hardware and software, marketed excellently.

2. Authority and Responsibility: According to this principle, Fayol believes that authority and
responsibility goes hand in hand. Authority without responsibility leads to irresponsible behaviour
while responsibility without authority leads to ineffective behaviour. This balance ensures that power
doesn't become despotic and that there's always a check in place.

Today, in hierarchal organizations, leadership are the one’s responsible to lead the organization and
fulfil shareholder’s interest to achieve the goals. With responsibility, they are the one’s in authority and
help accountable for achievement of results. Similarly, in flat or matrix organizations, the balance
between authority and responsibility becomes more relevant and crucial.

For example: In an organization, project managers have the authority to assign tasks to team members
but at the same time are responsible for ensuring the team’s success.

3. Unity of Command: According to this principle, an employee should receive orders from one superior
only. This prevents confusion, conflicts, and inefficiencies arising from multiple directives. If an
individual would get orders from two superiors at the same time, then the principle of unity of
command is violated, and he/she will find it very difficult to prioritize and obey. So, to avoid
confusion, employees should receive an order and be accountable to only one supervisor.
 In hierarchal organizations, the line of command is solid and well-defined. In matrix organizations, the
principle gets challenged by an individual having solid and dotted line reporting to different
individuals. But to avoid potential conflicts, primary and secondary line of reporting with clearly
communication is clearly laid down.

For example: In any manufacturing organization, while the sales team is directly interacting with the
end-consumers, the marketing team is the one who works out the promotions and the finance team
helps in pricing the product. To ensure seamless flow of information, the unity of command is laid out
to avoid potential conflicts and confusion.

4. Esprit de Corps: Fayol highlighted the importance of fostering team spirit and unity among employees
through this principle. This is crucial for ensuring smooth functioning of an organization and for
achieving common objectives. This principle highlights the focus of management to develop a sense of
belongingness and feeling of team work amongst individuals.

As there are newer ways of work and workplace emerging, the ways employees organize are also going
through a shift. Modern businesses are investing heavily in team-building activities, corporate retreats,
and tools that enhance collaboration.

For example: Google is popular and renowned for its corporate culture, promoting a sense of unity and
belongingness in the organization. Google has open workspaces with policies and culture to allow for
open communication.

The dynamism of today's corporate environment, with its focus on agility, innovation, and global outreach,
might seem distant and different from the structured, process-driven environment that Fayol operated in. Yet, the
relevance of these principles in contemporary and modern organization setting highlights its universality and
timelessness.

Answer 2.

In the dynamic and volatile landscape of the digital age, businesses often find themselves navigating the
complex and ambiguous challenges with aiming to ensure rapid growth and expansion. As companies like
LookBook launch new products or platforms, they have encountered a variety of internal management
challenges. These challenges, if not addressed effectively, can escalate and hinder the company's success. Larry
Greiner's Organizational Growth Model offers a comprehensive perspective, proposing that organizations go
through predictable phases of growth. This model acts as a guidance and roadmap for businesses, allowing them
to anticipate/ foresee potential challenges and prepare accordingly. For LookBook, understanding these phases
can be instrumental to address their internal management challenges by providing insights into the potential
future challenges. This allows for the organization to strategize and develop contingency plans to ensure the
successful launch and adoption of their new mobile application.

Larry Greiner's Organizational Growth Model is a descriptive framework that assumes that organization grows
and expands throughout the year. The model works as a guideline to help understand which management styles,
organization structures and collaboration/coordination mechanisms works across different phases as highlighted
in the model. There are five identified phases in Greiner’s model:

1. Phase 1: Growth through Creativity: In this phase of this model, the company is relatively young and
small eyeing growth. The way of organization is informal and employees are more entrepreneurial. The
founders play a central role in driving the organization’s agenda.

Leadership Crisis: As the organization tries to grow and scale, the informal structures become
inadequate and it becomes difficult for leader to organize. The need for professional management team
with defined leadership roles arises, thus a need for improved structures. For LookBook, this could
manifest as founders struggling to manage the increasing complexities of a growing team, leading to a
potential crisis of direction and leadership.
 2. Phase 2: Growth through Direction: In this phase, the organization structure becomes more
formalized with policies and procedures also well established. With this, a layer of middle management
also emerges with central coordination lying in the hands of the entrepreneur.

Autonomy Crisis: With more formal policies and procedure emerging, the decision making can get
delayed, arising the need for more autonomy and decision making at lower levels of management. In
the current context, in addition to the leadership vision, the designers for example need to feel that their
inputs are being heard and addressed.

3. Phase 3: Growth through Delegation: To tackle the challenges of autonomy, delegation of decision
making is turned to. The focus of this phase becomes decentralization, where routine and operational
activities are delegated to middle management while more strategic responsibilities are focus upon by
senior level of management.

Control Crisis: With delegation of decision making and authority, divisional structure emerges which
becomes difficult of control. It may lead to a crisis, if the divisional managers operate independently
without aligning to broader organizational goals. In the current context, with different teams having a
different visualisation for the app, different teams may work on different features, thus defeating the
overall goal.

4. Phase 4: Growth through Coordination: In this phase, the focus is to coordinate among various
divisions. There's a renewed emphasis on achieving a cohesive organizational vision. Mechanisms like
cross-departmental teams or company-wide project management tools might be introduced.

Crisis of Red Tape: Control from divisional managers and headquarters gives rise to a crisis of Red
tape and bureaucracy. LookBook might face situations where every small decision for the mobile
application needs to go through multiple layers of approval, curbing innovation and delaying delivery.

5. Phase 5: Growth through Collaboration: This phase is characterised by ensuring collaboration by

bringing down formal hierarchies hindering collaboration. It is a mix of the entrepreneurial spirit of the
phase 1 and scale achieved in later stages.

Growth Crisis: This phase gives rise to the question of where and how the next growth will come from?
Is more growth beneficial? In the current context, the organization needs to ascertain whether to add
and bring in new features for the users or refine and update existing features to bring a meaningful
experience to users.

To apply this model effectively, LookBook needs to:

1. Identify their current phase as per the model
2. Understand the nature of crisis, anticipate challenges and prepare accordingly
3. Stay agile in the nimble environment to course correct and face challenges head-on

The journey of organization growth is complex in nature and hence startups like LookBook go through each of
these stages at different points/milestones in their lifecycle. In order of sustain and prepare for potential crisis it
is essential to understand and integrate the insights from the model to strategize and proactively plan its next
course of actions.

Answer 3.

A. Organizational effectiveness is the capability of an organization, such as Ashish and Avanti's e-

commerce start-up, to achieve its vision, goals and objectives. For e-commerce businesses operating in
an intensely competitive and volatile digital landscape, measuring effectiveness is extremely important.
By analysing specific indicators/metrices, entrepreneurs can gain insights into the operational health of
their enterprise, and take actions to course correction as needed. This is not only about financial and
 shareholders’ returns but encompasses a wider spectrum of key performance indicators that collectively
bring out a comprehensive picture of business health.

Dimensions that the startup should consider include:

1. Operational Efficiency: This indicator highlights the efficiency of operation performance of the
organization. For e-commerce start-up one way to look at is the order fulfilment rate. This implies
that if the orders are being fulfilled accurately and in a timely manner with minimal errors.
If out of 1000 orders, 990 are being delivered in a timely and accurate manner, the Order
fulfilment rate, that is, their operation efficiency would be 99%

2. Customer Satisfaction: Tools like Net promoter Scores can be used to gauge customer
satisfaction. It indicates the level of satisfaction of the customers and their likelihood to
recommend their brand to their friends and families. A high NPS score indicate high satisfaction
and a greater likelihood of the platform being recommended to other users.

3. Financial Performance: Financial metrices like profit margins, shareholders’ returns indicate the
financial health of an organization. Stable and consistent financial performance generates
shareholder and creditors trust

4. Employee Satisfaction: Employee Satisfaction indicates the employee’s satisfaction within the
organization. Tools like ENPS can help ascertain employee sentiments within the organization. If
the ENPS score is high, employees are highly likely to recommend their start-up as a great place to
work.

5. Market Share and Growth: Capturing a significant portion of the market and maintaining or
expanding it is a sign of effectiveness. If their e-commerce platform grows from capturing 5% to
10% of the target market in a year, it's a positive growth indicator

For entrepreneurs like Ashish and Avanti, it's important to continuously monitor these key indicators to ensure
that their e-commerce start-up survives and thrives. This can help assess the health and trajectory of their
business. In doing so, they'll be better equipped, seize opportunities, and address challenges, ensuring the
sustained success of their e-commerce endeavour.

Answer 3.

B. Systems approach focuses on looking at an organization as a whole with different systems within the
organizations coming into play. Instead of viewing an organization as an isolated individual entity, the
systems approach emphasizes the importance of understanding the interplay between various
components/units of the business. The emphasis of this approach by Ashish and Avanti, highlights that
the understand the complex interrelationships that exist within their enterprise and the e-commerce
ecosystem as a whole.

An organization’s performance is influence by the various subsystems and the environment that it
operates in. The benefits of this approach is:

1. Holistic Viewpoint: It helps in looking at the organization as a whole thus, looking at any
challenge or opportunity through all perspectives. For example: a decline in sales may not only be
contributed to sales department but other including finance and or supply chain.

2. Flexibility and Adaptability: Recognizing that it is an interdependent system, hence a disruption

in one part of the system will definitely impact the other subsystems. In Ashish and Avanti’s start-
up scenario, an effective way to look at it make adequate check and changes in the system to
 ensure minimal disruptions across the board. For example: in case of supply chain disruptions,
managing marketing campaigns to helps minimize the impact.

3. Enhanced Problem Solving: The approach when looks at a holistic viewpoint, it helps in using
enhanced problem-solving methodologies to tackle with any challenges. Delayed deliveries for
example could be a function of multiple or one root cause that may not be directly related to the
outbound logistics.

4. Improved Coordination and Cooperation: This operation fosters greater sense of collaboration
and cooperation between various sus-systems in the organization. Effective flow of information
from various sus-systems ensures smooth functioning.

5. Optimal Resource allocation: It will help is allocating the resources internally in an effective
manner. For example: if the website analytics indicate high traffic but low conversion of sales, it
may indicate that resources may be allocated to enhance user experience rather than marketing.

As the digital marketplace continues to shift and evolve, the ability to understand and adapt to the
interconnected nature of business functions becomes important. Through the systems approach, they ensure that
their e-commerce start-up remains resilient, adaptable, and primed for sustained success.