The "New" Organization: Taking Action in An Era of Organizational Transformation

Module 1
The New Organization: Taking Action in

an Era of Organizational Transformation
PowerPoint Presentation by Charlie Cook

Copyright 2005 South-Western. All rights reserved.
Old Model of the Organization

Bureaucracyclassic model of formal organization
identified by Weber; features include:
Specialized individual positions and jobs
A formal hierarchy with a clear line of authority (chain of
command)
Formal rules and standard operating procedures
Set boundaries for each department and subunit, and clear
boundaries between the organization itself and its
environment
Standardized training and training requirements, career
paths, and reward systems, based on the development of
expertise
Copyright 2005 South-
Class Notes: Changing Organizational Models
12
Old Model of the Organization (contd)

Strengths of the classic model:
Predictability and reliability
Impartiality
Expertise
Clear lines of control
13
New Model of the Organization

Key features of the new model:
Networked
Flat
Flexible
Diverse
Global
14
Key Features of the New Model

Importance of networks results from:
Availability of new telecommunications and information
technologies to connect people and organization units
Competitive need for rapid response to customer
needs, changing environments, demands for
innovation
Need for increasingly complex and diverse resources
to develop and deliver value to customers
New approach of dealing with volatility by linking
source of volatility with part of organization most
affected by it
15
Key Features of the New Model (contd)

Flattening of the hierarchy necessary because:
Organizations must respond more rapidly and flexibly
to changes in markets and technology
Changes in information technology remove the need
for layers of middle managers whose main tasks were
organizing and transmitting information
Organizations face intense pressure to cut costs
16

Need for flexibility driven by:
Intensifying competition
Increasingly diverse labor force
Increasingly complex and unpredictable external
environment
17

Diversity is necessary because of:
Growing diversity of the workforce in demographic
terms
A greater need for innovation and creative approaches
to solving problems
Growing volatility in the business environment
Requisite varietythe diversity that matches the
diversity of key elements of the environment
18

Key factors driving globalization:
Greatly reduced costs of international transportation
and communications
Growing equalization across markets of advanced
factor endowments
Globalization of markets
19

Key factors driving globalization (contd):
Continuing differences in cost structures across
countries
Cross-border learning that expands capabilities of
firms
Pressures from international nongovernmental
organizations (NGOs)
110
Summary of Features of Old and New

Models of Organization
Old Model
New Model
Individual position/job as basic unit of

organization
Team as a basic unit
Relations with environment handled by

specialist boundary-spanners
Densely networked with environment
Vertical flows of information
Horizontal and vertical flows of information
Decisions come down, information flows up Decisions made where information resides
Tall (many layers of management)
Flat (few layers of management)
Emphasis on structures
Emphasis on processes
Emphasis on rules and standard

procedures
Emphasis on results and outcomes
Fixed hours
Flexible workday, part-time workers
Figure 1.1a
111
Summary of Features of Old and New

Models of Organization (contd)
Old Model
New Model
Career paths upward, linear
Career paths lateral, flexible
Standardized evaluation and

reward systems
Customized evaluation and reward systems
Single strong culture with strong

expectations of homogeneous behavior
Diversity viewpoints and behaviors
Ethnocentric mindset
International/global mindset
Specialist international managers
Boundary-crossers at all levels
Local value chains
Value chains crossing borders
Environment defined in terms of

country of location
Environment seen as global
Figure 1.1b
112
Framework for Taking Action

in the New Organization
Figure 1.2
Transparency 1.4
113
Search for the Organization of Tomorrow

Sources/Authorities
Managers:
Lawrence Bossidy, CEO, Allied Signal
H. James Maxmin, CEO, Laura Ashley
Philip Jarrosiak, Manager/HRM, GE
Herman Simon, plant manager, Gaines
William Buehler, Senior VP, Xerox
Richard Palermo, VP, Xerox
Don Fletcher, VP, Hallmark
Paul Allaire, CEO, Xerox
Consultants:
David Nadler, Delta Consulting
Doug Smith, McKinsey
Frank Ostroff
Mike Hammer, CSC Index
James Champy, CSC Index
Class Notes: Reading the Business Press
Number of Quotes
5
1
2
1
1
1
1
1
2
5
3
2
2
Figure 1.3a
114
The Organization of Tomorrow (contd)

Sources/Authorities
Academics/Researchers:
Peter Drucker
Marvin Weisbord
Shoshanna Zuboff
Quinn Mills
Robert Reich
Workers:
Robert Brookhouse, Kodak Zebra
Class Notes: Reading the Business Press
Number of Quotes
1
1
1
1
1
1
Figure 1.3b
115
A New View of Organization
Class Notes: The Search for the Organization of Tomorrow
Figure 1.4a
116
A New View of Organization (contd)

A new view of organization by McKinsey consultants
Frank Ostroff and Doug Smith is meant to help clients
hung up by the old template. Says Ostroff: They
needed a clear architecture to show how a
functional pyramid (previous slide) could become a
process-oriented, horizontal organization.
Figure 1.4b
117
McKinseys Plan
Organize primarily around
process, not task
Flatten hierarchy by minimizing
subdivision of processes
Give senior leaders charge of
processes and process
performance
Link performance objectives
and evaluation of all activities to
customer satisfaction
Make teams, not individuals, the
focus of organization
performance and design
Combine managerial and nonmanagerial activities

Each employee should develop
several competencies
Inform and train on a just-intime, need-to-perform basis
Maximize supplier and
customer contact with everyone
in the organization
Reward individual skill
development and team
performance instead of
individual performance alone
118
Contrasting Views of the Corporation
Data: Business Week.
Class Notes: Management by Web
Table 1
119
Features of 21st Century Corporations

Management by Web
More about bits, less about atoms
Mass customization
Dependent on intellectual capital
Global
Increased speed of actions, deliberations,
information
Class Notes: Management by Web
120

The "New" Organization: Taking Action in An Era of Organizational Transformation

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The "New" Organization: Taking Action in An Era of Organizational Transformation

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Module 1

The New Organization: Taking Action in

PowerPoint Presentation by Charlie Cook

Old Model of the Organization

Copyright 2005 South-

Class Notes: Changing Organizational Models

Old Model of the Organization (contd)

Copyright 2005 South-

Class Notes: Changing Organizational Models

New Model of the Organization

Copyright 2005 South-

Class Notes: Changing Organizational Models

Key Features of the New Model

Key Features of the New Model (contd)

Copyright 2005 South-

Key Features of the New Model (contd)

Copyright 2005 South-

Key Features of the New Model (contd)

Copyright 2005 South-

Key Features of the New Model (contd)

Copyright 2005 South-

Class Notes: Changing Organizational Models

Key Features of the New Model (contd)

Copyright 2005 South-

Class Notes: Changing Organizational Models

Summary of Features of Old and New

Individual position/job as basic unit of

Team as a basic unit

Relations with environment handled by

Densely networked with environment

Vertical flows of information

Horizontal and vertical flows of information

Flat (few layers of management)

Emphasis on rules and standard

Emphasis on results and outcomes

Flexible workday, part-time workers

Copyright 2005 South-

Class Notes: Changing Organizational Models

Summary of Features of Old and New

Career paths upward, linear

Career paths lateral, flexible

Standardized evaluation and

Customized evaluation and reward systems

Single strong culture with strong

Diversity viewpoints and behaviors

Specialist international managers

Boundary-crossers at all levels

Local value chains

Value chains crossing borders

Environment defined in terms of

Environment seen as global

Copyright 2005 South-

Class Notes: Changing Organizational Models

Framework for Taking Action

Copyright 2005 South-

Class Notes: Changing Organizational Models

Search for the Organization of Tomorrow

Copyright 2005 South-

Class Notes: Reading the Business Press

The Organization of Tomorrow (contd)

Copyright 2005 South-

Class Notes: Reading the Business Press

A New View of Organization

Copyright 2005 South-

Class Notes: The Search for the Organization of Tomorrow

A New View of Organization (contd)

Copyright 2005 South-

Class Notes: The Search for the Organization of Tomorrow

Copyright 2005 South-

Class Notes: The Search for the Organization of Tomorrow

Combine managerial and nonmanagerial activities

Contrasting Views of the Corporation

Data: Business Week.

Copyright 2005 South-

Class Notes: Management by Web

Features of 21st Century Corporations