Managing Organizations - Assignment Example

Managing Organizations of the Table of Contents Table of Contents 2 Managing Organizations 3 Question 2 3 Question 3 6 Question 4 11 References 15 Managing Organizations Introduction In today’s world, both public and private organizations face various business challenges such as meeting cost and time projection for developing innovative products, managing balance between mutual adjustment and standardization, installing coordination / integration mechanisms for bringing innovation and business initiatives etc. The afore mentioned issues are not only thought provoking and debateable topic among academic scholars but also important from real life business perspectives. Stacey (1993) has stated that, key challenge for modern organizations to deal with dynamic, complex and uncertain variables of business. There is no doubt that nature of the above mentioned issues is quite similar with nature of variables mentioned by Stacey (1993). According to Goswami (1993), frequency of changes and complexity for organizations has increased over the course of time. It is evident from the existing literature on the subject that there is scope for researchers to research further on behaviours of variables related to organizational complexities. Research work done by other academic scholars on the topic has influenced the study to provide a deep look on issues like, 1- meeting cost and time projection for developing innovative products, 2- managing balance between mutual adjustment and standardization and 3- installing coordination / integration mechanisms for bringing innovation and business initiatives. Next section of the study will discuss the above mentioned issues in order to understand nature of variables associated with complex nature of organizations. Question 2 Developing a new product is a challenging task for companies. The process involves multiple steps and cost variables. According to Whitney (1987), more than 80 percent of cost for developing new product is formulated is occurred due to transforming the prototype into physical shape. Whitney (1987) has conducted a survey on manufacturing firms and found that, in most of the cases time delay and rise in cost of the project occurs due to complexity in design process. Generally, cost of the final product is associated with the cost in the design process; hence it is possible for companies to decrease total cost of production by decreasing cost associated with the design process. According to Ostwald (1992), determine the cost for developing a new product is dependent on fundamentals like, 1- cost related to formulating the technical prototype of product, 2- cost related giving training and sharing knowledge about the technical aspect of the product and 3- cost related to semi-finished goods and raw materials needed to finish the new product development project. There are some difficulties associated with completing the project without exceeding the predetermined cost allocated for the project, for example, external political pressure or turbulent economic condition of a particular country can delay the completion of the project and simultaneously increase cost of the project. There are internal issues like inability of organizations to control issues like designing prototype and technology integration which can increase cost of the project. According to Smith (1990), companies like Hewlett Packard, General Motors, IBM, and Xerox had decreased their production life cycle by 50% in order to decrease total production cost. The scholar has given following matrix model in order to understand the relationship between cost and time associated product development. (Source: Smith, 1990, p. 13) The matrix model is valid companies like Hewlett Packard, General Motors, IBM, Xerox, Procter and Gamble which focus extensively in developing new products in order to survive in the competitive market place. According to the model, 10 month delay in product launch would decrease 10% of product performance, increase 50% production cost and increase $1 million expenses in the field of research and development. It is evident from the above model is that competitive advantage has direct relationship with time and cost associated with the production process for companies which is dependent on research and development in order to survive in the competitive marketplace. It is evident from the above analysis, majority of companies face challenges to control the cost and time associated with developing new product hence next section of the study will recommend some viable strategies which can help organizations to decrease cost and time for projects. Mechanistic structure can increase cost and time duration regarding new product development. For example, Acme Company failed to meet the time schedule regarding new product development project due to its centralized and has mechanistic organization structures which has restricted the knowledge sharing to top level management and few selected managers. Lack of coordination and communication between product development team during designing of prototype had led to delay in project completion. Mechanistic structure of Acme, did not allow departments to communicate freely with each other, as a result, each of the product development department was clueless about other department’s progress and consequently confusion among every departments was generated. In such cases organizations need to design horizontal communication model where departments are allowed to communicate with each other. In this way, each of the department will be aware of the status of the project completion of other departments and can speed up the process of completing the project by sharing the feedback with each other. Although organic structure is far more flexible in comparison to mechanistic structure when it comes to bringing innovation but there are examples where companies with organic structure face problems regarding developing new products within specified time. For example, Omega Electronics has organic structure which not only allows intra department communication but involves employees with every aspects of the company. Such model is not effective to for projects where deadline is stringent and high level of customization is not required because shifting employees who do not have knowledge about what he or she is required to complete from various departments and giving them training will not only waste time but will increase cost of the project. Hence, organic structure is not helpful in decreasing cost and time duration for standardized projects which are meant for mass production. Hence it can be suggested that companies should use hybrid mechanistic and organic structure in accordance with the demand of the project in order to develop new product within specified time period. In the hybrid model, mechanistic section will help employees to understand their job responsibilities while organic section will fillip coordination between them in order to accomplish the task. Question 3 Research scholars have stated that organizations need to establish equilibrium between issues like standardization and mutual adjustment, free floating creativity and disciplined execution, efficiency of the current processes and long-term effectiveness, current position and future business position etc. The study will cite examples of Procter & Gamble in order to recommend strategy for companies to establish balance between standardization and mutual adjustment. Procter & Gamble In the early 1990, Procter & Gamble (P&G) faced issues like saturation of in domestic market and squeeze in profits due to entry of many new players, lack of geographic diversification, shifting consumer demand, poor performance of top brands etc. Depth of the situation has forced P&G to rethink about their standardized business strategy. During late 1990s, P&G has adjusted its standardized business model and shifted focus from developing Americanize products for other parts of globe to establishing strategic business units in different countries across the globe in order to manufacture and deliver localized products to customers. For example, Procter & Gamble priced their detergent product ‘Tide’ six times less in Russia in comparison to USA market in order to attract price sensitive Russian customers. In many countries, P&G used the concept of economies of scale in order to decrease cost of production. According to CEO of the company, P&G’s focus on changing standardized global business model into “Front Back Hybrid Matrix” has helped the company to manufacture products in accordance with local demand. Front back matrix model of P&G can be explained in the following manner. (Source: Dyer, Dalzell, & Olegario, 2008, p. 295) It is evident from the example of Procter and Gamble that companies need to adjust the standardized business processes in order to achieve sustainability in the market place. Although strategic change in P&G is an example of how a multinational company responded to demand of the situation but in many cases it has been observed that small companies bank on tactical changes in order to create mutual adjustment. Whatever, there is no doubt a trade off between standardization and customization is the key mantra for companies who planning to excel in changing market condition. The study will cite example of Wal-Mart as a benchmark to recommend strategies for companies to establish balance between operational efficiency and long-term effectiveness. Wal-Mart Wal-Mart has designed its mission statement in order to bridge gap between operational efficiency and long-term effectiveness. Wal-Mart focuses on selling merchandises in everyday low price (EDLP) and offering fast and responsive customer service to customers. Modified mission statement of the company can be briefed as “the company will provide merchandises to customers in 24 *7 manners and company emphasizes on their talented human resource pool and treat them as asset”. It is evident from the above statement that Wal-Mart wants to achieve long term effectiveness with help of optimal utilization of their internal resources. Moreover, Wal-Mart follows cost orientation strategy in order to increase operational efficiency. Industry experts have pointed out that, Wal-Mart’s strategy of decreasing cost at every possible step in value chain has not only helped the company to decrease operating expense by 33% but has increased its operational efficiency also. Cost orientation strategy has helped Wal-Mart to maintain low margin and sell products at a low price. Adopting geographical pricing model has helped Wal-Mart has helped the company to cater demand of customers who are not only geographically dispersed but also exposed to unequal purchasing power parity. It is evident from above discussion that Wal-Mart believes that improving operational efficiency can help them to achieve long term effectiveness. Examples of Wal-Mart and P&G have helped the study to assume the fact that companies need to establish equilibrium between free floating creativity and disciplined execution or operational effectiveness and long term effectiveness. Now it is the time for the study to shift its gear and find a suitable recommendation which help organizations to design a structure and management process which can help them to reach above mentioned equilibrium. Generally, organizations use two types of organizational structures such as Organic and Mechanistic but the study will use a conjoint version of mechanistic and organic structure which is known as “Lattice Management Structure”. According to d’Orey (1996), lattice management structure is basically partial alignment of human capitals of the organization with the help of set of connections which have unique infimum and supremum. In simple words, lattice structure is basically a conjecture of spiral and partial alignment. In lattice management structure, nature of communication between employees and top level management is horizontal and diagonal in nature. Organizations can rationally get the benefit of skill distribution among employees and can infuse creative in daily operational activities. Following model can be used in order to understand how synchronization between organizational structure and management process can increase operational efficiency for organizations. (Source: Solesvik and Encheva, 2010, pp. 701 – 717) Suppose, employee g1 has the skill set of m3 but doesn’t have the skill set of m2; while employee g2 has the skill set m2 but doesn’t has the skill set of m3. Association of these two employees through lattice management model will create an environment of knowledge transfer among them; subsequently total skill level of both the employees will be increased. Conjoint network model encourages employees to perform a task in a team, which subsequently increases the chances for bringing creativity in the work. Another important aspect of lattice management model is that it promotes the concept of disciplined execution of creativity due to presence of unique infimum and supremum. Horizontal and diagonal communication with supervisors of a particular team will motivate employees to perform task more efficiently. In lattice model, multiple teams handle the pressure of maintaining operational efficiency while top level management focuses on achieving long term effectiveness, hence interlopes between two levels of management will help companies to establish equilibrium between operational efficiency and long term effectiveness. A proposed lattice management model is given below. (Source: Solesvik and Encheva, 2010, pp. 701 – 717) The proposed model is basically elongated version of lattice structure for companies red spot is highlighting the position of top level management while each number is specifying position of team leader in the organizational structure. The concept of knowledge management can be used in order to understand capability of lattice management structure in order to establish equilibrium between pertaining issues. A systematic model of knowledge management is given below. Every employee is interconnected in lattice management structure, hence it is easy for them to share and create knowledge with the help of horizontal communication. Knowledge about vision and mission statement of the company should be stored and disseminated among employees. Innovating new concepts or knowledge by employees will be fuelled by “Tacit to explicit” process, where individuals add his or her tacit knowledge to existing knowledge that has been taken by him in order to create something new that can be shared throughout the organization. Question 4 To answer the question 4, the study will cite examples of LEGO in order to show how coordination / integration between individual initiatives can create culture inside the organization promoting bottom up innovations and business initiatives. Lego Lego has adopted the concept of “Learning Organization” in order to response to following forces outlined by Marquardt; a. Globalization and the global economy b. Increased customer influence c. Radical transformation of the work world d. Changing roles and expectations of workers e. Technology f. Workplace diversity and mobility g. Rapidly escalating change and chaos h. Emergence of knowledge and learning as major organizational assets LEGO Group is one of the largest toy manufacturers in the world and the company has established its presence in more than 100 countries in the world. Lego used the concepts like ‘ICE’ or Internal, Connected and External in order to incorporate knowledge management among internal and external stakeholders. Employees and leaders of the organization work together in order to incorporate innovation in the product design, interest of suppliers and customers are aligned with the innovation framework of the organization. Lego was successful to involve external factors such as shareholders and community with the innovation environment of the organization. Innovation is the key mantra for any manufacturing company which is planning to achieve sustainable competitive advantage. Same is the case for Lego, the company focuses on bringing creativity in every step of the value chain in order to innovate new style, design and structure for toys. Industry experts have pointed out that, Lego focuses on three types of innovations such as functionality enhancement, incorporating radical innovation and reconfiguration. The company has rightly blended these three facets of innovation with issues like individual initiatives, creativity of employees and motivation for innovations in the following manner. Functionality Enhancement Lego asks its employees and other stakeholders such as customers to share ideas about new applications or functionalities which can be incorporate by the company in the toys. Employees are encouraged by the company to innovate new design or shape of toys. Reconfiguration In reconfiguration stage, stakeholders of the company are allowed to take part in reconfigure toys by incorporating new values like fun, care, creativity, learning and quality. Radical Innovation Stakeholders or individuals have very little role in incorporating radical innovation in toys because Lego uses its marketing department to achieve better product communication and product diversification. Case of Lego will be helpful for the study to recommend strategies regarding installing effective coordination / integration mechanisms for bottom up innovations and business initiatives for company. The study will use the coordination concept of LEGO in order to formulate the strategy. The company needs to establish a strategic coordination committee in order to ease the process of installing effective coordination. The innovation committee should be supervised by Executive Innovation Governance board. The innovation committee should synchronize activities like concept testing and incorporating concepts in achieving product diversification. Four strategic groups should be created in order to motivate employees to incorporate innovations in daily operational process. In manufacturing companies, generally production department triggers the innovation and creativity; hence concept of innovation committee should be integrated with the employees working in the production department. Strategic groups in the company should be involved in the following activities. Executive innovation group should take suggestion of employees in order to create process map for innovation. These group will be responsible be responsible for installing primary interface of effective coordination / integration mechanisms for individual initiatives. Functional group will install the second interface of innovation in core processes like sales & marketing, financial planning, operations etc. This group will work as executer of suggestions made by Executive innovation group. Concept lab will test the potentiality of innovations ideas that are given by employees and other stakeholders such as customers. In some cases concept lab will work in direct administrative manner with internal and external stakeholders in order to bridge gap between individual initiatives and motivation of employees to bring innovation. Companies can formulate some additional groups such as PMD or Product & Marketing Development and CE or Community, Education in order to integrate innovation at every corner stone of value chain. For example, Community, Education (CE) will work on creating forum, community for customers in order to involve them with the dynamic environment of innovation inside organization, while PMD or Product & Marketing Development will work on integrating innovation in the value offering process. Hence, it is expected that organizations can install effective coordination / integration mechanisms by following the above mentioned recommendations. References D’Orey, V. (1996). Fixed point theorems for correspondences with values in a partially ordered set and extended super modular games. Journal of Mathematical Economics, 25(3), 345-54. Dyer, D., Dalzell, F., & Olegario, R. (2008). Rising tide: Lessons from 165 years of brand building at procter & gamble. Harvard: Harvard Business Press. Goswami, A. (1993). The self-aware universe: How consciousness creates the material world. New York, NY: Penguin Group. Ostwald, P. F. (1992). Engineering cost estimating. Englewood Cliffs, NJ: Prentice-Hall. Smith, P. G. (1990). Fast cycle product development. Engineering Management Journal, 2(2), 11-16. Solesvik, M. Z., & Encheva, S. (2010). Partner selection for interfirm collaboration in ship design. Industrial Management & Data Systems, 110 (5), 701-717. Stacey, R. (1993). The chaos frontier. London: Redwood Press Limited. Whitney, D. E. (1987). Manufacturing by design: A symbiosis. IEEE Spectrum, 24(5), 47-54. Read More