Organizational Design, Competences & Technology

1. Organizational Design, Competences & Technology Chapter 9

2. Technology Everything used to create valuable G/S from raw materials (conversion of I  O): • Equipment Knowledge • Tools Techniques • Machinery Computers • Skills Disposal of G/S --The use of technology (to add value) can be a corporation’s core competence. --We use technology to: reduce costs; increase efficiency, reliability & quality of products.

3. Theories of Technology Used to 1. Choose a technology to effectively change I to O. 2. Design a structure that will allow the organization to effectively use that technology.

4. Theories • Technical complexity determines structure. • Task determines structure. • Task interdependence determines structure.

5. Technical Complexity High technical complexity • Conversion process programmed in advance • Fully automated (machines) • Work activities are standardized & predictable (high control) Low technical complexity • Conversion process dependent on people’s skills/ knowledge not machines • Work activities are not programmed or predictable (low control). Advantages of each?

6. It is very difficult to maintain high quality & consistency of production when technical complexity is: A. High B. Low

7. Small batch technology One-of-a-kind, customized Small quantities, wide range of products Conversion process is flexible Expensive (not preprogrammable) Ideal for new, complex products (Louis Vuitton) Technical complexity? BLS? Structure? Continuous process technology Conversion process is automated, mechanized, continuous Employees monitor/repair Cost effective Predictable Nuclear power, brewery, chemicals Technical complexity? BLS? Structure? Production Technology

8. Does Technology Affect Design of Structure? As technical complexity increases, one would expect: • Organization to become taller or flatter? • Span of control of first line manager? (widens then narrows  constant monitoring of subordinates/ equipment; rapid response to disaster) • Decision making to become centralized or decentralized? • Move toward mechanistic structure or organic structure?

9. Routine Tasks & Complex Tasks • Some technologies are more complex (unpredictable, difficult to control) because the associated tasks are more complex. What makes a task complex? • Task variability- number of unexpected situations a person encounters while doing a task • High—can expect to encounter many problems /variances • Low—task is standardized & repetitious • Variability in the quality of raw materials makes it hard to maintain consistent quality of product.

10. Continued… • Task analyzability- how much search activity is needed to solve a problem • More analyzable- task is routine & preprogrammable • Less analyzable- requires problem solver to use knowledge & judgment to find a way to solve any problems encountered • Tasks are more complex when variability is __? and when analyzability is __? • What type of organizational structure would we expect to see when performing complex vs. routine tasks?

11. Routine Tasks & Organizational Design (low task variability & high task analyzability) • Standardization: high or low? • Mutual adjustment: high or low? • Specialization: yes or no? • Formalization: high or low? • Hierarchy of authority: tall or flat? • Decision-making authority: centralized or decentralized? • Overall structure: mechanistic or organic?

12. Task Interdependence, Technology & Structure Task interdependence= how tasks are related to one another Low:people/ departments are individually specialized(work separately & independently) High:people/ departments are jointly specialized(depend on one another for inputs & resources).

13. Mediating Technology • Work process where I  O activities are performed independently of one another • Pooled task interdependence--- each person/dept contributes separately to overall org performance. Example? • What kind of structure(characteristics) will we see? • Little need for coordination & integration • Standardized evaluation/monitoring of employees • Bureaucratic rules & procedures • Outsourcing • Functional, network.

14. Long-Linked Technology • Work process where I  O activities are performed in a series • Sequential task interdependence--- outputs in 1 department become inputs in another. Example? • What kind of structure will we see? • Higher need for integration/coordination • Product structure, geographic structure

15. Long-Linked Technology How to prevent disruption of conversion process?(Reduce the uncertainty) 1. Slack resources- stockpile Inputs or finished G/S 2. Vertical integration- forward or backward 3. Standardize the conversion process.

16. Intensive Technology • Work process where I  O activities are inseparable • Reciprocal task interdependence--- all people/depts are fully dependent on each other. Tasks are complex, nonroutine & impossible to preprogram. Example? • What kind of structure will we see? • High coordination/integration! • Decentralized D/M (high mutual adjustment) • Flat (organic) • Product team & matrix structures

17. Intensive Technology • The uncertainty of this technology makes it hard to predict what skills or resources may be needed Very expensive! • What can an organization do to reduce uncertainty? Specialize  produce only a narrow range of G/S

18. Mass Production • Technical complexity is high, tasks are routine & sequentially interdependent making the process very inflexible. Traditionally mass production consisted of: • Stockpiled inputs or outputs • Dedicated machines • Fixed workers • Specialized products Problem? Inability to adapt product to changing customers’ needs

19. Advanced Manufacturing Technology(AMT) • Allows an organization to produce a wider range of G/S that can be customized to customer’s needs & introduced into market faster How?

20. Computer Aided Design(CAD) Design 3-D objects on computer.Benefits? • Makes redesigning products quicker • Increases quality & consistency of product Toyota’s core competence • Increases flexibility to customize products & adapt to changing customer needs

21. Computer Aided Materials Management (CAMM) • Computers used to track production schedules & control inventory • Flow of input materials is determined by customer requests for finished products • Conversion process is continuous flow • Reduced need for stockpiling. Benefit? • Requires __ structure. Why?

22. Just-In-Time Inventory • Inputs are delivered only as needed - keeps inventories to minimum • CAMM used to coordinate suppliers • Allow manufacturers to be flexible • Customize products • Make wider variety of products Why?

23. JIT • Technical complexity is increased • Task interdependence is increased (sequential) • More like continuous process technology than mass production • Advantages of small batch technology- flexibility • Low cost (continuous conversion, no inventory)and product differentiation advantages

24. Flexible Manufacturing Technology (FMT) • Machines are flexible because they perform a variety of functions (not dedicated) • Uses computer integrated manufacturing (CIM): • Computers command machines to switch over from one operation to another • Eliminates need to physically retool machines • Lowers costs (reprogramming is cheaper than retooling) • Speeds production • Prevents disruption of production process.

25. Advanced Manufacturing Technology • CAMM & JIT are advanced techniques to coordinate inputs • FMT & CIM take place in conversion stage

26. Benefits of AMT • Flexible organization (variety of customized products) • Cost effective • Speeds up production process • Continuous conversion process • Increased product reliability (automation reduces error).

27. Homework • Study chapters 8 & 9 • Prepare for 20 point quiz (do alone, graded, no notes/ book) on Feb 25th.