Organizations and Organization Theory

1. Organizations and Organization Theory

2. What is your opinion?

3. Founded in 1906 Its people-oriented culture and innovativeness was the envy of the corporate world for much of the 20th century. Bureaucracy took hold, its patents began expiring, and the Japanese took over. Market share went from 95% to 13% in a decade (Early 90�s to Early 00�s). Management cut costs and expanded into insurance and financial services, but ended up losing billions in insurance claims. A succession of CEO�s fought with an organization paralyzed by politics and management struggles between new and old management.

4. A classic case of a 100 year-old company becoming set in its ways and too bureaucratic. Was not responsive to rapidly changing technology. The �How we�ve always done it� mentality overwhelmed a series of new CEO�s.

5. Why We Study Org. Theory & Design Engineers and architects study how to design structures. Organizations are structures. We study them to� better understand organizational situations. be able to analyze and diagnose problems. be able to take appropriate corrective action.

6. Current Challenges Global Competition Ethics and Social Responsibility Digital Work Environment Diversity Need for Rapid Responsiveness

7. Management Philosophy �Top-Down strategies don�t win ball-games�. thousands of strategic choices have to be made every day by people closest to the action, rather than assuming that the people at the top have all the answers.� �Managers� responsibility is to design a learning experience, not to provide rules, solutions, and authority.�

8. Definition: Organization Organizations are social entities that are goal directed, are designed as deliberately structured and coordinated activity systems, and are linked to the external environment.

9. Kenneth Boulding�s Scale of System Complexity Social Systems (all of the following) Biological Systems (self maintaining) Control Systems (self regulating) EG: heating and cooling systems Framework Systems (EG: a bridge)

10. Without goals, there is no need for an organization. Goal accomplishment is why organizations exist. Goals provide a purpose for the organization. Goals provide direction for activities Goals create a need for planning.

11. TYPES of ORGANIZATIONS(requiring different structures) Small Medium Large Manufacturing <--> Service Organic <--> Mechanistic Profit and Not-for-Profit Categorized by Industry

12. Organizations are �Open Systems.� They are dependent on, and interact with, elements external to the organization.

13. An Open System and Its Five Subsystems

14. THE SYSTEMS APPROACH An organization is a system of subsystems. Any change in any subsystem affects all other subsystems. Chaos Theory Says the environment is too complex, too random, and too uncertain to be predictable. The �Butterfly Effect.�

15. Organizational Boundaries Do organizations have boundaries?

16. Henry Mintzberg�s Five Basic Parts of an Organization

20. Three Major Paradigm Shifts Pre-Industrial Revolution Small, family-oriented, Informal, no growth incentives 100 year period after Industrial Revolution Stable environment, formalized, centralized structures. Bigger was better. Bureaucratic, mechanistic Currently changing to a new paradigm Unstable, unpredictable environments. Flexible, organic, information-based structures Decentralized, less formalized, global

22. Contemporary Designs � � To a great extent, managers and organizations are still imprinted with the hierarchical, bureaucratic approach that arose more than a century ago. Yet the challenges presented by today�s environment (global competitiveness, diversity, ethical concerns, rapid advances in technology, rise of e-business, a shift to knowledge and information as the organization�s most important form of capital, growing worker expectations for meaningful work and opportunities for personal and professional growth) call for dramatically different responses from people and organizations.��The perspectives of the past do not provide a road map for navigating the world of business today.�

23. THE LEARNING ORGANIZATION Participative at all levels to include: Cooperative problem solving Information and idea sharing with minimal hierarchy (flatter organizations) They are called learning organizations because employees learn from sharing ideas and information, working together to solve problems, and making the organization more flexible and adaptable in a rapidly changing environment.

25. Levels of Organizational Analysis Organizational Behavior Approach A micro approach: Psychological - focusing on individuals and groups, motivation and leadership. Organizational Theory Approach A macro approach: Sociological - focusing on the organization�s social system and its external environment. External Environment Groups of interacting (inter-organizational) organizations Meso Theory Integrates the macro and micro approaches and examines their interrelationships. A realistic but complex analysis.

26. Framing Organizations �Framing� refers to the context in which we view a situation or organization. We can use any or all of the following frames. How we frame the situation often determines our actions. Structural framing uses one or more of the structural dimensions to view the situation. Human Resource framing looks at people�s needs and feelings Political framing views organizations in terms of power, conflict and politics. Symbolic framing focuses on organizational culture.

27. Rational versus Social

28. Resolving the Dichotomy(Rational vs. Social) Apply The Contingency Approach Either mechanistic or organic structures may be appropriate. Stable environments need the control that bureaucratic (mechanistic) structures have. Unstable environments require the flexibility and responsiveness of a more organic approach.

29. Why we have organic and mechanistic controls: Each may be justifiable in appropriate situations. The term �rational manager� should not exclude an awareness of the realities of disorder and chaos. �Rational� implies the use of sound judgment or good sense. Thus one who manages organizations as closed systems and considers the world as stable and predictable is not being rational. It says a firm that is managed too rationally (i.e.: as a closed system) will ultimately fail because it will not be adaptive. Managers must strive to eliminate or reduce disorder while being tolerant of the fact that disorder can never be eliminated for very long, if at all.

31. Answers

33. John Chambers: CEO of Cisco Systems(June 2010 Interview about his job)