Transcript Lecture 30.pptx

The Challenges Ahead
Lecture 30
Today’s Lecture

Organizing Principles
 The Learning Organization
 Processes Rather Than Functions
 Communities Rather Than Groups
 Virtual Rather Than Physical
 Self-Organizing Rather Than Designed
 Adaptable Rather Than Stable
 Distributed Rather Than Centralized
The
Challenges Ahead

The computer’s capability to leverage people’s brain
power allows companies to not only communicate in new
ways, but to compete in new ways

It looks at the challenges facing IS organizations
worldwide by assembling a collage of opinions about
possible principles underlying the e-world
 Acknowledging our transformation into a networked
world, it describes three viewpoints of the differences
between non-networked and networked and their
importance
The Challenges Ahead

Case examples include NYNEX, a football team,
National Semiconductor, Sun Microsystems, Cemex,
Semco S.A., Capital One, MIT’s IT for the Non-IT
Executive Program and SIM’s Strategic Business
Leaders Program
Introduction

Despite all the ‘bad news’ of the dot-com crash etc.
 Enterprises
around the world are quietly redefining
their strategy, work environment, and skills to
move into the e-world

In this Lecture we address the challenges faced by IS
organizations worldwide by assembling a collage of
possible principles underlying the ‘e-world’
Introduction..

The computer is an amazing machine
 Leverages
people’s brain power, not just muscle
power

This capability is being used to process data &
communicate in new ways

This communication in turn allows companies to
compete in new ways
Organizing Principles
EXCITING TIMES!
We are in a time of grand exploration – a new economy is
being born (perhaps in fits and starts)
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Equally frustrating though – is that the tenets of this
evolving economy are so different that the rules are just
now being formulated, reformulated and reformulated
again!
As the economy matures – some principles will prove to
be true, while others will fall by the wayside
The following opinions offer promising new thinking on
organizing principles
They point to areas enterprises need to focus on to
succeed in an ‘e-economy’
Organizing Principles
The Learning Organization

Most organizations live only 40yrs – 1/2 the life of a
person, because they have ‘learning disabilities’
Organizational Learning Disabilities
1.
Enterprises move forward by looking backward in
that they rely on learning from experience =
companies solve the same problem over & over
Organizing Principles
The Learning Organization..
2.
Organizations fix on events – yet the real threat comes
from processes that move so slowly, no one notices
them
3.
Teamwork is not optimal, contrary to current belief.
Team based organizations operate below the lowest
IQ on the team = skilled incompetence
Organizing Principles
The Learning Organization cont.
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Organizations that can learn faster than their
competitors will survive
 In fact, it is the only sustainable advantage
To become a learning organization, an enterprise
must create new learning & thinking behaviors on its
people
Organizing Principles
The Learning Organization cont.

An organization and its people must master the
following five basic learning disciplines:
1.
Personal mastery: lifelong learning
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People reach a special level of proficiency when
they live creatively
This personal mastery forms the spiritual
foundation for the learning organization, so
organizations need to foster these aspirations
Organizing Principles
The Learning Organization cont.
2.
Mental models: deeply ingrained assumptions,
generalizations, and images that influence how
people see the world and what actions they take

Organizations can accelerate their organizational
learning by spurring executives to surface their
assumptions and test them for relevancy
Organizing Principles
The Learning Organization cont.
3.
Shared vision: organization’s view of its purpose,
its calling
 It provides the common identity by which its
employees and others view it
 A shared vision is vital to a learning
organization because it provides the rudder for
the learning process
Organizing Principles
The Learning Organization cont.
4.
5.
Team learning: “dialog”: where people essentially
think together, occur when people explore their
own and others’ ideas, in order to arrive at the best
solution; “discussions”: occur when people try to
convince others of their point of view
Few teams dialog; most discuss, so they do not
learn.
Systems thinking: to understand systems, people
need to understand the underlying patterns
 Systems thinking is a conceptual framework for
making complete patterns clearer
Organizing Principles
The Learning Organization cont.

Of these 5 disciplines – systems thinking is the
cornerstone

Until organizations look inwardly at the basic kinds of
thinking and interacting they foster, they will not be
able to learn faster than their competitors
Organizing Principles
Processes Rather Than Functions
Key point in the re-engineering movement wasn’t that
changes needed to be dramatic – but that they needed to
be made from a process centered rather than task
centered view
Tasks - about individuals
Processes – about groups, we are now in a ‘group economy’

The shift to processes ramifications include:
 Need
for new position, such as process owners
Organizing Principles
Processes Rather Than Functions..
 In
one process virtually all departments are involved
 One
person needs to have end-to-end responsibility
 Process
owners provide the knowledge of the
process – not just manage people (still important!)
 Sense
of urgency & intensity as teams are more
intense & allow less slack time
Organizing Principles
Processes Rather Than Functions cont.
Requires measuring a process:
 How long it takes to complete
 Accuracy rate
 Cost, etc.
 Process centered structure requires:
 Measures of processes which are different from
measures of tasks
 Measuring a process means measuring an outcome
from the customers’ point of view
Organizing Principles
Processes Rather Than Functions cont.
Process Centering:
 Turns
people into professionals rather than workers
 If you define a professional as someone who is
responsible for achieving results rather than
performing a task
 The professional is responsible to customers,
solving their problems by producing results
NYNEX
Case Example: Process centered organization (1)

Targeted 12 major processes for redesign in a
company wide business process redesign initiative
 11 used the traditional approach.
 The 12th group used participative design & involved
the Work Systems Design group, along with 8
employees from across one provisioning process
 This project was the only one of the 12
implemented, and = excellent results
NYNEX USA
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Telephone Services
Company
NYNEX
Case Example: Process centered organization (1)

It followed a socio-technical approach to design a new
process for handling customer orders. Rather than pass
a customer among specialized groups, all the people in
the process worked together, in one area, as a
multifunctional team — with engineers working alongside
salespeople.
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A major difficulty with an innovative new process was
under-rating how difficult it would be to keep it going
when it is counter cultural
A (U.S.) FOOTBALL TEAM
Case Example: Process centered organization (2)
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Has 2 processes:
 Offensive
 Defensive
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Process owners:
 Offense
co-ordinators
 Defense co-ordinators
A (U.S.) FOOTBALL TEAM
Case Example: Process centered organization (2)

Team has:
 Position
coaches
 Head coach
Once on the field – the team is
self-directed.
It adapts to the unfolding play
Organizing Principles
Communities Rather Than Groups
Communities – form of their own volition
Groups – formed by design, their members are
designated a priori
 Communities:
 Perform the same job, or collaborate on a shared
task/product
 They have complementary talents & expertise
 They are held together by a common purpose & a
need to know what the others know
Organizing Principles
Communities Rather Than Groups cont.

Most people belong to several communities of
practice, and most important work in companies is
done through them

Note: not necessarily ‘defined’

Communities are the critical building blocks of a
knowledge-based document
Organizing Principles
Communities Rather Than Groups cont.

Three reasons:
 People,
not processes, do the work
 Learning
is about work, work is about learning, and
both are social
 Organizations
are webs of participation
NATIONAL SEMICONDUCTOR
Case Example: Community of Practice
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Company began encouraging communities after its
business model that built low margin commodity
chips collapsed
Community of practice:
 Energize & mobilize the firms engineers
 Shape strategy & then enact it
A community of practice on signal processing grew
slowly over 18 months & now includes engineers
from numerous product lines & has been influential in
strategy decisions
NATIONAL SEMICONDUCTOR
Case Example: Community of Practice
cont.

National is extending communities of
practice by:
 Formally
recognizing them
 Offering funding for their projects
 Handing out a toolkit to help people form
their own communities of practice
Organizing Principles
Virtual Rather Than Physical
A virtual organization doesn’t exist in one place or time – it
exists whenever & wherever the participants happen to
be

The virtual organization is a popular description of new
organizational form

Underlying principle = time & space are no longer the
main organizing foundations
SUN MICROSYSTEMS
Case Example: Virtual rather than physical
organization
Chief Scientist – John Gage
 The network creates the company

“Your e-mail flow determines whether you’re really part
of the organization: the mailing lists you’re on say a lot
about the power you have.”
Organizing Principles
Self-Organizing Rather Than Designed
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Form of future organizations – chaos theory, ecology,
biology, and look at nature & how it organizes itself
The basic tenet is that nature provides a good model for
future organizations that must deal with:
 Complexity
 Share information & knowledge
 Cope with change
The message is about being to adapt, it’s like imitating
structures found in nature
CEMEX
Case Example: ‘Self organized’
organization
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Cemex (Cementos Mexicanos) delivers ready mix
cement in Monterey Mexico

Delivering mix on time difficult – traffic jams, poor road
conditions, contractors not ready for their order

Delivery rate = 35%
CEMEX
Case Example: ‘Self organized’ organization
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Deal with problem of unpredictability:
 No
reservations required
 Deliver

faster than pizza
Turned attention to managing information rather than
assets
CEMEX
Case Example: Self designed organization
cont.
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To do so:
 They installed a GPS system for all the trucks &
full information to all employees
 Drivers to schedule themselves in real time as
calls came in, rather than dispatchers
Result
= 98% delivery rates
= delivery time 20mins, (rather than 3hrs)
= less wasted, hardened cement
= 35% fewer trucks
= lower fuel costs
= happier customers
Organizing Principles
Self-Organizing Rather Than Designed cont.
The self-organization point-of-view
• Requires taking the perspective of “organizing-as-a•
process” rather than “organization-as-an-object”
Self-organizing systems create their own structure,
patterns of behavior, and processes to accomplish
their work
SEMCO S.A
Case Example: An organization with a self
organizing principle
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Maverick the success story behind the worlds most
unusual work place – CEO Semco Richard Semler
Company – a Brazilian manufacturer of industrial
equipment moved from 56th to 4th place in its industry
by breaking all the rules to get costs down &
productivity up
SEMCO S.A
Case Example: An organization with a self
organizing principle cont.
Result =
 Factory workers:
 At times set up their own production quotas
 Help redesign products
 Formulate marketing plans
 Choose their own bosses
 Bosses:
 Set their own salaries – yet everyone knows what
they are as workers have unlimited access to
Semco’s one set of books
SEMCO S.A
Case Example: An organization with a self
organizing principle cont.
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The changes have been rough & not undertaken in
an orderly or cohert manner
BUT the radical changes to a far more democratic
workplace allowed the company to grow 600% at the
same time that the Brazilian economy was faltering
A dramatic story & illustrative of the benefits of selforganization
Organizing Principles
Adaptable Rather Than Stable

Speculation on future organizations
 Successful
organizations will be structured to
naturally support (perhaps even foster) volatility
and continual surprises
 Today’s organizations are structured to
maintain stability; change is minimised
 Change
costs a lot
 Firms built for stability are not adaptable
Organizing Principles
Adaptable Rather Than Stable
 IT
is causing the world to become more connected
 Connectivity increases volatility
 To keep pace companies will need to adapt more
quickly
 The only way to achieve adaptability = through
distributed intelligence and action
 Thus
organizational models will be built around
networks and will be designed to evolve
CAPITAL ONE
Case Example: Adaptable Rather Than Stable

Credit company that believes in “the law of large
numbers”

Conducts ‘000s of tests to read the marketplace

Strategy = dreaming up credit programs that might have
value to customers
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Then = testing numerous variations of each program to see
which yield the best results
Example = discovered from its first test that “balance transfer”
was a winning offer
CAPITAL ONE
Case Example: Adaptable Rather Than Stable

Strategy goes with its bottom-up culture where decisions
are made at the bottom based on the market tests
 Management
controls funds for rolling out new
products but not for conducting the testing

Has the lowest charge-off rate and the highest risk
adjusted margin in the industry

Grew 45% in one year!
Organizing Principles
Distributed Rather Than Centralized

Organizations of the future could become more
distributed. Two views:
1.
Distributed Capitalism
–
–
–
Commercial purpose of organizations is changing, hence
structures will change
Managerial capitalism will not really satisfy today’s
consumers due to the huge gap between consumer desires
and the good and services for sale
Will possibly lead to federations
Organizing Principles
Distributed Rather Than Centralized
2.
–
–
–
Market-Based Organizations
Cost of communications has influenced the
structure of organizations
• High = centralize
• Reducing (like now) = more decentralized
Organizations will structure more like
democracies or markets
Job of management will move from command
and control to coordination and cultivation
Summary

We have Covered Today
Organizing Principles
 The Learning Organization
 Processes Rather Than Functions
 Communities Rather Than Groups
 Virtual Rather Than Physical
 Self-Organizing Rather Than Designed
 Adaptable Rather Than Stable
 Distributed Rather Than Centralized
Summary….
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NYNEX
Case Example: Process centered organization (1)
A (U.S.) FOOTBALL TEAM
Case Example: Process centered organization (2)
NATIONAL SEMICONDUCTOR
Case Example: Community of Practice
SUN MICROSYSTEMS
Case Example: Virtual rather than physical organization