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Summary - Designing effective organizations : how to create structured networks
1 Structured Networks
De auteurs benaderen organisationeel design vanuit drie componenten;
1. Nine tests of good design
2. Taal in de vorm van een taxonomie die verschillende rollen en relaties duidt
3. Voorstel voor een procedure die managers kunnen volgen wanneer zij een design challenge tegenkomen.
What is according to G&C a 'structured network'?An organization with the maximum of self-management, but with sufficient structure and hierarchy to work well.
Een stuctured network heeft de kenmerken van een netwerk - units die zichzelf managen, zowel in belsuitvorming als in hun relatie met andere units. Maar wel met net genoeg structuur en hierarchie om er voor te zorgen dat verantwoordelijkheden en relaties duidelijk zijn en managers succesvol kunnen samenwerken. Mogelijkerwijs kan hierdoor de strategie op een doelmatige wijze worden doorgevoerd.
Het doel van de auteurs is om de managers hun organisatie zo te ontwerpen dat deze lijkt op de markt, maar wel meer waarde creert dan de markt. Dus een structured network is een design waarin waarde creatie centraal staat en waardeverlies wordt gemininmaliseerd.
To develop a structured network, G&C have an approach to corporate organization design. Which 3 components does this approach includes?1 Nine tests of good design: to highlight the weaknesses of, and refines the design2 A taxonomy thats help to describe and discuss different design options with more clarity. And to develop alternatives.3 A process that can be followed when managers are facing a design challenge. This helps them to achieve the structured network.
1.1 Nine design tests
Wat zijn de belangrijke elementen voor organisationeel design?Verantwoordelijkheid voor het positioneren van de unitsRapportage en laterale relatiesVerantwoordelijkheden voor unitsSleutel-rapportage en coordinatieprocessen
On which basics is G&C's framework grounded?1 The fit concept, with 4 drivers of fit: product-market strategies, corporate strategies, people and constraints2 5 good design principles, for optimal org. design: specialization, co-ordination, knowledge and competence, control and commitment, and innovation and adaptation principle.
Auteurs beschrijven vier drijfveren achter fit.
2. Corporate strategy
Daarnaast beschrijven ze vijf design principles van goed design.
1. Specialization principle
2. Co-ordination principle
3. Knowledge and competence principle
4. Control and commitment principle
5. Innovation and adaptation principle
1.1.1 The fit test
Er worden vier fit tests besproken, noem deze.1. Market advantage testHeeft het design voldoende oog voor prioriteit m.b.t operations en de mogelijke bronnen van voordeel in een product-markt gebied.2. The parenting advantage testHeeft het design voldoende oog voor de mogelijke bronnen van toegevoegde waarde en strategische initiatieven van de corporate parent3. The people testReflecteert het deisgn adequaat de motivaties, sterktes en zwaktes van de beschikbare mensen4. The feasibility testHeeft het design oog voor de beperkingen die het voorstel onwerkbaar maken?
The 4 fit drivers (product-market strategie, corporate strategie, people, constraints) lead to 4 fit tests, which 4?1 The market-advantage test: does the design allocate sufficient management attention to the operating priorities and intended sources of advantage in each product-market area?2 The parenting advantage test: does the design allocate sufficient attention to the intended sources of added value and strategic initiatives of the corporate parent?3 The people test: Does the design adequately reflect the motivations, strengths, and weaknesses of the available people?4 The feasibility test: does the design take account of the constraints that may make the proposal unworkable?
1.1.2 The good design tests
Het specialisatie en coordinatie principe hebben beide te maken met de grenzen tussen units. De eerste pleit voro grenzen ter ontwikkeling van gespecialiseerde vaardigheden. Het tweede principe geeft aan dat activiteiten die moeten worden gecoordineerd bij elkaar moeten zitten in een unit. Er zijn vaak wel trade -offs tussen beide.
The specialization (boundaries should exist to encourage development of skills) and co-ordination (activities need to be located within a single unit) principle both concern the boundaries between units. Describe the 2 tests which make those principles more precise and useful:1 Specialist cultures test: do any 'specialist cultures', units with cultures that need to be different from the sister units and above, have sufficient protection from the influence of the dominant culture?
>> Attention on the dangers of suppressing/damaging activities that fall outside the mainstream corporate culture.2 Difficulty links test: does the organization design call for any difficult links, co-ordination benefits that will be hard to achieve on a networking basis, and does it include solutions that will eas the difficulty?>> Assess which coordination benefits will be difficult to achieve if left to the network: whether and how can difficulties be overcome (bijv. ene wordt gemakkelijk overdragen via netwerk, ander moet gestructureerd worden).
Noem de verschillende tests die zijn verbonden aan de good design priciples1. Specialists cultures test2. Difficult links test3. Redundant hierarchy test4. Accountability test5. Flexibility test
The knowledge and competence principle is concerned with delegation: responsibilities should be allocated to the person/team best placed to assemble the knowledge/competence. Which practical tests follows from this principle?The redundant hierarchy test: are all levels in the hierarchy and all responsibilities retained by higher levels based on a knowledge and competence advantage?
The control and commitment principle concerns 2 challenges: how to maintain appropriate control and how to insure high levels of motivation? Units should feel strong pressured to self-correct, and parent-level management should be able to identify problems easily. To which test does this leads?The accountability test: does the design facilitate the creation of a control process for each unit that is appropriate to the unit's responsibilities, economical to implement, and motivating for the managers in the unit?
>> Helps managers to design units and establish performance measures that produce effective, low-cost controls that are highly motivating.
The innovation and adaptation principle states that structures should be designed to innovate and adapt as uncertainities become clarified and environments change. It has to cope with the conditions of tomorrow. Which leads to the test:The flexibility test: will the design help to the development of new strategies and be flexible enough to adapt to future changes?
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Describe the relevance of parenting concepts:
Describe the (dis)advantages of interdependent structures
Name the (dis)advantages of the SBU-based structure.
The taxonomy of G&C embraces 8 different unit types. Describe them
1 Business-units: market-focused, profit-responsible units with relatively high decision-making autonomy
2 Business functions: operating functions, such as sales, that report to a business unit general manager
3 Overlay units: market-focused units serving segments defined along dimensions that cut across the business units
4 Sub-businesses: market-focused units serve segments defined at a more disaggregated level than the business units.
5 Core resource units: units that develop and nurture scarce resources, such as R&D, that are key to competitive advantage for several business units
6 Shared service units: units which provide services that are needed by several other units in the company
7 Project units: units which carry out tasks or projects that cut across other units, normally for a finite (beperkte) time period
8 Parent units: upper-level units that carry out obligatory corporate tasks, and influence and add value to other units.
Bundling resources is the process by which capabilities are formed. Resources within the portfolio are bundled to create capabilities. With each capability being a unique combination of resources allowing the firm to take specific actions that are intended to create value for customers. Which 3 actions can they take (S,H&I):
1 Stabilizing: minor incremental improvements in existing capabilities. Creating value under low environmental uncertainty and high environmental munificence (vrijgevigheid).
2 Enriching: extend/elaborate current capability: create new value or maintain current value created in high uncertain environments.
3 Pioneering: integration of completely new resources or recombination of existing resources. The need of new capabilities is more pronounced in uncertain environments, to exploit opportunities that fleet in dynamic environments.
The notion of boundaries based on assumptions is critical because it sets the limitations in applying the theory and restrict the generalizability. These assumptions are about values, time and space. Describe those 3 assumptions:
1 Values: can often be revealed by psychoanalytic/historical/ideological studies of the theorist
2 Spatial (space) boundaries restrict the use of the theory to specific units of analysis (e.g. specific types of organizations)
3 Temporal (time) boundaries specify the applicability of a theoretical system.
What is the danger of not knowing the transacting partner, thus asymmetrical information? (W&Z)
The firm faces a greater risk of opportunistic behavior by its partner. Whereas repeated interaction allow two firms to better know each other, what reduces information asymmetry. This also developed trust and repeated transaction will also develop relational-specific absorptive capacity. They are able to identify critical knowledge to be learned from each other and even develop interfirm knowledge-transfer routines to facilitate the learning process.
When joining in all the activities seems the best option, why do firms isolate R&D activities from other aspects of the process? (O&S)
The risk of partner opportunism limits the knowledge-sharing what will reduce the alliance scope. When the alliance purely is R&D, partners are able to partition (afscheiden) the activities such that the exposure of a firm's (tacit) knowledge/skills/routines is relatively small. Contractual safeguards can control the exposed knowledge.
Establishing a company's dedicated alliance function contributes of making alliance management more professional and improve alliance management capabilities. What are, according to Hoffmann, the tasks of the center of competence of alliance management?
To formalize core alliance management processes, to standardize alliance management tools critical for success, and to create an infrastructure (e.g. IT platforms) so that experiences in managing alliances can be collected, shared and diffused systematically throughout the organization. A center of competence can improve internal coordination and resource support of alliances as well as monitor and evaluate alliance performance.
By defining features of IJV's that are unique to this organizational form, the tension already rises. This influences the extent of involvement of their boards. What is this tension? (RK&L)
1 IJV's are JV's: organisations owned by 2 or more independent firms working together under an incomplete contract. IJV's can be subject to exchange hazards in collaborations, so board involvement is valuable in controlling and coordinating IJV activities for parent firms.
2 The international aspect of IJV's indicates that the JV operates in a different host country and joins parents firms from different nations. International collaboration can make it the board difficult to monitor performance and its causes and to make appropriate policy/staffing etc. It can be efficient to delegate authority to local management.
Tension between: need for administrative control to monitor and coordinate vs value of delegating to local management.