Organizational

Agility

Chapter Nine

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 Learning Objectives
LO 1 Discuss why it is critical for organizations to be
responsive.
LO 2 Describe the qualities of an organic organization
structure
LO 3 Identify strategies and dynamic organizational
concepts that can improve and organization’s
responsiveness
LO 4 Explain how a firm can be both big and small
LO 5 Summarize how firms organize to meet customer
requirements
LO 6 Identify ways that firms organize around different
types of technology

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 The Responsive Organization
 Mechanistic
organization
 A form of
organization that
seeks to maximize
internal efficiency.
 Organic structure
 An organizational
form that
emphasizes flexibility

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 Organic Structure
1. Jobholders have broader responsibilities that
change as the need arises.
2. Communication occurs through advice and
information rather than through orders and
instructions.
3. Decision making and influence are more
decentralized and informal.
4. Expertise is highly valued.

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 Organic Structure (cont.)
5. Jobholders rely more heavily on judgment than on
rules.
6. Obedience to authority is less important than
commitment to the organization’s goals.
7. Employees depend more on one another and relate
more informally and personally.

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 Two Ways to Describe
an Organization
Figure 9.1(a)

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 Two Ways to Describe
an Organization
Figure 9.1(b)

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 Organizing around
Core Competencies
 Identify existing core competencies.
 Acquire or build core competencies that will be
important for the future.
 Keep investing in competencies so that the firm
remains world class and better than competitors.
 Extend competencies to find new applications and
opportunities for the markets of tomorrow
 Question: What do you think is the core
competency of Apple?

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 Question
What is a formal relationship created among
independent organizations with the purpose of
joint pursuit of mutual goals?

A. Knowledge organization
B. Learning organization
C. Strategic alliance
D. Wholly-owned subsidiary

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 Strategic Alliances

Strategic alliance
 A formal
relationship created
among independent
organizations with
the purpose of joint
pursuit of mutual
goals.
 Example?
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 How I’s Can Become We’s
Table 9.1

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 The Learning Organization

Learning organization
 An organization skilled at creating, acquiring, and
transferring knowledge, and at modifying its
behavior to reflect new knowledge and insights.

 Name any companies that you think is LO.

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 How do Firms Become
Learning Organizations?
 Engage in disciplined thinking and attention to
details, making decisions based on data and
evidence rather than guesswork and assumptions
 Search for new knowledge and ways to apply it
 Review successes and failures looking for lessons
and deeper understanding
 Benchmark - identify and implement best practices
 Share ideas throughout the organization

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The High-Involvement Organization

High-involvement organization
 A type of organization in which top management
ensures that there is consensus about the
direction in which the business is heading

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 Organizational Size and Agility

Large organizations are typically less organic

and more bureaucratic
Jobs tend to become more specialized in large
organizations
With size comes greater complexity and a
need for increased control

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 The Case for Big

 Larger size helps  Larger size helps

create scale develop economies
economies of scope
 Economies in which
materials and
processes employed
in one product can
be used to make
other related
products
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 The Case for Small
 Large organizations  Smaller organizations
can have difficulty can:
managing  Move fast
relationships with  Inspire greater
customers and involvement from
among its own units their people
 Large organizations  Being small can avoid
are more difficult to diseconomies of scale
coordinate and
control
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 Being Big and Small

Downsizing Rightsizing
 The planned  A successful effort
elimination of to achieve an
positions or jobs appropriate size at
which the company
performs most
effectively

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 Downsizing

Survivor’s
syndrome
 Loss of productivity
and morale in
employees who
remain after a
downsizing.

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 Customers and the
Responsive Organization
 The point of  Managers must stay
structuring a focused in three key
responsive, agile ingredients
organization lies in  The company itself
enabling it to meet  Competition
and exceed the  The customer
expectations of its
customers

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 The Strategy Triangle – Dr. Kenichi
Figure 9.2

Kenichi Ohmae states that these three factors

must be in balance in the form of a strategic
triangle. This balance can lead to a
sustainable competitive advantage.
These three key factors for success are:
• The Corporation
• The Customer
• The Competition

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 Customer Relationship Management

Customer relationship management (CRM)

 A multifaceted process focusing on creating two-
way exchanges with customers to foster intimate
knowledge of their needs, wants, and buying
patterns.

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 CRM Example

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© 2014 by McGraw-Hill Education. 7-23
 Class Activity 1

What do you think about CIMB bank’s

downsizing?

Give 2 examples of CRM that you may use.

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© 2014 by McGraw-Hill Education. 7-24
 Customer Relationship Management

Value chain
 The sequence of activities that flow from raw
materials to the delivery of a good or service,
with additional value created at each step.

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 Generic Value Chain
Figure 9.3

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 Total Quality Management

Total quality management (TQM)

 An integrative approach to management that
supports the attainment of customer satisfaction
through a wide variety of tools and techniques
that result in high-quality goods and services.

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 ISO 9001

ISO 9001
 A series of quality standards developed by a
committee working under the International
Organization for Standardization to improve total
quality in all businesses for the benefit of
producers and consumers.

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 Reengineering
Reengineering
 Revolutionizing key organizational systems and
processes to answer the question: “If you were
the customer, how would you like us to
operate?”
 Processes are redesigned from scratch as if the
organization was just starting out
 Reengineering examples – change the phone
booking to online booking, simplify the steps in
payment in government hospitals
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Types of Technology Configurations
Small batch
 Technologies that produce goods and services in
low volume. i.e. “Job Shop” – Car repair centre
Large batch
 Technologies that produce goods and services in
high volume. e.g. Factory – canned foods
Continuous process
 A process that is highly automated and has a
continuous production flow. e.g. Refinery –
water, petroleum; Nuclear power
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 Organizing for Flexible Manufacturing

 Mass customization
 The production of
varied, individually
customized products
at the low cost of
standardized, mass-
produced products.
 E.g. Dell – standard
laptops but can slightly
customized by adding
certain components
such as webcam for
additional cost

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 Key Features in
Mass Customization
Table 9.2

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 Computer-Integrated Manufacturing

Computer-integrated manufacturing (CIM)

 The use of computer-aided design and
computer-aided manufacturing to sequence and
optimize a number of production processes.

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 Flexible Factories

Flexible factories
 Manufacturing plants that have short production
runs, are organized around products, and use
decentralized scheduling.

 E.g. Certain factory only focuses on components,

another factory on assembling

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 Lean Manufacturing
Lean manufacturing
 An operation that strives to achieve the highest
possible productivity and total quality, cost
effectively, by eliminating unnecessary steps in
the production process and continually striving
for improvement.

 Toyota mentioned that it uses this method to

eliminates unnecessary parts that customers do
not want

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 Organizing for Speed: Time-Based
Competition
Time-based
competition (TBC)
 Strategies aimed at
reducing the total
time needed to
deliver a good or
service.

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 Question

___________ is the movement of the right

goods in the right amount to the right place at
the right time.
A. Logistics
B. Supply chain management
C. Value chain analysis
D. Customer Service

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 Time-Based Competition

Logistics
 The movement of
the right goods in
the right amount to
the right place at
the right time

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 Time-Based Competition

Just-in-time (JIT)
 A system that calls for subassemblies and
components to be manufactured in very small
lots and delivered to the next stage of the
production process just as they are needed.
 Components/products are ordered whenever
they are needed to reduce storage cost

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 Just-in-time (JIT)

Elimination of waste
Perfect quality.
Reduced cycle times.
Employee involvement
Value-added manufacturing
Discovery of problems and prevention of
recurrence

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 Time-Based Competition

Concurrent engineering
 A design approach in which all relevant functions
(i.e. from R&D, production to delivery) cooperate
jointly and continually in a maximum effort
aimed at producing high-quality products that
meet customers’ needs.

 E.g. Toyota, Honda?

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