Managerial Economics and Organizational Architecture, 5e Managerial Economics and Organizational Architecture, 5e Chapter 23: Organizational Architecture and the Process of Management Innovation McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc All Rights Reserved Managerial Economics and Organizational Architecture, 5e Management Innovations • Bookstores are filled with “how-to” books of management gurus, hype typically exceeds reality • Relevant questions – What explains popularity of innovations? – Why they often fail? – How to tell if a given technique is appropriate? – How to improve likelihood of success? 23-2 Managerial Economics and Organizational Architecture, 5e The Percentage of Business Articles Mentioning Various Management Techniques by Year 23-3 Managerial Economics and Organizational Architecture, 5e Demand for Management Innovations • Rational response to obsolescence, e.g – change in technology – worldwide competition • Examples – TQM – Reengineering – JIT – Outsourcing 23-4 Managerial Economics and Organizational Architecture, 5e Why Innovations Often Fail • Marketing – inappropriate expectations – quality is not free • Does the expected rate of return justify the investment associated with changing the organization? • Underestimating costs of change • Failure to consider the other legs of the stool 23-5 Managerial Economics and Organizational Architecture, 5e The Relation Between Quality and Firm Value 23-6 Managerial Economics and Organizational Architecture, 5e Managing Changes in Organizational Architecture • • • • If it ain’t broke, don’t fix it One size doesn’t fit all Make sure the stool balances Focus on one thing at a time 23-7 Managerial Economics and Organizational Architecture, 5e SDI Total Costs by Defects 23-8 ... 23-5 Managerial Economics and Organizational Architecture, 5e The Relation Between Quality and Firm Value 23-6 Managerial Economics and Organizational Architecture, 5e Managing Changes in Organizational. .. 23-2 Managerial Economics and Organizational Architecture, 5e The Percentage of Business Articles Mentioning Various Management Techniques by Year 23-3 Managerial Economics and Organizational Architecture, .. .Managerial Economics and Organizational Architecture, 5e Management Innovations • Bookstores are filled with “how-to” books