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The following will be discussed in this chapter: 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 Lecture 30 Today’s Lecture n Organizing Principles ¨ The Learning Organization ¨ Processes Rather Than Functions ¨ Communities Rather Than Groups ă Virtual Rather Than Physical ă Self-Organizing Rather Than Designed ă Adaptable Rather Than Stable ă Distributed Rather Than Centralized The Challenges Ahead n 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 n It looks at the challenges facing IS organizations worldwide by assembling a collage of opinions about possible principles underlying the e-world ă 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 n 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 n 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 n In this Lecture we address the challenges faced by IS organizations worldwide by assembling a collage of possible principles underlying the ‘e-world’ Introduction n The computer is an amazing machine ¨ Leverages power people’s brain power, not just muscle n This capability is being used to process data & communicate in new ways n 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) n n n n 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 n Most organizations live only 40yrs – 1/2 the life of a person, because they have ‘learning disabilities’ Organizational Learning Disabilities 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 Organizations fix on events – yet the real threat comes from processes that move so slowly, no one notices them 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 n n 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 CEMEX Case Example: ‘Self organized’ organization n Cemex (Cementos Mexicanos) delivers ready mix cement in Monterey Mexico n Delivering mix on time difficult – traffic jams, poor road conditions, contractors not ready for their order n Delivery rate = 35% CEMEX Case Example: ‘Self organized organization n Deal with problem of unpredictability: ă No reservations required ă Deliver n faster than pizza Turned attention to managing information rather than assets CEMEX Case Example: Self designed organization cont n To so: ă They n installed a GPS system for all the trucks & full information to all employees ă 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-aprocess” 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 n n 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 Result = organizing principle cont n n Factory workers: ă At times set up their own production quotas ă Help redesign products ă Formulate marketing plans ă Choose their own bosses Bosses: ă 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 n n n 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 n Speculation on future organizations ă Successful organizations will be structured to naturally support (perhaps even foster) volatility and continual surprises n Today’s organizations are structured to maintain stability; change is minimised ă Change costs a lot ă Firms built for stability are not adaptable Organizing Principles Adaptable Rather Than Stable ă IT is causing the world to become more connected n Connectivity increases volatility n To keep pace companies will need to adapt more quickly n The only way to achieve adaptability = through distributed intelligence and action ă Thus organizational models will be built around networks and will be designed to evolve CAPITAL ONE Case Example: Adaptable Rather Than Stable n Credit company that believes in the law of large numbers ă Conducts 000s of tests to read the marketplace ă Strategy = dreaming up credit programs that might have value to customers n n 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 n Strategy goes with its bottom-up culture where decisions are made at the bottom based on the market tests ă Management controls funds for rolling out new products but not for conducting the testing n Has the lowest charge-off rate and the highest risk adjusted margin in the industry n Grew 45% in one year! Organizing Principles Distributed Rather Than Centralized n Organizations of the future could become more distributed Two views: 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 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 n We have Covered Today Organizing Principles ă The Learning Organization ă Processes Rather Than Functions ă Communities Rather Than Groups ă Virtual Rather Than Physical ă Self-Organizing Rather Than Designed ă Adaptable Rather Than Stable ă Distributed Rather Than Centralized Summary… n n n n 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 ...Todays Lecture n Organizing Principles ă The Learning Organization ă Processes Rather Than Functions ă Communities Rather Than Groups ă Virtual Rather Than Physical ă Self-Organizing Rather Than... viewpoints of the differences between non-networked and networked and their importance The Challenges Ahead n Case examples include NYNEX, a football team, National Semiconductor, Sun Microsystems,... One, MIT’s IT for the Non-IT Executive Program and SIM’s Strategic Business Leaders Program Introduction n Despite all the ‘bad news’ of the dot-com crash etc ă Enterprises around the world are quietly