Organisational Structure, Innovation and Performance

Knowledge

Explicit

• codified knowledge

• documents, databases

Tacit

• intuitive knowledge & know-how, which is:

• rooted in context, experience, practice & values

• hard to communicate - it resides in the mind of the practitioner

• the best source of long term competitive advantage and innovation

• its passed on through socialization, mentoring, etc. - is not handled well by IT

Tacit ←→ explicit

Know-how ←→ Know what

Tacit

• experts

• corporate knowledge

• core competencies

• customer perspective

• external information

• databases

• hard archives

Explicit

Knowledge flow

Knowledge sources → idea generation → decisions → actions → results

Strategy

idea generation → decisions → actions → results

• all supported by:

  • knowledge sources: filtered + focused + expanded

Functional structures

President

• R&D

• Manufacturing

• Marketing

• HR

• Finance

• Procurement

Elements of functional structure

1. Work specialization

   To what degree should work tasks in an organization
   be subdivided into separate jobs? How well should
   these jobs be defined?

2. Hierarchy

   Should there be many layers of management (tall
   hierarchy) or few (flat hierarchy)? What are the
   implications in terms of communication, employees’
   motivation and staff costs?

3. Span of Control

   How many subordinates should a single manager /
   supervisor be responsible for?

4. Chain of command

   To whom should a given individual or group report with
   respect to their work? Should there be unity of
   command?

5. Departmentalization

   Should jobs be grouped within departments whose
   staff share a common expertise (functional); or
   according to the product or service they offer, the
   geographical area they operate in, the type of
   customer they serve, or some other basis?

6. Formalization

   To what degree should written rules, operating
   procedures, job-descriptions, organizational charts,
   and formal, written communication be used?

7. Centralization

   Should decisions be made at the top of the company
   or should decision making be delegated to the lower
   managers in the organizational hierarchy? –
   Advantages and disadvantages

Divisional structure

Division Product X

• R&D

• Manufacturing

• Marketing

• Finance

Division Product Y

• R&D

• Manufacturing

• Marketing

• Finance

Division Product Z

• R&D

• Manufacturing

• Marketing

• Finance

Matrix structure

Manager product X

Manager product Y

Manager product Z

R&D

Manufacturing

Marketing

Finance

Organizational Structures (mechanistic/bureaucratic versus Organic)

Mechanistic

1. High specialization

2. Rigid departmentalization

3. Clear chain of command

4. Narrow spans of control

5. Centralization

6. High formalization

Organic

1. Cross-functional teams

2. Cross-hierarchical teams

3. Free flow of information

4. Wide spans of control

5. Decentralization

6. Low Formalization

The Strategy-Structure Relationship

What structure would fit the following strategies?

• Innovation

  a structure that facilitates knowledge development and exchange

• Cost minimisation

  a structure that facilitates efficiency

• Imitation

  a structure that faciltates fast and efficient production

Six basic parts of the organisations

• ideology

• strategic apex

• middle line

• technostructure

• operating core

• support staff

the changing nature of work

• intellectual rather than physical

• innovative rather than routine

• culturally diverse rather than standard

• Geographically distributed rather than co-located

• Communication and coordination are increasingly done through electronic means rather than by face-to-face interaction

New forms of organising

In place of tall hierarchies, flatter structures allow for more decentralised decision-making, thereby reducing the burden on executives and allowing for quicker and more responsive decision-making

Organizational Culture

• A common perception held by the organization’s members; a system of
  shared meaning

• Characteristics:

  1. Innovation and risk taking

  2. Attention to detail

  3. Outcome orientation

  4. People orientation

  5. Team orientation

  6. Aggressiveness

  7. Stability

Culture

• Each organization has a unique culture

• Based on the values & principles displayed by leaders

• Has its own stories & myths

• Deeply rooted

  • Core essence of organization

  • Often first expounded by founder

Culture’s Functions

1. Defines the boundary between one organization and others.

2. Conveys a sense of identity for its members.

3. Facilitates the generation of commitment to something larger than self-
   interest.

4. Enhances the stability of the social system.

5. Serves as a sense-making and control mechanism for fitting employees in
   the organization.

Three Levels of Organizational Culture

1. Observable artifacts (most observable)

2. Espoused values (less observable, but conscious)

3. Tacit assumptions (deeply engrained, unconscious)

How Employees Learn Culture?

• Stories

• Rituals

• Material Symbols

• Language

• Role-models

Core values

Customers first

Quality and integrity always …

Knowledge exchange in organizations (personalization)

• Focus: inter-personal knowledge sharing

  • Master -apprentice relationships

  • Knowledge brokers

  • communities of practice

• ICT: Limited: Used for communication (e-mail) and reference (Yellow Pages)

• Challenge: transfer to the organization

Communities of Practice (COPs)

• Groups of people who share a concern, a set of problems, or a passion about a topic, and who deepen their knowledge and expertise in this area by interacting on an ongoing basis.’

What is a Community of Practice?

• people

• with similar goals and interests

• who employ common practices

• who work with the same tools

• who use a common language

• hold similar beliefs and value systems

Cops in relation to other groups

CoPs are hard to grasp

• Often there are loose ties

• There are many different guises

• Important differences are:

  • Strategic (corporate) and spontanous CoPs

  • Aimed at knowledge sharing or knowledge development

  • Within or between organizations

• CoPs may have many different functions

Benefits of CoPs

• Benefits for individual members:

  • To solve ‘ad hoc’ problems

  • To accumulate knowledge through presentations, discussions, etc.

  • To network

  • To establish social bonds within the organization

• Benefits for the organization:

  • To develop ‘best practices’

  • To reduce costs (by creating more efficiency)

  • To innovate: developing new ideas

Typology of CoPs

• Local knowledge sharing communities:

  • 10 -20 members, physical proximity; intra-organizational

• Formal expert communities

  • 10 - 25 members, established by management, often inter-organizational,

  • Mode of interaction: face to face and through ICT

• Informal network communities

  • 20-200 members, informal, free access, very distributed,

  • Mode of interaction: through ICT

• Problem solving communities

  • Large amount of members (e.g. 600 monopile installators, distributed)

  • Mode of interaction: distribution list /e-mail Q&A sessions

• Latent networks (Delft Cluster)