Lectures 3 & 4 - Factors & Variables in Organisational Design, and Business Process Management & Viable Systems Model

Flat organisations tend to succeed when:

• Environment is rapidly changing – small, autonomous teams, responsive

• Innovation is your differentiator – flatter structure tends toward innovativeness

• Organisation has a shared purpose – a shared commitment

Why Organisation Strategy is important (MNCs)

• Provides direction and alignment across their complex global operations, ensuring cohesion across countries/regions

• E.g. Toyota has a focus on operational excellence and continual improvement. Focus on lean operations and efficiency guides decisions across their worldwide manufacturing and business units

• Helps MNCs to respond effectively to rapidly changing international market differences and opportunities. By outlining priorities for global integration versus local responsiveness, resources can be allocated appropriately across regions.

• E.g. L'Oreal's strategy emphasizes customizing products and marketing for local beauty preferences while leveraging global scale in R&D and production. This dual strategic focus has driven their international expansion.

Why Organisation Structure is important (SMEs)

• Structures allow flexibility and quick decision making in dynamic environments. Flatter SME structures give staff autonomy and avoids slow responses.

• For example, Shopify's operational structure is highly decentralized so that small teams can rapidly develop solutions and bring products to market.

• Secondly, organisational structure evolves to support increasing coordination demands as SMEs grow. More specialized functions, management tiers, and formal processes may be adopted to manage rising complexity while maintaining control over operations.

• Uber evolved from a flat start-up structure to establishing regional divisions grouped globally by function as complexity grew with expansion
  

5 factors that affect organisational structure within organisations

• Customer and Markets

• Environment

• Size

• Strategy and Organisational Design

• Technology

4 characteristics of environments and their opposites:

Complex

Diverse

Dynamic

Hostile

• complex - many environmental elements to monitor

• simple - few environmental elements to monitor

• diverse - high variety of products and services

• integrated - one of very few products or services

• dynamic - high rate of change and uncertainty

• stable - predictable, steady change

• hostile - resource scarcity and high competition

• munificent - plentiful resources and limited competition

what is the role of boundary spanning departments?

to filter out uncertainty (often from environment e.g. suppliers or customers)

Possible issues of organisational design

culture clashes - takeovers, old vs. new

over-regulation - bureaucratic approval process

politics - PM, departmental/historical turf wars

What sort of uncertainty exists OUTSIDE an organisation?

• Competitor actions

• Demand - unpredictable changes in demand

• Distribution system performance

• Economic uncertainty

• Supplier performance

What sort of uncertainty exists INSIDE an organisation?

• Absenteeism

• Breakdowns

• Strikes

Dealing with uncertainty - Filter it out:

• use lean techniques

• increase automation

Dealing with uncertainty - Live with it:

• less structure

• use knowledge

• output performance measurement

• decision support systems

• create weak situations

Transformation today means:

• simpler business led change

• full process visibility and governance

• optimised processes and decisions

6 parts of basic system model

OC

OC

DP

-

-

-

1 - Operations (doing things, making stuff)

2 – Coordinating (standards, committees, informal)

3/4 – Optimising (setting & monitoring goals) and Checking (periodic checks of KPI, audit)

5 – Development (observing, predict future environment)

6 – Policy making (how should system alter to deal with changing environment)

Algedonic system – emergency by-pass regulation (regulation by pain or pleasure)