OB II Chapter 10 (final)

Characteristics of small organization

- responsive, flexible.

- regional reach

- flat structure

- organic

- simple

- niche finding

- entrepreneurs

Characteristics of large organziations

- economies of scale

- global reach

- vertical hierarchy

- mechanistic

- complex

- stable market

- employee longevity, raises and promotions

stages of organization life cycle

1. Entrepreneurial

2. Collectivity

3. Formalization

4. Elaboration

Entrepreneurial stage characteristics

- nonbureaucratic

- informal structure

- single product or service

- innovation by owner

- goal is survival

- individualistic, entrepreneurial management style

Collectivity stage characteristics

- pre-bureaucratic

- mostly informal structure, some procedures

- major product with variations

- innovation by employees and managers

- goal is growth

- charismatic, direction-giving management style

Formalization stage characteristics

- Bureaucratic

- formal procedures, division of labour, specialties added

- line of products

- innovation by separate innovation groups

- goal is internal stability and market expansion

- delegation with control management style

Elaboration stage characteristics

- Very Bureaucratic

- teamwork within bureaucracy, small-company thinking

- multiple product or service lines

- innovation by institutionalized R&D

- goal is reputation, complete organization

- team approach, attack bureaucracy management style

Weber's Organizational Characteristics that can be found in successful bureaucratic organizations

- rules and procedures

- specialization and division of labour

- hierarchy of authority

- technically qualified personnel

- separate position from position holder

- written communications and records

Forms of Control

Bureaucratic, Market, Clan

Bureaucratic Control

Formal control mechanisms

- rules

- standards

- hierarchy

- legitimate authority

Market Control

Economic value, "market forces"

- price

- competition

- exchange relationships

Clan Control

Informal social control mechanisms

- tradition

- shared values and beliefs

- trust

Structure for Growth

- balance mechanistic and organic processes

- have the right amount of bureaucracy

- design scalable processes (processes that work whether you have ten or ten thousand employees)

Culture for growth

- adaptability or clan culture (flexible)

- mission and bureaucracy (top-down change)

Success Paradox

Success leads to greater strategic persistence (sticking to the status quo) after a radical environmental change, which induces performance declines

three factors considered to cause organizational decline

1. Organizational Atrophy

2. Vulnerability

3. Environmental decline or competition

Organizational Atrophy

Organization becomes overly bureaucratized, can't adapt to the environment

Usually follows a long period of success.

Organization takes success for granted, becomes attached to practices and structures that worked in the past, and fails to adapt to changes in the environment

Vulnerability

An organizations strategic inability to prosper in its environment

- may need to change domains; small orgs, startups

Environmental Decline or Competition

Capacity of the environment to support organizations

reduced energy and resources available to support an organization, new competition increases the problem

Organizational Decline

a condition in which a substantial, absolute decrease in an organization's resource base occurs over a period

5 Stages of Decline

1. Blinded

2. Inaction

3. Faulty action

4. Crisis

5. Dissolution

Blinded Stage

the internal and external stage that threatens long-term survival and may require the organization to tighten up

Blinded Stage solution

develop effective scanning and control systems that indicate when something is wrong

Inaction Stage

Denial occurs despite signs of deteriorating performance

- risk of "creative accounting"

Inaction Stage - Solution

Leaders need to acknowledge decline and take prompt action to realign the org with the environment

- new problem solving approach

- increasing decision making participation

- encouraging expression of dissatisfaction to learn what is wrong

Faulty Action Stage

Org is facing serious problems

- leaders must consider major changes

Faulty Action Stage - Solution

Leaders should reduce employee uncertainty by clarifying values and providing information

Crisis Stage

Org is not able to deal with the decline and is facing a panic

- chaos

- efforts to go back to basics

- sharp changes

- anger

Crisis Stage solution

Only solution is major reorganization

- dramatic actions are necessary

Dissolution Stage

this stage is irreversible

- only available strategy is to close down the org and reduce the separation trauma of employees