Chapter 1 - Management: "Right Work, Done Well", Chapter 2 - The Evolution of Management, Chapter 3 - Identifying the "Right Work", Chapter 4 - Doing What's "Right", Chapter 5 - Growth, Innovation, and Entrepreneurship, Chapter 6 - Managing a Global...

"What vs. "How" of Management

"What" : identifying the right work that needs to be done

"How" : understanding ways in which a manager gets the work done "well" (i.e. actions they make to manage/influence)

How do managers identify the "Right Work" to be done?

1. Vision, Mission, Goals, Strategy, & Plans

2. Doing What's Right (i.e. Legal Compliance, Ethical Decision Making, Core Values, CSR)

3. Managing Growth, Innovation, and Entrepreneurship

4. Managing a Global Business

How do managers make sure work is "Done Well"?

1. Organization Design

2. Human Resources Mgmt. (HR)

3. Employee Engagement

4. Performance Management

Management is a "practice"

To learn mgmt., you must apply concepts and processes you learn to real world situations

Limitations of Management Theory

1. Rarely grounded / difficult to conduct scientific studies

2. Based on years of experience and research

When was Frederick Taylor born?

1856

Study of Management History - Controversy

1. Mgmt. practices are situational

2. 4 Facets Influence Mgmt. Practices (Economic, Social, Political, Technological)

3. Facets are constantly changing and require better/new practices

What are management practices?

Considered a primary means for an organization to achieve its goals

Study of Mgmt. History Controversy - Historian Bias?

1. The people who write about it (i.e. selectively use data that supports their views)

2. Original documents that recorded it (i.e. these docs. may be a product of the biases of those who originally wrote them)

Study of Mgmt. History Controversy - Data Limitations?

1. May not represent general practices

2. May not represent best practices

What is the Value of Management History Study?

1. To observe the drivers/pace of change

2. To examine whether practices have been universal or variable (i.e. across orgs.)

3. To determine if facets/practices are dependent or independent of each other

4. To observe the "focus" of mgmt. practices and if it's changed/changing

What best approaches should we use to study the evolution/history of management?

1. Study the "stages" or "time periods"

2. Study "schools of thought"

3. Study "organizations"

4. Study "biographies"

What are the 5 Categories of Management Practices?

1. Specialization of Labor

2. Systematic Management

3. Scientific Management

4. Administrative

Management

5. Human Relations Management

1/5: Specialization of Labor

1. 1st identified by Adam Smith in the late 1700s

2. 1 laborer focuses on 1 single component of production

3. Increase experience and productivity

2/5: Systematic Management

1. Early Industrial Revolution

2. Ideas on how to run large businesses/factories came from:

- Economists: financial aspects

- Engineers: how to set up/run which machines for certain tasks

3. Work became specialized and moved to being done by other specialists over time

3/5: Scientific Management

1. Main Focus: increase productivity

2. Frederick Taylor (late 1800s/early 1900s):

- record steps/actions in tasks

- analyze worker's interaction w/ machinery

- incentivize them to achieve a certain "standard" or performance goal

3. Frank & Lilian Gilbreth (early 1900s): time & motion studies

4. Henry Gantt (early 1900s): sequential illustration of workflows

5. Deming, Juran, Ishikawa, & Ohno (mid to late 1900s): Statistical Process Control & JIT

6. Eliminating waste time and motions are foundations for "Lean" & "Big Data"

4/5: Administrative Management

1. Henri Fayol (early 1900s): 14 Principles & 1st to identify the Mgmt. Process

2. Max Weber (late 1800s - 1900s): Bureaucratic Mgmt. & Six Doctrines

5/5: Human Relations Management

1. increasing power of "Unions"

2. advent of "Employee Welfare" departments that evolved into "Personnel" departments

3. Hawthorne Studies (Elton Mayo) - effect of lighting levels on the productivity of workers

- productivity increases regardless of light changes / foundation of "human relations movement"

4. Mary P. Follett (early 1900s): believed in the role of the leader to obtain desired outcomes

1930s:

- National Labor Relations Act

- Coalition of Labor Unions (CIO)

5. Herbert Simon: theory of "Bounded Rationality" - not humanly possible for a manager to make "perfect" decisions

6. Roots of Org. Theory & Org. Behavior Studies

Historical FOCUS of Management Practices:

1. The notion of the "Right Work" has changed

2. The notion of how to do it "Well" has changed

3. The purpose of mgmt. remains the same! *

Scientific Perspective of Evolution of Mgmt.?

1. Economic and Technological

2. Mgmt. Primary Responsibilities: Owners & Profits

- focused on optimizing efficiency

Human Relations Perspective of Evolution of Mgmt.?

1. Social and Political

2. Mgmt. Primary Responsibilities: Society & Worker

- recognizes individual's needs to belong to a group

Collaborative Perspective of Evolution of Mgmt.?

1. Mgmt Primary Responsibility: stakeholder balance

2. Primary Means:

- Corporate Social Responsibility (CSR)

- Worker Engagement

What are the 5 Elements for Identifying "Right Work"?

1. Vision

2. Mission Statement

3. Goals

4. Strategy

5. Plans

1/5: Vision

describes organization's purpose/aspirations for existence

2/5: Mission Statement

- business description (products/services)

- elaborates how the org. will pursue its vision

- describes why constituents (customers, employees, shareholders, communities, etc.) should support the org.

3/5: Goals

- identify the results/outcomes an org. wants to achieve - specifies their success

- Two Primary Types of Goals:

1. Financial: sales/revenue earned, profit, net cash flow amt., etc.

2. Operational: market share vs. competitors, # of new & returning customers, etc.

4/5: Strategy

describes how/what actions managers will take to achieve the organization's goals

5/5: Plans

Outlines specific actions/steps, resources required, and timeline for completion to execute the organization's strategy for achieving its goals

What are the 4 Strategy Options?

1. Differentiation

2. Low-Cost

3. Combination

4. Focus

1/4 Strategy: Differentiation

Provide products/services and develop features/benefits that are superior and appeal more attractive to customers than competitive/rival offerings

- EX: BMW vs. Chevy

2/4 Strategy: Low-Cost

Develop, produce, and deliver products/services using lowest total cost methods vs. competitors (taking out all its inefficiencies)

- EX: Walmart

3/4 Strategy: Combination

Provides a few differentiation features enjoyed/valued by customers at an overall lower cost/price point than competitors' fully differentiated product/service offerings

- EX: Lexus w/ automobiles (some luxury features but affordable price)

4/4 Strategy: Focus

Serves a market segment more effectively (picking a target group) than competitors' offerings for the total market

Market Segments include:

1. Geographic (location)

2. Demographic (age, income level)

3. Product/Service Specialization or Customization (i.e. Big & Tall Clothing)

Core Competencies

Things that an organization can do well

What is the 'Strategy Model'?

Once a strategy is selected, it allows an org. to develop distinctive competencies - in order to create a competitive advantage - which leads to superior performance - and achieves the org.'s goals

5 Steps of the Strategy Development Process

Step 1: develop/review/update the Vision, Mission, and Goals of the organization

Step 2: conduct an external analysis of the business environment & industry it competes in

Step 3: conduct an internal analysis of products/services and capabilities vs. competitors and world-class standards

Step 4: based on 1-3, evaluate & select the best strategy for achievement of goals

Step 5: implement the strategy

What is management?

The purpose of management is to get the right work, done well

What are the 3 External Analysis Tools?

1. Porter's 5 Forces Analysis

2. Industry Life Cycle Analysis

3. Macro-environmental Analysis

1/3 External: Porter's 5 Forces Analysis

An analysis tool that looks at how the following factors influence profitability in an industry:

(1) Intensity of Rivalry

(2) Bargaining Power of Buyers

(3) Bargaining Power of Suppliers

(4) Threat of New Entrants

(5) Threat of Substitute Product/Service

The stronger these forces are, the more downward pressure there is on industry profitability

2/3 External: Industrial Life Cycle Analysis

This tool looks at typical stages of the evolution of industries. The stages include:

(1) Embryonic

(2) Growth

(3) Shakeout

(4) Mature

(5) Decline

1/5 Life Cycle: Embryonic

A unique/new product/service begins formation of a new industry

2/5 Life Cycle: Growth

New product/service beings to be accepted by customers (accelerating growth)

3/5 Life Cycle: Shakeout

Growth flattens/decline w/ participants exiting or merging to competitors

4/5 Life Cycle: Mature

When industry growth slows down and # of entrants declines

5/5 Life Cycle: Decline

When growth is negative; few participants remaining

3/3 External: Macro-environmental Analysis

This tool evaluates a variety of factors that broadly affect all industries. Is it an opportunity, threat, or neither? The factors commonly evaluated include:

(1) Macroeconomic

(2) Global

(3) Technology

(4) Demographics

(5) Social Values

(6) Political/Legal Factors

What are the 5 Internal Analysis Tools/Attributes Evaluated?

1. Product/ Service Quality

2. Efficiency

3. Innovation

4. Customer Responsiveness

5. Distinctive Competencies

1/5 Internal: Product/Service Quality

Customer-perceived performance relative to alternatives & world-class standards

- Does the customer value your product, rather than alternatives?

2/5 Internal: Efficiency

Outputs/inputs resource use relative to competition and world-class standards

- Relative comparison of overall cost structure vs. competitors

3/5 Internal: Innovation

Success rates at developing new products and improved processes vs. competitors & world-class standards

4/5 Internal: Customer Responsiveness

How well does the organization understand and fulfill/deliver customer requirements vs. competitors?

5/5 Internal: Distinctive Competencies

Definition: allow the organizations to differentiate products/services from competitors in order to create 'superior' value with the ability to have the lowest cost structure

- do the organization's DCs provide a competitive advantage?

- are they superior to competitors' DCs?

- how vulnerable are the organization's DCs to imitation?

What are the 3 Elements of Strategy Implementation?

1. Organization Structure

2. Monitoring & Control

3. Culture

1/3 Strategy Implementation: Organization Structure

Identify and create jobs req. to complete necessary tasks to execute org.'s plans and fulfill its missions/goals

- Integrates and coordinates employee activity by grouping jobs & assigning authority in order to effectively/efficiently deliver results

2/3 Strategy Implementation: Monitoring & Control

Creating a system that reviews progress in org. and individual performance

- Feedback mechanisms to share performance results and encourage goals being achieved

- Provides motivation to encourage good performance

3/3 Strategy Implementation: Culture

Set of values, norms, beliefs, and attitudes shared by members of the organization

- The culture must be aligned and supportive of strategies/plans of the organization to implement them

Why are Plans often revised or abandoned?

1. Competitor's Actions/Reactions

2. Limited Resources or Capabilities

3. Lack of Support from Employees

4. Ineffective

5. Competing Priorities

6. New Information/Unexpected Events

Some organizations are more __________ than others in regards to pursuing the "Right Work"

Disciplined

When _________ comes, organizations need to be ___________ in order to increase profitability of successfully achieving goals

1. Change

2. Flexible & Adapt Quickly

4 Elements of Doing What's "Right"

1. Business Law

2. Ethical Decision Making

3. Core Values

4. Corporate Social Responsibility (CSR)

1/4 : Business Law

Legal requirements for businesses & their impact on business activities

Variety of laws/regulations that govern the activities of businesses:

(1) Labor Laws & Regulations

(2) Uniform Commercial Code

(3) Environmental Protection

(4) Industry Specific Regulations

1/4 B. Law: Labor Laws and Regulations

list of laws that were enacted to protect workers (over the last 85 yrs.)

- National Labor Relations Act (1935): right to strike

- Fair Labor Standards Act (1938): established 40-hour work week

- Social Security Law (1935): retirement income for workers aged 65(+)

- Equal Pay Act (1963): illegal to have different pay rates based on gender

- Civil Rights Act (1964): illegal to discriminate in employment (i.e. race, religion, sex)

- OSHA (1970)

2/4 B. Law: Uniform Commercial Code

Set of laws that regulate commercial transactions / provide set standards that market participants can refer to

- Purpose: provide a set of standards to be used nationwide to deal w/ disputes (i.e. shipping across state lines)

3/4 B. Law: Environmental Protection Laws and Regulations:

Legal responsibility of businesses to protect the environment - governed by federal statutes, regulations, judicial decision, & common law

- Over 25 different federal statutes dealing with environ. protection (i.e. Clean Air / Water Act, Noise Control)

- Environmental Protection Agency (EPA): primary federal gov't institution responsible for implementing statutes

4/4 B. Law: Industry Specific Regulations

Govern specific activities - some examples:

- Publicly Traded Companies: Sarbanes-Oxley Act (2002) required companies' senior executives to be responsible for accuracy of financial reporting

- Financial Services: SEC & bank regulations → rules applying to stock exchanges, investment banks, etc.

- Professional Baseball

- Oil & Gas Industry

2/4: Ethical Decision Making

Many examples of misconduct in businesses

- EX: inappropriate financial gain (Enron, WorldCom)

Why are there many examples of unethical behavior in businesses?

1. What does happen?

2. What should happen?

"What Does Happen" when someone acts unethically has to do with:

1. Internal Factors: moral development, ability to accept/obey authority, control one's behavior

2. External Factors: organization's culture, consequences of bad behavior, work characteristics, etc.

"What Should Happen" when someone is faced with an ethical decision has to do with:

Model developed by James Rest suggests 4 steps to be followed:

1. Moral Awareness

2. Moral Judgement

3. Moral Intention

4. Action/Implementation

Moral Awareness

Realize that there is a moral issue or ethical problem

Moral Judgement

Figure out what you should do by applying moral standards to determine the appropriate moral course of action

1/6 Ethical Standards: Utilitarian

Should choose the option that provides the greatest good for greatest amount of people

2/6 Ethical Standards: Individualism

Should choose the option that aligns best with and promotes the individual's long-term interests

3/6 Ethical Standards: Moral Rights

Should choose the option that doesn't violate any individual rights (privacy, speech, etc.)

4/6 Ethical Standards: Justice

3 types

1. Distributive

2. Procedural

3. Compensatory

1/3 Justice: Distributive Justice

Should choose based on standards of equity and fairness -- considering the outcome and whether it's affecting certain groups vs. others

2/3 Justice: Procedural Justice

Should choose based on fair administration -- following a process that's intended to deliver a fair outcome

3/3 Justice: Compensatory Justice

If there's essentially no way you can act that isn't going to harm someone, you should take responsibility to protect/compensate those affected by your decision in an appropriate way

5/6 Ethical Standards: Impartial Opinion

Inviting a 3rd party to reduce unbiasedness and visualize the situation

6/6 Ethical Standards: Full Disclosure

Whatever decision gets made is presented publicly to view how majority of the public would judge this situation

Moral Intention

Place moral values above other personal values in order to intend to do what is morally right

Action/Implementation

Implement a plan of action based on strength & determination to follow through on your plan to behave morally

3/4: Core Values

Are the underlying norms of behavior and actions that are expected of all employees in an organization

- Developing core values is essential for defining the 'Right' thing to do for employees

- Must be reinforced by examples & actions

4/4: Corporate Social Responsibility (CSR)

Is the actions of an organization to recognize and proactively respond to the needs and expectations of all of its stakeholders

- Stakeholders include: customers, suppliers, distributers, employees, communities, etc.

What is not just the "Right" thing to do, but also the "Smart" thing to do?

CSR

(CSR & McKinsey Studies) What are 3 things that proactive leaders do?

1. Act as a role model (words and actions)

2. Use empathy

3. Create a broader vision

2 Drivers of Economic Value of a Business

1. Profitability

2. Growth

Profitability

Ability to generate long-term positive cash flow necessary to provide an appropriate, risk-adjusted, rate of return on capital employed

- ROIC = NIAT/Equity + LT Debt

Growth

Rate of increase in net cash flows in a business year over year

- Business that is growing is more valuable that one that is not

What are the key components for doing the "Right Work"?

Growth, innovation, & entrepreneurship

Options for Creating Growth

1. Selling more of a business's existing products/services to existing customers

2. Gaining new customers from current market, while keeping the ones you already have

3. Selling new products/services to existing AND new customers

4. Selling existing products/services to completely NEW markets

5. Entering NEW markets with NEW products/services

What is "Innovation"?

Executing an idea which addresses a specific challenge and creates value for the developer and the user

- Can be used to create new/improved products OR business processes

- Innovation is a KEY enabler of growth

3 Mechanisms for Successful Innovation

1. Use of Artificial Intelligence (AI)

2. Use of Technology Platforms

3. Use of Collaborative Ecosystems

1/3 Innovation: Artificial Intelligence (AI)

Computer systems able to perform tasks that normally require human intelligence

- i.e. visual perception, speech recognition, decision-making, translation between languages

2/3 Innovation: Technology Platforms

Provide a foundation for developing other business offerings

- with TPs, organizations are able to innovate faster by capitalizing on capabilities these platforms assist

3/3 Innovation: Ecosystems

Multiple organizations working collaboratively to enable rapid development of new technologies, products, and services - How do they help?

- Collecting & using data

- Gaining access to Intellectual Property (IP)

- Merging physical and digital marketing channels

- Advancing new technologies

What is "Entrepreneurship"?

Bringing forth new ideas/concepts that create value; entrepreneurs often act w/ urgency (in unusual ways) to address immediate challenges and generate opportunities among uncertainty

Intrapreneurship

How large businesses are able to create new business ventures through creative and uncommon actions of their employees

How Do Large Businesses Create Successful Ventures?

1. Top Leadership Commitment

2. Creating limited target/interest areas aligned to business' core competencies

3. Overcome typical obstacles that hold back internal new ventures

4. Create separately funded business development organizations

5. Use innovation tools (TPs & ecosystems)

6. Learn from successes and failures of prior ventures

7. Terminate unsuccessful ventures

Globalization

Is the trend towards a more integrated and interdependent global economy