Chapter 7

Principles of Management

• Course: MAN3025

• Instructor: Jones

• Date: 2/17/25

Miscellaneous Notes

• Grading & Inputting Grades

  • Almost complete with grading tasks.

• Summer Courses Offered:

  • MAN4201 - Organizational Theory

  • LDR4263 - Leadership Practicum (2)

  • All courses conducted online.

• Extra Credit Opportunity:

  • Guest Speaker: Viv Dietrich from Glazier & Dietrich, PA

  • Topic: Succession planning discussion

  • Time: 1:40 PM

  • Location: Building 2 (Founders Hall), Room 2212

In The News

• Headline: OpenAI Rejects Elon Musk's $97.4 Billion Bid

  • OpenAI board chairman, Bret Taylor, stated the company is "not for sale."

  • The bid by Musk and investors deepens conflict with CEO Sam Altman.

  • OpenAI's board unanimously rejected Musk's attempt to disrupt competition.

Organizational Charts

• Purpose:

  • Visual representation of a company’s structure and reporting relationships.

• Types of Organizational Structures:

  • Functional: organized by department

  • Divisional: organized by product or region

  • Matrix: dual reporting structure

  • Flat: minimal management layers

Apple’s Organizational Structure

• Overview:

  • Largely functional, organized by expertise.

  • Centralized decision-making process.

  • High-level collaboration across teams.

  • Includes one major geographical division.

Types of Divisional Structures

• Product-Based Example:

  • Procter & Gamble has divisions in Home Care, Baby Care, Beauty, Health, and Grooming.

• Geography-Based Example:

  • Coca-Cola is divided by regions: North America, Latin America, Asia Pacific, Europe, Middle East, and Africa.

• Market/Customer-Based Example:

  • Johnson & Johnson has divisions for Consumer Health, Medical Devices, and Pharmaceuticals.

Matrix Organization Structures

• Description:

  • Combines functional and product-based structures, allowing employees to report to both functional and project managers.

• Examples:

  • Google, Boeing, and Nike employ matrix structures.

Flat Organizational Structures

• Characteristics:

  • Few management layers promoting autonomy.

  • Decision-making is generally quicker.

• Example:

  • Spotify uses innovative team structures including "squads," "tribes," "chapters," and "guilds."

Board of Directors

• Responsibilities:

  • Oversees long-term strategy and protects shareholder interests.

  • Key Roles:

    • Set the vision for the company

    • Hire or fire the CEO

    • Approve major decisions

  • Example:

    • OpenAI’s board famously fired CEO Sam Altman in 2023, highlighting governance concerns in tech firms.

• Composition:

  • Public companies require a mix of internal and external directors; private companies may prioritize family representation.

CEO Responsibilities

• Role Overview:

  • Sets the strategic direction of the company and publicly represents it.

  • Must balance innovation and operational execution.

  • Example: Tim Cook focuses on operations and services growth post-Steve Jobs.

Jamie Dimon Example

• Background:

  • CEO and Chairman of JPMorgan Chase since 2006.

  • Led the bank to become the largest U.S. bank by assets.

• Leadership Style:

  • Known for pragmatic leadership and strategic acquisitions.

  • Successfully navigated the bank through the 2008 financial crisis.

Risks of CEO and Board Chair Consolidation

• Potential Disadvantages:

  • Lack of oversight due to the CEO monitoring themselves.

  • Risk of unchecked power and poor accountability.

  • Case Study: WeWork's challenges with governance due to concentrated power.

WeWork Case Study

• Overview:

  • Founded in 2010, scaled rapidly due to significant investments from SoftBank.

  • IPO filing in 2019 revealed gross losses and poor governance—eventually withdrew IPO.

  • Valuation dropped from $47 billion to under $10 billion, declaring bankruptcy in 2023.

Adam Neumann's Leadership

• Role:

  • Served as both CEO and Chairman with significant power but limited board oversight.

• Leadership Issues:

  • Promoted grand visions while neglecting fundamental business metrics.

Discussion Question:

• Reflect on experiences of disproportionate control in teams or organizations.

• Discuss the effects on group success and decision-making.