Wednesday, November 30, 2011

Long-linked Technology - sequential interdependence

In the last blog, we looked at the realign between mediating technology and the related task interdependence - pooled task interdependence. In today's blog we look at the long-linked technology and the related task interdependencies. 

To begin with, let’s take an example of assembly line. We sometimes see that there are lots of functions operators can perform independent of one another. So the different lines are pooled in the sense that their outputs are aggregated into the total output of the organization - this is an example of pooled task interdependence. 

In another situation, we see that within a production line, we see that each worker is dependent on the work of the others located at positions prior to theirs in line; this means that there is a sequential dependence of the tasks - this is called sequential task interdependence. This can be visualized as shown in the diagram below. 

Such sequential task interdependence requires more planning and scheduling than pooled interdependence. Getting back to the context defined earlier, we would   need to design tasks and assign workers and schedule to work together in order for the assembly line to work properly. Any break in the line can interrupt production, careful planning of tasks and scheduling of workers is imperative. Rules and procedures are also necessary and these don't need any explanation.

Tuesday, November 29, 2011

Mediating Technology - task interdependence and coordination

In the last blog, we looked at the relation between Technical complexity, Uncertainty and Routineness. In today's blog, we begin the discussion on relation between task interdependence and mechanism of Coordination.

Thompson recognized that the objects being processed or the work processes of a technology may be interrelated so that changes or problems in one part of the technical system affect other parts. This is defined situation as task interdependence.

In this blog, we look at specifically at mediating technology. To understand this, let’s take the example of a bank.

Bank employees mediate between borrowers and savers or investors. The mediation cab is accomplished simultaneously by several bank branches that operate independently of one another.  Little direct contact is needed between the various units. In such cases, the output of the organization is simply the sum of the efforts of each unit. - This is called "pooled task interdependence". 

We could visualize this as shown in the diagram below.

Another interesting point to note is that, if the organization wishes to achieve a coherent organizational identity or ensure services are consistent across units, this can be achieved by setting up and following rules and standard procedures.

Monday, November 28, 2011

Technology Complexity, Uncertainty and Routineness

In the last blog, we discussed about the technology imperative and how it affects the structure of an organization. In todays blog, we look at how technical complexity, uncertainty and routiness are related.

Woodward's study indicated that both unit and continuous processing technologies are associated with low routineness while mass production technologies have high routineness. Thus the relationship between routines of work and technical complexity takes the form of an inverted U. The following diagram indicates the same. 

We could represent Perrow's two dimensional topology of technology into once single dimension of routiness as shown in the following diagram. 

The above 2 diagram shows how both the topologies link technology and social structure in terms of routines and non-routinesss of work.

Thursday, November 24, 2011

Technology and Implications on Organization Structure

In the last blog, we looked at Perrow's topology of technology. Beginning with today's blog we begin understanding the relation of the technology on the social structure of an organization. We could classify the affects of this social structure into one of the following 3 classes. 
  1. Technology Imperative
  2. Relationship between Technology complexity, Uncertainty and Routine-ness 
  3. Task interdependence ant Mechanism of Coordination

In today's blog, we begin the first of these - The Technology Imperative.

The early works of Woodward's indicated that technology used by the organization would determine what sort of organization structure was best. This belief was called "Technology Imperative". However, when this was studied extensively by the researchers at "Aston Group", they found the result which Woodward's had indicated was contingent on the organization size.

The study by Aston Group summarized is as follows - technology has a greater significance for the structure-performance relationship when organizations are small than when they are large. 

This becomes clear when we have a closer look a these small organizations. [Relating back to this blog on the structure we had defined something called operational core, which we could here call as technical core]. In these smaller organization, most employees work directly on the core technology, but in larger organizations many employees are involved in technologies which are not directly related to the core. The structure in large organizations reflects greater differentiation and integration of a wider array of technologies than do social structures in smaller organizations.

Wednesday, November 23, 2011

Organization Theory - 42 (Perrow's typology of technology with examples)

In the last blog, we looked at Thompson's Topology of Technology. In today's blog, we look at Perrow's Topology of Technology.

In the topologies described by Thompson and Woodward, a common problem was that there was only one dominating technology in the organization and it would be challenging if an organization would have more than one technology. For this he used 2 dimensions:
  1. Task variability
  2. Task analyzability
Task Variability could be defined by the number of exceptions to standard procedures encouraged in the application of a given technology.

Task Analyzability could be defined as the extent to which, when an exception is encountered, there are known analytical methods for dealing with it.

Put on a 2x2 matrix, we could look at it as shown in the diagram below.

The classification of the technology could be as:
  1. Routine
  2. Craft
  3. Engineering
  4. Non-routine

An example for each of these is:
  1. Routine - The job of a clerk generally has low variation on the kind of activity that (s)he performs and almost always has a known method of solving the problem at hand
  2. Craft - The job could be that of a construction worker. The number of exceptions to the standard procedures could be minimal, but when such exceptions occur there is almost always a new case at hand to handle which a new method needs to be involved
  3. Engineering - Consider the case of aerospace engineering, every challenge at hand would different exceptions to face and handle every time each requiring a special method to solve. There is a high task variability and high task analyzability in such a scenario
  4. Non-routine - A case could be in an RnD lab, when high task variability could be found but there are standard ways to handle the exceptions that come in the means of achieving the objective

Tuesday, November 22, 2011

Organization Theory - 41 (Thompson's topology of technology)

In the last blog, we looked at Woodward's Topology of Technology. In today's blog, we looked at Thompson's topology of technology. 

Thompson classified the technology as one of the following 3 varieties:
  1. Long-linked
  2. Mediating
  3. Intensive

Long-linked technology covers’ Woodward's mass production or continuous processing categories. Essentially, this technology indicate linear transformation process that can be thought of as having inputs entering at one end of a long line of steps from which products emerge at the far end.

Mediating technologies bring clients and customers together in an exchange or transaction. Mediating technologies are called so because firms using these technologies act as go-between (i.e. mediators) in bringing together the interest of two or more different parties to a transaction.

An example of Intensive technologies is hospital emergency rooms, research laboratories etc. This technology requires coordinating the specialized abilities of two or more experts in the transformation of a usually unique input into a customized output.

Thompson's theory could be visualized in a 2x2 matrix as below, on 2 dimensions.
  • standardization of inputs and outputs
  • standardization of transformation process

The interesting part is the 4th quadrant - where we have standardized inputs/outputs with un-standardized transformation processes. It could be interpreted as a nonexistence due to enormous inefficiencies associated with such a system, hence not a very serious impact

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Monday, November 21, 2011

Organization Theory - 40 (Woodward's Topology of Technology)

In the last blog, we began our discussion about technology. In today's blog we discuss one of the initial classifications of technology done by - Woodward.

Woodward began attempting to find a relation between structure and performance; however no significant relation was found. That is when she began classifying the companies based on the level of technical complexity; she began seeing patterns and relation between structure and performance. 

She classified the technologies into 3 basic technologies:

  1. Unit or Small Batch
  2. Large Batch or Mass production
  3. Continuous Processing

The following diagram summarizes the various topologies.

Woodward’s study showed that organizations using unit and small technologies are more successful when they have smaller spans of control, fewer levels of management and when they practice decentralized decision making.

The study also showed that organizations that use larger batch and mass production technologies are more successful when their managers have larger spans of control and when they practice centralized decision making. 

The successful continuous processing organizations are similar to those for unit and small batch processing technologies, they have smaller spans of control and decentralized decision making. However they have more levels of management than either of the earlier discussed technologies. 

Though this was breakthrough in classifying companies based on the type of technology, the study was not without limitations. The 2 major drawbacks are:
  1. The study mainly focused on small and medium sized organizations - the relation discovered between structure and performance is less significant when the organizations are larger and more complex
  2. Non-manufacturing firms were not part of the study

Thursday, November 17, 2011

Organization Theory-39 (Technology)

In the last blog, we discussed buffering and boundary spanning roles. In todays blog, we being understanding another important concept - "technology" and continue the discussion over the next few blogs. 

A general understanding of "technology" is more closely aligned with the concept of science that we know. However, this is pretty different when economists try to define "technology".

The economists and there by the organization theorists look at technology as  a means by which society provides its members with the things that they need and desire. So one can consider organization is a technology for producing a set or subset of the objects and services that society demands. This could be the environment level of analyzing the term technology.

A dive deep into the organization and we could have a completely different perspective - the view of how things are actually done! The organization has number of departments which coordinate amongst each other to provide the material another department needs etc. A complete new technology perspective within the firm. This level of analyze would be at the organization-level

One could go further and discuss these at the tasks in each of these organizational departments. However for clarity sake, we could limit the level of analysis at Organizational and Environmental level. The variations across the organizations is reduced by focusing more on the core technology to produce the organization's primary output.

This simplified view, enables us to compare organizations with different core technologies by which core technologies, by noting key similarities and differences between them. What gets lost in this approach is the details of technology diversity within the organization.

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Wednesday, November 16, 2011

Organization Theory - 38 (Buffering and Boundary Spanning)

In the last blog, we looked at a framework for understanding the relation between complexity, change and uncertainty. In today's blog we look at how organizations handle the need for information through buffering and boundary spanning roles. We begin with understanding and then better it with 2 examples.

Buffering involves protecting the internal operations of the organization from interruption by the environmental shocks such as material, labor, capital shortage etc. Organizations generally create a role to handle this sort of shocks. Through their efforts, uncertainty associated with a complex or changing environment is absorbed, freeing those in the production centers from concerns that might distract them from their work.

Boundary spanning is the name given to environmental activities including passing needed information for decision makers. It also covers the activities representing the organization o its interests to the environment.

The difference between the 2 is that while Buffering deals with the material requirements of the organization, while boundary spanning is more of information need. Many a times the 2 roles are seen to overlap - we take 2 examples in here.

A sales person, for example is responsible for transferring the organization's output to its customers, but they also bring important information about changing customer demands into the organization and represent the organization’s capabilities and reputation to the customer.

Purchasing agents in organizations too combine buffering and boundary spanning roles. As they transfer required raw materials etc into the organization, they also gather information on new supplies and techniques and techniques of production from their suppliers.

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Tuesday, November 15, 2011

Organization Theory - 37 (Uncertainty and Information need)

In the last blog, we looked at the relation between the various ecology theories we learnt. In today's blog we begin our discussion on Complexity and its implications.

Early definitions of Complexity looked at it from 2 angles
- Number of Elements in the Environment
- Rate of Change in these environmental elements

Put on a 2 x 2 matrix, it would look similar to the following.

However, this definition would be relative to the person reading it and getting one standard definition for the same wouldn't be easy. It would be easier to look at this from the information perspective.

The information perspective argues that managers feel uncertain when they perceive the environment to be unpredictable, and this occurs when they lack the information that they feel need to make sound decisions. The new 2 x 2 would now look like the following:

On an interesting note, Isomorphism refers to requisite variety - the belief that organizations match the complexity of the environment with internal structures and systems. i.e. when the environment is simple the organization is simple.

Organizations which confront different conditions and elements in their environment handle this pressure nu internal differentiation. The different departments specialize to handle the change in that component of the environment!

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Monday, November 14, 2011

Organization Theory - 36 (Relation between theories)

Over the last few blogs ending with this one, we have discussed the various organization theories. In today's blog, we look at the inter-relation between the 3 theories we studied:

The Resource Dependency Theory is formulated at the organizational level of analysis and provides a top-management perspective looking outwards from the organization to its surrounding environment.

The later 2 theories are formulated at the level of environment. The Population ecology model attempts to explain why there are so many different kinds of organizations. institutional theory tries to explain why many organizations look alike in essence, both these theories answer their fundamental questions with the reference to the influence to the environment no the organizations.

When environment has many rules and expectations to which organizations must confirm to derive necessary social legitimacy - institutional theory best explains organization's structure and outcome.
When the environment is not highly institutionalize and is influenced more by economic and technical competitions - population ecology perspective explains better to begin with.

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Thursday, November 10, 2011

Journey So Far

Over the last nearly 35 blogs, we have looked at organization from a theoretical context.

The study of organization theory summarizes the patter of growth of organizations through their lifespan. We have covered initially the phase of looking at organization processes like - centralization etc and its implication on the organization. We then moved on to discuss about the relation between environment and organization.

Before we proceed, we would love to inform our future plans. Our steady success over the last 9 months of operations have given us the confidence to move to the next leap - A newsletter.

We would love to listen to our readers what they would love to see in the newsletter. This is the starting point for us to enhancing our ambit of offerings and making it more relevant to the readers of this blog.

Expecting your response.

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Wednesday, November 9, 2011

Organization Theory - 35 (Institutional Theory)

In the last blog, we looked at the population ecology model partially. In today's blog we look at another theory - Institutional Theory.

Environment puts demands on organization in 2 ways
1. They make a technical and economic demands that require organizations to produce and exchange their goods and services in a market or a quasi-market.
2. They may make social and cultural demands that requirer organizations to play particular roles in society and to establish and maintain certain outward appearances.

Institutions generally have a repeated actions and shared concept of reality. Sometimes actions are repeated because explicitly rules or laws exist to ensure their repetition (legal and political influences). Sometimes activity patterns are supported by norms, values, and expectations (cultural influences); sometimes by a desire to be or look like another institution (social influences).

In the institutional perspective, the environment is session as providing a more or less shared view of what organizations should look like and how they should behave.

In this approach the manager would need to analyze the particular organization you should consider how the organization is adapting to its institutional context.

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Tuesday, November 8, 2011

Organization Theory - 34 (Population Ecology theory)

In the last blog, we looked at the Resource Dependency Theory of relation between organization and environment. In today's blog we will into another theory - Population Ecology theory.

Similar to the Resource dependency theory, the Population Ecology theory too starts with assumption that organizations depend on their environment for the resources they need to operate.

The population ecology assumes that the environment of an organization is assumed to have the power to select from a group of competitors those organizations which best serve the needs. Organizations which share a resource pool are competitively interdependent and the patters of interdependence that they adopt within the group affect the survival and prosperity of individual members.

The main interest of the theory to explain the evolutionary process of the organization. There are 3 evolutionary processes - variation, selection and retention - which explain the dynamics of a population.

Variation occurs in a population through entrepreneurial innovation and through the adaptation of established organizations.

The new organizations that are formed through birth or adaptation provide the range of choice the environment has during the selection process.
Environment sélects on the basis of fitness - the survival. Retention equals survival.

This model provides a more detached view of the organizations than they are normally used to taking.

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Monday, November 7, 2011

Organization Theory - 33 (Resource Dependency Theory)

In the last blog, we began our discussion about the relation between organization and environment with the contingency theory. In today's blog we look at another theory - the Resource Dependency Theory.

The Resource Dependency Theory suggests that "an analysis of inter-organizational relations within the network of the organization can help managers to understand the power/dependence relationships that exist between their organization and other network actors.

Every organization depends on its environment for almost all the tangible requirements - raw materials, labor, capital, equipments, and outlets for its produce.  This dependency of the organization on its environment gives the environment a power over the organization. 

Managers would need to perform this resource dependency analysis by identifying the source of organization's resources. The next point of focus has to be on environmental actors which can affect these organization-environment relationships and there by the organization. These are generally competitors and regulatory agencies. This is to be followed by sorting these by criticality and scarcity. 

With this analysis done, an apt strategy would have to be developed by the manager towards addressing these challenges from the resource front. There are numerous ways that have been traditionally followed, we would look at them in different cases at a later date.

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Thursday, November 3, 2011

Organization Theory - 32 (Contingency Theory Environmental - Organization Relation)

In the earlier blog, we looked at the larger context of International environment and the relevance to the managers. Beginning today over the next few blogs we would look at some of the theories that highlight the organization-environment relations. Today we discuss the first of these theories - Contingency Theory.

The Contingency Theory talks about the relation between the environmental condition and the nature of organization that would develop in such an organization. A careful observation of the business environment around us and we begin to realize that this theory is really true.

Simply put, this theory finds that a stable environment would have the organization with strict line of authority, distinct areas of assigned responsibilities etc. Since, this resembles a machine with strict rules and predictability - this is called mechanistic organization. On the other hand if the environment is very dynamic, the organization operating within it would have to be very flexible and employees would have the freedom to respond with a fitting reply relevant to the context. Given this lively nature, this is called an organic organization.

Of these 2 types - mechanical and organic, none could be said as superior to the other. Each is appropriate to different environmental conditions. In stable environment, the mechanistic form is advantageous through the standard procedures to perform routine activities. Under rapidly changing environment, the organic model scores over the mechanistic model or organizations. Flexibility of organic organizations, support the need for innovations and adaption.

To summarize - the most effective way to organize is "contingent" upon the conditions of complexity and change in the environment - Thus the name "Contingency Theory".

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Wednesday, November 2, 2011

Organization Theory - 31 (International Environment in Business)

In the last blog, we looked at the general environment view of the organization, in today's blog we look at a larger view - the international environment and the elements that would be part of it.

We could visualize the international organization in the following manner:

In the fast paced global world of today, managers cannot afford to just be limited to the general environment of an organization which generally operates within a national boundary. Today's businesses are always getting global. We have numerous companies opening up their manufacturing set up in China, and the software giant’s their offices in India. These trends come in with their own complexity. Such international context of the organization also get along with it the numerous treaties, etc that generally rule the international business environment. Let’s understand with an example:

Consider the Earth Summit held in Rio de Janeiro in 1992, (). Managers would need to be aware of the specific ways in which these changes might affect and are already affecting their inter-organizational network and their organization. 

As soon as an organization decides to expand its activities beyond the boundaries of its home nation, it will interact with representatives of organizations from other nations - joint venture partners, consumer groups, tariff collecting agencies, tax authorities all these will be part of the organization's network. Even before the organization enters international market or exchanges, it would have to face competition not just with in the international market but by firms that entre the organization's domestic markets from abroad!

Managers would have to broaden themselves in a way that more local aspects of the inter-organizational network are taken care of. This is pretty important and we have multiple cases where organizations ignoring such local flavors have had to pay a heavy price. In essence, organizations dealing in the international environment have to - "Think global, act local"

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Tuesday, November 1, 2011

Organization Theory - 30 (General Organizational Environment and Sectors involved)

In the last blog, we looked at the most significant factors that affect the organizational environment in the inter-organizational network view of the environment. In today's blog let’s look at the general environment view and the factors involved in it. 

The general environment could be looked at as - social, cultural, legal, political, economic, technological and physical. These could be depicted in the following diagram:
Sectors in General Organizational Environment

  • Social Sector- This involve the class structure, demographics, mobility patterns life styles, and traditional social institutions like educational system, religious practices etc.
  • Cultural Sector- This includes the issues of history, traditions, expectations for behavior, and the values of the society or the society in which the organization operates.
  • Legal Sector- This include the constitution and laws of the nations in which the organization conducts his business, as well as legal practices in each of these domains.
  • Political Sector- This describes the distribution and concentration of power and the nature of the political systems in those areas of the world in which the organization operates.
  • Economic Sector - This includes numerous markets like the labor, financial, market for goods and services. This tends to have a very powerful influence on conditions in the other sectors that we discuss here
  • Technology Sector - This provides the knowledge and information in the form of scientific developments that the organization can acquire and use to produce output (goods and services).
  • Physical Sector - This covers the nature and natural resources of a nation.

Though for the case of understanding the environment we have divided the various sectors, in reality these are interrelated. This classification assist us reduce the complexity into a manageable unit of analysis. A manager would have to take calls on which of these sectors would be the most significant and which of these would be better classified differently. It is again a call that the manager trying to analyze the industry has to take.

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