Organizational Theory, Design, and Change -...

9- Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 1

Organizational Theory,

Design, and Change Sixth Edition

Gareth R. Jones

Chapter 9

Organizational Design,

Competences, and

Technology


Learning Objectives

1. Identify what technology is and how it relates to organizational effectiveness

2. Differentiate between three different kinds of technology that create different competences

3. Understand how each type of technology needs to be matched to a certain kind of organizational structure if an organization is to be effective


Learning Objectives (cont.)

4. Understand how technology affects organizational culture

5. Appreciate how advances in technology, and new techniques for managing technology, are helping to increase organizational effectiveness


What is Technology?

Technology: the combination of skills, knowledge, abilities, techniques, materials, machines, computers, tools, and other equipment that people use to convert or change raw materials into valuable goods and services


What is Technology? (cont.)

Technology exists at three levels

Individual level: the personal skills, knowledge, and competences that individuals possess

Functional or department level: the procedures and techniques that groups work out to perform their work and create value


What is Technology? (cont.) Technology exists at three levels

(cont.)

Organizational level: the way an organization converts inputs into outputs

Mass production: the organizational technology based on competences in using standardized, progressive assembly process to manufacture goods

Craftswork: the technology that involves groups of skilled workers who interact closely to produce custom-designed products


Technology and Organizational Effectiveness Technology is present in all

organizational activities: Input: allows each organizational

function to handle relationships with outside stakeholders so that the organization can effectively manage its specific environment

Conversion: transforms inputs into outputs

Output: allows an organization to effectively dispose of finished goods and services to external stakeholders

9- Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall

Technology and Competitive Advantage

The technology of an organization’s input, conversion, and output processes is an important source of competitive advantage

8


Figure 9.1: Input, Conversion, and Output Processes


Technical Complexity: The Theory of Joan Woodward Programmed technology: a

technology in which the procedures for converting inputs into outputs can be specified in advance

Tasks can be standardized and the work process can be made predictable


Technical Complexity (cont.)

Technical complexity: the extent to which a production process can be programmed so that it can be controlled and made predictable

High technical complexity: exists when conversion processes can be programmed in advance and fully automated

Low technical complexity: exists when conversion processes depend primarily on people and their skills and knowledge and not on machines


Technical Complexity (cont.) Woodward identified 10 levels of

technical complexity that are associated with three types of production technology:

Small-batch and unit technology

Large-batch and mass production technology

Continuous-process technology


Technical Complexity (cont.) Small-batch and unit technology

Involves making one-of-a-kind, customized products or small quantities of products

The conversion process is flexible, thereby providing the capacity to produce a wide range of goods that can be adapted to individual orders

Is relatively expensive

Scores lowest on the dimension of technical complexity


Technical Complexity (cont.) Large-batch and mass production

technology

Involves producing large volumes of standardized products

The conversion process is standardized and highly controllable

Allows an organization to save money on production and charge a lower price for its products

Scores higher on the technical complexity dimension


Technical Complexity (cont.)

Continuous-process technology Involves producing a steady stream of

output Production continues with little variation in

output and rarely stops

Individuals are only used to manage exceptions in the work process

Tends to be more technically efficient than mass production

Scores highest on the technical complexity dimension


Figure 9.2: Technical Complexity and Three Types of Technology


Technical Complexity and Organization Structure An organization that uses small-batch

technology

Impossibility of programming conversion activities because production depends on the skills and experience of people working together

An organic structure (chap. 4) is the most appropriate structure for this technology


Technical Complexity and Organization Structure (cont.)

An organization that uses mass production technology

Ability to program tasks in advance allows the organization to standardize the manufacturing process and make it predictable

A mechanistic structure (chap. 4) becomes the appropriate structure for this technology



An organization that uses mass production technology

Tasks can be programmed in advance, and the work process is predictable and controllable in a technical sense

Still the potential for a major systems breakdown

An organic structure is the appropriate structure for this technology


Figure 9.3: Technical Complexity and Organizational Structure



Technological imperative

The argument that technology determines structure

Aston studies found that:

Technology is one determinant of structure

Organizational size is a more important determinant of structure


Routine Tasks and Complex Tasks: The Theory of Charles Perrow

Perrow’s two dimensions underlie the difference between routine and nonroutine or complex tasks and technologies:

Task variability

Task analyzability


Theory of Charles Perrow (cont.)

Task variability: the number of exceptions – new or unexpected situations – that a person encounters while performing a task

Is low when a task is standardized or repetitious

Task analyzability: the degree to which search activity is needed to solve a problem

Is high when the task is routine


Theory of Charles Perrow (cont.)

Four types of technology Routine manufacturing: characterized

by low task variability and high task analyzability

Craftswork: both task variability and task analyzability are low

Engineering production: both task variability and task analyzability are high

Nonroutine research: characterized by high task variability and low task analyzability


Figure 9.4: Task Variability, Task Analyzability, and Four Types of Technology


Theory of Charles Perrow (cont.) When technology is routine,

employees perform clearly defined tasks – work process is programmed and standardized Mechanistic structure

Nonroutine technology requires the organization to develop structure that allows employees to respond quickly to manage exceptions and create new solutions Organic structure


Table 9.1: Routine and Nonroutine Tasks and Organizational Design


Task Interdependence: The Theory of James D. Thompson

Task interdependence: the manner in which different organizational tasks are related to one another affects an organization’s technology and structure

Three types of technology Mediating

Long-linked

Intensive


Theory of James D. Thompson (cont.)

Mediating technology: a technology characterized by a work process in which input, conversion, and output activities can be performed independently of one another

Based on pooled task interdependence Each part of the organization contributes

separately to the performance of the whole organization



Long-linked technology: based on a work process in which input, conversion, and output activities must be performed in series

Based on sequential task interdependence

Actions of one person or department directly affect the actions of another

Slack resources: surplus resources that enable an organization to deal with unexpected situations



Intensive technology: a technology characterized by a work process in which input, conversion, and output activities are inseparable

Based on reciprocal task interdependence

The activities of all people and all departments are fully dependent on one another

Specialism: producing only a narrow range of outputs


Figure 9.5: Task Interdependence and Three Types of Technology


From Mass Production to Advanced Manufacturing Technology

Mass production is based on:

Dedicated machines: machines that can perform only one operation at a time and that produce a narrow range of products

Fixed workers: workers who perform standardized work procedures, thereby increasing an organization’s control over the conversion process


From Mass Production to Advanced Manufacturing Technology (cont.)

Mass production:

Attempts to reduce costs by protecting its conversion processes from the uncertainty of the environment

Makes an organization inflexible

Fixed automation is a combination of dedicated machines and fixed workers

Expensive and difficult to begin manufacturing a different kind of product when customer preferences change


Figure 9.6: Work Flows


Advanced Manufacturing Technology: Innovations in Materials Technology

Advanced manufacturing technology: technology which consists of innovations in materials and in knowledge that change the work process of traditional mass-production organizations

Materials technology: comprises machinery, other equipment, and computers

Organization actively seeks ways to increase its ability to integrate or coordinate the flow of resources between input, conversion, and output activities


Advanced Manufacturing Technology (cont.)

Computer-aided design (CAD): an advanced manufacturing technique that greatly simplifies the design process Computers can be used to design and physically

manufacture products

Computer-aided materials management (CAMM): an advanced manufacturing technique that is used to manage the flow of raw materials and component parts into the conversion process, to develop master production schedules for manufacturing, and to control inventory Flow of inputs determined by customer demand


Advanced Manufacturing Technology (cont.)

Just-in-time inventory (JIT) system: requires inputs and components needed for production to be delivered to the conversion process just as they are needed Input inventories can then be kept to a

minimum

CAMM is necessary for JIT to work effectively

Increases task interdependence between stages in the production chain


Figure 9.7: Just-in-Time Inventory System


Flexible Manufacturing Technology

Technology that allows the production of many kinds of components at little or no extra cost on the same machine

Each machine is able to perform a range of different operations

Machines in sequence able to vary operations so that a wide variety of different components can be produced


Computer-Integrated Manufacturing (CIM)

An advanced manufacturing technique that controls the changeover from one operation to another by means of commands given to the machines through computer software

Depends on computers programmed to: Feed the machines with components

Assemble the product from components and move it from one machine to another

Unload the final product from the machine to the shipping area

Use of robots integral to CIM

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