Contemporary Management

Dr. Nada Morsi

LEARNING ORGANIZATION
 Many managers are redesigning their companies toward
something called the learning organization. The learning
organization promotes communication and collaboration so that
everyone is engaged in identifying and solving problems, enabling
the organization to continuously experiment, improve, and
increase its capability.
 MECHANI S TI C O RGANI C

Mechanical – characterized by Natural – design of organization is

machine-like standard rules and looser, free-flowing, and adaptive
procedures with clear authority
ORGANIC AND MECHANISTIC
DESIGNS
 Structure

Tasks/Roles

ORGANIC VS. System Formality

MECHANISTIC
Communication

Hierarchy versus Collaboration

 Generally little collaboration occurs across
functional departments, and the whole
organization is coordinated and controlled
through the vertical hierarchy, with decision-
making authority residing with upper-level
1. FROM managers. It is effective.
VERTICAL TO In a rapidly changing environment, Top
HORIZONTAL executives are not able to respond rapidly
enough to problems or opportunities.
S TRUCTURE

In the learning organization, the vertical

structure promotes horizontal workflows or
processes rather than departmental functions.
teams include members from several functional
areas.
 A task is a narrowly defined piece of work
assigned to a person. In traditional
organizations, tasks are broken down into
specialized, separate parts, as in a machine. tasks
2. FROM are centralized at the top of the organization,
ROUTINE and employees are expected to do as they are
told
TASKS TO
EMPOWER
A role, in contrast, is a part in a dynamic social
ED ROLES system. A role has discretion and responsibility,
allowing the person to use his or her discretion
and ability to achieve an outcome or meet a
goal.
 In young, small organizations communication
is generally informal and face-to-face. because
the top leaders of the company usually work
directly with employees in the day-to-day
3. FROM operation of the business. However, when
FORMAL organizations grow large and complex, the
CONTROL distance between top leaders and workers in
the technical core increases .
S YS TEMS TO
SHARED In learning organizations, all employees have
INFORMATION complete information about the company so
they can act quickly. organizations maintain
open lines of communication with customers,
suppliers, and even competitors to enhance
learning capability
 In traditional organizations designed for efficient
performance, strategy is formulated by top
managers and imposed on the organization. Top
executives think about how the organization can
best respond to competition, efficiently use
4 . F RO M resources, and cope with environmental changes.
C O M P E T I T I V E TO
C O L L A BO R AT I V E In the learning organization, in contrast, the
S T R AT E GY accumulated actions of an informed and
empowered workforce contribute to strategy
development. Since all employees are in touch with
customers, suppliers, and new technology, they help
identify needs and solutions and participate in
strategy making. They make the results public
through conferences and reports. companies often
forming partnerships to compete globally,
 A danger for many organizations is
that the corporate culture becomes
fixed
5. FROM
RIGID TO
ADAPTIVE In a learning organization, the culture
CULTURE encourages openness, equality,
continuous improvement, and change.
the organization becomes a place for
creating a web of relationships that
allows people to develop and apply
their full potential.
 Pressure for growth

• Compete on a global scale

Organization • Invest in new technology
Size: Is Bigger • Control distribution
• Guarantee access to markets
Better? • Stay economically healthy
• Power & increased revenues
• Attractive for quality employees
What size
organization
is better to
compete in a
fast-changing
global
environment?
 Small is beautiful because the crucial requirements for success in a global
economy are responsiveness and flexibility in fast-changing markets

often enjoy greater employee commitment because it is easier for people

to feel like part of a community

SMALL
ORGANIZATION Employees typically work on a variety of tasks rather than narrow,
specialized job

S
quick reaction to changing customer needs or shifting environmental and
market conditions. Small organizations have a flat structure and an
organic, free-flowing management style that encourages entrepreneurship
and innovation.
 Huge resources and economies of scale are needed to
compete globally

Have the resources to be a supportive economic and

social force in difficult times

LARGE
ORGANIZATION Ability to get back to business more quickly following a
disaster.

S
standardized, often mechanistically run, and complex.
The complexity offers hundreds of functional specialties

the organization can provide longevity, raises, and

promotions.
Wal-Mart after Hurricane Katrina
Size was never THE strategy
 GIANT COMPANIES ARE “BIG-COMPANY/SMALL-
“BUILT FOR OPTIMIZATION, COMPANY HYBRID”
NOT INNOVATION”
Royal 10% of the division’s research budget for “crazy” ideas.

Dutch/Shell
1. Entrepreneurial
stage

• Org is born
• Emphasis is on creating a product or
service
• Surviving in the marketplace
• Devote entrepreneur´s full energies
• Org is informal and nonbureaucratic
• Long working hours
• Growth comes from creativity

Crisis: Need for leadership

2. Collective
stage

• Clear goals and direction

• Hierarchy of authority
• Job assignments
• Hiring skilled executives
• Members feel part of a collective
• Informal Communication

Crisis: Need for delegation

3. Formalization stage

• Rules, procedures & control systems.

• Formal communication
• Decentralization to improve
coordination
• Top managers focus on strategy while
middle managers on operations
• Incentive system

Crisis: Too much red tape

4. Elaboration stage

• New sense of collaboration and

teamwork
• Social control and self-discipline
• Work within bureaucracy
• Simplify formal systems
• Org spit into divisions

• Crisis: Need for revitalization

Organizational Characteristics during the Life Cycle

• Entrepreneurial. Initially, the organization is small, nonbureaucratic, and a

one- person show. The top manager provides the structure and control
system. Organizational energy is devoted to survival and the production of
a single product or service.
Organizational Characteristics during the Life Cycle

• Collectivity. This is the organization’s youth. Growth is rapid, and

employees are excited and committed to the organization’s mission. The
structure is still mostly informal, although some procedures are emerging.
Strong charismatic leaders like Jeff Bezos at Amazon.com provide direction
and goals for the organization. Continued growth is a major goal.
Organizational Characteristics during the Life Cycle

• Formalization. At this point, the organization is entering midlife.

Bureaucratic characteristics emerge. The organization adds staff support
groups, formalizes procedures, and establishes a clear hierarchy and
division of labor. Major goals are internal stability and market expansion.
Top management delegates, but it also implements formal control systems.
Organizational Characteristics during the Life Cycle
Max Weber
• Bureaucracy
• Org more efficient a
• & rational
 Bureaucracy could
be GREAT

• Most efficient possible system of

organizing
• Allowing organizational activities to be
predictable
• Clear tasks
• Sensible mechanism for supervision and
control
• People are hired based on technical
competence
• Memory and continuity over time
• Allows work to be conducted fairly,
efficiently, and according to established
rules.
How to overcome the problems of bureaucracy
in rapidly changing environments?

Innovative structural solutions where there is temporary structures to

respond to an emergency or crisis. Hence, maintain the efficiency and
control benefits of bureaucracy yet prevent the problem of

S L O W response
During times of high uncertainty, the most effective structure
is one that loosens the lines of command and enables people
to work across departmental and hierarchical lines to
anticipate, avoid, and solve unique problems within the
context of a clearly understood mission and guidelines
Organization Decline

A condition in which a
substantial, absolute decrease
in an organization’s resource
base occurs over time
What are the causes?
1. Organizational atrophy

2. Vulnerability

3. Environmental decline or
competition
 Atrophy occurs when organizations grow

1) Organizational older and become inefficient and overly

atrophy bureaucratized. when org takes success for

granted, becomes attached to practices and
structures that worked in the past, and fails to
adapt to changes in the environment
 Inability to prosper in its environment.
2) Vulnerability Happens to small companies that are
not yet fully established. unable to
define the correct strategy to fit the
environment and are vulnerable to
shifts in consumer tastes
3) Environmental Environmental decline refers to
reduced energy and resources
decline available to support an organization.
or competition Thus, the organization has to either
scale down operations or shift to
another domain.
Model of decline stages
Blinded stage
The first stage of decline is the internal and external change that threatens long-
term survival and may require the organization to tighten up. The organization may
have excess personnel, lack of harmony with customers. Leaders often miss the
signals of decline at this point, and the solution is to develop effective scanning and
control systems that indicate when something is wrong. With timely information,
alert executives can bring the organization back to top performance.
 Denial occurs despite signs of
deteriorating performance. Leaders
may try to persuade employees that
all is well. “Creative accounting” may
make things look fine during this
period. The solution is to take prompt
action to realign the organization
with the environment. Leadership
actions may include new problem-
solving approaches, increasing
decision-making participation, and

Inaction stage encouraging expression of

dissatisfaction to learn what is wrong.
Faulty Action stage
Facing serious problems, and indicators of poor performance cannot be ignored.
Failure to adjust to the declining spiral at this point can lead to organizational
failure. Major changes is required like retrenchment, including downsizing
personnel. A major mistake at this stage decreases the organization’s chance for a
turnaround.
 Crisis stage
Organization still has not been able
to deal with decline effectively and
is facing a panic. may experience
chaos, efforts to go back to basics,
sharp changes, and anger. The only
solution is major reorganization.
Such as replacing top administrators
and revolutionary changes in
structure, strategy, and culture, are
necessary. Workforce downsizing
may be severe.
Dissolution stage

This stage of decline is irreversible. The

organization is suffering loss of markets and
reputation, the loss of its best personnel, and
capital depletion. The only available strategy is
to close down the organization in an orderly
fashion and reduce the separation trauma of
employees.

‫ﻣﻊ اﻟﺳﻼﻣﮫ ﺑﺎي ﺑﺎي‬

Donwsizing
Implementation
Intentionally reducing the size of a company’s
workforce

1. Communicate more, not less.

2. Provide assistance to displaced workers.

3. Help the survivors thrive

 Rumors can be much more damaging than

Communicate open communication. Managers should

more, not remember that it is impossible to

less. “overcommunicate” during turbulent times.

Remaining employees need to know what is

expected of them, whether future layoffs are a

possibility, and what the organization is doing

to help co-workers who have lost their jobs.

 The organization has a responsibility to help
Provide displaced workers cope with the loss of their

assistance to jobs and get reestablished in the job market.

displaced counseling services for both employees and

their families can ease the trauma associated
workers. with a job loss. allow employees to leave with
dignity, giving them an opportunity to say
goodbye to colleagues and meet with leaders
to express their hurt and anger.
 “Layoff survivor syndrome” Many people
Help the experience guilt, anger, confusion, and sadness

survivors after the loss of colleagues, and leaders should

thrive acknowledge these feelings. Survivors also

might be concerned about losing their own
jobs, lose confidence in company
management, and grow depressed. It is key to
help developing coping skills such as flexibility,
curiosity, and optimism
ESSAY QUESTION

State at which department stage is your company at currently and

what could be done to get it back on track
Amazon
Case
Study
Amazon case study
Amazon case study
 Amazon

u Can Amazon.com continue to progress successfully through the stages of the life cycle,
or will Jeff Bezos’s inability to delegate keep it stuck in a prolonged adolescence?

u Amazon.com might be considered as entering the formalization stage. By continuing to

run Amazon like a young, entrepreneurial firm, Bezos might be hurting the company’s
ability to keep good managers and grow successfully.
UPS
(United
Parcel
Services)
case study
UPS Cast Study
UPS Cast Study
UPS Cast Study
 UPS Cast Study

u UPS illustrates how bureaucratic characteristics increase with large size. UPS is so productive and
dependable that it dominates the small package delivery market.

u As it expands and transitions into a global, knowledge-based logistics business, UPS managers
may need to find effective ways to reduce the bureaucracy.

u New technology and new services place more demands on workers, who may need more
flexibility and autonomy to perform well.
SEE YOU NEXT
WEEK
J