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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
9- Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2
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
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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
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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
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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
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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
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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
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Technology and Competitive Advantage
The technology of an organization’s input, conversion, and output processes is an important source of competitive advantage
8
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Figure 9.1: Input, Conversion, and Output Processes
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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
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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
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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
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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
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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
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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
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Figure 9.2: Technical Complexity and Three Types of Technology
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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
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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
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Technical Complexity and Organization Structure (cont.)
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
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Figure 9.3: Technical Complexity and Organizational Structure
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Technical Complexity and Organization Structure (cont.)
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
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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
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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
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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
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Figure 9.4: Task Variability, Task Analyzability, and Four Types of Technology
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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
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Table 9.1: Routine and Nonroutine Tasks and Organizational Design
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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
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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
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Theory of James D. Thompson (cont.)
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
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Theory of James D. Thompson (cont.)
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
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Figure 9.5: Task Interdependence and Three Types of Technology
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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
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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
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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
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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
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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
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Figure 9.7: Just-in-Time Inventory System
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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
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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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