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Unformatted text preview: Chapter 09 - Organizational Agility CHAPTER 9 ORGANIZATIONAL AGILITY KEY STUDENT QUESTIONS The concepts in this chapter can be difficult for students to master. You may find yourself being asked to give examples of many different concepts, especially things like economies of scale/economies of scope, organic and mechanistic companies, big companies that are small and small companies that are big. Many of these examples can be found in the Class Roadmap below. Other questions students might ask include: 1. What are the advantages and disadvantages to working in an organization with an organic structure? . 2. Are companies more effective if they operate on a centralized or decentralized structure, and how do they determine which one works best? 3. What are the differences between organizing for environmental, technological, and strategic responses? Answers to Student Questions 1. In an organic company, people tend to have more autonomy over how they do their work, and they tend to do a variety of tasks on the job. For someone who is highly motivated, and willing to seek out the skills they need to accomplish whatever is asked of them, this can be a stimulating and exciting environment. It is also a good environment for people who like change, and who are comfortable with ambiguity. The downside of working in an organic company is that such companies are often highly politically charged, and if you are not good at working in teams and/or communicating extensively with others, it is easy to get lost. Exercise 9.1, Mechanistic and Organic Structures is a good lead-in to this discussion. 2. Large companies tend to cycle between centralized and decentralized structures, depending on their leadership, profitability, and environment. While Burns and Stalker noted that the most effective organizations use a centralized structure in stable environments, and a decentralized structure in turbulent environments, Nickerson and Zenger 1 point out that savvy managers adopt the benefits of different 1 Nickerson, J.A. and Zenger, T.R., Being efficiently fickle: A dynamic theory of organizational choice. Organization Science: A Journal of the Institute of Management Sciences , Sep/Oct. 2002, Vol. 13, Issue 5, p. 547-566. 9-1 Chapter 09 - Organizational Agility types of structures as they are needed by the organization. For example, Hewlett- Packard vacillated between centralizing and decentralizing core activities six times in sixteen years, and KPMG Peat Marwick changed their organizational structure five times in seven years, switching between geographic, functional, and industry- focused approaches on different occasions. Such fluctuations help firms to operate more efficiently because they allow them to respond to a constantly changing environment - one which is rarely totally stable or turbulent.....
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- Spring '09