BSZ_IM_Ch23_4e - Managerial Economics and Organizational...

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Managerial Economics and Organizational Architecture Instructor’s Manual Part 1: Chapter Overview and Solutions Chapter 23: Page 1 CHAPTER 23 O RGANIZATIONAL A RCHITECTURE AND THE P ROCESS OF M ANAGEMENT I NNOVATION Management innovations, such as total quality management and business process reengineering, rise and fall in popularity and, to some, appear as fads. This chapter uses the framework in the book to provide an economic explanation of this phenomenon. The chapter argues that many of these innovations are not simply fads and can be value increasing for the right firms. Innovations, however, often fail to meet managerial expectations and the chapter discusses why. The chapter highlights the managerial implications of this analysis and presents a case study. The chapter is intended to be a concluding chapter that focuses on some of the key managerial insights of the Organizational Architecture framework. C HAPTER O UTLINE M ANAGEMENT I NNOVATIONS T HE D EMAND FOR M ANAGEMENT I NNOVATIONS The Rise of TQM Other Innovations W HY M ANAGEMENT I NNOVATIONS O FTEN F AIL Marketing Underestimating Costs of Change Failure to Consider Other Legs of the Stool M ANAGING C HANGES IN O RGANIZATIONAL A RCHITECTURE C ASE S TUDY : S OFTWARE D EVELOPMENT , I NC . S UMMARY T EACHING THE C HAPTER We have the students read this chapter to conclude the course. We do not lecture extensively on its contents, but instead we use it to lead into a final summary of the key principles of the course. If we taught a longer course (ours is only 10 weeks) we would expand the discussion of this chapter. For example, it would be interesting to take the most current management “fads” and analyze why they are occurring at this time. The management implications for adopting and implementing these innovations could be discussed.
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Managerial Economics and Organizational Architecture Instructor’s Manual Part 1: Chapter Overview and Solutions Chapter 23: Page 2 C ASE S TUDY S OFTWARE D EVELOPMENT , I NC . Software Development, Inc. (SDI), produces and markets software for personal computers, including spreadsheet, word processing, desktop publishing, and database management programs. SDI has annual sales of $800 million. Producing software is a time-consuming, labor-intensive process. Software quality is an extremely important aspect of success in computer software markets. One aspect of quality is program reliability. Does the software perform as expected? Does it work with other software in terms of data transfers and interfaces? Does it terminate abnormally? In spite of extensive testing of the software, programs always contain some “bugs” (defects). Once the software is released, SDI stands behind the product with phone-in customer service consultants who answer questions and help the customer work around existing problems in the software. SDI also has a software maintenance group that fixes bugs and sends out revised versions of the programs to customers.
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BSZ_IM_Ch23_4e - Managerial Economics and Organizational...

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