Week 13, Monday Lecture Outline
- I. The problem of sense-making
- II. Structure as a solution
- III. Some consequences of structure
- IV. Ford: A case of re-structuring
- assumption: the environment is complex and ambiguous
- this creates high demands on individuals processing information
- BUT -- people have limited attention and limited cognitive capacity
- assumes that people want to make optimal decisions
- optimal decisions require full knowledge of solution space -- this is
impossible
- BUT -- optimal decisions are possible within a restricted solution space,
"satisficing"
- bureaucratic structure reduces complex information into manageable
chunks
- Weber -- bureaucracy defines: functional domains and the flow of information
- offices and job descriptions determine functional domains
- reporting relationships determine the flow of information
- therefore, bureaucratic structure reduces complex issues into manageable
chunks
- shape varies as a function of the span of control, or the number of
subordinates per manager
- tall shape = narrow span of control = few subordinates per manager
- flat shape = broad span of control = many subordinates per manager
- form reflects the nature of an organization's divsions, or specialized
sub-units
- product form = divisions organized around product lines = GM
- functional form = divisions organized around functional activities =
DuPont
- centralization varies as a function of the concentration of decision-making
authority
- mechanistic = high centralization = predictable environment
- organic = low centralization = unpredictable environment
- tradition: product form organized within geographic markets
- problem: complicates design and manufacture of vehicles, vis "chimney"
organizations
- solution: Ford 2000 will create a world-wide functional form
- result = Ford is the Big Three quality leader, but Mondeo/Contour cost $6
billion to develop
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Revised - November 4, 1996