MGMT 005 – MANAGING IN A

VUCA CONTEXT

CLASS 5
Today

• Quick recap of last session

• What are organizational boundaries?
• How to draw organizational boundaries?
• Organizational boundary spanning
• Open collaboration
• In-class activities
Recap

• What do you remember from last session?

• Disruptive innovation vs. sustaining
innovation
• Why it’s hard for incumbents to spot and
react to disruption?
• Implications of disruptive innovation
• Discussion on whether online education
would disrupt the education industry?
Chotukool

• https://www.youtube.com/watch?v=5Tq4y1rKWFU

• How was ChotuKool developed?

• Who were the targeted customers?
• How is the development of ChotuKool
different from a usual product
development process?
What are organizational boundaries

• Organizational boundaries are

imaginary dividers meant to
distinguish a unit/company from
external but nearby influences.
(Adapted from Fiol, 1989)
Boundary decision from
transaction cost analysis

• Governance
• Opportunism
• Transaction-specific investment
Governance

• Market • Intermediate • Hierarchy

• Buy • Collaboration • Make
• Arm’s-length • Strategic alliances • Perform
market activities in-
transactions houses
• Less integrated • More integrated
Transaction-specific investment

Opportunistic behavior
Where to draw the line?

The cost of a
governance The threat of a
mechanism opportunism
Boundary decisions

• Transaction specific investment  opportunism?

• Cost of hierarchical governance – costly to create or to

acquire certain capability

• Opportunism stemming from transactions specific

investment – part of the cost of gaining access to
capabilities that are too costly to obtain in alternative
ways
Boundary decision from
capability considerations

• Cooperate with firms already possess the capabilities

needed – market or intermediate governance
• Develop capabilities needed in-house – hierarchical
governance
• Acquire another firm already possess capabilities
needed – hierarchical governance
Costly to create a particular
capability

• The ability to create a capability in a cost-effective

way may depend on unique historical conditions
that no longer exists

• The creation of a capability may be “path-

dependent”.

• A capability may be socially complex.

• The actions that a firm would need to take to

create a capability may not be fully known
Costly to acquire a particular
capability

• Legal constraints on an acquisition

• An acquisition may reduce the value of the capabilities
held in the acquired firm
• An acquisition can be costly to reverse if it turns out not
to be valuable
• Substantial “unwanted baggage” bound with the desired
capabilities in the acquired firm
• Costly to leverage acquired capabilities throughout an
acquiring firm

• A lot of acquisitions DO fail!

Chotukool

• https://www.youtube.com/watch?v=IUADltOgj3w

• What kind of governance can be identified in this case?

• Any evidence of boundary spanning here?
• Why did Godrej cross its organizational boundary?
• Impact of this innovation?
Organizational Boundaries

• Vertical POWER
• Horizontal FUNCTION
• Stakeholder PURPOSE
• Demographic PEOPLE
• Geographic LOCATION
Boundary Spanning Model

Boundary
spanning
practices enable
leaders to
progress up the
spiral
Boundary Spanning – Some
Strategies to increase collaboration

• Buffering (shield groups to make them secure)

• Reflecting (see both sides of a divide)
• Connecting (baby steps in neutral territory)
• Mobilizing (for the greater goal)
• Weaving (intergroup interdependence and
reliance)
• Transforming (reinventing groups)
The nexus…
• … when groups achieve much more
together than they could have done on
their own.

• Call for boundary spanning and

collaboration
Boundaryless Organisation

“transcend the rigid lines of bureaucracy and

divisional boundaries within a corporation and
ignore the borders where the corporation itself is
separated from its markets, customers and
'stakeholders'"
 How is this happening?

• ‘Co’ has become very critical: Collaboration happen

 Collaborate across:
 Co-create Internally
Externally
 Co-operate
Business to Business
 Co-develop
Cross Industry
 Crowd source
 Co-finance

• https://www.youtube.com/watch?v=UF7oU_YSbBQ
Lifebuoy’s Help a Child Reach
5 campaign

• Has been ranked #4 in the Warc 100, the world’s best

marketing campaigns list
• The handwashing programs launched in Thesgora, India,
has achieved an overwhelming drop in the incidence of
diarrhea from 36% to 5%.
• It is now being rolled out to villages across 14 countries and
scaled up in India to reach 45 million people.
• Sustainable growth for Unilever – Lifebuoy has achieved
three years of double-digit growth to become the world’s
number one anti-bacterial brand
• Co-created by many stakeholders…
https://www.youtube.com/watch?v=i0dBWaen3aQ

What kind of product is m-pesa? Who are the

targeted customers?
 Identify any boundary spanning in the case of m-
pesa?
What are the impacts of m-pesa?
Lessons can be learned?

https://www.youtube.com/watch?v=zQo4VoLyHe0
Summary
• Power of boundary spanning and
collaborations
• Have to be cautious…
Next week

• Organizational learning

• “Understanding organizations as learning

systems”

• “Analytics 3.0”