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Engineering Group Textbook Summary

Chapter # : 01
Chapter Title : Organizations and their changing environments
Summary by : Devan Tay

Chapter Objectives:
1. Able to describe the general characteristics of the different organizations and how they are
setup. Align this to Honeywell Aerospace characteristics and setup
2. Identify the triggers for change in a range of organizations. Align what has trigger the change in
Honeywell Aerospace to start the HOS
3. Discuss the concept of organizations as systems operating in multi-dimensional environments
and the implications for understanding the causes of organization changes. Check Honeywell
against the concept and discuss its cause(s) for change.
4. Analyze the level of turbulence in organizational environments, esp in Honeywell Aerospace

Organizations operate in multiple environments (temporal, external and internal). The key task for
organizations is to work with and try to manage them.

The first part covers the history for change as a whole from agricultural, industrial revolution to the
information era today. In the past, it used to be demand for products outstripped supply. Famous
remark from Henry Ford, “Any customer can have a car painted any color so long as it is black”.

In today’s information age, knowledge is the key resource. Typical example is illustrated by Peter
Drucker (1988, p48) on the organizations as symphony orchestras. Middle management becomes the
victim of downsizimg in the past 2 decades.

Besides changes rising from internal setup, the next part covers the different environmental triggers of
change. Using the example of the financial crisis that happened in 2008, the fall of Lehman Bros
triggers a series of failure in the finance sector. This brings us to the topics of environmental triggers of
change and how it will affect the company we are analyzing.

Economic changes like the US financial meltdown in 2008 to political changes in election of Barack
Obama as the President of USA had triggered significant changes to the new regime of doing
businesses and product/service offering mix. The organization setup and culture would evolve to the
changes from the environment.

This is when the study of the analytical framework such as PEST (refer to pg 15 Fig 1.3) is important
to look at the different triggers as follows.

- Political triggers
Refer to lower half of the text pg 15
- Economic triggers
Refer to pg 18 of text
- Socio-cultural triggers
Refer to lower half of text pg 18

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- Technological triggers
Refer to pg 20 of text

Other than these triggers in the framework, the organization is also susceptible to its own internal
triggers and strategic changes. Darwin’s theory of evolution reviews that human mind will always
continue to replace powerful ideas one after another over time and thus organization change could also
arise from the following internal triggers:

• Decisions to recognize or not to recognize a union;


• A new chief executive or other senior manager;
• Realization that operating structures are performing poorly;
• The redesign of jobs and working relationships among a work group;
• The redesign of a factory or ofiice layout;
• The adoption of new technology;
• A new marketing strategy;
• A decision to sell or acquire a business unit;
• A cut in overtime working;
• Labour shortages or surplus.

It is difficult to separate the internal triggers from external completely.

Ansoff and McDonnell (1990) state that a firm’s performance is optimized when its aggressiveness and
responsiveness match its environment. They propose the five levels of environment turbulence (pg 24
Figure 1.4)
Level 1: Predictable
Level 2: Forecastable
Level 3: Predictable threats and opportunities
Level 4: Partially predictable opportunities
Level 5: Unpredictable surprises

These levels can compared to the 3 different kinds of change situations proposed by Stacey (1990):
Closed change, contained change and open-ended change. Refer to pg 25 for detailed explanation.

Notes:
o include names, dates and suggested concepts
o include model / framework
o further (other) related readings and example
o thoughts related to our proposed engineering project

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Honeywell (FAQs)

Which business sectors does it operate in? What are we zooming in for the analysis?

Does the target of HW analysis operate at a local, regional, national or international level?

Does it supply domestic or international market?

In what ways does the organization need creativity or innovation to survive?

What is the mix of the employees – unskilled, skilled and professional?

Can it attract and keep high-performing employees?

How much autonomy do the employees have over the work they choose to do and how they do it?

How much is decision-taking devolved to the lowest level possible or kept in the hands of the top
management?