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Organizing and Learning to Sustain Advantage

Some Key Organization Design Practices


Reward and Performance Evaluation Systems Hierarchy-based systems Performance-based systems

Impact on corporate performance

Shared Values and Corporate Culture Reward Systems: Key Characteristics of a Hierarchy-Based System
Close superior-subordinate relationships Extensive use of subjective and objective criteria to measure performance Superiors will guide the career and actions of subordinates Emphasis on group and team efforts and results Emphasis on long-term thinking and actions that help the organization Supports differentiation strategies at the business unit level Supports related diversification and global strategies at corporate and business levels

Reward Systems: Key Characteristics of a Performance-Based System


Superior-subordinate relationships not typically close Emphasis on tangible, concrete measures of output or performance Focus on individual, not group, measures of performance Bonuses are a big portion of total compensation Enhances individual initiative, entrepreneurial thinking, and personal efforts to excel Supports low-cost leadership strategies at the business unit level Supports unrelated diversification and multidomestic strategies at the corporate and business levels

Shared values:
The basic norms and ideals that guide peoples behaviors in the firm and form the underpinning of a firms corporate culture.

Corporate culture:
The system of unwritten rules that guide how people perform and interrelate with one another.

Ideal Key Characteristics of Shared Values


Simple to understand Crystallized at the top Consistent over time Examples Q & CV Fun, warm, friendly Efficient service and low prices Quality is key Execution is key Do the right thing

McDonalds Southwest Airlines Wal-Mart Motorola Intel Johnson & Johnson Ways to Transmit Shared Values Myths and Legends Develop internal Folklore

Heighten awareness of key cherished values Learning proper behaviors and ways of doing things Extensive mentoring and coaching

Socialization

Ways to Transmit Shared Values


Myths and Legends Develop internal Folklore Heighten awareness of key cherished values

Socialization Learning proper behaviors and ways of doing things Extensive mentoring and coaching

Learning organizations: Firms that view change as a positive opportunity to learn and create new sources of competitive advantage.

Management Practices of Learning Organizations


Continual training

Frequent Rotation of managers


Learning Organization

Decentralization

Multiple experiments

High tolerance for failure

Openness and diversity of ideas

Adaptability to Corporate Change


AT&T
Kodak United Airlines NEC Timex General Motors Sears IBM

Adobe Systems
Microsoft Hewlett-Packard Merrill Lynch Intel Sony

DuPont Lockhead-Martin Toshiba Static dinosour organizations Most firms fall somewhere in the middle

Southwest Airlines Cisco Systems Agilent Technologies Learning organizations

Common Reasons for Organizational Resistance to Change

Lack of awareness of need to change


Lack of interest in opportunity for change Incompatibility of change with existing values or interests Fear of cannibalization Fear of personal loss
Sense need Build awareness Foster debate Create consensus Assign responsibility Allocate resources

Key Steps to Implement Strategic Change

Act quickly

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