Managerial Economics and Organizational Architecture, 5e

Managerial Economics and

Organizational Architecture, 5e

Chapter 23: Organizational

Architecture and the
Process of Management
Innovation
McGraw-Hill/Irwin

Copyright 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved.

Managerial Economics and Organizational Architecture, 5e

Management Innovations
Bookstores are filled with how-to books
of management gurus, hype typically
exceeds reality
Relevant questions
What explains popularity of innovations?
Why do they often fail?
How to tell if a given technique is appropriate?
How to improve likelihood of success?
23-2

Managerial Economics and Organizational Architecture, 5e

The Percentage of Business Articles Mentioning

Various Management Techniques by Year

23-3

Managerial Economics and Organizational Architecture, 5e

Demand for Management

Innovations
Rational response to obsolescence, e.g.
change in technology
worldwide competition

Examples
TQM
Reengineering
JIT
Outsourcing
23-4

Managerial Economics and Organizational Architecture, 5e

Why Innovations Often Fail

Marketing
inappropriate expectations
quality is not free

Does the expected rate of return justify the

investment associated with changing the
organization?
Underestimating costs of change
Failure to consider the other legs of the
stool
23-5

Managerial Economics and Organizational Architecture, 5e

The Relation Between

Quality and Firm Value

23-6

Managerial Economics and Organizational Architecture, 5e

Managing Changes in
Organizational Architecture

If it aint broke, dont fix it

One size doesnt fit all
Make sure the stool balances
Focus on one thing at a time

23-7

Managerial Economics and Organizational Architecture, 5e

SDI Total Costs by Defects

23-8