11. Agile Organizations Flashcards
How does IT change the optimal form of coordination in organizations?
It shifts the curves to the right so that for a given degree of specificity, transaction costs are lower. This makes it more optimal to have a hybrid form were we do some things in-house and outsource other things ( a combination)
How does IT influence the hierarchy of employees within organizations?
Companies are reducing levels and flattens organizations. Because today it’s easier to have 10 people under you, whereas before you shouldn’t have more than 7 under you –> we had more levels back then. This flatter style makes us more agile.
How does IT affect functional integration?
We have more functional integration and processes are changed to faster and more efficient thanks to IT. Ex. instead och filling out paper forms, we can do things in software programs.
What is modularity?
It is the decomposition of systems into subsystems. They all have strong ties within the subsystem and some weak ties with other subsystems.
3 benefits of modularity:
- Module-level independence: decision on the design of one module have no/limited effects on other modules.
- Recombinability: building novel or customized solutions by reusing and combining existing modules.
- Substitutability: Ind. modules can be exchanged or upgraded without affecting other modules.
6 fundamentals of modularization:
- Organize and structure the org according to processes.
- Customer orientation.
- Integration of tasks.
- Developing smaller org. units.
- Decentralized decision-making and responsibility for results.
- Non-hierarchical coordination forms between modules. (instead market-similar mechanisms to coordinate autonomous units)
2 drivers for modularization (dysfunctional traditional organization principles):
- Hierarchy - long decision processes and decision-making far away from the market/processes.
- Bureaucracy - dysfunctions are the same as with hierarchy.
- -> trend towards de-bureaucratization.
The enabler of modularization is new technology, what can it do to improve organizational processes? (4)
There are more than 4 of course but those listed are:
- realtime information
- realtime communication and collaboration tech
- automation
- sensors
- > they all improve collaborate and reduce human intervention in many tasks
Implementation forms: Modularization concepts at the organizational level (4): how can we implement modules?
- Profit Center - formation of relatively independent profit centerns and a small central unit.
- Modularization through business divisions and products - ex building models based on market segments
- Modularization through core competencies - build modules based on core competencies and or capabilities(key tech).
- Modularization through regions and local single markets.
Autarchy vs cooperation model for implementing modularization - what are the differences?
Autarchy means an entire process can be completed by one employee - fully integrated single workspace. Full autonomy to solve the task how she prefers.
Cooperation model means having teams instead. Semi-autonomous groups around projects.
How does crowdsourcing and hyperspecialization come into play when we have modularization?
Because when we have modules around or processes and ways of working, we can outsource these tasks. This can be done n four levels: project, task, sub-task and micro-task. The smaller the module, the more hyperspecialization we have.
- For projects and tasks, we can outsource to another company through negotiation.
- For sub-tasks we can outsource via an outsourcing platform to freelancers.
- For micro-tasks we post it on a crowdsourcing platform and the human do the micro task without even knowing for which company.
What does ‘on-demand economy’ means for how workers/employees are organized?
–> Not only modularization within organizations, but also in how workers are organized.
We have markets for work. Workers on tap. Nowadays we can hire people for just one day or for only a task/micro-task or whatever you need to have done. Temporary workers increase as a share of the workforce. This is because the transaction cost of hiring people temporary has decreased, there are so many platforms out there to use.
6 challenges of virtual work organizations:
- Job design - hard to define what should be done in the module, can be abstract
- Task allocation - should it be self-selection or matching procedure? Choose the right people.
- Motivation & Remuneration - pay for result or per hour? Only the winner or everybody?
- Monitoring and quality assurance - should we let algorithms do it or peer-reviews?
- Reputation- and recommendation mechanisms - references and certifications?
- Internationally different legal systems - can make it hard for ex with minimum wages, occupational safety etc.
Three leading principles of agile organizations:
- Govern for value over predictability
- Organize for responsiveness over cost-efficiency
- Design for intrinsic motivation
What is most important with governing for value instead of predictability?
That we maximize adaptability and chase value through good and fast feedback loops so that we have iterative development.
