LEc 11 Flashcards
Shipyard industry
Shipyard industry has similar history to railways: long history, heavy industry, backbone of economics, too big to fail mentality, highly specialized, outsiders lack knowledge, results cannot be easily be measured in terms of quality, strong unions
In the case study there was an exceptionally detailed analysis of shipyards. The author left out culture (internal and external) in his first case study. This point includes corruption, which is a huge influence factor in the industry.
Culture input
The author probably left out the culture input due to overly focusing on analytics, apparent accuracy and complexity of the analysis. Also, due to it not being politically and culturally being acceptable to even mention these issues. Corruption is an omnipresent phenomenon therefore the affected people are maybe not always actively aware of this issue and accept it as a state.
Shipyard management
In the second study the author then mentions the point shipyard management, which includes the cultural aspects, and identifies it as the single most important factor. The point includes: company culture, management systems and business networks.
To confront issues like these, companies need to implement Compliance management and processes!
Important point in culture
- Active stakeholder management is input for strategy
- Stakeholders may be benevolent, ambivalent or malevolent.
- Strategic goals navigate organization and give purpose
- Regardless of good strategy, lacking congruence between structure and culture of company will make it fail.
- Overengineering analytical methodologies lead to blind spots.
- A company consists of people, has people and the work as people as input, works through people and for people. In this chain of irrationality, a completely rational approach will most definitely lead to blind spots.
Railway industry in Europe
British and Dutch
The british Railway changed the structure (outsourced) part of their operation without caring about all other aspects and influence on the business. Thus, they were not able to keep the knowledge and information flow going. The formal structural cut, disabled any exchange between subcontractors and main business. The UK railway system was therefore not able to provide a secure and adequate service anymore.
The dutch railway system was more successful in changing the formal structure due to enabling informal information flow. They learnt from the mistakes of the British and even though they outsourced part of their business (formal restructuring), they maintain a network of informal exchange channels (informal, cultural) . This ensured that knowledge could flow between the different parties and led to maintaining knowledge within the railway entity. A new matrix structure was then established on top of this informal network.
Important points
To summarise, in order to change the formal structure, informal aspects/cultural/people and other internal aspects of the company need to be considered and adapted accordingly. Every aspect of the company needs to be congruent with the other features. It must be ensured that the change does not only look good on paper but that it can also be supported, accepted and facilitated by the informal cultural characteristic. It is therefore damaging for the company to simply introduce harsh restructuring measures, without considering the influence it has on other aspects. It should be ensured that the restructuring is an ‘‘evolution and not a revolution’’. The business can be viewed as an organism in which all aspects need to work together.
Bonus culture
A bonus culture is counterproductive for restructuring for the following reason:
- Manager eligible for a bonus is short run focused.
Long run consequences of restructuring are neglected. - Only the financial improvement is considered.
Costs might decrease but so might also quality of service - Restructuring bias
Only those in favour of restructure might have a say in the process.
Those pointing out potential problems will be ignored (leads to blind spots)
