MT 1 Flashcards
Why do we have organizations?
Organizations exist to optimize or satisfy goals
What can an organization do?
- Acquire. marshal, and allocate resources (money and people)
- Organize and harness the ingenuity of people
- Org will respond to commercial and social environments - some form of a market where various types of exchanges will occur
- Finally, coordinate the challenges of producing and distributing goods and providing services, all on a local to a global scale
MECE
Mutually Exclusive: Is each issue a separate and distinct issue?
Collectively Exhaustive: Does every aspect of the problem come under one, and only one, of the issues
MECE approach is basically fact finding
Steps in Analysis of Organizational Management
- Descriptive: This is the MECE step
- Diagnostic: Determines what the facts in the descriptive step do and do not relate to organizational goals. In the business analytics model (BA) this step is often referred to as “predictive”
- Prescriptive: Looks to change either the facts (add new components or delete components of the organization) and or change the organizational goals to be aligned with reality - the facts
- Comment: We use the term “analysis” in a general sense. There are two specific uses of the term that would be good to mention
Organizational Design Framework - External
Buy Side - Strategy - Sell Side
Organizational Design Framework - Internal
People, Culture, Structures, Identifying Tasks, Systems
Mother City
Centralized city that gave way to trade and allowed for people to do other things other than agriculture and hunting. Allowed for people to become artists, priests, doctors, etc.
Ex: Caral people made nets out of cotton, traded nets to fisherman for seafood, and fisherman then had higher quality nets
Alexander the Great
Personality driven organization - Leader more important than company. Ex: Polaroid CEO unwilling to listen to change advice
Genghis Khan
- Keep only the best people - promote by ability, not rank
- Looked after worker’s needs
- Widely used communication measures so everyone could understand
- Train, train, train
- Mission driven organization
Dynastic Cycles
- Ruler unites under a “mandate from heaven”
- Leads to prosperity
- Leads to population growth
- Leads to corruption
- Leads to not being able to respond to disasters
- Leads to ruler loses the “mandate from heaven”
- Leads to warring states emerging
- Leads to one state is victorious
- Leads to “mandate from heaven” comes back
Wild West Management Style
- No history
- Access to resources
- An aspect of inevitability
- Success supplants survival as mission
- Opportunity driven organization
- Much like the “start up’s” of today
Ringmaster/Ringleader
- Sets the pace for the organization
- Everyone knows what they are supposed to do
- Everyone has a different task
- The audience plays a part
- Market driven organization
Ex: Blockbuster - markets punish those who do not change
Classical Management
Careful selection and training of worker such as motion studies
Fred Taylor - Classical Management / Scientific Management
- Design jobs with standards leading to efficiency
- Select workers to fit the job design (coal shoveler)
- Train workers to follow the design
- Support workers by planning their work
Max Weber - Classical Management / Bureaucracy
Bureaucracy with logic, order, and legitimate authority, not an organization based on social standing
- Division of labor
- Hierarchy of authority - structured
- Formal rules
- Impersonality - best worker wins - merit based (groundbreaking because historically, Germany hired on birthright before)
- Promotion on merit
Henri Fayol - Classical Management / Administration
Termed “administration”
- Planning
- Organizing
- Command
- Coordination
- Control
- Unity of command: No one has more than one boss
Anthony’s Management Hierarchy
Strategic Planning -> Management Control -> Operational Control -> Organizational Members (From top to bottom of pyramid)
Behavioral Management
An attempt to increase production by understanding people as it is easier to change the organization than change the people - different than the Taylor approach
Related historical events for behavioral approach:
- Emergence of a working class
- Emergence of population centers
- “Democratization” of education
- Diversity of population between US-born and foreign-born
Hawthorne Experiment by Elton Mayo - Behavioral Management
Two groups were studied from the scientific management perspective on the effects of differing working conditions but the results were not as planned
- In the assembly test rooms there was no difference in productivity between the room with the same amount of light and the room with differing amounts of light that could be caused merely by the change in the illumination
- In the wiring room experiment where the pay was on a piecework basis, the workers told the faster workers to slow down
- Started the human relations movement and subsequently the field of organizational behavior
- Started a shift away from just the scientific approach of management now to include the human and social concerns to increase productivity along with scientific management approach
No new technology was introduced in these studies, different from the long-wall / short-wall methods
Maslow Hierarchy of Needs - Behavioral Management
- Physiological Needs: food, water, physical well-being
- Safety Needs: shelter, protection, stability
- Social Needs: love, affection, belongingness
- Esteem Needs: Respect, prestige, mastery
- Self-actualization Needs: Self-fulfillment, growth
People have deficits in these needs and they work to satisfy these needs in the hierarchy from physiological needs up to self-actualization needs
Theory X - Douglas McGregor - Behavioral Management
Assumes people do not like to work and want to be led
Theory Y - Douglas McGregor - Behavioral Management
Assumes people are willing to work and can be creative
If a manager holds to one or the other approaches (X or Y) then a self-fulfilling prophecy can occur: people will do what the boss wants them to do
Management Sciences Approach
Application of quantitative tools and applied mathematics to management issues. This is a current trend but does not quite approach everyone as are the classical and behavioral approaches
- The learning organization: Ability to learn from experiences and then make changes with some quantitative estimates of future results
- Contingency Thinking: Ability to respond to changes in the supply and demand functions
- Systems Approach: Ability to see the org. as an interrelated group of subsystems and coordinate their activities with some models such as a probability model of work being done in one area and moving to the next area
- Total quality management: ability to estimate acceptable error rates
The difference between the management science approach and the behavioral approach is the reliance on “technology” as a factor of production separate from labor and capital
Value Proposition
Here we see the link between what the customer gets in exchange for what the customer gives up (Think of web diagram)
Five Hiring Criteria for Google
- Leadership
- Humility
- Collaboration
- Adaptability
- Learn and Re-Learn
Long-Wall
One person operates a machine that then carries the goods to a different station. Resulted in lower performance and higher absenteeism. Production decreased because they had failed to consider the impact of the changes on the psychosocial or cultural system
Short-Wall
People work in pairs to extract goods and take them to next station. This was deemed inefficient.
Macro Problems
Important, but not urgent
Issue: We get so caught up in micro problems that we don’t think about macro problems
Micro Problems
Urgent problems that need to be fixed
Issue: We get so caught up in micro problems that we don’t think about macro problems
Five Focusing Steps to ToC
- Articulate the goal of the org.
- Identify the constraint
- Decide how to exploit the constraint
- Subordinate all other processes to above decision
- Elevate the constraint (if required, permanently increase capacity of the constraint; “buy more”)
If, as a result of these five steps, the constraint has moved to another point in the process, return to Step 1. Don’t let inertia become the constraint - this is the Process of Ongoing Improvement.
Throughput
Rate at which org. achieves its goal
Inventory
Money the organization has invest in raw material or raw talent used for throughput
Operational Expense
Money the org. spends to convert inventory into
throughput
Drum-Buffer-Rope (DBR) Model
- Drum: The physical constraint of the plant
- Buffer: Protects the drum so that it always has work flowing to it
- Rope: Work release mechanism for the plant
Driving Forces for Transformational Change
- Globalization
- Rapid change in technology
- Changes on consumer demands
- Changes in supply of raw materials
- Shifts in asymmetric or symmetric information
- Competition
Targets of Transformational Changes
- Tasks
- People
- Culture
- Technology
- Structures
Continuous Improvement Model (Incremental Change)
- Solving performance gaps (Doing the same thing, but better)
- Reactive changes (Get us back to the status quo)
- An alignment issue to nudge the org to operate better
Transformational Change
A radical or frame-breaking planned change that results in a major and comprehensive redirection of the organization. It creates fundamental shifts in strategies, culture, structures, and even underlying vision and mission of the organization
Values, Beliefs, and Behavior
Values: Bring people to separate answers
Beliefs: Based upon facts. Must change beliefs if you want to change behavior
Types of Conflicts - Substantive
Outcomes
Types of Conflicts - Emotional or Relationship
The way people work together
Types of Conflicts - Functional
Something can be achieved to help task performance. Generally has a focus on “how” and “when” the outcome will be achieved and not on the outcome itself
Types of Conflicts - Dysfunctional
Hurts task performance. Generally has to do with the inability of the parties to resolve the conflict such as not listening to each other
John Gottman’s Four Horsemen
- Criticism: Involves attacking someone’s personality or character - rather than a specific behavior - usually with blame.
- Contempt: Intention to purposely insult
- Defensiveness: When one party sees themselves as the victim, which leads to making excuses
- Withdrawal or stonewalling: Considered the most dangerous of all because an individual begins to withdraw from the conflict itself, avoiding it at all costs
Conflict Resolution - Avoidance
Often works well; just avoid it, don’t participate at all
Conflict Resolution - Accomodation
I’ll work on this, but maybe I don’t agree with you
Conflict Resolution - Authoritative Command
Either you two agree, or boss will choose an answer
Conflict Resolution - Compromise
Half yellow, half blue -> always bad
Conflict Resolution - Consensus or Collaborative Problem Solving
Want different things but can agree on one thing. (Right answer)
Mechanisms for Conflict Resolution but not the Resolution Itself
- Negotiations: 2 parties meet and solve conflict
- 3rd party involved to make negotiations more efficient
- Only way to get out of it is in cases of fraud of the arbitrator
Best Alternative to a Negotiated Agreement (BATNA)
- Needs to be real and actionable
- It is your best outcome of the negotiation if all else fails
- Not the “walk-away” point or the “reservation point”
- A form of game theory
Statistical Fluctuations
- Found in processes
- Occur on a random basis
How do the accumulate?
- They do not have a property of “offset” like win-loss in a coin toss
- Once there is a “loss” it cannot be “made up”
- From ToC, once the “drum” or the constraint falls below full utilization, the loss is permanent
- They are visible and measurable
Statistical Process Control
An example of fact based analysis
Ex: six sigma process
Customer Specification Limits
Nothing to say…
Process Control
- Upper control limit
- Lower control limit
Technical Subsystem
Comprises the devices, tools, and techniques needed to transform inputs into outputs in a way which enhances the economic performance of the org.
Social Subsystem
Comprises the employees (at all levels) and the knowledge, skills, attitudes, values and needs they bring to the work environment as well as the reward system and authority structures that exist in the organization.
Environmental Subsystem
Encompasses the wider reach of the organization by including customers, suppliers, and the rules and regulations, formal and informal, which govern the relations of the org. to society at large
Structural Subsystem
Includes the formal design, policies, and procedures, and so on of the organization or the system. It is usually set forth by the organization chart and includes division of work and patterns of authority.
Technical Subsystem
Includes the primary functions, activities, and operations, including the techniques, equipment, and so on, used to produce the output of the system including the administrative output of the system or organization such as payroll and reports
Psychosocial Subsystem
This includes the network of social relationships and behavioral patterns of members, such as norms, roles, and communications. This system includes both formal and informal processes
Goals and Values Subsystem
Includes the basic mission and vision of the organization. Such goals might include profits, growth, or survival and are often taken from the larger environment in which the org. or system operates
Managerial Subsystem
Subsystem spans the entire organization by directing, organizing, and coordinating all activities toward the basic mission. The managerial function is important in integrating the activities of the other subsystems.
Environmental System
The setting in which the org. exists such as the governmental setting, market setting, or geographic setting. One important aspect of the environmental setting is that it can set boundaries to behavior as well as force specific behaviors within those boundaries
What is the goal?
To make money. The answer to their problem is “To make money by increasing net profit, while simultaneously increasing return on investment, and simultaneously increasing cash flow
How does Lou look at the problem?
Lou agrees the goal is to make money. This can be achieved by looking at Net Profit, ROI, and Cash Flow
Throughput - The Goal
The rate at which the the system generates money through sales
Inventory - The Goal
All the money that the system has invested in purchasing things which it intends to sell
Operational Expense - The Goal
All the money the system spends in order to turn inventory into throughput
How are they now expressing the goal? - The Goal
Increase throughput while simultaneously reducing both inventory and operating expense
What is a balanced plant? - The Goal
A plant where the capacity of each and every resource is balanced exactly with demand from the market. Most plants cannot achieve this because the closer you come to a balanced plant, the closer you are to bankruptcy.
Dependent Events - The Goal
An event, or a series of events, must take place before another can begin… the subsequent event depends upon the ones prior to it
Statistical Fluctuations - The Goal
Information which varies from one instance to the next
What do they mean by the accumulation of statistical accumulations? - The Goal
Each period of slowing down accumulates and causes the line to spread.
What is Herbie? - The Goal
Herbie is the governor of throughput (the bottleneck). Whether he moves quickly or slowly, will determine the level of throughput because nothing gets done if he doesn’t get his task done
Bottleneck - The Goal
Any resource whose capacity is equal to or less than the demand placed upon it
Non-Bottleneck - The Goal
Any resource whose capacity is greater than the demand placed on it.
What is the balanced plant now? - The Goal
Balancing the flow of product through the plant with demand from the market. (balancing flow, not capacity)
The idea is to make the flow through the bottleneck just a bit less than demand from the market because if the market demand goes down, you’ll lose money if product flow is equal to demand
What is Jonah trying to get at about the cost of a bottleneck?
If a bottleneck is holding up production for an hour, that is an hour lost throughout the whole plant, which equates to around $2188.
The idea is to make the bottlenecks work only on what will contribute to throughput today, not nine months from now.
What is the sane approach to the problem?
Make sure the bottlenecks are processing parts for those late orders according to the same priority
What is the function of the colored tape?
The colored tape represents the priority level of the work-in-process. Red means the part is on a bottleneck routing. After parts are finished with the bottleneck, they are given yellow tape to show that they are to be treated like gold
What is a significant aspect of Ralph and the heat treatment process? - The Goal
Ralph wanted to collect data on the heat treat so that he could accurately project the number of products through the line each week. When asking for information, he noticed that products were being left in the heat treat for much longer than they should have been.
How did the new bottlenecks start? - The Goal
With the increase in throughput, the plant has become loaded to a level that it’s run out of capacity on some other resources in addition to the two previous bottlenecks.
How do Alex and his kids look at the problem? - The Goal
The kids suggest to use a drummer to keep pace or to tie ropes to each kid to keep them from spreading apart.
How does Stacey’s and Jonah’s approach differ? - The Goal
Stacy quickly assumes that the issue is a new bottleneck and uses paperwork to find her results. Jonah states that it is not a new bottleneck and is simply because it is a nonbottleneck that is sending product to the bottleneck too quickly
What is the four weeks about? - The Goal
Rogo promises to Johnny Jons of marketing that he can have any order shipped out within four weeks of contract.
What is the improvement thing about? - The Goal
The improvement thing is to determine what they have done in the plant and how they can relate that to other plants. They come up with the fact that they have completed a process and then lay out that process.
