Organizational Design →
- 10 Aug 2009
- Research & Ideas
High Commitment, High Performance Management
High commitment, high performance organizations such as Southwest Airlines, Johnson & Johnson, McKinsey, and Toyota effectively manage three paradoxical goals, says HBS professor Michael Beer. His new book explains what all companies can learn. Q&A Key concepts include: High commitment, high performance (HCHP) firms carry out performance alignment, psychological alignment, and the capacity for learning and change. HCHP transformations are a unit-by-unit process. HCHP firms allow employees to speak to power in honest, collective, and public conversations. Leaders must make conscious, principled choices. Leaders develop an institution that cares about people while understanding the importance of profits. Closed for comment; 0 Comments.
- 30 Jul 2009
- Working Paper Summaries
Fluid Teams and Fluid Tasks: The Impact of Team Familiarity and Variation in Experience
In the context of team performance, common wisdom suggests that performance is maximized when individuals complete the same work with the same people. Although repetition is valuable, at least up to a point, in many settings such as consulting, product development, and software services organizations consist largely of fluid teams executing projects for different customers. In fluid teams, members bring their varied experience sets together and attempt to generate innovative output before the team is disassembled and its individual members move on to new projects. Using the empirical setting of Wipro Technologies, a leading firm in the Indian software services industry, this study examines the potential positive and negative consequences of variation in team member experience as well as how fluid teams may capture the benefits of variation while mitigating the coordination costs it creates. Key concepts include: As organizations continue to depend on the output of teams, and teams, in turn, rely on members with varied prior experience, it becomes critical for teams to manage these differences and dependencies successfully. If the most valuable assets of many companies are their employees, then organizations need to shift from only thinking about their project portfolio to also considering their employee-experience portfolio. Managing employee-experience portfolios will require managers to consider the breadth of types of experience (e.g., customer, technology, etc.) captured across the members of a team as well as their familiarity with each other. Doing so may offer managers an important new lever for improving organizational performance. Closed for comment; 0 Comments.
- 09 Jul 2009
- Working Paper Summaries
Performance Pressure as a Double-Edged Sword: Enhancing Team Motivation While Undermining the Use of Team Knowledge
Why do teams often fail to use their knowledge resources effectively even after they have correctly identified the experts among them? Project teams are a prominent feature of the knowledge-based economy, and member expertise has long been recognized as an important resource that can greatly affect team performance, but only to the extent that it is accurately recognized and used to accomplish the objective. The step between recognizing others' expertise and then actually applying it to achieve a collective outcome, however, is highly problematic: Even when individuals know who holds relevant task expertise, they are often unwilling or unable to give the experts appropriate influence over the group process and outcomes. HBS professor Heidi K. Gardner takes a multidisciplinary approach to develop theory explaining how interpersonal dynamics in teams affect members' use of each other's distinct knowledge, ultimately leading to differential performance outcomes. Key concepts include: Teams facing significant performance pressures tend to default to high-status members at the expense of using team members with deep knowledge of the client, with detrimental effects on team performance. The more important the project, the less effective the team: Excessive performance pressure results in the team reverting to less effective ways of divvying up influence over its end product, in turn leading to lower performance ratings for the whole team. Team process is important in enabling organizations to harness knowledge resources for the benefit of maintaining strong relations with their clients. Closed for comment; 0 Comments.
- 20 May 2009
- Working Paper Summaries
On Good Scholarship, Goal Setting, and Scholars Gone Wild
When confronted by anecdotal evidence and some causal evidence, how should scholars—and indeed businesses and society—react? In this response to a critique in the journal Academy of Management Perspectives, the authors articulate the aims of their article "Goals Gone Wild: How Goals Systematically Harm Individuals and Organizations," describe points of disagreement with the critics, offer a definition of good scholarship, and suggest a program of research for future studies of goal setting. Key concepts include: Future research should investigate both the constructive and harmful effects of goals. These studies will require new and creative approaches. Anecdotal evidence matters. Given that one large negative effect can overwhelm the influence of many positive effects, anecdotes and empirical results linking goals with harmful outcomes deserve more attention and systematic research. As financial crises, Ponzi schemes, and the collapse of the automotive industry demonstrate, the combination of unethical behavior, risk-taking and poor judgment can be toxic. Three areas of research with significant prospects for illuminating potential problems are the links between goal setting and unethical behavior, goal setting and excessive risk-taking, and goal setting and judgment. Closed for comment; 0 Comments.
- 01 May 2009
- What Do You Think?
Do Innovation and Entrepreneurship Have to Be Incompatible with Organization Size?
Like a good case study, this month's question divided respondents nearly down the middle, says professor Jim Heskett. Can managers lead both a large, established organization and encourage intrapreneurial effort inside it? Readers weighed in. (Online forum now closed. Next forum begins June 5.) Closed for comment; 0 Comments.
- 14 Oct 2008
- Research & Ideas
Should You Bring Advertising Expertise In-House?
Advertising agencies have traditionally offered services to firms that couldn't afford or didn't find value in having that expertise in-house. But a recent study indicates more firms than previously thought are developing internal advertising units. Q&A with HBS professor emeritus Alvin J. Silk. Key concepts include: The likelihood of a firm internalizing advertising services decreases as the size of its advertising expenditures increases. Cost efficiencies and savings are the major reasons for pursuing the in-house advertising route. Some industries more than others develop in-house advertising expertise, particularly technology-based and creative industries. The make or buy decision relating to advertising services is complex, and should be based on a careful economic analysis. Closed for comment; 0 Comments.
- 18 Sep 2008
- Working Paper Summaries
The Internalization of Advertising Services: An Inter-Industry Analysis
When are advertisers more likely to establish and maintain their own in-house agencies? Despite occasional indications to the contrary, such self-sufficiency has long been viewed by industry observers and scholars as more the exception than the rule in the U.S. advertising and marketing services business. With the background that vertical integration in this industry is a neglected domain of research, analysis by HBS professor emeritus Alvin J. Silk and colleagues suggests that while most large U.S. advertisers rely primarily on independent agencies for advertising services, many other advertisers operate in-house advertising units. Key concepts include: The organization of the advertising and marketing services industry is likely to undergo considerable change as it absorbs new communication and information technologies, creating challenges and opportunities for both managers and researchers. In the 1990s, almost half of all U.S. advertisers, large and small, operated some form of in-house advertising unit. Smaller advertisers and advertisers of technical, creative, or highly differentiated products were more likely to integrate. Closed for comment; 0 Comments.
- 04 Sep 2008
- Working Paper Summaries
Wellsprings of Creation: Perturbation and the Paradox of the Highly Disciplined Organization
Many organizations struggle to balance the conflicting demands of efficiency and innovation. Organizations can become more efficient in the short run by replacing costly, unpredictable problem solving activity with consistent, streamlined routines. However, this efficiency often comes at the cost of long-run adaptability. The more organizational activity is dominated by stable routines, the less the organization learns, and the more rigid and inflexible it becomes. To escape this fate, the authors of this working paper theorize that highly disciplined organizations must actively engage in strategic and selective perturbation of established routines. A perturbation interrupts an established routine and creates an opportunity to innovate and learn. Using illustrations from Toyota, the authors investigate the conditions under which perturbations can sustain exploration in highly disciplined organizations. Key concepts include: To sustain adaptability in the long term, perturbations must occur throughout the organization. In highly disciplined organizations, adaptability depends on the active participation of organization members in inducing and interpreting perturbations. Management must trust employees to perturb processes, teach them to detect and interpret perturbations, and motivate them to do so. In the long term, business success depends as much on the commitment and knowledge of frontline employees as on strategic decision-making by senior management. Closed for comment; 0 Comments.
- 08 May 2008
- Working Paper Summaries
Organizational Design and Control across Multiple Markets: The Case of Franchising in the Convenience Store Industry
Chain organizations operate units that are typically dispersed across different types of markets, and thus serve significantly different customer bases. Such "market-type dispersion" is likely to compromise the headquarters' ability to control its stores for two reasons: Relative differences in local conditions make it difficult to monitor a store manager's behavior, and a chain with wide-ranging customer bases will have a harder time serving its customers and will need to rely more heavily on store managers' ability to adapt to local needs. This study identifies market-type dispersion as a factor that is systematically related to firms' organizational design choices. The results may help managers and consultants who deal with control challenges related to a chain's geographic expansion into different markets. Key concepts include: Chains experiencing higher levels of variation in customer demands across different locations are more likely to increase delegation and the provision of incentives through the organizational design choice of franchising. Stores are more likely to be franchised when their location characteristics are more divergent from the most prevalent location characteristics of the chain as a whole. Non-franchisor chains with higher levels of such market-type dispersion tend to decentralize operations to a greater extent. It is also possible that they provide higher variable pay. Closed for comment; 0 Comments.
- 26 Mar 2008
- Sharpening Your Skills
- 14 Nov 2007
- Research & Ideas
Growing CEOs from the Inside
Who is the best CEO candidate? An insider with intimate knowledge of your company, or an outsider who is ready to put sacred cows out to pasture? The answer, says HBS professor Joseph L. Bower, is both. In this Q&A, he discusses his new book, The CEO Within, and why inside-outsiders are the key to succession planning. Key concepts include: Effective succession planning is a hallmark of many top-performing companies, but most firms pay little attention to the process. In many cases an ideal candidate for CEO will come from the inside but carry an outsider's perspective. Closed for comment; 0 Comments.
- 01 Oct 2007
- Working Paper Summaries
Team Familiarity, Role Experience, and Performance:Evidence from Indian Software Services
In contexts ranging from product development to service delivery, a significant amount of an organization's work is conducted by "fluid teams" that strive for innovative output. Fluid project teams exist only for the duration of a single project, and are comprised of members who may join or leave a team during the course of a project. In such settings, simple measures of cumulative output may not accurately capture team experience, particularly when changes in team composition are substantial over time. This study of an Indian software services firm, Wipro Technologies, considers an approach for capturing the experience held by fluid teams. It extends the concept of team fluidity in a way that allows for greater granularity in the measurement of team experience and a finer understanding of the determinants of team performance. Key concepts include: The findings underscore the need to use caution in assuming cumulative output wholly captures experience when team membership is not constant from one project to the next. These results build on previous research on team familiarity by considering longitudinal data on the individual members of teams. The findings also emphasize the importance of considering role experience and studying experience at different levels of seniority. Closed for comment; 0 Comments.
- 14 Aug 2007
- Working Paper Summaries
Improving Patient Outcomes: The Effects of Staff Participation and Collaboration in Healthcare Delivery
Health-care organizations have a well-documented, industry-wide need to improve their processes. To that aim, the Institute of Medicine has made at least 2 recommendations that focus on front-line staff—physicians, nurses, and respiratory therapists. The first recommendation states that front-line staff should be involved in unit decision-making and the design of work processes and workflow (participation). The second emphasizes respectful interactions among front-line staff, including information-sharing and coordinating activities to achieve organizational goals (collaboration). This study provides preliminary supporting evidence for the Institute of Medicine's recommendations to use a dual, front-line strategy of participation and collaboration to improve patient outcomes. Key concepts include: Shared decision-making and respectful collaboration are vital to enabling improvement in health-care organizations. Front-line staff participation in process improvement can solve a common problem: lack of commitment from health-care professionals to implement new practices. Units with more collaboration—as measured by staff perception and use of collaborative work practices—experienced greater improvement in risk-adjusted mortality among patients. Participation in process improvement may be an effective strategy for other service organizations that face staff resistance to new routines. Closed for comment; 0 Comments.
- 05 Jun 2007
- Working Paper Summaries
Leading and Creating Collaboration in Decentralized Organizations
No matter how a multi-divisional organization is designed, it will need to find effective ways for its units to spontaneously and responsively cross boundaries. This paper discusses 3 key barriers to collaboration and information-sharing within an organization, and offers 3 strategies to overcome them. Key concepts include: The first barrier is intergroup bias: the systematic tendency to treat one's own group or its members better than another group and its members. Company funding, access to markets, intellectual property rights, and other organizational assets are all potentially scarce resources over which groups may have to, or feel they have to, compete. Recommendation to counteract this barrier: Link group interests to overarching interests. The second barrier is group territoriality expressed through behavior and physical symbols that separate "us" from "them." Territoriality stems from a group's needs for identity, efficacy, and security. Recommendation: Frame collaboration as the solution to group needs. The third barrier consists of poor strategies that members of different organizational divisions use when they negotiate with each other. Errors include the belief in a "fixed pie" in negotiations, the failure to carefully consider the decision processes of one's negotiation partner, and the failure to recognize opportunities for negotiation in the first place. Recommendation: Enable and encourage effective negotiation skills. Closed for comment; 0 Comments.
- 31 May 2007
- Working Paper Summaries
Organizational Designs and Innovation Streams
Ambidextrous organizational designs are those that sustain current success while simultaneously building new products, services, or processes. This research looks at a sample of 13 business units and describes the relations between alternative organizational designs and innovation streams. These business units used 4 distinct organizational designs in service of innovating and improving existing products: functional, cross-functional, spinouts, and ambidextrous. The researchers also used longitudinal data in order to explore how designs evolve over time and how design transitions affect innovation success. Key concepts include: Ambidextrous organizational designs are composed of an interrelated set of competencies, cultures, incentives, and senior team roles. These designs are significantly more effective for serving innovation than are functional, cross-functional, and spinout designs. Business units that switched to an ambidextrous design improved their innovation outcomes while transitions to cross-functional or spinout designs did not. Ambidextrous designs for carrying out innovations helped the performance of existing products. Closed for comment; 0 Comments.
- 30 May 2007
- Working Paper Summaries
Ambidexterity as a Dynamic Capability: Resolving the Innovator’s Dilemma
Can organizations adapt and change—and if so, how does this occur? There are two major camps in the research on organizational change: those that argue for adaptation, and those that argue that as environments shift, inert organizations are replaced by new forms that better fit the changed context. There are data to support both arguments. This paper discusses the idea and practicality of ambidexterity and shows how the ability to simultaneously pursue emerging and mature strategies is a key element of long-term success. Key concepts include: Ambidexterity, the ability of a firm to simultaneously explore and exploit, is one solution to the innovator's dilemma as outlined by HBS professor Clayton Christensen. Under the appropriate conditions, organizations may be able to explore new avenues as well as exploit their existing capabilities. Strategic contradictions can be resolved by senior leaders who design and manage their own processes and, in turn, ambidextrous organizations. Leadership is therefore key. Closed for comment; 0 Comments.
- 08 Feb 2007
- Working Paper Summaries
Managing Know-How
For many firms, the ability to create, organize, and disseminate know-how is a key factor in their ability to succeed. But should all companies engage in formal knowledge management? If not, which companies derive most value from a formal knowledge system? Conditional on implementing such a system, should the company focus more on learning from successes or learning from failures? Should such knowledge systems simply capture all experience, or should they be more selective? This paper develops and applies an economic framework to examine these questions. Key concepts include: Supporting firms' focus on best practice, information about successes is typically more useful than information about failures. Past successes can guide future successes, while past failures only point out certain pitfalls. Recording mediocre know-how can be counter-productive by inefficiently reducing employees' incentive to experiment. Larger firms with high turnover potentially gain the most from knowledge systems, but should also be the most selective when encoding information. The framework in this paper can be used to explore other questions on knowledge management. As knowledge management continues to grow in importance, a systematic economic perspective may shed important insights. Closed for comment; 0 Comments.
- 31 Jan 2007
- HBS Case
When Good Teams Go Bad
Jeff Polzer and Scott Snook teach "The Army Crew Team" case and the dilemma faced by a rowing coach who has great individual parts but can't get them to synchronize. Open for comment; 0 Comments.
- 10 Jan 2007
- HBS Case
The Challenge of Managing National Security
What can we learn from mistakes made in managing national intelligence before 9/11? Professor Jan Rivkin discusses the difficulties of integrating a highly differentiated organization, and the dangers of overcentralizing decision making. From HBS Alumni Bulletin. Key concepts include: The issues around managing national security provide an extreme example of the challenges faced by organizations that break into specialized parts yet must get the parts to work together. While private sector organizations can roll out complex changes over time, the intelligence community must change quickly—it must be patient and impatient at the same time. In the highly turbulent field of national security, a single "intelligence czar" could be quickly overwhelmed by informational burdens, and oversight groups can bury talented individuals under bureaucracy. The Director of National Intelligence should serve as a centralized provider of leadership and infrastructure that allows both decentralized and coordinated action. Closed for comment; 0 Comments.
Culture Clash: The Costs and Benefits of Homogeneity
Culture clash is often considered a major cause for the failing of mergers and acquisitions, and for this reason it is an important consideration for corporate strategy. Although less publicized, culture clash has also plagued alliances and long-term market relationships. It provides a unique lens on the performance effects of corporate culture itself, and thus culture's potential to generate a competitive advantage. This paper develops an economic theory of the costs and benefits of corporate culture—in the sense of shared beliefs and values—in order to study the effects of culture clash in mergers and acquisitions. Key concepts include: Culture is the degree to which members have similar beliefs about the best way of doing things. In mergers and acquisitions, the costs of culture clash will typically show up immediately and affect mainly the operational efficiency of the merged firms. The benefits of culture clash will take more time to emerge and will affect more the fit with the environment. Closed for comment; 0 Comments.