Electronic Business (MGT-485) Lecture 26 Electronic Business (MGT-485)

Recap – Lecture 25 E-Business Strategy: Implementation Organizational Culture and e-Business Organizational Structure and e-Business

Contents to Cover Today E-Business Strategy: Implementation Organizational Structure and e-Business The Boundary-less organization The virtual organization Change Management Organizational Change Management

Organizational Structure & e-Business: The boundaryless organization Traditional organizations have boundaries that create barriers against their ability to compete. These can be external or internal barriers. An external boundary is the geographical constraint of being physically distant from markets and customers. Internally, firms face barriers created by the hierarchy that characterizes their organizational structure. The boundaryless organization is one where the structure is not defined by, or limited to, the boundaries imposed by traditional structures.

Organizational Structure & e-Business: The boundaryless organization The main advantages that organizations gain from a boundaryless structure are that it: Improves the scope for co-operation, co-ordination and collaboration among the functional areas that comprise the organization; Allows greater knowledge sharing across the organization; Allows organizations to respond more quickly to changes in the environment; Helps co-ordination and collaboration with partners, suppliers and customers; Empowers staff members and encourages a culture of innovation and creativity.

Organizational Structure & e-Business: The Virtual organization The development of the internet as a means of conducting business has proved a catalyst for the growth of virtual organizations This is because it is an ideal medium for communicating and coordinating collaborative business activities at a significantly lower cost than traditional bricks-and-mortar firms could achieve. The main characteristics of a virtual organization include: No physical structure; Emphasis on knowledge creation and sharing; Reliance on electronic communications; Geographically dispersed and mobile workforce; No organizational boundaries; Temporary working relationships.

Organizational Structure & e-Business: The Virtual organization A virtual organization typically employs few people since its approach is to hire in the skills it needs from specialist organizations. This saves on overheads and administration costs relating to employing a permanent workforce. The main reason firms join virtual organizations is to be able to compete effectively on a global scale by exploiting opportunities for collaborating with other organizations in complementary activities that achieve mutual benefits. The success of virtual organizations depends largely on what each participant can offer to the collective group.

Organizational Structure & e-Business: The Virtual organization The advantages of a virtual organization can be summarized as: Offering the scope for firms to access a wide range of skills, experience and knowledge; Increasing the flexibility and responsiveness of firms to meet changes in the environment; Helping firms grow by allowing them to compete on a global scale; Increasing competitiveness by reducing overheads and the cost of employing a large workforce.

Organizational Structure & e-Business: The Virtual organization There are some disadvantages associated with virtual organizations The loss of direct control. Collaboration with partners necessarily means relinquishing some control in favor of interdependency. Need for strong management to maintain a focus on objectives and a high standard of contributions from participants. Managers of virtual teams must also be flexible and adaptable to deal with constant change as groups form and disband quickly. As the medium for carrying out these management tasks is electronic, the scope for misunderstanding, confusion or conflict is increased.

Change Management Change management refers to major alterations to an organization's processes, structure, technology, staff or culture. Change management is necessary when firms seek to improve their current performance through changing their infrastructure and internal processes and activities. Usually, change management is necessary when a performance gap emerges To effect change management it is necessary for managers to understand what forces drive change and what forces restrain change. These form the basis of a force-field analysis.

Change Management: Force-Field Analysis Force field analysis is a management technique developed by Kurt Lewin, a pioneer in the field of social sciences, for diagnosing situations. Force Field Analysis is a useful technique for looking at all the forces for and against a decision. In effect, it is a specialized method of weighing pros and cons. By carrying out the analysis you can plan to strengthen the forces supporting a decision, and reduce the impact of opposition to it.

Change Management: Force-Field Analysis Analytical Purpose: FFA is an analysis technique to identify forces that either drive or restrain planned change aimed at solving a problem in an organization. It is a creative activity that can be used by needs analysts as they focus on solutions which will help an organization make a transformation from the ‘current (problem) state’ to the ‘desired (solved) state’ as they identify interventions to improve performance.

Change Management: Force-Field Analysis Force-Field Analysis can be used to: Identify the forces which support change as well as those which will act against it. Assess the causes of performance problems or inhibitors to business opportunities. Evaluate the relative strength of forces that affect alternative solutions to performance problems or business opportunities. Help analyze and prioritize solutions to problems or areas needing improvement.

Change Management: Force-Field Analysis Process of FFA Unfreezing -- melting away resistance Change -- departure from the status quo Refreezing -- change becomes routine

Force-field Model of Change Desired state Restraining forces Status quo Driving forces Time

Organizational Change Management It is not uncommon for an organization to choose to conduct a project that will have impact on the organization itself. Examples: New Time and Attendance System New email system Transition from paper to electronic Requisitions Change from primarily print to primarily electronic media Introduction of a new technology Distribution of workers in new office space

Organizational Change Management Upper Management undertakes these projects because they believe that there is sufficient gain to the organization to warrant the expense. And Upper Management usually moves forward on the basis that since it is in everyone’s best interest, those individuals affected will of course endorse the project and work to make it a success. And all too often Upper Management receives a rude shock.

Organizational Change Management It can be very difficult to introduce change to an organization. Failure to recognize and deal with this fact has been the cause of many project failures. As the Management Team, you must be aware of the extent to which your projects may introduce organizational change, and then you must deal with this issue.

Organizational Change Management What is Organizational Change? It is generally considered to be an organization-wide change, as opposed to smaller changes such as adding a new person. (See first slide of this section for examples) It includes the management of changes to the organizational culture, business processes, physical environment, job design / responsibilities, staff skills / knowledge and policies / procedures. When the change is fundamental and radical, one might call it organizational transformation

Organizational Change Management What provokes Organizational Change? Examples: Management adopts a strategy to accomplish some overall goal May be provoked by some major outside driving force, e.g., substantial cuts in funding An Organization may wish to evolve to a different level in their life cycle, e.g. from traditional government to e-government Transition to a new chief executive can provoke organization-wide change when his or her new and unique personality pervades the entire organization

Organizational Change Management Why is Organization-wide Change difficult to accomplish? Organizations go through four stages on the way to achieving their strategic objective: Denial Resistance Exploration Renewal

Organizational Change Management Factors in Organizational Change Efforts by employees to block the intended change is referred to as Resistance to Change. Resistance to Change has been defined as: ”behavior which is intended to protect an individual from the effects of real or imagined change” ”any conduct that serves to maintain the status quo in the face of pressure to alter the status quo“

Organizational Change Management Factors in Organizational Change Resistance is a natural and inevitable reaction in an organization. You can expect it Resistance is sometimes hidden, so it may be necessary to take active steps to find it There are many reasons for resistance; it is important to understand it We manage resistance by working with people, and helping them deal with their concerns There are many ways to build acceptance. It is important to be flexible. But persist!

Organizational Change Management Factors in Organizational Change The key to successful management of organizational change lies in the people. They are the agents for successful transformation of the organization. They determine the Return on Investment from this process So let’s have a look at where Resistance to Change comes from and how to best manage it

Organizational Change Management Resistance to Change Why people resist change: Resistance to change can be a defense mechanism caused by frustration and anxiety Individuals may not be resisting the change as much as they are resisting a potential loss of status, pay, comfort, or power that arises from expertise In many case there is not a disagreement with the benefits of the new process, but rather a fear of the unknown future and about their ability to adapt to it, e.g. fear that one will not be able to develop new skills and behaviors that are required in a new work setting

Organizational Change Management There may be resentment in disgruntled employees due to a perceived unfairness of the change. This can be strong enough to lead to sabotage. Some employees may see the change as a violation of "personal compacts" management has with their employees. This can involve elements of mutual trust, loyalty and commitment and go very deep An employee may have a “competing commitment” that is incompatible with the desired change An employee may be operating on the basis of a desire to protect what they feel is the best interests of the organization An employee may provoke insightful and well-intended debate, criticism, or disagreement in order to produce better understanding as well as additional options and solutions.

Organizational Change Management Resistance to Change The take-home message from all this is that there is no simple explanation for Resistance to Change, and therefore no simple way to circumvent it. Indeed, there are instances where an employees “resistance”, although not in the plan, could result in beneficial consequences

Organizational Change Management How prevalent is Resistance to Change? It is generally acknowledged that in an average organization, when the intention for change is announced: 15% of the workforce is eager to accept it 15% of the workforce is dead set against it 70% is sitting on the fence, waiting to see what happens

Organizational Change Management How can I best accomplish Organization-wide Change? The high-level view: Get senior management agreement (i.e. conflicting goals can kill the project!) Identify a champion who can articulate the reasons for and advantages of the change Translate the vision for change into a realistic plan and then carry out the plan Involve people from every area of the organization Communicate. Communicate. Educate. Educate. Get organizational buy-in to the change Modify organizational structures so that they will sustain the change

Summary E-Business Strategy: Implementation Organizational Structure and e-Business The Boundaryless organization The virtual organization Change Management Organizational Change Management