SHIFT IN FOCUS IN ORGANIZATIONAL DESIGN Classical organizational design theories emphasized stability. Classical organizational design theories emphasized stability. Unsuited for fast and dynamic environment faced by many businesses today. Unsuited for fast and dynamic environment faced by many businesses today. Search for alternative model has lead to the interest in organic systems. Search for alternative model has lead to the interest in organic systems. Organic systems seen as more adaptive than the traditional mechanistic design. Organic systems seen as more adaptive than the traditional mechanistic design.

MECHANISTIC VS. ORGANIC SYSTEMS MECHANISTIC Fragmented units Fragmented units Rigid task definitions Rigid task definitions Role specific individual responsibility Role specific individual responsibility Hierarchical control Hierarchical control Omniscient leader Omniscient leader Vertical communication Vertical communication Instructive communication Instructive communication Loyalty and obedience to organization Loyalty and obedience to organization ORGANIC Integrated subunits Integrated subunits Flexible task definition Flexible task definition Broad responsibility beyond immediate role Broad responsibility beyond immediate role Community of interest Community of interest Leader not omniscient Leader not omniscient Consultative & lateral Consultative & lateral Advise and convey information Advise and convey information Commitment to task and loyalty to discipline Commitment to task and loyalty to discipline

EXPLOITATION AND EXPLORATION Exploration and exploitation are organizational learning approaches Exploration and exploitation are organizational learning approaches Exploitation focuses on making incremental improvements to existing capabilities Exploitation focuses on making incremental improvements to existing capabilities Exploration focuses on seeking new learning and more radical improvements Exploration focuses on seeking new learning and more radical improvements The different focus of these 2 requires different organizational design The different focus of these 2 requires different organizational design Exploitation depends on process management Exploitation depends on process management Involves process mapping and creating stable architecture Involves process mapping and creating stable architecture Exploration depends on flexibility and adaptability Exploration depends on flexibility and adaptability Involves managing diffusion of knowledge to create new combinations Involves managing diffusion of knowledge to create new combinations Requires development of high combinative ability Requires development of high combinative ability

OTHER APPROACHES IN DEVELOPING RESPONSIVENESS Develop loose coupling of system Develop loose coupling of system Reliance on dynamic routine Reliance on dynamic routine Develop asset robustness Develop asset robustness Develop absorptive capacity Develop absorptive capacity Implement ambidextrous organizational design Implement ambidextrous organizational design Structural disaggregation Structural disaggregation Reliance on outsourcing and network arrangements Reliance on outsourcing and network arrangements

KEY ISSUES IN NETWORK DEVELOPMENT Partner selection. Partner selection. Share strategic direction and focus Build relationship on trust and performance Relationship maintenance Relationship maintenance Attain cultural fit Develop conflict resolution mechanisms Assessment and performance management Assessment and performance management Emphasize commitment to standard Improving partnership Improving partnership Develop an improvement orientation Take mutual ownership of problems

JAPANESE KEREITSU SYSTEM BANKS MAJOR COMPANIES VENDORS, OUTLETS AND SUPPLIERS SUB-VENDORS AND SUPPLIERS

CHINESE GUANXI Based on family, clan and ancestral village. Based on family, clan and ancestral village. Three levels of social network Three levels of social networkJiarenShurenShengren Bond created thru Renqing. Bond created thru Renqing.

PREREQUISITE FOR SUCCESS Require managers with certain skills. Require managers with certain skills. Recognize interdependence. Recognize interdependence. Role of managers as brokers. Role of managers as brokers. Develop ability to customize products to maintain position in network. Develop ability to customize products to maintain position in network. Invest in development of interfirm capabilities. Invest in development of interfirm capabilities. Compete on network basis. Compete on network basis. Network is both a structural arrangement and a state of mind. Network is both a structural arrangement and a state of mind.