1. ENGM 742: Engineering Management and Labor Relations
Session Two – 17 January 2017
Systems Thinking
Innovation
Technology Cycles

2. Modified Nadler-Tushman Open-Systems Model
Boundary
Internal
Supply Chain
Formal Organization Structure
Vertical
Horizontal
Standard Operating Procedures
Formal Reward System
Competitors
Informal Organization
Culture
Politics
Inter-departmental Relations
Technical Systems
Organization Level
Department Level
Individual Level
Information Systems
Stake Holders
Inputs
Outputs
Human Resources
Selection
Roles
Personal Dynamics
Employee Needs
Positive and Negative Feedback
Technology
Change
Market

3. KEY ELEMENTS OF O.S THEORY

4. Definitions
Environment – All factors existing outside the boundary of the organization that have a potential impact on all or part of the organization.
Environment Sectors – Subdivisions of the external environment that contain similar elements.
Task Environment – Sectors with which organization interacts directly and that have a direct impact on the organizations ability to achieve its goals.
General Environment – Sectors that may not have a direct impact on the operations of the firm but indirectly influence it.

5. An Organization’s Environment
(g) Recession, unemployment rate,
inflation rate, rate of investment,
economics, growth
(h) City, state, federal laws
and regulations, taxes,
services, court system,
political processes
(i) Age, values, beliefs,
education, religion,
work ethic, consumer
and green
movements
(j) Competition from
and acquisition by
foreign firms,
entry into overseas
markets, foreign
customs, regulations,
exchange rates
(a) Competitors, industry size and
competitiveness, related issues
(b) Suppliers,
manufacturers, real
estate, services
(c) Labor market,
employment agencies,
universities, training
schools, employees
in other companies,
unionization
(d) Stock markets,
banks, savings and
loans, private
investors
(e) Customers, clients,
potential users of products
and services
(f) Techniques of production, science,
computers, information technology
International Context
(j)
International
Sector
(a)
Industry
Sector
(i)
Sociocultural
Sector
DOMAIN
(b)
Raw Materials
Sector
(c)
Human
Resources
Sector
(h)
Government
Sector
ORGANIZATION
(g)
Economic
Conditions
Sector
(d)
Financial
Resources
Sector
(e)
Market
Sector
(f)
Technology
Sector

6. Analytic Questions based on O.S. Model

7. Dynamic Processes of a System

8. Analytic Questions based on Dynamic Processes

9. Open-Systems Theory Organizational Effectiveness Best Organization-
Environment Fit
Organizational
Effectiveness
--Customers
--External Stakeholders
--Employees
Internal
Social and
Technical Systems Fit

11. Environments External Environment Internal Environment
forces outside the organization that have the potential to significantly influence the likely success of products or services
Internal Environment
the general conditions that exist within an organization
Organizational Culture
a system of shared values, assumptions, beliefs, and norms that unite the members of an organization

12. External Environments
Mega-Environment
Task
Environment
Culture of
Organization

13. External Environments
Mega-Environment
International
Element
Technological
Element
Sociocultural
Element
Economic
Element
Legal-Political
Element

14. Mega-Environment Technological Element Economic Element
reflects the current state of knowledge regarding the production of products and services
Economic Element
the systems of producing, distributing and consuming wealth, e.g.
capitalist economy is governed by market forces and the means of production are privately owned
socialist economy in which the means of production are owned by the state and economic activity is coordinated by the plan
international economies have significant impact on operations

15. Mega-Environment Legal-Political Element
the legal and governmental systems within which an organization must function
Clean Air and Clean Water Act
Occupational Health and Safety Act
SEC computerized tracking for illegal insider trading

16. Mega-Environment Sociocultural Element
the attitudes, values, norms, beliefs, behaviors, and associated demographic trends that characteristic of a given area
McDonald’s allows menu modifications in foreign countries
American trends
delay marriage
aging of large baby boomer group
growing birth rate
growing diversity of work force

17. Mega-Environment International Element
the developments in countries outside an organization’s home country that have the potential to influence the organization
North American Free Trade Agreement

18. Xerox Environments Mega-Environment International Fuji-xerox
Rank xerox
Xerox Canada
Competition
Technological
Smart copiers
Robotics
Color copiers
Xerox
Economic
Global capital markets
Growth of service sector
Low US inflation
Sluggish economy
Sociocultural
Employee Involvement
Globalization of Mgmt.
Home use of machines
Older consumers
and workers
Legal-Political
Patent laws
Trade restraints
Deregulation of financial services

19. Task Environment Mega-Environment Task Culture of Organization
Customers & Clients
Competitors
Suppliers
Labor
Government
Agencies

20. Task Environment Customers & Clients Competitors
those individuals and organizations that purchase an organization’s products and services
Competitors
other organizations that either offer or have a high potential of offering rival products or services
benchmarking

21. Task Environment Suppliers Labor Supply
organizations and individuals that supply the resources an organization needs to conduct its operations
trend is towards fewer more dependable suppliers
Labor Supply
those individuals who are potentially employable by an organization
Bureau of Labor Statistics: increasingly diverse workforce
KFC’s Designate program

22. Task Environment Government Agencies
agencies hat provide services or monitor compliance with laws and regulations at local, state or regional, and national levels

23. Xerox Task Environment
Customers & Clients
AT&T
DuPont
Sun Microsystems
DOD
Competitors
Canon
Ricoh
Kodak
IBM
Suppliers
Reell Precision
Rogers Corp
Nationwide Precision
Labor
Amalgated Clothing
and Textile Workers
Other Unions
Varying labor markets
Government
Internal Revenue
EEC Commission
SEC
EPA
Xerox

24. Organization/Environment
Population Ecology Model
focuses on populations or groups of organizations and argues that environmental factors cause organizations with appropriate characteristics to survive and others to fail
natural selection model
of 100 largest companies in 1917, only 22 remained in 100 largest category in (Forbes, 1987)
managerial actions are of limited consequence in dealing with the environment

25. Organization/Environment
Resource Dependent Model
highlights organizational dependence on the environment for resources and argues that organizations attempt to manipulate the environment to reduce that dependence
organizations attempt to be as independent as possible by controlling critical resources
managers have strategic choices that influence organizational success

26. Environmental Uncertainty
A condition in which future environmental circumstances affecting an organization cannot be accurately assessed and predicted
function of complexity and dynamism
Environmental Complexity
the number of elements in an organizations environment and their degree of similarity
homogeneous
heterogeneous

27. Environmental Uncertainty
Environmental Dynamism
the rate and predictability of change in the elements of an organization’s environment

28. Environmental Complexity
Environmental Dynamism
Environmental Complexity
Homogeneous Hetergeneous
Stable
Unstable
Low Uncertainty
1. small # of
similar elements
2. elements change
slowly
funeral homes
Moderately Low
1. large # of
dissimilar elem.
Insurance
Moderately High
rapidly
Women’s Apparel
High Uncertainty
Software Co.

29. Environmental Munificence
Environmental Munificence (capacity)
the extent to which the environment can support sustained growth and stability
organizations operating in rich environments can build up internal resources; capital, equipment, experience
organizations operating in rich environments can also attract competition

30. Managing Environmental Elements
Adapt to existing environmental conditions
attempt to influence environmental elements
shift domain of operations away from threatening environmental conditions
James D. Thompson

31. Adaptation Buffering Smoothing Forecasting Rationing
stockpiling either inputs or outputs from a process in order to cope with environmental fluctuations
Smoothing
taking actions aimed at reducing the impact of fluctuations given the market
Forecasting
predict future environmental conditions
Rationing
providing limited access to a product or service that is in high demand

32. Favorability Influence
Advertising/Public Relations
Boundary Spanning
Recruiting
Negotiating
Co-oping
Joint Ventures
Trade Associations
Political Activity

33. Domain Shifts
Changes in the mix of products and services offered so that an organization will interface with more favorable environmental elements.

34. Organizational Culture
Factors Impacting Corporate Culture
Direction
the degree to which a culture supports reaching organizational goals
Pervasiveness
the extent to which a culture is widespread among members
Strength
degree to which members accept the values and other aspects of a culture

35. Manifestations of Culture
Symbol
object, act, event that serves as a vehicle for conveying meaning
Corning quapple (Q pin)
Stories
a narrative based on true events which sometimes may be embellished to highlight the intended value
B-52 vs F15 - shut down two engines
Rites & Ceremonials
elaborate planned set of activities to convey cultural values

36. Changing Culture Surfacing actual norms Articulating new directions
Establishing new norms
Identifying culture gaps
Closing culture gaps

37. Definitions
System – A set of interacting elements that acquires inputs from the environment, transforms them, and discharges outputs to the external environment.
Subsystem – Elements within a system that perform the specific functions required for organizational survival.
Production & service
Boundary spanning
Adaptation
Maintenance
Management

38. Definitions
Closed system – A system that exists without dependence on its environment.
Autonomous / Independent
Enclosed / Non-interactive with external envt.
Stable
Internal focus
Open system – A system that must interact with the environment to survive.
Contingent / Dependent
Resource consumption and exportation
Dynamic
External focus

39. Open systems theory IS a contingency theory.
Open Systems Paradigm
Contingency Theory
Perspective which states that effective orgs. must have a “goodness of fit” b/w structure and conditions in the external environment.
“It depends” – no such thing as one best way.
Ex: stable/unstable environment  bureaucratic/flexible control
Open systems theory IS a contingency theory.