1. Organizational
Design,
Competences,
and Technology

2. Learning Objectives
Identify what technology is and how it relates to organizational effectiveness
Differentiate among three different kinds of technology that create different competences
Understand how each type of technology needs to be matched to a certain kind of organizational structure if an organization is to be effective

3. Learning Objectives
Understand how technology affects organizational culture
Appreciate how advances in technology, and new techniques for managing technology, are helping increase organizational effectiveness

4. What is Technology?
Technology: The combination of skills, knowledge, abilities, techniques, materials, machines, computers, tools, and other equipment that people use to convert or change raw materials into valuable goods and services

5. What is Technology? Technology exists at three levels
Individual level - The personal skills, knowledge, and competences that individuals possess
Functional or department level - The procedures and techniques that groups work out to perform their work and create value

6. What is Technology? Technology exists at three levels (cont.)
Organizational level - The way an organization converts inputs into outputs
Mass production: the organizational technology based on competences in using standardized, progressive assembly process to manufacture goods
Craftswork: the technology that involves groups of skilled workers who interact closely to produce custom-designed products

7. Technology and Organizational Effectiveness
Technology is present in all organizational activities:
Input: Allows each organizational function to handle relationships with outside stakeholders
Conversion: Transforms inputs into outputs
Output: Allows an organization to effectively dispose of finished goods and services to external stakeholders

8. Figure 9.1 - Input, Conversion, and Output Processes
The technology of an organization’s input, conversion, and output processes is an important source of competitive advantage

9. What approaches measure and increase effectiveness using technology?
External resource approach for managing and controlling outside stakeholders.
Internal systems approach for innovation, product development, and reduced development time.
Technical approach for increasing efficiency and quality, and reducing costs.

10. Three theories consider the relationship between technology and design
Technical complexity
Complex tasks and routine tasks
Task interdependence

11. Technical Complexity: The Theory of Joan Woodward
Programmed technology: A technology in which the procedures for converting inputs into outputs can be specified in advance
Tasks can be standardized and the work process can be made predictable

12. Technical Complexity (cont.)
Technical complexity: The extent to which a production process can be programmed so that it can be controlled and made predictable
High technical complexity - Exists when conversion processes can be programmed in advance and fully automated
Low technical complexity - Exists when conversion processes depend primarily on people and their skills and knowledge and not on machines

13. Technical Complexity (cont.)
Woodward identified 10 levels of technical complexity that are associated with three types of production technology:
Small-batch and unit technology
Large-batch and mass production technology
Continuous-process technology

14. Figure 9.2 - Technical Complexity and Three Types of Technology

15. Technical Complexity (cont.)
Small-batch and unit technology
Involves making one-of-a-kind, customized products or small quantities of products
The conversion process is flexible, thereby providing the capacity to produce a wide range of goods that can be adapted to individual orders
Is relatively expensive
Scores lowest on the dimension of technical complexity

16. Technical Complexity (cont.)
Large-batch and mass production technology
Involves producing large volumes of standardized products
The conversion process is standardized and highly controllable
Allows an organization to save money on production and charge a lower price for its products
Scores higher on the technical complexity dimension

17. Technical Complexity (cont.)
Continuous-process technology
Involves producing a steady stream of output
Production continues with little variation in output and rarely stops
Individuals are only used to manage exceptions in the work process
Tends to be more technically efficient than mass production
Scores highest on the technical complexity dimension

18. Technical Complexity and Organizational Structure

19. Technical Complexity and Organization Structure (cont.)
Technological imperative: The argument that technology determines structure
For small organizations the importance of technology as a predictor of structure may be more important than it is for large organizations

20. Routine Tasks and Complex Tasks: The Theory of Charles Perrow
Perrow’s two dimensions underlie the difference between routine and nonroutine or complex tasks and technologies:
Task variability: The number of exceptions— new or unexpected situations—that a person encounters while performing a task
Is low when a task is standardized or repetitious
Task analyzability: The degree to which search activity is needed to solve a problem
Is high when the task is routine

21. Theory of Charles Perrow (cont.)
Four types of technology
Routine manufacturing: characterized by low task variability and high task analyzability
Craftswork: both task variability and task analyzability are low
Engineering production: both task variability and task analyzability are high
Nonroutine research: characterized by high task variability and low task analyzability

22. Figure 9.4 - Task Variability, Task Analyzability, and Four Types of Technology

23. Theory of Charles Perrow (cont.)
When technology is routine, employees perform clearly defined tasks – work process is programmed and standardized
Mechanistic structure
Nonroutine technology requires the organization to develop structure that allows employees to respond quickly to manage exceptions and create new solutions
Organic structure

24. Table 9.1 - Routine and Nonroutine Tasks and Organizational Design

25. Task Interdependence: The Theory of James D. Thompson
Task interdependence: The manner in which different organizational tasks are related to one another affects an organization’s technology and structure
Three types of technology
Mediating
Long-linked
Intensive

26. Theory of James D. Thompson (cont.)
Mediating technology: a technology characterized by a work process in which input, conversion, and output activities can be performed independently of one another
Based on pooled task interdependence
Each part of the organization contributes separately to the performance of the whole organization

27. Theory of James D. Thompson (cont.)
Long-linked technology: based on a work process in which input, conversion, and output activities must be performed in series
Based on sequential task interdependence
Actions of one person or department directly affect the actions of another
Slack resources: surplus resources that enable an organization to deal with unexpected situations

28. Theory of James D. Thompson (cont.)
Intensive technology: a technology characterized by a work process in which input, conversion, and output activities are inseparable
Based on reciprocal task interdependence
The activities of all people and all departments are fully dependent on one another
Specialism: producing only a narrow range of outputs

29. Figure 9.5 - Task Interdependence and Three Types of Technology

30. From Mass Production to Advanced Manufacturing Technology
Mass production is based on:
Dedicated machines: Machines that can perform only one operation at a time, such as repeatedly cutting or drilling or stamping out a car body part
Fixed workers: Workers who perform standardized work procedures increase an organization’s control over the conversion process

31. From Mass Production to Advanced Manufacturing Technology (cont.)
Attempts to reduce costs by protecting its conversion processes from the uncertainty of the environment
Makes an organization inflexible
Fixed automation is a combination of dedicated machines and fixed workers
Expensive and difficult to begin manufacturing a different kind of product when customer preferences change

32. From Mass Production to Advanced Manufacturing Technology (cont.)
Advanced manufacturing technology: Technology which consists of innovations in materials and in knowledge that change the work process of traditional mass- production organizations

33. Figure 9.5A - The Work Flow in Mass Production

34. Figure 9.5B - The Work Flow with Advanced Manufacturing Technology

35. Advanced Manufacturing Technology: Innovations in Materials Technology
Materials technology: Comprises machinery, other equipment, and computers
Organization actively seeks ways to increase its ability to integrate or coordinate the flow of resources between input, conversion, and output activities

36. Advanced Manufacturing Technology (cont.)
Computer-aided design (CAD)
Computer-aided materials management (CAMM)
Just-in-time inventory (JIT) system

37. Advanced Manufacturing Technology (cont.)
Computer-aided design (CAD): An advanced manufacturing technique that greatly simplifies the design process
Computers can be used to design and physically manufacture products

38. The advantages of CAD
Reduced design costs and a differentiation advantage
Improved manufacturing efficiency
Easier selling and servicing with improvements made during design
Risk of failure reduced by solving problems during design
Competitive advantage and reduced costs through quality
Increased flexibility and lower cost
Customized product design
Quick response to environmental changes

39. Advanced Manufacturing Technology (cont.)
Computer-aided materials management (CAMM):
An advanced manufacturing technique that is used to manage the flow of raw materials and component parts into the conversation process
Develops master production schedules for manufacturing and controls inventory

40. Advanced Manufacturing Technology (cont.)
Just-in-time inventory (JIT) system: Requires inputs and components needed for production to be delivered to the conversion process just as they are needed
Input inventories can then be kept to a minimum
CAMM is necessary for JIT to work effectively
Increases task interdependence between stages in the production chain

41. Figure 9.7 - Just-in-Time Inventory System

42. Flexible Manufacturing Technology
Technology that allows the production of many kinds of components at little or no extra cost on the same machine
Each machine is able to perform a range of different operations
Machines in sequence able to vary operations so that a wide variety of different components can be produced

43. Computer-Integrated Manufacturing (CIM)
An advanced manufacturing technique that controls the changeover from one operation to another by means of commands given to the machines through computer software
Depends on computers programmed to:
Feed the machines with components
Assemble the product from components and move it from one machine to another
Unload the final product from the machine to the shipping area
Use of robots integral to CIM

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