1. Managerial Economics and Organizational Architecture, 5e Managerial Economics and Organizational Architecture, 5e Chapter 23: Organizational Architecture and the Process of Management Innovation McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved.

2. Managerial Economics and Organizational Architecture, 5e Management Innovations Bookstores are filled with “how-to” books of management gurus, hype typically exceeds reality Relevant questions –What explains popularity of innovations? –Why do they often fail? –How to tell if a given technique is appropriate? –How to improve likelihood of success? 23-2

3. Managerial Economics and Organizational Architecture, 5e The Percentage of Business Articles Mentioning Various Management Techniques by Year 23-3

4. Managerial Economics and Organizational Architecture, 5e Demand for Management Innovations Rational response to obsolescence, e.g. –change in technology –worldwide competition Examples –TQM –Reengineering –JIT –Outsourcing 23-4

5. Managerial Economics and Organizational Architecture, 5e Why Innovations Often Fail Marketing –inappropriate expectations –quality is not free Does the expected rate of return justify the investment associated with changing the organization? Underestimating costs of change Failure to consider the other legs of the stool 23-5

6. Managerial Economics and Organizational Architecture, 5e The Relation Between Quality and Firm Value 23-6

7. Managerial Economics and Organizational Architecture, 5e Managing Changes in Organizational Architecture If it ain’t broke, don’t fix it One size doesn’t fit all Make sure the stool balances Focus on one thing at a time 23-7

8. Managerial Economics and Organizational Architecture, 5e SDI Total Costs by Defects 23-8