Quiz 11: Adaptive Organizational Design

Business

In a global marketplace, it is difficult for companies to avoid change. Change can occur due to introduction of new technology, increase in funding or new goals. Changes create new opportunities for the companies; however, it might lead to employee resistance and criticism. The reasons behind employee resistance for implementation of MRP system, at Company CSH are as follows: • Self-interest. Employees acting in their own self-interest, instead of the organization's good, will resist change. In Company CSH, Vice President of Sales was concerned about accurate sales forecast, whereas Director of Logistics was worried for delayed orders. Hence, both of them were ignoring the organizational benefits of MRP system. • Lack of competence. Sometimes, change requires employees to acquire new skills. This is often resisted by employees, as they fear of failure during transition process. In case of Company CSH, dearth of skills might be another reason for resistance, as MRP system requires highly technical skills. • Feeling excluded. Informed employees show less resistance than uninformed employees. If employees hear of a sudden change, they will feel excluded from the decision making process and thus will not accept the change openly. In this case, other departmental heads might not be aware of the upcoming change and hence resisted the same. • Changes to routines. Implementation of MRP system requires at least 25 more managers to be employed. This can bring the feeling of insecurity among the existing managers. Also, more employees mean change in the existing routine of work and responsibilities. which is again resisted by Company CSH's departmental heads.

Crisis is a common motivator for change which requires fast and confident decision making. Many people are unwilling to change unless they perceive a problem or a crisis. Normally, rival companies compete against each other. Sometimes, they used to complain regulators about one another and even drag them to court. But, in times of crisis and emergency they should help each-other to form an informal alliance. Such cooperation between rival players would increase their productivity as well as uplift the economy. For example, many U.S. companies changed their way of conducting business activities after the terrorist attacks. Earlier some companies were unable to develop teamwork and collaboration in their organization. But, after the incident, employees and channel partners started helping each-other. Crisis broke the barriers and enabled people to perceive the value of helping one another. Another example of cooperation can be shown between two rival companies of Japan, viz. Renesas Electronics and ROHM. In July 2011, ROHM was severely affected by the Thai floods. This led to the shortage of semi-conductors for automobile companies. At that time, Renesas temporarily covered the production of semi-conductors for ROHM, to reduce the impact on auto industry. Such collaboration during economic stress can have a significant financial effect on operating costs, without affecting operational standards. The ways for successful utilization of crisis situation by various companies, are given below: • Enables the companies in saving their resources. • Companies can benefit each other in complimentary ways , by collaboration. For example, a software company might collaborate with a hardware company for better productivity and revenue generation. • Rival companies have their own dedicated customer bases. In times of crisis, both companies might use the opportunity to reach mass markets , by working together. This will help to put the economy back on track, in less time. This kind of cooperation between competitors is rare, but it is a good practice during crisis. However, applicability of this practice in long run depends upon the following considerations: • Choosing the right partner Selection of the partners for collaboration process must be done very carefully. When two partners decide to work together, conflicts might arise on profit sharing. Therefore, before collaboration, partners should decide the proportion of benefits, risk, technologies and planning techniques. • Leader of the cooperation Partnering during crisis involves companies of different sizes, market shares coming together. These factors along with their contribution and organizations' philosophies influence the leadership. This leadership must be established before collaboration to avoid future conflicts. • Differences in operational detail Operational activities of different firms might vary according to their work culture. This might cause challenge in dealing with customers after collaboration when rival companies partners. To avoid losing customers, they have to agree on a tailored middleware plans to cope with this level of differentiation. • Ad hoc approach Change initiatives require companies to adopt a structured and formal approach. At the time of emergency, businesses use a rigorous process for defining their goals and adapting to the immediate change. They adapt a temporary methodology of planning and managing to cope up with the crisis. This leaves employees burned-out, making the next change objective even more difficult to accomplish.

To determine an action to take on the proposed new business model, A needs to balance the vision of the company - producing high quality designs that are a work of art - against the basic value of a business, which is to produce items that meet customer needs and to make a profit for shareholders. In terms of the vision, the crowdsource-produced designs do not meet the original vision, as the quality is not as high as those developed in-house by professional designers. In terms of the business and its future success, the new designs are very attractive to customers and are more profitable due to the lack of professional design effort required to produce them. In the meeting, A should argue for a return to the original vision of the organization. This is the model she and the other designers came to the company to support. If she finds that the company wishes to continue with the more profitable crowdsource design model, she should begin seeking employment elsewhere that is more compatible with her personal values of high-quality design.

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