Tips for communicating with partners, and an alliance's most crucial element

This week's readings touched on all aspects of creating alliances, from the strategic goals that foster the collaboration to the inevitable road blocks that can deter the partnership.  But what happens when the alliance is already formed?  How do we maintain it and make sure the partnership does not become stagnant?  Author Rob Shaff touched on this topic in his article, Preserving Business Partnerships, written in 2003 for The Practicing CPA.

Shaff touches on several strategies for preserving a business partnership, from meeting over your morning coffee each day (obviously not applicable in an international alliance) to agreeing to disagree on certain issues you feel strongly about.  He also urges partners to pick your battles, and understand the difference  between what's worth fighting for, and what you can let go in the best interest of the union.

But perhaps Shaff's most important point of all is the one he doesn't explicitly make.  All of these strategies for handling an alliance's relationship between the parties involved simply accentuates the importance of this crucial bond.  As Rosabeth Moss Kanter highlights in Collaborative Advantage: The Art of Alliances, a partnership between companies is strikingly similar to a romantic relationship between two people.  It is a living, breathing thing, needing constant care and maintenance and open lines of communication.

It is this relationship that, in my opinion, is the determining factor in whether or not an alliance comes to fruition.  A partnership can meet all your strategic goals, be logical for both parties, and gain your organization market positioning or corporate knowledge.  But if you do not like the people on the other side of the board room, if you cannot relate to them as people, the alliance more then likely will never truly succeed.

So what can we do as communications professionals to ensure we can create solid bonds with our potential partners?  Take the time to learn about their company, and learn about them as a person.  What are their hopes and dreams for their organization?  What are their philosophies on how to run a company, or how to handle certain types of disputes?  Learning this information can give you powerful insight into what makes this company - and the person you're dealing with - tick.

But don't stop there.  Learn about the people you want to be come partners with on a personal level, aside from the business aspect of their lives.  Do they like sports?  Do they like a particular type of music?  Do they like art, architecture or have a particular favorite hobby?  Take the time to learn about the man or woman that lives outside Corporate America, and find some common ground.  This will create a general rapport between all parties involved, and create a more lasting bond then a meeting over budgets and proposals.

Most importantly, doing these things and going the extra mile to get to know your counterparts shows them that you care - not only about the business at hand, but about truly creating a bond that will be able to withstand adversity, and the test of time.  Just like in a romantic relationship, it's nice to become partners with the best-looking company, but a long-lasting relationship only works if you truly know the people behind that company.  Take the time to get to know the people you'll be partners with, because they are the lifeblood of their organization, and the lifeblood of your union.  The result will be a union that, while it may not reach your organization's goals in the end, will certainly stand a much better chance for survival.

References

Shaff, R. (2003). Preserving Business Partnerships. The Practicing CPA, 27 (7).

Why Airline Alliances Work

I caught a flight not too long ago from Newark to DFW. We left four hours later than scheduled on a Friday night, and by the time we took off, 11 passengers were on board. As I was watching our estimated departure time getting later and later while sitting in the gate area that night, two flight numbers kept popping up on the screen: one American Airlines number and one for British Airways. The woman sitting next to me asked if we were going to be on a BA plane on our flight back home to Dallas. “No,” I told her. I contemplated telling her about airline alliances and code share flights, but decided not to.

Airline alliances seem to work. Alliances are so effective “because there are economies of scale and scope to operating across major markets, while foreign-owned airliners have restricted rights in each market” (Gomes-Casseres, 1993, p. 6). This saves airlines money by being able to have passengers share lounges, check-in counters and gate space. They can also share flight attendants, ticketing agents and marketing costs. The benefit for travelers is a more streamlined process from check-in to baggage claim and can minimize connection time.

Creating the alliance in the first place is not a decision that is made easily. “The first task…is defining precisely why their firm might want to collaborate with another firm” (Gomes-Casseres, 1993, p. 2). In the case of the OneWorld Alliance, which includes American Airlines, British Airways, Finnair, Iberia, Japan Airlines, and Royal Jordanian, the partnerships are so attractive because of the global expanse the alliance reaches. It creates a hub-and-spoke type of network that reaches across the globe. Airlines also need to have complementary needs and assets and compatible goals.

Another decision that needs to be made is if the firms will operate on a complementary or parallel alliance model (Park, 1997). A complimentary alliance would occur if two alliance airlines run flights to the same two cities. For example, American Airlines and British Airways both have nonstop flights from Dallas/Ft. Worth to London Heathrow several times each day. A parallel alliance would occur if one carrier in the alliance ceased operation to the second city to limit competition with the other airline in the alliance. For example, if the DFW/LHR flights on British Airways ceased to operate and American Airlines added two flights to its daily schedule to Heathrow, this would be a parallel alliance.

A problem in airline alliances arises when passenger expectation is not met (Gomes-Casseres, 1993). Delta and Swissair formed a partnership to create a route across the Atlantic. Upon first glance, the partnership worked. However, Swissair passengers started getting upset when they transferred to Delta on other legs of their journey because Delta did not hold up to the quality of service Swissair did. Even though the two airlines had complementary territories, “there was some question of whether their goals were compatible” (Gomes-Casseres, 1993, p. 6). This could lead to customer dissatisfaction and in the long run, might cost the airline money.

Forging an alliance isn’t a decision that can be taken lightly or made without weighing the pros and cons. As the readings suggest, an alliance is like a marriage: even though you’re committed to each other, you still have to work at keeping each other happy.

References:

Gomes-Casseres (1993). "Managing International Alliances: A Conceptual Framework." Harvard Business School.

Park, J (1997). “The effects of airline alliances on markets and economic welfare.” Logistics and Transportation Review.

Exploratory Alliance Strategy: Bigger is Better

Environmental change and partnerships (or alliances) – two business topics we have studied in the past three weeks – are inevitably bound in the world of business.  In the article, “Strategic repositioning by means of alliance networks: The case of IBM,”  Dittrich, Duysters, and de Man (2007) use the IBM case study to contend that these partnerships can be utilized as a vehicle for significant internal changes.  In a period spanning about 20 years, IBM used over 60 alliances to change the strategic direction of its firm from a computer manufacturing company to a dominant service provider.  The transformation of IBM was so severe that by the beginning of the 21st century "most activities that characterized IBM in the late eighties and early 1990's have been farmed out to multiple layers of specialized suppliers (Dittrich, Duysters & de Man, 2007, p. 1501)."

When comparing the cases of IBM and Wal-Mart it is apparent that larger organizations play by a different set of rules when considering the use of partnerships.  A larger company’s prominence (i.e. revenue, experience, infrastructure, etc.) can provide the unique opportunity to participate in an aggressive exploration strategy, one defined by “experimentation with new alternatives and the exploration of a new (technological) field (Dittrich, Duysters & de Man, 2007, p. 1497).”  When I think of “exploration,” the word “access” comes to mind.  IBM pursued alliances to gain access to capabilities that were outside its current realm – such as the micro processing industry of Intel – and Wal-Mart pursued the Bharti partnership to gain access to an untapped international market  (Dittrich, Duysters & de Man, 2007; Bose, 2012).   

Smaller firms are unable to pursue such ambitious partnerships with regularity because they operate on an entirely different cost-benefit tradeoff paradigm.  Size and revenue determine (to a large extent) the amount of risk, or transaction costs, that a firm can acquire from its pursuit of partnerships (Barney & Hansen, 1994).  According to the authors of the week 4 readings, agreements such as equity alliances and weak-form trust partnerships can require relatively low risk (Gomes-Casseras, 1993; Barney & Hansen, 1994).  In the late eighties, IBM, realizing that its strategy was ill-suited to adapt to the rapidly changing computer industry, decided to pursue a series of low-risk partnerships that would eventually change the internal direction of the company.  Due to this high volume, IBM had the ability to wait and see which partnerships would be profitable for the firm.  This strategy allowed IBM to keep its eggs in several baskets, so to speak – which in turn gave IBM the flexibility to react to different changes in the market

One might argue that the size of small firms can lead to added agility in a changing business environment, minimizing the need to pursue ambitious partnership strategies.  This might be true in some cases.  Nevertheless, these smaller firms must employ more conservative partnership strategies in order to survive.  When considering a company’s exploratory strategy of partnerships, larger firms have the access and ability to pursue more opportunities.

References

Barney & Hansen, (1994). "Trustworthiness as a Source of Competitive Advantage." Strategic Management

Journal, Vol. 15, pp. 175-190.

Bose, I. (2012). "Wal-Mart and Bharti: Transforming Retail in India." Asia Case Research Centre. pp. 1-18. (Full

Article)

Dittrich, K., Duysters, G., de Man, A. (2007).  Strategic repositioning by means of alliance networks: The case of

IBM. Research Policy, 36 (10), 1496-1511.  Retrieved February 19^th, 2012 from SciVerse.

Gomes-Casseres, (1993). "Managing International Alliances: A Conceptual Framework." Harvard Business School.

pp. 1-20. (Full Article)

How Communication Can Affect International Alliances

This week’s readings focused on collaboration and alliances between businesses – both domestic and international. Gulati (1998) focused on how networks assisted with the formation of alliances, which has a communication component, and Kanter (1994) touches on the need for communication to overcome some of the hurdles of a strategic alliance. However, neither author focuses on the strategic importance of communication on the overall scheme of an alliance or partnership.

Butler (2010) states increased technology development costs and more competition from foreign companies as two reasons for an upswing in strategic alliance activity (pg. 698). The benefits of collaboration such as pooled resources for costs and breaking into a new international market were already covered by our readings this week (Kanter, Gomes-Casseres). Butler uses the example of a defense contract to explain how communication can be the linchpin for a successful international alliance.

Communication has two key objectives in the management of change. The first is to facilitate understanding by those who need to adopt new processes of what will change and why. Interpersonal communication is a substantial part of the interaction process and can therefore be regarded as a process element of relationships and networks. (Butler, pg. 702)

Successful integration of a strategic alliance requires collaboration between all levels of management for success – strategy, tactics and operations (Kanter, 1994). While Kanter focuses on the need for cultural awareness, Butler (2010) shows that communication is also key to this success.

Butler (2010) surveyed 76 firms involved in international alliances (out of a 250 initial sample size) and asked about the communication between partners in the alliance. The surveys and follow-up interviews showcased the need for communication throughout the alliance process.

Using Kanter’s (1994) phases of the business relationship, communication is essential in each.

• In courtship and engagement, “there may be hidden agendas” (Butler, 704). Communication is important to determine and resolve these agendas. “Several respondents stressed that it is important to have skills in interpreting conversation in order ‘to understand what really makes them tick’” (Butler, pg. 704).

• In the newlywed stage, “mistranslation of documents, misinterpretation of communication at meetings and the wrong calibration of technical measurements across different countries are the greatest sources of frustration and problems in the communication process” (Butler, pg. 704).

• In the old married stage, maintaining high levels of communication is important.

Butler’s (2010) research continues into the specific challenges faced in an alliance that includes 3 or more nations and how the potential for miscommunication is significantly increased. As a way of resolving communication, Butler (2010) suggests increased meetings between upper and lower levels of management and team-oriented decision making (pg. 708)

References

Butler, C. (2010). “Internal and lateral communication in strategic alliance decision making.” Management Decision, 48(5), 698-712. Retrieved February 19, 2012, from ABI/INFORM Global. (Document ID: 2044879541).

Gomes-Casseres, (1993). "Managing International Alliances: A Conceptual Framework." Harvard

Business School. pp. 1-20.

Gulati, R. (1998) "Alliances and Networks" Strategic Management Journal, Vol. 19, pp. 293-317.

Kanter, R. (1994). "Collaborative Advantage: The Art of Alliances."Harvard Business Review. pp. 1-16.

Strategic Alliances: A Successful Community Model

In an article in the Journal of School Violence written by Dr. Rebecca Gajda, she analyzes the impact strategic alliances have on increasing school safety through prevention and response.  An “inter-organizational collaboration” between law enforcement, mental heath providers, and schools is assessed through a national evaluation rubric (Strategic Alliance Performance Rubric) developed by the author (Gajda, 2006). She advocates for an “intentional” collaboration that: can be measured; relies on people; goes through a developmental process; and is clearly assessed by her national rubric (Gajda, 2006).  The author applies her rubric to a strategic alliance, Project LINK, which successfully prevented a Columbine like massacre that three students were planing to execute at their Junior High in December 2000.  Based on this case, she summarizes that “when school and community partners engage in the cultivation of inter-organizational collaboration - school violence prevention, intervention, and response efforts are greatly enhanced” (Gajda, 2006, p. 78).

In the readings this week, the theme focused on alliances in corporate, national and international settings.  There are correlations between the corporate examples given and the social alliances shared by Gajda.  For instance, Gulati’s own definition of “strategic alliances as voluntary arrangements between firms involving exchange, sharing, or co-development of products, technologies, or services” (Gulati, 1998, p.293) aligns social sector alliances where parties have to engage in this voluntary arrangement to maximize resources and increase effectiveness of services.  In the case illustrated by Gajda, the inter-organizational collaborations evolved from the need to leverage “resources and capabilities beneficial to but not possessed by the other” as shared by Guliati in his description of open systems focused on resource procurement among social service agencies (Gulati, 1998, p. 299).  The collaboration between law-enforcement, mental health providers, and schools was built upon “base alliances on concrete strategic complementarities that they have to offer each other” (Gulati, 1998, p. 301) to prevent and respond to school violence.

The relationship between these organizations is based on what Barney & Hansen (1994) describe as a weak form of trust “because its existence does not depend on the erection of contractual or other forms of exchange governance” (p. 177) and there are “limited opportunities for opportunism” (p. 177).  In Gajda’s inter-organization collaboration, there is a shared goal to prevent and respond to school violence with pooled resources and expertise, so the chances for someone to “cheat” or “gain” at the expense of others is almost non-existent.  Therefore, the transaction or coordination costs for this collaboration seems to be quite low (Guliati, 1998, p. 304) because neither party gains an economic “competitive advantage” (Barney & Hansen, 1994) instead through their good partnership they gain a “collaborative advantage” (Kanter, 1994, p. 96).  In Gajda’s example there is also a sense that the individual players are “hard-core” trustworthy due to the “values, principles, and standards” (Barney & Hansen, 1994, p. 179) that they and the culture of their organizations exemplify.  For instance, the likelihood that a police officer or school administrator is not trustworthy is very low given their respective professional paths, so although the relationship is based on a weak form of trust, the members collaborating seem to be trustworthy individuals coming from high trust professions.

Finally, a successful alliance depends on a strong framework and its results. Gajda uses a similar approach to the development of school violence prevention initiatives as the one used to manage alliances introduced by Gomes-Casseres (1993).  Both approaches, if implemented properly, are supposed to lead to successful alliances and results.

Gajda’s Stages of Collaboration Development (p. 70)	Gomes-Casseres’ Managing Alliances in Stages (p. 11)
1. Assemble/Form	1.Strategy formulation 2. Partner search
2. Storm/Order	3. Negotiation 4. Start up
3. Norm/Perform	5. Operation 6. Adjustments
4. Transform/Adjourn

Results, as stated by many of the authors, are measured in various ways. In some cases, the success is defined as purely financial while in others it is an investment in a relationship that will pay off, pure exchange of knowledge or in Gajda’s example preventing loss of life.  The introduction of her Strategic Alliance Formative Assessment Rubric (SAFAR) aims to measure effectiveness of collaboration efforts by assessing qualitative and quantitative data collected from partner organizations.  The “level of integration, purpose, strategies and tasks, leadership and decision-making and interpersonal and communication levels” are measured through SAFAR to assess the degree of “networking, cooperation, partnering, merging and unifying” that the strategic alliance has achieved (Gajda, 2006, p.72). This assessment includes all the “characteristics of effective inter-company relationships” outlined by Kanter (2010): “Individual excellence, importance, interdependence, investment, information, integration, institutionalization, and integrity” (p.100).

Performance or results metrics will vary depending on the purpose of the alliance, but it is clear from the readings that alliances are still struggling to clearly measure success (Guliat, 1998).  In this case, Gadja was able to illustrate through SAFAR how Project LINK's strategic alliance prevented a massacre from taking place.  The effective integration, communication and collaboration by all the partners prior to the arrests of the suspects and immediately after clearly showed the success of this strategic alliance in prevention and response to school violence.

References

Barney, J. B., & Hansen M.H. (1994). Trustworthiness as a source of competitive advantage. Strategic    Management Journal, 15, 175-190.

Gajda, R. (2006). Safe schools through strategic alliances. Journal of School Violence, 5:1, 63-80. Retrieved on February 16, 2012 from USC Libraries http://dx.doi.org/10.1300/J202v05n01_05

Gomes-Casseres, B. (1993). Managing international alliances: Conceptual framework. Harvard Business School, pp.1-20.

Gulati, R. (1998). Alliances and networks. Strategic Management Journal, 19, 293-317.

Kanter, R. M. (2010). Collaborative advantage: The art of alliances. Harvard Business Review, pp.1-16.

Should Osamu Suzuki, the Japanese carmaker's chairman, see the red flags that Volkswagen was a control freak (Hill, 2011)?  Were there warning signs that Casino would cheat supermarket tycoon, Abilino Diniz with Carrefour (Hill, 2011)?  These companies were once like starry-eyed teenagers.  However, like many relationships, the honeymoon has ended and the divorce has begun. 

"Like marriages, business alliances involve people.  People can be trusting, optimistic and tolerant but also weak, overbearing and devious" (Hill, 2011).  The merging of two businesses is not unlike that of romantic relationship.  The partnership is built on hopes, dreams and promises of the future (Kanter, 1994).  However, like many marriages the partnership is at risk for dissolution and can result in bruised feelings of disappointment.  Between two thirds and one half of all business alliances fail (Hill, 2011).

When entering into a business alliance should be done with the same caution of entering into a marriage.  It's easy to get caught up in the excitement of partnership and dream of all the great things the two partners are going to do and achieve together.  Curbing over-optimism is a good start (Hill, 2011).  This is a business venture, and like a romantic relationship, there is a possibility it won't all work out in the end and a break up is highly possible. 

It is also a good idea to pay attention to past behavior.  Just as one would most likely not marry someone who has a track record of infidelity, a business alliance should not be formed with a company that has a reputation of flawed or failed previous merger attempts.  For example, Mr. Diniz is known to be extremelty controlling and restless (Hill, 2011).  Casino should have noted this and realized they would not be "the one" to change Diniz.  Diniz's infidelity should have come of no surprise to Casino.

The selection process for corporate alliances should mirror that of the selection process for a romantic partner. 

• Each partner should know themselves and be comfortable with what they are bringing to the table (Kanter, 1994).
• There should be good chemistry, rapport and a feeling of good will on both sides (Kanter, 1994).
• Common ideals, values, philosophies and direction for the future should be in place (Kanter, 1994)

So whether it's Suzki and Volkswagen or Brad Pitt and Jennifer Aniston, "marriages" are contracts that need to be carefully scrutinized before committing.  The promise of a successful life together can fall apart at any time.  Past behavior is a good measure for future actions.  Although it may be easy to be swept away by the glories of what may be, it is a good idea to keep one foot firmly planted in reality and enter into relationships with logic and reason.

                                                                                 References

Hill, A (2011), Corporate marriages often end in divorce. Financial Times, 1-3.  Retrieved from http://www.ft.com/cms/s/0/2d8bd966-b6f5-11e0a8b8-00144feabdc0.html

Kanter, R. M. (1994), Collaborative aadvantage: The art of alliances.  Harvard Business Review.  Boston, MA: Harvard Business School Publishing

RESPONSE TO THOMAS ALFORD'S ASSIGNMENT POST (VIDEO)

RESPONSE TO THOMAS ALFORD'S ASSIGNMENT POST (VIDEO)

(Below is the script and references for the video that is attached).

I WAS STOKED (ONE OF MY WORDS FOR EXCITED) TO READ ABOUT FLIP CAMERAS AND CISCO.  I HAVE A FLIP CAMERA HERE AND WHILE READING YOUR POST, I THOUGHT "WHAT BETTER WAY TO RESPOND THAN TO DO SO ON A FLIP?"  I DIDN'T INSERT TITLE CARDS, CHYRONS OR ANYTHING, BUT THINK YOU'LL BE ABLE TO GET THE GIST OF WHAT I'M ARTICULATING SO HERE IT GOES...


FIRST OFF, I WAS ABLE TO LISTEN IN TO THE LIVE SESSION LAST WEEK FROM THE AVAILABLE ARCHIVES AND I HAVE TO SAY GOOD JOB TO YOU AND YOUR TEAM FOR THE ANALYSIS FOR MAD MEN.  IF YOU DIDN'T KNOW WHY WE PICKED THAT NAME BY NOW, IT IS AN ACRONYM FOR OUR LAST NAME INITIALS. 

BUT YES, WE DID BASE MUCH OF OUR DESCRIPTION ON KODAK. WE ALSO DISCUSSED STOCK OPTIONS AS COMPENSATION FOR THE EMPLOYEES SO THERE WOULD BE A SEMBLENCE OF BALANCE TO THE MANAGER EMPLOYEE ISSUE OF BRAIN DRAIN.... THAT IS, IF THERE WASN'T ANY TYPE OF STOCK OPTION FOR THE EMPLOYEES, THERE WOULD BE ABSOLUTELY NO REASON FOR ANYONE TO STAY AT KODAK, WHICH IN A WAY MAKES THE STORY OF KODAK THAT MUCH OF A TRAGEDY.


BUT BACK TO FLIP  CAMERAS,  I REMEMBER HEARING ABOUT FLIP CAMERAS DURING CHRISTMAS OF 2008 AND GOT ONE IN 2009 (STILL WORKS)

AND THOUGHT THAT WOULD BE AN EXCELLENT TOOL FOR WORK AND PLAY... IT IS EXTREMELY EASY TO USE ON A MAC OR PC AND WE GOT ONE FOR MY MOM WHO HAS USED HERS IN EUROPE, ALASKA, RUSSIA AND THE MIDDLE EAST.  FLIP CAMERAS AS YOU KNOW USE AVI FILES, SO THEY ARE VERY TRANSFERABLE (DESPITE THE RESOLUTION) ANYWHERE.

BUT EVEN SINCE 2008, I DIDN'T HEAR MUCH ABOUT THEM UNTIL ABOUT 2009 OR SO WHEN I HEARD ABOUT CISCO. 
I THEN THOUGHT THAT CISCO'S ECONOMIES OF SCALE AND FINANCIAL POSITION WOULD PROVIDE FOR MORE MARKETING (I CAN'T REMEMBER A SINGLE CAMPAIGN UNTIL PERHAPS EARLY LAST YEAR?) AND FLEXIBILITY  TO HELP THEM GAIN MARKET SHARE AMID THE IMMINENT ARRIVAL OF SMARTPHONES AND THEIR VIDEO CAPABILITY.  WHAT SEEMED MISSING WAS THE INTEGRATION  AND COORDINATION TO ALLOW  IT TO GROW (DAFT, 2007).

SOMETHING I FOUND OUT IN MY ASSIGNMENT POST WAS ABOUT LARGE COMPANIES WHO AIM TO MAKE CHANGE BUT PERHAPS THEY ARE JUST NOT BUILT FOR CHANGE (MCARDLE 2012)

IN 2012, PADE'S LIVE SESSION PRESENTATION TOUCHES UPON ORGANIZAIONAL ECOLOGY, EXPLAINING THAT PERHAPS THE DESTINY OF THE ORGANIZATION IS IN ITS DNA MAKEUP, THAT COMPANIES DONT OFTEN (OR AREN'T ABLE TO) ALTER THEIR FUNDAMENTAL STRUCTURAL CHARACTERISTICS (PADE, 2012)

PERHAPS THAT IS WHY SOME ANALYSTS WERE SCRATCHING THEIR HEADS WHEN THEY HEARD OF THE CISCO PURCHASE OF
FLIP.  AND WHY SOME WHO ESPOUSED CONTINGENCY THEORY WERE CHEERING THE ACQUISITION.

IN ANYCASE, I HOPE THIS LITTLE CAMERA KEEPS GOING; IT IS CERTAINLY STILL HELPFUL TO ME.


    REFERENCES

    McArdle, M. (2012, March). Why Companies Fail. The Atlantic. Retrieved from
        http:/www.theatlantic.com

     Daft, R. (2007) Fundamentals of Organizational Structure, “ Organization
         Theory and Design. ( 9th Ed.), pp. 88-125

    Nohria, N. (1991).  Note on organizational structure. Boston, MA:  Harvard
        Business School Publishing

    Pade, C. (Producer). (2012, February 9). CMGT 500 Week 03 Live Session https://www.fuzemeeting.com/       
        replay_meeting/e7ade9be/2279241  Retrieved from http://www.mcm.usc.edu

Analysis of an Inc.com article relating to organizational design

David Tinsley

Analysis of an article from popular press relating to organizational design

Heffernan, M. (2012, February 6). Why flexible hours inspire perfomance. Inc.com. Retrieved from http://www.inc.com/margaret-heffernan/why-flexible-hours-inspire-achievement.html?nav=pop

I ran across an article on Inc.com that I found very appropriate to our discussions and reading on organizational structure.  The article is mostly an experience-based story on how a manager uses a process with her employees that helps to foster an information age structured organization (Applegate, 1995). 

The manager tells the story of an experience she had with a recent hire.  The new hire asked what time she was supposed to report to work each day.  The manager’s response, much to the surprise of the employee was, “I don’t care” (Inc.com, 2012).  The manager went on to explain to the employee that her approach was it did not matter the time she arrived, but that everyone was expected to get their “work completed on schedule and on budget” (Inc.com, 2012).  The manager related the fact that she had never been “disappointed with the results of using this approach” (Inc.com, 2012) on her employees.

The article presents a good example of a manager being allowed to manage her employees in the environment of an “information age organization” (Applegate, 1995).  One of the primary design elements of an information age organization is, as Applegate explained, “transforming an organization requires more than just changing the structure” (1995).  It is through a process of giving employees the opportunity to “redefine the way they work and the values that guide decision-making and action” (1995).  It is the “harnessing of the energy of the workforce” (1995) that not only gives an employee more “responsibilities” (1995), but it also serves a part of a more motivating reward system.  The company has created a greater “incentive” (1995) for the employees by not making them punch the clock, so to speak.  Their apparent reward is the flexibility with their work schedule, as long as they complete their tasks on time (Applegate, 1995).

References

Applegate, L . (1995). Managing in an Information Age. Harvard Business Publishing.

Heffernan, M.  (2012, February 6). Why flexible hours inspire performance. Inc.com. Retrieved from

http://www.inc.com/margaret-heffernan/why-flexible-hours-inspire-achievement.html?nav=pop

The Atlantic - Why Companies Fail - Hard to Change Culture?

In our previous readings and live sessions, we’ve begun learning about organizations and their structures given a stable environment from which to operate their businesses. 

Now understanding more about Contingency Theory, we know that especially in this very unique time in our economic history, there are changes that can affect nearly every component of an organization.  For large companies, they do not possess completely a “pure functional structure or a pure divisional structure” (Nohria, 2002, p. 6). Because of multiple projects and/or product lines, these endeavors/groups may be placed over the functional structure so these groups may improve coordination across functions.

In the March 2012 of The Atlantic (“Why Companies Fail”), author Megan McArdle raises question of General Motors’ recent performance post-government bailout, suggesting that despite the promise for change (for the better) by organizations like GM, slight gains may not be long lasting.  She notes experts who say that GM, the Big Three, the UAW (and others) have had difficulty changing their ways to leaner, better coordinated groups:

Over the past few decades, GM’s ability to resist change has proved

almost uncanny. Why did the company wait so long and do so

little—not once, but time and again—before finally falling into

bankruptcy? And what, if anything, does that portend for its future?

The questions go beyond GM, a company that’s hardly unique. Why did Blockbuster idly watch Netflix destroy its business? Why did Kodak let digital cameras drive a once-mighty industrial giant into penny-stock territory? (McArdle, 2012)

McArdle quotes various turnaround specialists (who are doing great business these days, she adds), who say that unless the company’s crisis is extreme and serious, its not easy to enact change (McArdle, 2012). 

But turnaround experts aside, what if the companies just aren’t made to redesigned?  Certainly a person or group may want to change.  They are given plans, incentives both abstract and concrete.  But sooner or later we revert back to who we really are, says McArdle (McArdle, 2012):

One possibility is that firms don’t change because inertia is in their DNA—indeed, it’s a gene that once made many of them successful. In their 1989 book, Organizational Ecology, Michael Hannan and John Freeman argue that organizations are actually selected for inertia by their environment, and “rarely change their fundamental structural features.” Change is risky, after all, since it definitionally involves doing something that isn’t already working—and even product lines that have grown lackluster still have some customers. Firms that are prone to frequent large changes will probably have more opportunities to kill themselves off with bad choices than firms that resist big changes.

It seems like a very disturbing point, where the “larger and older the firm is, the heavier the selection for stability” (McArdle, 2012).  But turnaround specialists say that its got to be the entire company that has to really want to change.” (McArdle, 2012).  I suppose it has to be a constant, near-unanimous decision on the part of the organization’s employees.  Otherwise, slipping in the competitive market is a certainty.

  REFERENCES:

McArdle, M. (2012, March). Why Companies Fail. The Atlantic. Retrieved from

        http:/www.theatlantic.com

 Daft, R. (2007) Fundamentals of Organizational Structure, “ Organization

         Theory and Design. ( 9th Ed.), pp. 88-125

Nohria, N. (1991).  Note on organizational structure. Boston, MA:  Harvard

        Business School Publishing

Organizational Change:  Theory to Real World Experience

1.     Interview: Talk to someone in an organization about what you read about. Ask them whether their experiences are consistent with the ideas presented in the readings, how the ideas might be useful in their work, etc. (This modality should include your own assessment of what you learned in the interview in addition to reporting the contents of the interview.)

“What do the readings tell me about the organizational structure used by my company, McKesson (MAI)?”  This is the question I sought to address when beginning the readings for CMGT week three.  Like many companies, MAI has had to adapt “on the fly” to a changing competitive environment.  Ideally, a company would be able to redesign an organization by asking and addressing the nine questions recommended by Gould & Campbell (2002), before making all the necessary changes.  Unfortunately, changes cannot be made in a vacuum.  As a company seeks to change it has to do so in a way that doesn’t significantly disrupt the productivity of its employees and units.

MAI sought to modify the sales organization (18 months ago) by adding a functional team to the existing divisional structure.  This functional team is referred to as the “SPS Team” – under the leadership of Andrew Bandurski - an addition made as MAI’s direct response to competitive pressure in two critical product lines (Nohria (1995)– nurse and anesthesia dispensing solutions.  As a member of this SPS team, I have faced some of the challenges Daft (2007) and Nohria (1995) referred to when mentioning matrix organizations. 

As a case study to put the claims of our week 3 authors to the test, I decided to interview my boss, Andrew Bandurski, to ask him a few questions highlighting the origins of the SPS team, SPS challenges, and SPS value to MAI.  After each of the following questions I will provide my own comments in italics.

CH: Andy, if you were to describe the SPS team to a stranger, how would you go about doing that.

AB: Well, first and foremost the SPS team is a team of sales professionals: skilled in driving revenue by finding, pursuing, and closing major capital deals.  SPS’s are product specialists that are a resource for the sales reps in their respective regions.  SPS’s are hunters that seek new opportunities for MAI.  SPS’s are an extension of marketing by bringing competitive intelligence back to marketing and in turn communicating marketing’s messaging to the sales force and clients.

From AB’s response, SPS’s clearly exhibit characteristics of horizontal linkages.  By facilitating communication between marketing and the sales force, and marketing and clients, SPS’s are providing that horizontal coordination that allows organizations to react swiftly to environmental changes (Daft, 2007).

CH: Andy, why was the SPS team added to the existing MAI sales structure 18 months ago?

AB: Hospital distribution models were becoming more decentralized (placing additional importance on SPS product lines).  Omnicell and Pyxis (two major competitors) were dominating in two product lines.  Sales (representatives) wasn’t equipped with the necessary knowledge to compete with specialized personnel from Omnicell and Pyxis.  Omnicell and Pyxis were meeting the needs of pharmacists more effectively – from a sales and technological standpoint. 

Here, AB makes a reference to a changing environment as “distribution models…becoming more decentralized.”  This changing environment is best suited by agile built-to-change organizations (Worley & Lawler, 2006).  MAI’s change in structure was a reaction to a change in environment.  With added specialization the SPS team would give MAI a better chance at competing with competitors.  Added skill and expertise would contribute to increase speed and ability for MAI to respond to the changes in customer needs (Applegate, 1995).”

CH: Andy, what are the biggest challenges the SPS team has faced thus far?

AB:  Lack of acceptance by the existing sales representatives.  Collaboration issues.  Difficulty finding opportunities to build the funnel. 

Whenever organizations are redesigning structure it is imperative that the existing people are capable and willing to accept the impending changes.  As you can see, there was a culture of resistance by many to the addition of the SPS team; which led to friction and ineffectiveness.  Gould and Campbell (2002) recommend that a people test is critical to any organizational design changes.  The losers, or those who lose influence or power, must be taken into consideration before any changes are made (Gould and Campbell, 2002).  In MAI’s case, the loss of influence by the sales reps proved to be a major obstacle of organizational change.

References

Applegate, L (1995). "Managing in an Information Age." Harvard Business School.

Daft, R. (2007) "Fundamentals of Organizational Structure." Organization Theory and Design (9th ed.), pp. 88-125 (Chapter 3)

Gould,M. & Campbell, A. (2002) "Do You Have a Well Designed Organization?" Harvard Business Review.

Nohria, N. (1995). "Note on Organizational Structure." Harvard Business School.

Worley, C. & Lawler, E. (2006) Designing Organizations that are Built for Change, MIT Sloan Management Review, 48(1), pp. 18-23