Appunti secondo parziale Organization theory and design

THERANOS' CASE

VALUES at Theranos:

Control (make sure that clock in and clock out at certain hour, work until

o 8 pm)

Achievement (behaviour in firm based on hard working)

o Being opaque towards stakeholders

o NOT INNOVATION, because it was a fraud

o

Organizational ARTIFACTS:

Holmes' car (black, with bullet-proof windows)

o Windows of the building

o Voice she pretends to use (in order to make her way in society)

o

It has been discovered by a journalist

Only an investigation could reveal the truth regarding the company

There are some differences in global values and norms. In fact, a country’s culture can

affect values and norms of a company or a company’s culture. Differences can be in

communication styles, attitude toward competing tasks, different approaches to

decision making.

Website that ranks cultures of the world that have strongest influence on human

behaviour is Hofstede Insights.

It considers 5/6 dimensions to set the cultural value of a country.

Company/Country’s culture could be analysed through:

Risk adversion = extent to which a culture programs its members to feel

o either uncomfortable or comfortable in unstructured situations (unknown

and surprising situations from usual)

How members will feel in unexpected situations (comfortable or

uncomfortable)

Power distance = extent to which the less powerful members of

o organizations and institutions (like a family) accept that power is

distributed unequally

Individualism-collectivism = individualism if individual performance is

o more important than teamwork, while collectivism is degree to which the

individuals are integrated into groups

Masculinity-femininity = tied to stereotypes with genders. Masculine

o countries prioritize technical performance rather than value of

relationship among employees in the firm (masculine cultures’ values are

competitiveness, ambition and power), whereas feminine cultures place

more value on relationship among employees and quality of life

Long term-short term orientation = long term oriented societies attach

o more importance to the future, promoting values oriented towards

persistence, saving and capacity for adaptation (like to program things to

be projected in the unexpectedness), while short term oriented societies

are more based on history/past and present, past goals achieved rather

than projecting innovation, including steadiness and respect for tradition

Organizational Culture comes from the Organizational Structure:

Mechanistic vs organic:

 Mechanistic = predictability and stability are desired goals

o Organic = innovation and flexibility are delivered end states (terminal

o value)

Centralized vs decentralized:

 Decentralized = encourages and rewards creativity and innovation

o Centralized = reinforces obedience and accountability

o

Example: Theranos:

High power distance (hierarchical company, even if new start-up in

o Silicon Valley, high centralization because of the fact that she wanted

control)

Risk adversion is very low

o Theranos individualism

o Masculine company

o Company is in an industry, which is clearly focused on innovation and

o progress. So the industry is long term orientated, but Theranos' activity

was based on a fraud so we can't really determine if the firm has a long

term or short term orientation

In collectivistic companies, training is offered to everybody. So new training courses

which is technical, but anyone of the same function will attend it regardless of career,

promotion

Individualistic companies promote one-to-one coaching, which is extremely expensive.

Provide these teaching to very promising employees, so human research tools you use

are many.

Artifacts mythologies and storytelling is fundamental to distinguish between long term

and short ter, orientation. In general, if they are based on future and innovation, surely

it is a long term orientation company, while if they remind the glorious past of a firm,

then they are short term oriented.

Tale of two companies

Southwest: Employees at the centre (in 90's was one of the first to fix love as a

o value, but in the honour code is called luve in order to mix love and fun)

Excellence is a fundamental value (must deliver an excellent service to

o the customers)

Also sustainability is a very important long-term aim of the firm

o Collectivism (tools for managers to get closer to employees, 22% of the

o stock of the company owned by employees, company cookout on friday,

job rotation

Informal dressing code

o Meeting informally the CEO of the company

o Low power distance

o

Value line: No collaboration at all

o Duty to clean up desks

o

Values are instrumental to company's survival

Organizational change = process by which organizations move from their present

state to some desired future state to increase their effectiveness

An example is Nokia, which 2013 was facing a difficult transformation due to iPhone

and smartphones. CEO decided to implement a new strategy, cutting jobs while

increasing speed of launching of new products, increase speed and efficiency of the

production. These changes were effective only for a while, but then it became a failure

If a company must introduce new products fast together with cutting jobs:

If they were a divisional structure, then you have flattered structure, so

o that you don't have to pass through many layers to get new decisions,

organization must be more team based

In order to propose new things to the market, there is a need of

o competence in functions like research and development, innovation, …

5 principles meant to highlight connection between values and culture you want to

implement in the company:

Inspire through purpose; connect the transformation to something with a

o deeper sense of meaning and the organization's larger purpose

Go all in; go beyond short-term cost-cutting to establishing a new

o business model and the organization required to support it

Build capabilities; specific training tools within human resource in order to

o support organizational change, enable people with skills and tools

required to perform in their transformed roles

Instill a learning culture; reinforce a growth mindset, encouraging

o curiosity and experimentation

Lead inclusively; leaders need to be directive but also inclusive, engaging

o people early and deeply throughout the transformation journey

These 5 principles are practiced when you decide values, and support change in

structure and strategy of the organization. In fact, targets of organizational change

include improving effectiveness at different levels:

Organizational design (Change in design) = organizations can change

o their structure to improve value they create

Human resources/people (Change people in the company) = can

o change organization through new human capital used in order to create

value for the firm (change hiring processes), or new investments in

training, socializing employees, monitoring promotions and reward

systems. All these diversity management systems can be introduced in

order to create value for the firm

Organizational culture = values, norms, artifacts, practices,

o storytelling can be changed

Organizational capabilities = organizational abilities changing

o relationships among people, organization and culture to increase their

ability to create value. It is no ìt easily imitable by others because:

Causal ambiguity = competitors cannot distinguish what to

 implement first and with what effect

Path dependence = along time, these reciprocal relationships

 among structure, culture and HR reinforce each other

Main forces that can oblige companies to organizational change are:

Competitive forces = organization must make changes in order to match or

 exceed its competitors on at least one of the following dimensions: efficiency,

quality or innovation

Ex. Apple is giving bonuses to employees in attempt to keep talent from leaving

company and go to Meta, which is developing a new smartwatch business and has

hired employees from Apple as it pushes more into hardware. These changes meant

to retake human capital. The only way to imitate is to hire new employees from the

more competitive company in order to discover their secrets (of Apple) of each

product.

Economic, political and global forces = these forces affect organizations by

 forcing them to change how and where they produce goods and services

Demographic and social forces = changes in the composition of the

 workforce and the increasing diversity of employees have presented many

challenges for organizations

Ethical forces = government, political and social demands for more

 responsible corporate behaviour. It means:

Creation of ethics officer position

o Encourage employees to report unethical behaviours

o

2 main kinds of change in an organization:

1) Evolutionary change = change that is gradual, incremental, and narrowly

focused (start by changing one practice or routine. If It is successful, then there

is the potential to change all capabilities). Evolutionary change can be

developed by:

a) TQM strategies = Total quality management is an ongoing and constant

effort by all organization’s functions to find new ways to improve the

quality of the organization’s goods and services. TQM is invited to work

daily, organize meetings to address main issues of the company, and

elaborate solutions. They start up in small groups, finding small problems

and solutions, so that the firm changes gradually. Centred on more

operative problems.

Ex. PDCA cycle (Deming cycle) in healthcare is a four-step cycle

composed of 4 phases:

i) Plan = establish objectives and processes to deliver results

ii) Do = implement processes

iii) Check = monitor processes against objectives, legal requirements,

report the results

iv) Act = take actions to continually improve health and safety

performance

Important to implement change and continuously improve processes,

cyclical in order to be used in a continuous manner for ongoing

improvement. Employees become flexible.

b) Flexible work teams = composed by employees who have acquired and

developed skills to perform any of tasks to assemble a range of finished

goods. Main characteristics of flexible work teams are:

i) Workers can substitute one from each other

ii) Team members jointly assign tasks and transfer workers from one

task to another

iii) Manager's role is to facilitate team’s activities (facilitator of

communication among units)

2) Revolutionary change = change that is sudden, drastic and broadly focused

(drastic, because it tackles organizational capabilities. Change organizational

structure, change values, but not gradually, with consultants). Revolutionary

change can be developed by:

a) Reengineering = process by which managers redesign how tasks are

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