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Exam 8: Designing Adaptive Organizations

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Question 51

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Yahoo! Welcome to Yahoo! where you'll find a $100 million loss, plummeting advertising sales, a stock price that has fallen from an all-time high of $237 to less than $10 per share, and layoffs that cost 800 people-including the previous CEO-their jobs. At this once-phenomenally-successful company, so many basic things have gone wrong that the question is: Where do you start to fix it? One key problem is the organizational structure: with just 3,200 employees, Yahoo! has forty-four different business units! Even General Electric, with 300,000 employees, has only 13. You think to yourself, "This is unmanageable. Too many people and no focus." Amazingly, despite having 44 business units, Yahoo! doesn't have a direct sales unit. No one, it turns out, is responsible for cultivating customers. Why not? Well, during the "go-go" days, customers were literally throwing themselves and their advertising dollars at the company. As one Yahoo! manager said, "The fish were jumping into the boat." Consequently, most orders took place via email. Yahoo! didn't have to establish relationships with customers because customers came to it. Unfortunately, this led to arrogance. Jeff Bell, a vice president at one of Yahoo!'s potential customers, said the message was, "Buy our stuff [meaning Yahoo!'s advertising], and shut up." Jeff Mallett, Yahoo!'s former president, said, "We ran Yahoo! to optimize market share. I make no apologies for that. If there was a company that didn't get it [Internet advertising], we moved on very quickly." Another problem was the overly creative, freewheeling, spontaneous company culture in which everyone, including the CEO, worked in cubicles. The problem wasn't so much the cubicles, but what they came to represent: an overly informal culture with no controls. At Yahoo!, employees played soccer in a large open space outside the company boardroom, even while the board was meeting. Furthermore, no one had an overall perspective of what was best for the entire company. Consequently, said one Yahoo! vice president, "[Unit] managers would beg, borrow, and steal from the network [meaning the overall company] to help their own properties." Plus, if you had an idea, you pursued it without having to get anyone's feedback or approval. Yahoo!'s chief operating officer said, "Yahoo!'s original mission was to grow as fast as you can and put things out there and see what works." The more serious problem, he said, was that "nobody knew what would work." The most amazing aspect of this culture was that, as one manager explained, "There was a fair amount of resistance toward the strategy of monetizing our businesses." In other words, the culture at Yahoo! was so informal, so unfocused, and so freewheeling that no one really worried about whether the company could charge for the services it provided and make a profit. "There was a fear," said this manager, "that if all of our efforts were put into profit making, we'd starve research and development and lose our innovation." Refer to Yahoo!. One of the causes of the precipitous drop in the value of Yahoo's stock was the company's inability to subdivide work and workers into separate organizational units responsible for completing particular tasks. For example, Yahoo has no sales unit to cultivate and call on advertising customers. Yahoo caused itself trouble when it decided to not engage in ____.

A) decentralization
B) cultural rigidity
C) the appropriate change of command
D) departmentalization
E) employee empowerment

F) A) and B)
G) A) and C)

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Question 52

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Specialized jobs are generally inefficient.

A) True
B) False

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Question 53

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Identify an organization that you know of and explain how and why its approach to organizational design tends to fit better with either the traditional (structure)or contemporary (process)approaches to organizational design. Be sure to state whether your organizational example more closely fits the model of mechanistic or organic organizational design.

____ determines the number, kind, and variety of tasks that individual workers perform in their jobs.

Commerce Insurance Services has five divisions. They are personal; core commercial; Main Street business; major commercial; and benefits. The company is also departmentalized along product lines. Commerce Insurance Services uses ____ departmentalization.

Empowerment can lead to changes in organizational processes because meaning, competence, impact, and self-determination produce empowered employees who take active rather than passive roles in their work.

The central concern of the job characteristics model (JCM) is ____.

Product departmentalization organizes work and workers into separate units responsible for particular kinds of customers.

The Ryerson University Library is organized in a hierarchy with six unit heads reporting to a chief librarian. Within these units are fifteen librarians and forty-seven full-time library staff. One of the tools used in the organizational development of the library was to systematically move employees from one job to another to give them an opportunity to learn and use different skills. The Ryerson University Library used ____.

Which of the following is NOT one of the core job characteristics in the job characteristics model (JCM) ?

The organizational process ____.

A virtual organization is an organization that outsources noncore business activities to outside companies, suppliers, specialists, or consultants.

Which of the following approaches to job redesign entails more than simply providing additional variety in job tasks?

Hallmark has four departments. These departments are (1) Flowers and Gifts, (2) Cards and E-cards, (3) Hallmark Collectibles, and (4) Photo Albums and Scrapbooks. Hallmark uses ____ departmentalization.

Of all types of departmentalization, ____ departmentalization requires the highest level of management skill for successful implementation.

An organic organization is characterized by broadly defined jobs and responsibility; loosely defined, frequently changing roles; and decentralized authority and horizontal communication based on task knowledge.

Yahoo! Welcome to Yahoo! where you'll find a $100 million loss, plummeting advertising sales, a stock price that has fallen from an all-time high of $237 to less than $10 per share, and layoffs that cost 800 people-including the previous CEO-their jobs. At this once-phenomenally-successful company, so many basic things have gone wrong that the question is: Where do you start to fix it? One key problem is the organizational structure: with just 3,200 employees, Yahoo! has forty-four different business units! Even General Electric, with 300,000 employees, has only 13. You think to yourself, "This is unmanageable. Too many people and no focus." Amazingly, despite having 44 business units, Yahoo! doesn't have a direct sales unit. No one, it turns out, is responsible for cultivating customers. Why not? Well, during the "go-go" days, customers were literally throwing themselves and their advertising dollars at the company. As one Yahoo! manager said, "The fish were jumping into the boat." Consequently, most orders took place via email. Yahoo! didn't have to establish relationships with customers because customers came to it. Unfortunately, this led to arrogance. Jeff Bell, a vice president at one of Yahoo!'s potential customers, said the message was, "Buy our stuff [meaning Yahoo!'s advertising], and shut up." Jeff Mallett, Yahoo!'s former president, said, "We ran Yahoo! to optimize market share. I make no apologies for that. If there was a company that didn't get it [Internet advertising], we moved on very quickly." Another problem was the overly creative, freewheeling, spontaneous company culture in which everyone, including the CEO, worked in cubicles. The problem wasn't so much the cubicles, but what they came to represent: an overly informal culture with no controls. At Yahoo!, employees played soccer in a large open space outside the company boardroom, even while the board was meeting. Furthermore, no one had an overall perspective of what was best for the entire company. Consequently, said one Yahoo! vice president, "[Unit] managers would beg, borrow, and steal from the network [meaning the overall company] to help their own properties." Plus, if you had an idea, you pursued it without having to get anyone's feedback or approval. Yahoo!'s chief operating officer said, "Yahoo!'s original mission was to grow as fast as you can and put things out there and see what works." The more serious problem, he said, was that "nobody knew what would work." The most amazing aspect of this culture was that, as one manager explained, "There was a fair amount of resistance toward the strategy of monetizing our businesses." In other words, the culture at Yahoo! was so informal, so unfocused, and so freewheeling that no one really worried about whether the company could charge for the services it provided and make a profit. "There was a fear," said this manager, "that if all of our efforts were put into profit making, we'd starve research and development and lose our innovation." Refer to Yahoo!. Before restructuring, Yahoo! was described as having an overly creative, freewheeling culture, a highly decentralized decision-making structure in which managers did only what was best for their units rather than what was best for the entire company and exhibited resistance to actually making a profit by placing too much value on innovation to the exclusion of profit. What kind of an organization did the company have?

List and briefly identify each of the five traditional departmental structures. Explain which one tends to be the most difficult to manage effectively.

Which of the following statements about mechanistic organizations is true?

The three types of task interdependence are