CAOT 31 Lecture Notes - Lecture 2: Batch Production, Coping With, Market Segmentation
11 Oct 2020
School
Department
Course
Professor
Zoe Zwiebelmann Maastricht University S8-ESBM CH12
S8-ESBM: Chapter 12 – Growth: Building the foundations
1. THE CHALLENGES OF GROWTH
Stage models of growth: offer framework for considering development of a business & managerial
challenges facing the founder
• each phase of growth is followed by crisis that requires change of how founder manages business →
needs to be overcome for business to continue
• length of time of each phase depends on industry: (a) fast growing: shorter (b) slow growing: longer
GREINER’S MODEL WITH 4 STAGES
1) Leadership-stage challenge: give direction by effective leadership
2) Autonomy-stage challenge: develop effective management team, and delegate to them
3) Control-stage challenge: coordinate decision-making through organisational structures that balance
autonomy & control and encourage collaboration
4) Bureaucracy-stage challenge: facilitate collaboration while avoiding bureaucracy
CHURCHILL & LEWIS MODEL WITH LINK OF FACTORS
• emphasis on link between management style, organisational structure, formality & strategic
imperatives ass business grows
• crucial stage 3: most business do not go beyond 3rd stage (salary-substitute firms & lifestyle firms)
but gazelles move until end of stage 5
• most important point: move from entrepreneur’s operational ability to strategic ability as firm grows
Zoe Zwiebelmann Maastricht University S8-ESBM CH12
2. BUILDING THE ORGANISATIONAL STRUCTURE
2.1 SPIDER’S WEB STRUCTURE
• works best with up to 20 employees – 2 REASONS:
2.2 HIERARCHICAL STRUCUTRE
Hierarchical structure: creates order and allows coordination of complex tasks
• two forms: 1) simple form – fewer interactions to manage but can also discourage collaboration and
sharing of knowledge 2) multiple layer form – tall (narrow span of control for manager) & flat (large
span of control) → trend to delayer and use flatter structures
2.3 MATRIX STRUCTURE
Matrix structure: structure in which people have multiple reporting lines – 1) functional manager 2)
geographic/product manager
2.4 TEAM-WORKING STRUCTURE
Team-working structure: used 1) in businesses seeking to encourage creativity and innovation 2)
way of informal coordination within formal structure (multinational firms that need to maintain
functional consistency between geographic locations)
Spider’s web: most typical organisation structure in small scale start-
ups; founder at centre at web with each member of orga reporting to
him; efficient in responding to change
1) communication becomes too complicated above as interactions
increase → formula – Parkinson’s Coefficient of Inefficiency:
inefficient number of group is 21 as group interaction becomes
impossible
2) entrepreneur’s character: due to high internal locus of control will
always try to meddle so that new employees find informal reporting
line to entrepreneur while short circuiting the manager they are
supposed to report to = creating informal reporting lines
MATRIX & TEAM-STRUCTURE BOTH
MORE FLEXIBLE IN RESPONDING TO
CHANGE
Zoe Zwiebelmann Maastricht University S8-ESBM CH12
3. CONTROLLING PEOPLE
• degree of control depends on: 1) core value proposition (if low-cost, then more control) 2) task
complexity 3) environment
→ the simpler the task + the more stable environment = the easier to impose control
4. AUTONOMY & MOTIVATION
Autonomy: major motivational influence on individuals undertaking cognitive (compared to
mechanical) tasks involving complexity or creativity
• dilemma: how much autonomy to give
→
answer by Birkinshaw: find balance btw 4 dimensions
→ broad conclusion: the greater the task complexity, the more cognitive resources used = the more
autonomy needed – all influenced through direction, slack boundaries & support combined with
accountability
5. THE CHALLENGES FACING SOCIAL ENTERPRISES
Quadrant 1: machine bureaucracy; well-developed IS reporting
on activity; centralised power; continuous & line production
Quadrant 2: staff have more autonomy; culture is important =
staff need to be motivated to make frequent changes; jobbing
& batch production
Quadrant 3: matrix team working on complex tasks within set
protocols; jobbing & batch production
Quadrant 4: organic structure; great emphasis on personal
relationships & interactions; decentralised power; projects
Discretion: company’s broad strategy and goals – people need
purpose in their work → 1) align strategies of units & firm itself
2) re-evaluate direction
Space/slack: degree of looseness in resource availability &
experimenting → 1) goal setting clear & specific but freedom in
how achieved 2) employees allowed to learn from mistakes
Boundaries: legal, regulatory and moral limits within which
company operates, should come from values → 1) identify
critical boundaries & monitor them 2) manage other boundaries
in non-invasive way (training, codes of conduct)
Support: knowledge transfer systems & training/development
→ 1) put in place support systems employees can approach
2) systems should encourage collaboration
TYPE OF SKILL & TRUST DEVELOPMENT CHANGES OVER
TIME
• stage 1: danger that one stakeholder hijacks mission and
revises it to meet own goals
• stage 2: crucial to develop measures of accountability to
evaluate success of work
• stage 3: crucial to manage succession
Document Summary
S8-esbm: chapter 12 growth: building the foundations: the challenges of growth. Matrix structure: structure in which people have multiple reporting lines 1) functional manager 2) geographic/product manager. Team-working structure: used 1) in businesses seeking to encourage creativity and innovation 2) way of informal coordination within formal structure (multinational firms that need to maintain functional consistency between geographic locations) S8-esbm ch12: controlling people, degree of control depends on: 1) core value proposition (if low-cost, then more control) 2) task complexity 3) environment. The simpler the task + the more stable environment = the easier to impose control. Quadrant 1: machine bureaucracy; well-developed is reporting on activity; centralised power; continuous & line production. Quadrant 2: staff have more autonomy; culture is important = staff need to be motivated to make frequent changes; jobbing. Quadrant 3: matrix team working on complex tasks within set protocols; jobbing & batch production.
