MS-10 SOLVED ASSIGNMENT 2015

PROVIDED BY WWW.MYIGNOU.IN

Course Code: MS-10

Course Title: Organisational Design, Development and Change
Assignment Code: MS-10/TMA/SEM-I/2015
Coverage: All Blocks

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Q1. What are the different approaches to organisation? Briefly

explain the 7s model with the help of examples.
Ans:

YI

GN

OU

The basic elements of organisations have remained the same over the years. Organisations
have purposes (be they explicit or implicit), attract people, acquire and use resources to
achieve the objectives, use some form of structure to divide (division of labour) and
coordinate activities, and rely on certain positions/people to lead or manage others. While
the elements of organizations are the same as ever before, the purposes o\f organisation,
structures, ways of doing things, methods of coordination and control have always varied
widely over the years and even at the same time amongst different organisations. For
example, public sector organisation in India with there multiple objectives in early years
were not roused by the profit motive but are now required to make surpluses. At a given
point in the time of history. Ford Motors relied more on centralization and General Motors
on decentralization. The crucial aspect that accounts for the differences is how an
organisation adapts itself to the environment. Organisation being part of the society affects
and is affected by the changes in society. The changes could be social, economic, technical,
legal or political; they could be in input (labour, capital, materials etc.) or output markets.

It is essential to develop a perspective understanding about organisations because human

behaviour and organisational behaviour are influenced by the people in organisations and
the specific characteristics in the basic elements in the organisations and the way they
adapt themselves to the environment. There is considerable body of knowledge and
literature, called organisation theories, developed over the years reflecting what goes on in
organisations. Organisation theories are sets of propositions which seek to explain or
predict how individuals and groups behave indifferent organisational structures and
circumstances.
Basically we have the three types of approaches to organisation
1. Classical

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2. neo-classical
3. modern approach
Now we will describe
Classical View point:

.IN

these concepts have come to be popularly known as classical concepts or classical theories
of organisation. The structure of an organisation received emphasis under this school of
thought. According to the classical view, An organisation is the structure of the
relationships, power, objectives, roles, activities, communications and other factors that
exist when persons work together.

Bureaucracy

GN

OU

The streams of concepts in the classical mould are based on the same assumptions, but
are developed rather independently. Bureaucracy as a concept, first developed by Max
Weber, presents a descriptive, detached, scholarly point of view. Administrative theories
not only described macro aspects of organisations but also focused on principles and
practice for better performance. Scientific management thought focused mainly in micro
aspects like individual worker, foreman, work process, etc. The classical theorists on the
whole, with scientific management stream being a minor exception, viewed organisations
as mechanistic structures. Let us consider the three streams of classical theories briefly : i.e
Bureaucracy, Administrative theory and Scientific Management.

YI

Bureaucracy is the dominant feature of ancient civilizations as well as modern

organisations in contemporary world. Max Weber describes an ideal type approach to
outline the characterstics of a fully developed bureaucratic form of organisation. The
features that the described as being characterstic of a bureaucracy are common to all social
institutions, be they political, religious, industry, business, military, educational or
government organisations. Size and complexity produce bureaucracy. As such, the rigid
structures, fixed jurisdictions, impersonal rules and mundane routine, concomitant with
bureaucracies often result in delays, produce inertia, encourage buck-passing, lead to
wastage of resources and cause frustration. As such, in general parlance the word
bureaucracy has come to have a negative connotation and many tended to wish it away.
But the features that characterize bureaucracy have become inevitable and ubiquitous with
the growing size and complexity in organisations. There is need, therefore, to understand
and improve bureaucracies than indulge in dysfunctional debates over their relevance.
Administrative Theory
Administrative theory is another stream of thought in the classical mould.

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Among the several proponents of the Administrative theory, the earliest and significant
contribution came from Henri F Fayol, a French industrialist, in 1916. The 14 principles
that capture the essence of the administrative theory could be summarized as follows:
Division of work. Division of work or specialization gives higher productivity because one
can work at activities in which one is comparatively highly skilled.
Authority and responsibility. Authority is the right to give orders. An organisational
member has responsibility to accomplish the organisational objectives of his position.
Appropriate sanctions are required to encourage good and to discourage poor
performance.

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Discipline. There must be respect for and obedience to the rules and objectives of the
organisation.

OU

Unity of command. To reduce confusion and conflicts each member should receive orders
from and be responsible to only one superior.
Unity of direction. An organistion is effective when members work together toward the
same objectives.

GN

Subordination of individual interest to general interest. The interests of one employee or

group of employees should not prevail over that of the organisation.
Remuneration of personnel. Pay should be fair and should reward good performance,
decentralization.
good

balance

should

be

found

between

centralisation

and

YI

Centralisation. A
decentralization.

Scalar chain. There is scalar chain or hierarchy dictated by the principle of unity of
command linking all members of the organisation from the top to the bottom.

Order. There is a place for everything and everyone which ought to be so occupied.
Equity. Justice, largely based on predetermined conventions, should prevail in the
organisation.
Stability of tenure of personnel. Time is required for an employee to get used to new work
and succeed in doing it well.
Initiative. The freedom to think out and execute plans at all levels.
Espirit de corps. Union is strength.
Scientific Management
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The third stream of classic school of thought is the scientific management. Whereas
bureaucracy and administrative theory focused on macro aspects of the structure and
processes of human organisations, scientific management concerned itself with micro
aspects such as physical activities of work through time-and-motion study and examination
of men-machine relationships. Unlike in the other two, the scientific management and
based its inductive reasoning on detailed study and empirical evidence. In juxtaposition the
principles of bureaucracy and administrative theory were formed by synthesising
experience and observation with abstract reasoning.
Neoclassical Viewpoint

OU

.IN

The neoclassical theory, also referred to as the human relations school of thought reflects a
modification to and improvement over the classical theories. While classical theories
focused more on structure and physical aspects of work the neoclassical theory recognizes
the primary of psychological and social aspects of the worker as an individual and his
relations within and among groups and the organisation. Though neoclassical philosophy
could be traced to ancient times, it gained currency only after the world War I, particulary
in the wake of the Hawthrone experiments at Western Electric Company by Elton Mayo
during 1924 to 1932.

GN

The neoclassical viewpoint thus gave birth to human relations movement and provided the
thrust toward democratisation of organisational power structures and participative
management. The emerging changes in social, economic, political and technical
environment of organisations also seems to have provided the rationale for such shift in
emphasis.

YI

The neoclassical viewpoint does not replace classical concepts. The need for order,
rationality, structure, etc. have been modified to highlight the importance of relaxing the
rigid and impersonal structures and consider each person as an individual with feelings
and social influences that effect performance on the job.

Modern (Systems) Viewpoint

Modern theories of organisation and management have been developed largely since the
1930s. The perspective here is to provide a systems viewpoint. Among the several persons
who contributed to the modern theory, it was perhaps Chester I. Bernard, who in 1983,
provided a comprehensive explanation of the modern view of management and
organisation. He considered the individual, organisation, suppliers and consumers as part
of the environment. Ten years later, Weiner;s pioneering work on cybernetics developed
concepts of systems control by information feedback. He described an adaptive system
(including an orgainsation) as mainly dependent upon measurement and correction
through feedback. An organisation is viewed as a system consisting of five parts: inputs,
process, output, feedback and environment as shown in Figure .
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Input Process Outputs

The GST approach suggests the following nine levels of systems complexity:

.IN

1. The most basic level is the static structure. It could be termed the level of frameworks.
An example would be the anatomy of the universe.
2. The second level is the simple dynamic system. It incorporates necessary Predetermined
motions. This could be termed the level of clockworks.

OU

3. The next level is a cybernetic system characterized by automatic feedback Control

mechanisms. This could be thought of as the level of clockworks.
4. The fourth level is called the open-systems level. It is a self-maintaining Structure and
is the level where life begins to differentiate from nonlife. This is the level of the cell.

GN

5. The fifth level can be termed the genetic-societal level. It is typified by the plant and
occupies the empirical world of the botanist.
6. The next is the animal level, which is characterized by increased mobility, Teleological
behaviour, and self-awareness.

YI

7. The seventh level is the human level. The major difference between the human level and
the animal level is the humans possession of self-consciousness.

8. The next level is that of social organisations. The important unit in a social organisation
is not the human per se but rather the organisatonal role that the person assumes.
9. The ninth and last level is reserved for transcendental systems. This allows for ultimates,
absolute and the inescapable unknowables.
Each level is more complex than the one that precedes it. However, no stage is as yet fully
developed and knowledge about different levels is for varying degrees. Beyond the second
level none of the theories are comprehensive or fully meaningful. Over the last here
decades further developments in research into organisations may have added to the
existing knowledge, but human organisations continue to be extremely complex.

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The systems approach points to the interdependent nature of everything that forms part of
or concerns an organisation. A system is composed of elements which are related to and
dependent upon one another and which, when in interaction, from a unitary whole.
Systems framework covers both general and specialized systems and closed and open
analysis. A general systems approach to the management processes deals with formal
organisation and concepts relating to different disciplines such as technical, social,
psychological and philosophical. Specific management systems deal with aspects relating to
organisation structure, job design, specific functions of management, etc.

.IN

A closed system operates in a closed loop, devoid of external inputs. An open system, in
contrast, is a dynamic input-output system in continual interaction with environment to
achieve a steady state of dynamic equilibrium while still retaining the capacity for work or
energy transformation.

OU

While the classical theorists recognised only a closed system viewpoint, the modern
theorists believe in organisations as open systems. The work of D.Katz and R L Kahn
provided the intellectual basis to merge classical, neoclassical and modern viewpoints.
Here below we are describing the different approaches to organisation in relevence
of 7s model.

GN

The 7-S-Model is better known as McKinsey 7-S. This is because the two persons who
developed this model, Tom Peters and Robert Waterman, have been consultants at
McKinsey & Co at that time. Thy published their 7-S-Model in their article Structure Is Not
Organization (1980) and in their books The Art of Japanese Management (1981) and In
Search of Excellence (1982).

YI

The model starts on the premise that an organization is not just Structure, but consists of
seven elements:

Those seven elements are distinguished in so called hard Ss and soft Ss. The hard elements
(green circles) are feasible and easy to identify. They can be found in strategy statements,
corporate plans, organizational charts and other documentations.
The four soft Ss however, are hardly feasible. They are difficult to describe since
capabilities, values and elements of corporate culture are continuously developing and
changing. They are highly determined by the people at work in the organization. Therefore
it is much more difficult to plan or to influence the characteristics of the soft elements.
Although the soft factors are below the surface, they can have a great impact of the hard
Structures, Strategies and Systems of the organization.
Description

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The Hard Ss
Strategy Actions a company plans in response to or anticipation of changes in its external
environment.
Structure Basis for specialization and co-ordination influenced primarily by strategy and by
organization size and diversity.
Systems Formal and informal procedures that support the strategy and structure. (Systems
are more powerful than they are given credit)

.IN

The Soft Ss
Style / Culture The culture of the organization, consisting of two components:

Organizational Culture: the dominant values and beliefs, and norms, which develop over
time and become relatively enduring features of organizational life.

OU

Management Style: more a matter of what managers do than what they say; How do a
companys managers spend their time? What are they focusing attention on? Symbolism
the creation and maintenance (or sometimes deconstruction) of meaning is a fundamental
responsibility of managers.

GN

Staff The people/human resource management processes used to develop managers,

socialization processes, ways of shaping basic values of management cadre, ways of
introducing young recruits to the company, ways of helping to manage the careers of
employees

YI

Skills The distinctive competences what the company does best, ways of expanding or
shifting competences

Shared Values / Superordinate Goals Guiding concepts, fundamental ideas around which a
business is built must be simple, usually stated at abstract level, have great meaning
inside the organization even though outsiders may not see or understand them.
Effective organizations achieve a fit between these seven elements. This criterion is the
origin of the other name of the model: Diagnostic Model for Organizational Effectiveness.
If one element changes then this will affect all the others. For example, a change in HRsystems like internal career plans and management training will have an impact on
organizational culture (management style) and thus will affect structures, processes, and
finally characteristic competences of the organization.
In change processes, many organizations focus their efforts on the hard Ss, Strategy,
Structure and Systems. They care less for the soft Ss, Skills, Staff, Style and Shared Values.
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Peters and Waterman in In Search of Excellence commented however, that most

successful companies work hard at these soft Ss. The soft factors can make or break a
successful change process, since new structures and strategies are difficult to build upon
inappropriate cultures and values. These problems often come up in the dissatisfying
results of spectacular mega-mergers. The lack of success and synergies in such mergers is
often based in a clash of completely different cultures, values, and styles, which make it
difficult to establish effective common systems and structures.

.IN

The 7-S Model is a valuable tool to initiate change processes and to give them direction. A
helpful application is to determine the current state of each element and to compare this
with the ideal state. Based in this it is possible to develop action plans to achieve the
intended state.

OU

Q2. Discuss the universal perspectives of Organisational Design. Identify

the restructuring strategy being adopted by an organisation you are
familiar with and make a brief analysis of the contingent factors that
have influenced the strategy of the said organisation. Briefly describe
the organisation you are referring to.
Ans:

GN

Organization Design is a formal, guided process for integrating the people,

information and technology of an organization. It is used to match the form of the
organization as closely as possible to the purpose(s) the organization seeks to
achieve.

YI

Universal Perspectives

The Bureaucratic Model

Max Weber, a German sociologist, conceptualized the idea of bureaucracy. A

bureaucracy is a form of organizational structure in which people can be held fully
accountable for their actions because they are required to act in accordance with
well-specified and agreed-upon rules and standard operating procedures. Basic
Elements of the Bureaucratic Structure are:

formal rules and behavior bounded by rules

uniformity of operations continuity despite changes in personnel
functional division of labor based on functional specialization
rational allocation of tasks
impersonal orientation
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membership constitutes a career

promotion based on technical competence
limited discretion of officers
specific sphere of competence
legally based tenure
employment based on merit-no ascribed status
qualifications tested
proscribed authority-legally defined

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The Behavioural Model

GN

OU

This model has evolved from the Human Relations School of management thought.
In this model the performance of an organization is believed to depend on human
beings, their behaviour, characteristics and their mutual relationships emerging
from work patterns and organizational settings. The important factors which play
significant roles are needs, motivations, attitudes, values, leadership, group
behaviour, perceptions, communications, responsibility and authority relationship,
etc. In other words, the behavioural models of organization design reflect the social
and psychological implications of organizational life. The most popular behavioural
models of organization design the socio-technical systems theory and Likerts
System 4 Organization.
Contingency Approach

YI

The contingency approach to organizational design tailors organizational structure

to the sources of uncertainty facing an organization. The structure is designed to
respond to various contingencies- things that might happen and therefore must be
planned.
According to Contingency Theory, the structure of an organization depends on the
circumstances at any given time. The key contingency variables addressed in the
literature include:

strategy
ability to adapt to the environment
technology and
size

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The organisation I are familiar with is Toyata and make a brief analysis

of the contingent factors that have influenced the strategy

Continuing Their coverage of the Toyota Recommendations from the Quality
Advisory Panel, today we highlight the first recommendation, and its one that all
corporations struggle with at some point:

The findings from the Toyota Quality Advisory Board:

YI

GN

OU

.IN

a) Toyota North American Quality Advisory Panel Conclusions: The high-level

summary of the findings from the quality advisory panel.
b) Balance Between Local and Global Management Control: How can Toyota best
balance decision making between Toyota Motor Corporation in Japan and its
regional operations in the North America and the world?
c) Responses to Problems Raised by Internal and External Sources: The panel
found that problems raised by sources external to Toyota were not treated as
seriously as those found within Toyota. The panel claims that this violates the
tenets of the Toyota Production System.
d) Management Responsibility for Quality and Safety: Because Toyota treated
Safety as a subset of Quality, the panel believes that this has led to the
blurring of the lines and makes the question Who is Responsible? more
difficult to answer; consequently, this has led to the old adage of if everyone
is responsible, then nobody is accountable.
e) The Challenges of Integrating Electronics and Software: Has the integration of
software led to safety problems?
f) Management of Supplier Product Quality: As Toyota becomes more and more
decentralized, has Toyota maintained the rigorous supplier quality
requirements it once had?

According to the Quality Advisory Panel, Toyota has remained too much on the side
of an organizational structure that is too globally centralized. In the Panels words:
a) In the Panels view, Toyota has erred too much on the side of global
centralization and needs to shift the balance somewhat toward greater local
authority and control.
b) Toyota has traditionally structured its global operations to maximize control
by TMC in Japan. Decision-making structures involving everything from
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recalls, communications, marketing, and vehicle design and development

have historically been centrally managed and tightly controlled by TMC.
c) To accomplish this, Toyota has structured its global operations around
functional silos, each of which reports separately to TMC. In North America,
Toyota does not have one chief executive in charge of all its divisions (e.g.,
sales and marketing, general corporate, engineering, and manufacturing).
Instead, there are individual heads of each division, each of which reports
directly to TMC in Japan.

.IN

Apparently, strategy and structure go hand-in-hand and Toyotas lack of a strategy

led to its organizational structure. The outcome has, in large part, led to the public
relations nightmare that Toyota has had to deal with.

OU

In its review, the Panel has determined that this structure contributed to several of
Toyotas quality and safety issues in North America. Specifically, Toyotas tightlycontrolled global structure:
a) hindered information sharing and contributed to miscommunication;
b) and delayed response time to quality and safety issues, fueling criticism that
Toyota was being unresponsive to regulators and customers.

GN

The Quality Advisory Panel provides specific recommendations for Toyota on how it
can change its organizational structure to better allow quicker decision making and
faster flow of information:

YI

a) Work to further break down the regional silo structure in North America
and consider appointing one chief executive for North American operations
with responsibility for all regional functional organizations.
b) Identify additional critical cross-silo processes and organize decision-making
teams around them. Toyotas inclusion of senior executives from North
America in decisions regarding product recalls in North America appears to
be a model for this. However, Toyota must be ever mindful that when
responding to critical and emergent safety issues, decision making by
committee can be inefficient and time-consuming. Toyota should consider
what other decision-making models might be employed in emergency
situations.
c) Strengthen communication among global regions, especially regarding
reports of vehicle safety issues in vehicles that may share parts across
regions. It is not enough to improve the channels of communication between
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.IN

Toyotas regional operations and TMC. Toyota should also find ways to
facilitate communication across regions, especially regarding critical safety
issues. As part of that effort, Toyota should consider appointing a director
from one of its key regional markets such as North America.
d) Develop clearer lines of communication, authority, and decision making
between North America and TMC. This is especially important as it relates to
gathering and responding to direct feedback from customers, lawmakers,
regulators, and other stakeholders. This will allow North America and other
regions to benefit from the additional autonomy and authority they have been
granted.
e) Continue to increase North American involvement in the product
development and design process for vehicles in North American markets.

OU

Q3. Explain the contemporary approaches to job design citing suitable

examples.
Ans:

YI

GN

The scientific approach is not always effective, organisations began searching for
alternative job designs.

One such individual contemporary job design is job enrichment. As shown in Figure
5.1, five positive personal and work outcomes - high motivation, quality work
performance, satisfaction, absenteeism and turnover - result when people are

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allowed to function in an environment where work enables the individual to obtain

a sense of:

meaningfulness
responsibility
empowerment
satisfaction in knowing the results

YI

Examples

GN

OU

.IN

Whereas the individual contemporary and the scientific approaches design jobs for
individuals, the team approach designs jobs for teams of individuals. These designs
generally show a concern for the social needs of individuals as well as the
constraints of technology. Here teams of workers often rotate jobs and many follow
the product they are working on to the last step in the process. In the team
contemporary design, each worker learns to handle several duties - many requiring
different skills. Thus, they can satisfy their needs for achievement and task
accomplishment, as well as some needs for social interaction. When faced with
decisions, teams that work well together try to involve all members in decisionmaking [teamwork]. If their decisions and behaviours result in greater output, all
team members share the benefits. Typically, teams may start out making only a few
decisions.Yet, after time, training and familiarity, they begin to make more
decisions.Essentially, the team members pass through stages of greater
empowerment- allowing people the freedom and authority to do their jobs well4.In
each new stage, they make more decisions, resulting in self-managed teams.

Examples of such programs include flextime, workplace wellness, and family

support. Flexible work schedules can allow an employee to work whenever they can
as long as a certain amount of hours are worked each week and some employers
allow their employees to work from home. Sometimes employers utilize flextime
schedules that allow employees to arrive to work when they choose within specified
limits. A wellness program can involve having an exercise facility, offering
counseling, or even having programs set up to help employees lose weight or stop
smoking cigarettes.Family support programs involve help with parenting, childcare,
and some programs allow employees to leave for family purposes.
One study found that men often identify themselves with their career and work
roles while women often identified themselves with the roles of mother, wife, friend,
and daughter.The Sloan Foundation found that even though women enjoy working
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as much as men, women prefer to work nights and weekends if time needs to be
made up instead of cutting their hours. A study conducted by the Alliance for WorkLife Progress surveyed employees to find out the type of workplace flexibility
employees say they would like to use in the following year. Burrus et. al. found that
71 percent of people want an occasional opportunity to adjust their schedule, 57
percent want to work from a location other than their office, 73 percent want to
make their work-life flexibility arrangement official, and 12 percent want to work
less hours.

.IN

Q4. Define organisational diagnosis. Discus different methods of

organizational analysis and cite how it is carried out in your
organisation or an organisation you are familiar with. Briefly describe
the organisation you are referring to.

OU

Ans:

In the field"Corporate diagnosis is a process that involves the three steps of

publicly entering a human system, collecting valid data about experiences, and
feeding back to the system toward promoting corporate performance".

GN

The effective diagnosis of organizational culture, and structural and

operational strengths and weaknesses are fundamental to any successful
organizational development intervention. As Beckhard said in the preface to
his seminal work.

YI

Since the beginnings of organizational development as a profession, diagnosis

has moved from the purely behavioral towards a strategic and holistic
business diagnostic approach. Moving away from looking at human
interventions in isolation, to exploring the interactions of people in the
context in which they operate. equally as organizations are increasingly
collaborative in nature, the traditional silo approach to diagnostics is
becoming increasingly rare. Organizational development and in particular the
diagnostic phase of activities is spreading from the occupational psychologists
towards main stream business. This is important for OD practitioners as the
role is increasingly holistic.
Different methods of organizational analysis

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Strategic/organizational analysis methods depend on the particular

organization. A list of data sources is available for determining training and
HRD needs.
The list includes the following:
known

as

manpower

.IN

a) human resource inventories (formerly

inventories),
b) skills inventories,
c) organizational climate measures,
d) and efficiency indexes.

GN

OU

Some of these sources, such as efficiency indexes are continuously monitored

by many organizations as part of the normal control procedures and the data
are readily available. Other existing organizational measures can be used as a
basis for performance improvement and training efforts also. Such sources
include employee surveys and interviews. For example, the Institute for Social
Research at the University of Michigan markets two instruments Survey of
Organizations and Michigan Organizational Assessment Questionnaire that
are supported by substantial reliability and validity data.
The Organization I am familiar with is WALMART for organizational
diagnosis

YI

Wal-Mart is losing business to rivals of different shapes and sizes. Customer

traffic at U.S. stores has declined for five straight quarters. Meanwhile, sales
have surged at discounters like Dollar Tree and Family Dollar Stores. A recent
study by Wells Fargo [WFC] showed that those chains often charge less than
Wal-Mart, though they carry a much smaller selection of items.
So Wal-Mart is caught in the middle. If you want something quick, go to a
convenience store. If you want something cheap, go to Amazon. Wal-Mart? We
dont need you any more.
While the likes of Wal-Mart and OfficeMax have struggled to increase
revenues recently, Amazon has thrived, with sales rising 40% in 2010 to $34
billion. For the first time, annual sales of media products like books and DVDs
accounted for less than half of total revenue.
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Over ten years, Wal-Marts share price has stagnated, while Amazons has
increased around ten times.
So what is Wal-Mart doing about it?

.IN

Chief Executive Mike Duke said yesterday that problems at Wal-Mart Stores
Inc. have been more severe than management expected and will take time to
fix. Some of the pricing and merchandising issues in Wal-Mart U.S. ran
deeper than we initially expected, and they require a response that will take
time to see results.

OU

But will time show results? It seems more likely that if Mr Duke spends his
time on pricing and merchandising issues, it wont be long before Wal-Mart
follows other retailers like Borders and Circuit City into bankruptcy, fresh
victims of the Amazonian jungle.
Traditional Management Cant Save Wal-Mart

How?

GN

There is no sign that Mr Duke realizes that his firm is suffering from a fatal
disease: traditional management. Working over pricing and merchandising
issues isnt going to save Wal-Mart. Instead Wal-Mart has reinvent itself. WalMart has to start delighting its customers.

YI

Wal-Mart has some strengths. It has a lot of money and a lot of assets.

And its a plus that Wal-Mart is undertaking a thorough reform of its energy
and environmental policies and seems intent on becoming a model green
corporation. Thats welcome news, but its not a business strategy that will
save the firm.
And Wal-Mart also has significant handicaps.
Wal-Marts assets are a mixed blessing. In the Amazonian jungle, bytes beat
bricks. Managing a whole lot of real estate assets can distract management
from its real challengecreating a business that has a future. Besides, the
stores are big and clunky and located in places that people used to be willing

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to drive to, just to buy cheap stuff. Now that its stuff is no longer the cheapest,
distance becomes an issue.
Wal-Mart also has an unfortunate tradition of extraordinarily asocial practices
in labor relations. As a result, it may not have the kind of skilled and
motivated staff that can easily generate the continuous innovation that is
needed to turn Wal-Mart into a genuine 21st Century firm.

.IN

Moreover Wal-Mart has no tradition of delighting its customers. Its the

quintessential 20th Century firm with an inside-out perspective: You buy
what we sell, because its cheaper. Now that what Wal-Mart sells is no longer
cheaper, that business model is broken.

OU

And Wal-Mart cannot simply emulate Amazon. Amazon is already so far ahead
as an online firm, Wal-Mart will never be able to catch up.
Instead Wal-Mart has to reinvent its business model from scratch. Mr Duke
isnt going to save Wal-Mart just by working on pricing and merchandising. He
needs to re-think his whole business.

GN

How could Wal-Mart reinvent itself? It must begin by asking who its
customers are and what would delight them? Wal-Mart has to start
understanding them in depth, figuring out what might delight them and go on
doing it, time after time.

YI

Personally, I dont know Wal-Mart customers well, but we could take the
analogous case of my relationship with a local supermarket to start to see
some of the directions that reinventing a supermarket might take.
Offer what the customers really want: Its only in the last few years that my
local supermarket offered wine. Now it offers a wide selection of wines that I
like at reasonable prices. This makes me want to go the supermarket,
something I used to hate doing.
Eliminate checkout queues: I used to hate waiting in line at the
supermarket, as the checkout clerk moved at a snails pace to scan items. Now
I can scan my own items at a self-checkout counter. I like doing the scanning

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and checking the prices, rather than waiting in a queue. I am in and out in a
flash.
Deliver: I now have heavy groceries delivered in bulk from the local
supermarket to my kitchen. I used to hate carrying all that stuff. Now I dont
need to. The groceries are about the same price as Amazon groceries online,
but the local supermarket guarantees the time when they will be delivered,
something Amazon is unable so far to do. So for now at least, I have the
groceries delivered by the local supermarket, not Amazon.

OU

.IN

Treat its own staff right: One thing I still dont like about the local
supermarket is the attitude of the staff, who seem embittered by the way they
are treated there. If they were treated better, their attitude would be better,
and they might be more inclined to find other ways that would delight me.

GN

I am obviously not a typical Wal-Mart customer and am not likely to be, at

least in Wal-Marts current incarnation. But my experience with the local
supermarket begins to show how one might turn a relatively unpleasant
relationship with a supermarket into something rather more promising.

YI

For Wal-Mart to pursue this kind of a strategy, it would require a shift from an
inside-out perspective of making money for its shareholders to one of
pursuing customer capitalism and adopting an outside-in perspective that
consistently seeks ways to delight its customers.

Mr Duke and his team would need to decide who its customers are, figure out
what are the hopes and dreams and fears and irritations and fears, find ways
to alleviate those fears and irritations and fulfill those hopes and dreams.
Q4) Write an essay on the process of change and enumerate how it is
carried out in an organization.
Ans:
Organizational Change Process
Selecting and implementing significant change is one of the most challenging
undertakings that faces an organization. If the change involves the entire
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organization and also requires new paradigms that will replace established
ways of doing business the challenge is daunting.
Research shows that the success rate for implementing major organizational
change is quite low, for several reasons. First, asking organizations to change
the way they conduct their business is similar to asking individuals to change
their lifestyle. It can be done but only with the greatest determination,
discipline, persistence, commitment and a clear plan for implementing the
change.

.IN

Second, resistance to change is a natural human phenomenon. All people

resist change, some more than others. Managing that resistance is an essential
part of the process.

GN

OU

Third, change creates uncertainty. Organizations generally achieve fairly

predictable results with their existing business model. Their outcomes may
not be the desired results, but they are predictable. Change is unpredictable.
The results may be far better but they may also be far worse. And success
often looks and feels like failure until the change is very nearly completed.
Staying the course of implementing a change which is essential for its
success meets with continuing human and organizational resistance and
pressure to pull the plug before the process is completed.

YI

Managing the process of change is essential to successful implementation.

Success will be based on two major factors: a defined process to guide the
change and an assigned Change Leadership Team.

The Change Leadership Team is not necessarily a full-time, dedicated team.

But it must be a team that is given the charter, the responsibility, the authority
and the accountability for the full implementation of the required changes. If
the change is organization-wide, paradigm-shifting or systemic, this may well
be the senior management team of the organization. If the change is for a
major subset of the organization, then a separate cross-functional team may
be designated. In either event, the team must be clearly defined and allocated
sufficient capacity time, resources, and authority - to do its work.
Methods of Changing
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One of the challenges in modifying systems is knowing the key levers and how
to use them to create and sustain change. The three levers for creating
organizational change are:
Lever One The Senior Management Team

.IN

The single best lever is the senior management teamif they are truly aligned.
When aligned, they speak with one voice and reinforce each other throughout
the organization. If they are not aligned but give verbal agreement to change
while proceeding with their own agendas the organization loses its best
leverage point. Actually, if the senior management team is not fully aligned
and doing real work in designing the change together, they may become the
biggest point of resistance.

OU

Lever Two A Common Organizational Model

GN

The second lever is having an agreed upon mental model of the organization.
This common picture of how to examine the organization and approach
change is essential to success. Otherwise, the senior team will argue about
what to change and where and why. They will each have their own root cause
analysis based on their own personal experience. And each story will have its
validity. Full alignment can only be achieved if everyone understands and
agrees to a common model.

YI

Lever Three A Structured Change Methodology

The third lever is a structured methodology to analyze the organization,

design the change, implement it, and monitor progress until it becomes the
natural way of conducting business. Without this methodology change will be
sporadic, not sustained and employees will view the change effort as the
initiative of the week, waiting until it goes away. A structured methodology
based on a common model that is fully and completely implemented and
supported by the senior management team provides the leverage for
sustainable change.
The Change Management Methodology
Step One - Confirming the Compelling Need to Change
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It is not uncommon for the process to begin with significant discussion about
whether broad-based systemic change is needed, or whether smaller
incremental improvements will do the job. This often requires some external
data (market share, competitive information, etc.) as well as objective internal
data (how long does it take to complete projects vs. plan; are costs per unit
increasing or decreasing; is our organization getting better at what it does; is
competitive positioning weakening, etc.).
Step Two - Identifying the Boundary Conditions

OU

.IN

Boundary conditions define the limits (or playground) within which change
might be considered. When senior teams begin their discussion some large
topics usually emerge very quickly. Issues such as mergers, acquisitions,
international or global initiatives, large capital investments, strategic alliance
partners, equity situations, private vs. public ownership, etc. may be debated.
Step Three - Creating the Vision of the Desired End State

YI

GN

A group of people aligned around a common vision are a very powerful force.
John Kennedys vision of "put a man on the moon by the end of the decade"
spurred NASA to unprecedented performance. Martin Luther Kings vision in
his "I have a dream" speech energized the civil rights movement. Jack Welchs
vision for GE in which he said that "We will be number one or number two in
every category or we wont be in it" drove incredible energy and focus
through GE. The vision of Mercedes Benz to "always make the best engineered
car in the world" has been the hallmark of its focus for decades.

Step Four - Developing the Core Work Processes

The mention of work processes typically creates mixed reactions. Everyone
agrees that some degree of process is required. Without defined processes a
company would not be able to produce a consistent payroll. It would not be
able to hire people. It would not have any consistent methodologies for its
work. It could never assure any consistency or reliability.
Step Five - Defining Key Roles and Responsibilities

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Every company has a relatively small number of key roles that are central to
its business. There are usually a number of people who perform these roles,
and they are the linking pins for one or several core processes. Some examples
of such key roles are: project director, lead engineer, national account
manager, customer service representative, senior consultant, systems
engineer, account executive, etc.

YI

GN

OU

.IN

The next step is to identify the few key roles in the organization that are
central to how the companys work gets done and then for the senior team
collectively to define them.

Step Six - Modifying the Organizational Structure

Most changes begin with a modification of the organizational structure.

Unfortunately, most changes end there as well which is precisely why most
large scale change is unsuccessful. Step six represents the point where
examining and possibly modifying the organizational structure is both
appropriate and necessary.
Step Seven - Establishing the Key Performance Measures

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.IN

Every organization measures its performance. Unfortunately, most

organizational measures have two fundamental flaws. First, there is a
disproportional emphasis on financial measures. Financial measures are not
direct performance measures. They are the consequences of company
performance achieved or not achieved. By themselves, they indicate very little.
Second, most performance measures cause the company to look through its
rear view mirror. These measures indicate past performance and do little to
help guide future performance or have a positive impact on organizational
results.
Step Eight - Reviewing System-Wide Tools

OU

Tools are powerful forces in defining how an organization behaves. An

enterprise-wide tool can be one of the most dramatic vehicles to create (or
force) organizational change.
Step Nine - Develop Training that Enables Performance

GN

Training is an integral part of organizational design and behavior. It is

essential to ensure that individuals have the knowledge and skills to perform
in their current jobs and prepare for new ones.
Step Ten Aligning the Reward Systems

YI

Traditionally reward systems have been approached conservatively in the

form of salaries for professional employees, and hourly wages for non-exempt
employees. In some companies annual bonuses or profit-sharing programs
have been added, tied to organizational performance for that year.

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