Background to organizational development

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Method & Scope

This chapter describes, motivates and critically analyses the research approach used in this study. A method of strategy development which gives a structure to how the work will progress is also included.

The organization

The organization investigated here is a merge between two different companies. Even if the companies work in completely different industries their challenges are similar. This work is limited to the software development parts of the research and development department.
The reason for the merge is that the companies are reluctant to make their strengths and weaknesses in development public. The goal of the merge is to make sure the two companies can’t be recognized but still the result of this project should be applicable to both. The resulting organization from the merge is called “the organization”.

Research approach

Initial discussions with the management of the organization showed that they didn’t have any metrics or quantitative data for how they operate. Since no proven ways to measure how well they cope with complexity or how innovative they are were found in the literature it was clear that a qualitative approach for this study was necessary.
The purpose was to define a strategy for improvements by obtaining a big picture of how they operate and identify key areas of improvement. It is thus not known from the beginning what the investigation will lead to and in which direction it will go. This further supports the choice of a qualitative approach. Table 2-1 summarises the features of qualitative and quantitative approaches.

Structure of the work

To structure the work a method for strategy development (Grant, 2007) was followed through out this project. The method includes four phases; analysis, objectives and recommendations, options and Implementation, see Figure 2-1.
In the analysis phase the focus was on the internal environment since much of the external analysis was given as an input. The internal environment or the current situation was investigated by studying documented development processes and models. In addition to this personal interviews were performed with people with different positions to capture aspects not included in the official processes. The interviews were informal and performed as an open discussion about how things work. In addition to this the author worked as a consultant for a few weeks within the organization to get a real insight in how things work and personal experience.
These three steps were chosen because the official documents would show the corporate initiative and then personal interviews will give an insight in how strictly the formal methods are followed. The interviews will show if the individuals have a common understanding and view of how things work or should work. Then by getting into the organization and do some personal work, the consultant can get a personal view, based on experience from other organizations, about how things work.
The current situation was then analyzed with theoretical models to capture areas of improvement supported by theory about knowledge creation, development models and organizational structure.
Based on the analysis a number of possible improvements, some with help of model based design, was generated and then selected in an order suitable to create a plan for improvements.

Critical analysis of the method

The qualitative approach was necessary because there was no empirical data available and obtaining such data would take a long time. The main problem is that conclusions are more open to debate compared to a quantitative approach with empirical findings. This can make the change effort harder. Empirical findings can work as change agents and are hard to dispute. For future continuous improvements of the processes it is important to establish metrics to get necessary empirical data to supervise the operations and identify and prioritize areas of improvements.
A qualitative approach which partly involves previous experience of the researcher can also be criticized since the organizations culture and environment is not identical to previous situations when that experience was gained. A weakness in the analysis here is that the external environment was not included which makes it hard to re-use conclusions from other organizations and development models.
The four phase strategy development method includes the major steps in this work and provides a good and communicable structure. It is, however, important for the change work that individuals in the organization affected by the change take a more active role in the development of the objectives and the plan. The internal culture, financial situation and other changes should be taken into consideration before any major changes are implemented. Therefore the validity of this study is mainly to serve as a recommendation and guideline for the real change project.

Background to organizational development

Since every organization is unique with its internal capabilities and resources and its external environment, it isn’t possible to make one development model and organizational structure to fit all. The aim of this chapter is to provide some general background to organizational structure, development models, knowledge management and change management that can be used for analysis and establishing objectives for the strategy development.
The important question to be kept in mind is how to use the organization, the development model and knowledge to gain competitive advantage long term.

Organizational structure

To accomplish complex tasks humans need to cooperate. Cooperation can be split in two fundamental concerns; how to divide the work into smaller tasks and how to coordinate these tasks to accomplish the whole. In this part, two basic types of organizational structures are first described which are extreme cases of organic or mechanistic views (Dahlbom, 1993) (Robbins, 2007). After that the matrix organization and hypertext organizations are briefly presented as examples of ways to modify the extreme cases to fit different organizational needs. Further attempts (Robbins, 2007) to organizational structure are team structure, virtual organization (mainly outsourced) and boundary-less organization (Tichy, 2005), these are not discussed here.

The bureaucratic organization

The most well known way to divide and coordinate labor is the bureaucratic organization (Robbins, 2007). In a bureaucratic organization there are workers who do the work and a hierarchy of managers who make the decisions. Work is mainly coordinated by well specified and formalized tasks for the workers.
All organizations operate in an environment which is mainly not controllable from the organization. This includes competitors, suppliers, market, and political, technological and economic factors. The effectiveness of an organizational structure is strongly dependant on the environment of the organization. This means that it is not possible to determine one best way to do things.
The main disadvantage with bureaucratic organizations is its inability to cope with change in the environment. When things change, the formal procedures and formalized tasks are no longer useful which put more and more load on the management hierarchy. The bureaucratic organization requires a stable and predictable environment to be efficient. It is also generally recognized that bureaucratic organizations isn’t good for motivation and creativity.

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The organic organization

When things are uncertain the organic organization (Robbins, 2007) steps in. In an organic organization the structure is more like a network or task force oriented than hierarchical. All members are supposed to participate in decision making which means that everybody needs the tools to communicate and interact. Coordination in an organic organization can be viewed as a dynamic negotiation and creation of commitments. The role of the manager is to serve as intermediary between the planners and the workers.
The main disadvantage with the organic organization is the problem that arises with coordination when the tasks grow in complexity.

The matrix organization

The matrix organization (Robbins, 2007) is an attempt to combine the functional bureaucratic organization with a cross-functional project oriented organization, see Figure 3-1. It is well suited for project oriented organizations where the project manager manages a cross functional team with specific time-bound projects. The functional manager has a long term responsibility to develop each functional group, their skills and knowledge transfer.
Advantages with the matrix organization are that specialists’ time can be used efficiently in different projects and it is flexible as individuals can easily be moved between different projects. The cross functional projects also improves communication and knowledge sharing.
The main disadvantage is ambiguity in command. Project members have two managers (at least) to report to, this can increase stress for the individual. There can also be conflicts between functional managers and projects managers in terms of how to use resources and priorities.

Hypertext organization

The hypertext organization was presented by Nonaka and Takeuchi (Nonaka & Takeuchi, 1995) and is an attempt to take knowledge creation into consideration in the organizational structure. It is also an attempt to combine the matrix organization with bureaucratic organization to get the advantages of both and minimize the drawbacks.
The metaphor hypertext is used to emphasize that the organization is built up by different layers and the layers should be interpreted as different contexts that are available. The hypertext organization has a formal hierarchical structure, the business system layer, working in tandem with a nonhierarchical task force structure, the project team layer, and a knowledge base layer, see Figure 3-2.
The knowledge base layer doesn’t exist as an actual entity but is captured in organizational vision, culture, people, databases and simulation models (simulation models added by the author to include model bases design).
Members of the project teams are taken out from the business system and only reports to project management, this is an important difference from the matrix organization. When projects are over the team members go back to the business system where they share knowledge gained in the project work. The fact that members only report to one layer at a time removes most weaknesses that the matrix organization has. Also by putting different members together temporarily the cycle of knowledge conversion and creation can flourish within the organization, see section 3.3.
Successes and failures in the project teams are evaluated re-categorized and re-contextualized and stored in the knowledge base, available for everybody.

Centralization vs. decentralization

This model summarizes the key points about how to choose the right level of centralization for an organization in a specific situation (Smedberg, 2001). When leaders are in control in a way that they have enough information about what is going on and have efficient enough communication, the organization can be more centralized. When situation awareness is low for leaders and communication is poor a more decentralized approach is more efficient since it allows people in the situation to react immediately. In the latter case it is very important that goals and strategies are clearly explained and understood by everybody; otherwise it is not possible to work for the same goal. Choosing the right level of centralization is a delicate matter. Too much centralization, even if communication and control is good, will decrease motivation.

Table of contents :

1 Introduction
1.1 Background
1.2 Statement of problem
1.3 Purpose
1.4 Disposition
2 Method
2.1 The organization
2.2 Research approach
2.3 Structure of the work
2.4 Critical analysis of the Method
3 Background to organizational development
3.1 Organizational structure
3.2 Development models
3.3 Knowledge management
3.4 Reflection
3.5 Change Management
4 The Organization
4.1 Background
4.2 People and what they do
4.3 The development process
4.4 Workflow
5 Analysis, objectives and recommendations
5.1 Analysis of the external environment
5.2 Analysis of the internal environment
5.3 Objectives
6 Option generation, evaluation and selection
6.1 Options related Objective 1 – Task force layer
6.2 Options related Objective 2 – Business system layer
6.3 Options related Objective 3 – The knowledge layer
6.4 Options related Objective 4 – Standardize the simulation environment
6.5 Options related Objective 5 – Process improvement
6.6 Options related Objective 6 – Knowledge creating enablers
6.7 Options related Objective 7 – Knowledge transfer
7 Planning
7.1 Kotters ten steps and recommendations
7.2 The plan
8 Conclusions
8.1 Further work
9 References

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