Read all case studies again and the study questions from all

the lesson. Extra important

PLANNING

The SMART model is an approach to determining effective organisational objectives

that requires that they be specific, measurable, actionable, reasonable and

timetabled

S – Specific – objectives need to be clearly defined so that it is easy to understand

what is to be achieved and what is considered successful. If the broad goal of Mr

Daniel is to grow his company, his objectives might be that he will acquire 5 new

clients in his consultation business.

M – Measurable – the exact measure must be stated and the objective must be able

to be measured through some means. Mr Daniel can measure his progress by

measuring the number of new clients he brings on while maintaining his current

client base.

A – Actionable – an organisation needs to make sure that its business-unit managers

have enough authority to take action to make sure the goals are achieved. Mr Daniel

can launch a social media campaign and network with local businesses.

R – Reasonable – the goals set must be achievable. Unrealistic goals are a

disincentive for both managers and their employees. Mr. Daniel believes that

additional clients will help his to grow his business and increase his revenue.

T - Timetabled – objectives must have deadlines at which progress towards achieving

them is measured. Mr Daniel aims to achieve his goal in 3 months.

SCENARIO PLANNING – it identifies alternative future scenarios and makes plans to

deal with each of them.

In a fast changing and unpredictable world, there are pressures that the company

faces from different sources.

a) External pressures include regulations imposed by the governments like the

goods and services tax imposed in Australia, complex and changing technologies

like animal cloning, economic uncertainities like the conflicts in the middle east,

costs of investment in capital, labour and other supporting resources like

increasing costs of office locations, scarce natural resources etc

b) Internal pressures include need for operating efficiencies through work practice

reforms, new management structures and technologies like virtual teams,

increased workplace diversity, heightened job expectations from a tertiary –

educated workforce and other related managerial challenges.

BENEFITS OF SCENARIO PLANNING

1) Scenario planning improves focus and flexibility – this is essential for successful

individual and group performance in highly competitive and dynamic

environments. An organisation with focus knows the needs of the customer and

knows how to serve them well. An individual with focus knows where he/she

wants to go in their career and is able to maintain that objective when difficulties

arise. An organisation with flexibility is willing to adapt to shifting changes and an

individual with flexibility factors into careers plans the problems of new and

developing situations. Example: the challenges and opportunities presented by

virtual organisations is an example of the impact of external changes on the

individual.

2) Scenario planning improves action orientation – it helps individuals and

organisations weather difficult circumstances and stay ahead of the competition.

It helps us take the initiative rather than being reactive to situations by making us

more result oriented (creating a performance-oriented sense of direction),

priority oriented (making sure the most important tasks get first attention),

advantage oriented (ensuring all resources are used to their best advantage) and

change oriented ( anticipating problems and opportunities so that they can be

dealt with in the best way)

3) Scenario planning improves coordination – it creates a hierarchy of aims in which

objectives at each level of work are linked together in a means-end fashion.

Higher level objectives as ends are linked to lower level objectives as the means

for their accomplishment. Example: the corporate level quality objective is to

deliver error free products that satisfy customer needs 100% of the time. This

translates down and for one of the team leaders it is a formal assessment of to

assess the capabilities of machine operators and provide appropriate timing.

4) Scenario planning improves time management – each day the manager is

bombarded with a multitude of tasks and demands in a setting of frequent

interruptions, crisis and unexpected events. Planning helps reduce the confusions

and in turn reduces wastage of time.

5) Scenario planning improves control – when planning is done well, it is easier to

exercise control by measuring performance results and taking action to improve

things as necessary. Planning makes this happen because the objectives are

defined along with specific actions to pursue.

TYPES OF PLANS

Short range and long range plans

A rule of thumb is that a short range plan covers one year or less, and intermediate

plan covers between one to two years and a long range plan covers more than three

years. Top management is likely to be involved in setting long range plans and

directions for the organisation as a whole and lower management levels focus more

on intermediate and short range plans that serve the long range objectives. In the

absence of hierarchy of objectives and long range plans, there is always risk that

pressures of daily events might divert attention from important tasks. Also it is found

that due to complexities and uncertainties in today’s world, the long range plans are

becoming shorter and shorter.

Strategic and tactical plans – strategic plans define long term needs and define

action directions for an organisation and tactical plans are developed and used to

implement strategic plans. Top management planning of this scope involves

determining objectives for the organisation and deciding on the actions and resource

allocations to achieve them. A successful cereal company might acquire a clothing

company.

Operational plans – they are short term plans that define activities to implement

strategic plans.

a) Production plans - deal with methods and technology needed by people in their

work.

b) Financial plans – deal with money required to support various operations

c) Facilities plans – deals with facilities and work layouts designed to support task

activities.

d) Marketing plans – deals with the requirements of selling and distributing goods

and services

e) Human resource plans – deals with recruitment, selection and placement of

people in various jobs.

POLICIES – it is a standing plan that communicates broad guidelines for decisions and

action. Example: typical human resource policies deal with matters like workplace

hiring, terminations, performance appraisals, pay increases and discipline.

PROCEDURES – They precisely describe actions that are to be taken in specific

situations. They define the recommended sequence of events needed to accomplish

a task or a set of tasks. Example: The Whistleblowers act clearly outlines procedures

on how information should be disclosed and the protection afforded to those

disclosing the information.

RULES – they indicate what is and what is not acceptable behaviour and often specify

the consequences of breaking them.

BUDGETS – they are single use plans that commit resources to projects or activities.

FIXED BUDGET – allocates resources on the basis of a single estimate of costs. A

manager might have $25000 for equipment purchases in a year.

FLEXIBLE BUDGET – allows allocation of resources to vary along with the different

levels of activity – a manager might have a budget allowance for temporary workers

if production costs exceed a certain volume.

ZERO-BASED BUDGET – it allocates resources to a project or activity as if it were

brand new. ARMS Australia offers assistance to large client organisations by setting

up zero based budgets to track project management and asset management

especially where true cost of breakdowns and maintenance needs to be

incorporated.

PROJECT SCHEDULES -they are single use plans for accomplishing a specific major

project.

PLANNING TOOLS, TECHNIQUES AND PROCESSES

FORECASTING – it is the process of making assumptions about the future. They are

of two types

1) Qualitative forecasting – it uses expert opinions to predict the future

2) Quantitative forecasting – it uses mathematical and statistical analysis of data

banks to predict the future. Time series analysis makes predictions by using

statistical routines such as regression analysis to project past trends into the

future.

The final analysis forecasting always relies on human judgement. Even the results of

quantitative forecasting require human interpretation. Large multinational

companies like Sony, Ford and News Corporation analyse economic and business

forecasts for each region and country.

CONTIGENCY PLANNING – it identifies alternative courses of action for use if and

when circumstances change with time. Trigger points must be made to indicate that

the existing plan is no longer desirable and must be reselected and closely

monitored. The more uncertain the planning environment, the more likely the

forecasting becomes incorrect.

#. Scenario planning is a long-term version of contingency planning. In Asia, Acer has

adopted a flexible and dynamic approach to corporate planning because the

uncertainties of the technology market coupled with other concerns with China.

BENCHMARKING – a technique that makes use of external comparisons to better

evaluate the organisation’s current performance and identify possible courses of

action. The purpose of benchmarking is to find out what other people and

organisations are doing and then incorporate the ideas into the organisation.

STAFF PLANNERS – They are employed to coordinate planning for the organisation as

a whole or for one of its major components. They need to be skilled in all steps of the

formal planning process including benchmarking and scenario planning approaches.

A drawback is it might lead to a communication gap between the staff planners and

line managers. The resulting plans may lack relevance or the employees might lack

motivation to implement the plan.

MBO - MANAGEMENT BY OBJECTIVES – it si a process of joint objective setting

between a manager and a staff member. Refer to diagram on pg. 180

The types of objectives that can be mentioned in a MBO contract.

1) Improvement objectives for improving performance in a specific way. Example: to

reduce quality rejects by 10%

2) Personal development objectives pertain to personal growth activities often

those resulting in expanded job knowledge or skills. Example: to learn the latest

version of computer software.

3) Maintenance objectives that formally express intentions to maintain performance

at an existing level.

ADVANTAGES OF MBO – it can focus workers on most important tasks and

objectives, focus managers on areas of support by truly helping employees attain the

agreed – upon objectives, helps in relationship building, encourages self-

management by providing opportunity for participation in decision making.

DISADVANTAGES OF MBO – common mistakes to avoid include giving too much

attention to easy objectives, requiring excessive paperwork, and having managers

simply tell the employees the objectives.

PARTICIPATORY PLANNING – it includes people who would be affected by plans

and/or whose help is needed to implement them. It includes a level of strategic

planning. The more aware all levels are of strategic plans and the more involved they

are in helping establish them, the greater the commitment throughout the

organisation to their accomplishment. Example: Sustainable Futures Australia works

with the local government and regional communities to genuinely facilitate

participative planning, working on implementation of plans for policy and

governance applications. Refer to diagram on pg. 181 for formal planning process.

CONTROLLING

CONTROLLING – it is the process of measuring performance and taking action to

ensure desired results.

RATIONALE FOR CONTROLLING –

1) Control is aimed at ensuring that plans are fulfilled and that performance targets

are met.

2) It also ensures that performance is consistent. Controlling requires accurate and

timely flows of information on the key operational variables and outcomes.

3) It ensures that people comply with organisational policies and procedures.

Example: Xerox in the US is a company that is in need of control mechanisms

because it was reporting higher levels of profit that the actual amounts.

CYBERNETIC CONTROL SYSTEM – it is a system where the control system is self-

contained in its performance-monitoring and correction capabilities. Organisations

do not use this form of control system which is used in thermostats.

STEPS IN THE CONTROLLING PROCESS

1) Establish objectives and standards – the control process starts with planning

when the performance objectives and standards for measuring them are set. The

focus of planning should be to describe critical results that will make a substantial

difference in the success of an organisation. Example: Mr Daniel wants to get five

new clients for his consultation business and he gives himself three months to do

this. There are two types of standards common to the controlling process.

a) Output standards – they measure performance results in terms of quantity,

quality, cost or time. Eg. Percentage error rate, dollar deviations from

budgeted expenditures.

b) Input standards – they measure work efforts that go into a performance task.

Eg. Efficiency in use of resources, work attendance.

2) Measure actual performance – the goal is to accurately measure performance

results and they need to be accurate enough to spot significant differences

between what is taking place and what needs to be taking place. This can be done

quantitatively by analysing statistical data collected by employees or qualitatively

by observing employees at work. At the end of three months, Mr Daniel would

need to check his customer database to see how many new clients he has

attracted and whether he has lost current clients.

3) Compare results with objectives and standards – it can be expressed by

Need for action = Desired performance – Actual performance.

A historical comparison uses past performance as a benchmark for evaluating

current performance. A relative comparison uses performance achievements of

other people, units or organisation as the standard and an engineering comparison

uses engineered standards that are set scientifically through such methods as time

and motion studies. Benchmarking is a popular technique that makes use of external

comparisons to better evaluate the organisation’s current performance and identify

possible courses of action. Mr Daniel will need to compare the number of new clients

he has attracted and the number of clients he set out to attract in the first place.

4) Take corrective action – the control equation indicates that the greater the

difference between actual and desired performance, the greater the need for

action.

MANAGEMENT BY EXCEPTION – the practice of giving priority attention to situations

which show the greatest need for action. This approach saves time, energy and other

resources, while allowing all efforts to be concentrated on areas of greatest need.

Under this approach, there are two types of exception that can occur.

a) Problem situation – in which actual performance is below standard. Corrective

action is required to restore performance to desired level.

b) Opportunity situation – in which actual performance is above standard. Action

should be taken to continue this higher level of accomplishment in the future.

AFTER-ACTION REVIEW – it formally examines results to identify lessons learned in a

completed project or special operation. It is an integral part of the organisation’s

continuous improvement process because it makes review a part of the

organisational culture and it encourages people involved to take responsibility for

their performance and accomplishments. Staff could be asked questions about the

objectives, the actual outcomes, the lessons learned and suggestions on how future

projects might be best managed.

TYPES OF CONTROL

FEEDFORWARD CONTROLS – they are also called preliminary controls and are

accomplished before a work activity begins, at the inputs stage. They ensure that

objectives are clear, proper directions are given and resources are available to

accomplish the given task. They are preventive in nature and designed to eliminate

potential problems later in the process. Eg. McDonalds requires its suppliers to

produce the buns to exact specifications covering everything from texture to

colour.it works hard to find local suppliers that can offer dependable quality.

CONCURRENT CONTROLS – they are also called steering controls and focus on what

happens during the work process. They monitor ongoing operations and activities to

make sure things are being done according to the plan. They allow corrective actions

to be taken before task is complete to reduce waste in the form of unacceptable

products. Shift leaders at McDonalds intervene immediately when something is not

done the right way to correct things on the spot. Detailed instruction manuals also

steer workers in the right directions.

FEEDBACK CONTROLS – they are also called postaction controls and take place after

work is completed. They focus on quality end of results rather than inputs and

activities. It provides useful information for improving things in the future.

McDonald’s employees never know when the corporate evaluator may stop in to

sample food and service. However when this does happen, the evaluator provides

feedback for improvement.

INTERNAL CONTROLS – it allows motivated employees to exercise self-discipline in

fulfilling job expectations. It takes places when people are motivated to do their job

and are given the chance to do so. It happens when employees have a clear sense of

organisational mission, they know their performance objectives, and they have the

resources necessary and are trusted to do their jobs well.

EXTERNAL CONTROLS – this occurs through direct supervision or administrative

systems such as rules and procedures.

a) Bureaucratic control – it influences behaviour through authority, policies,

procedures, job descriptions, budgets and day-to-day supervision. Organisations

generally have policies for sexual harassment to make sure employees are

treated with respect.

b) Clan control – it influences behaviour through norms and expectations set by the

organisational culture. It is observed in the way school children talk, dress and

behave in schools among their peer groups

c) Market control – it is the influence of market competition on the behaviour of

organisations and their members. When an organisation receives positive

publicity for the use of renewable energy sources, the competitors are likely to

follow suit.

ORGANISATIONAL CONTROL SYSTEMS

REMUNERATION AND BENEFITS – it’s as simple as if the remuneration is attractive

and competitive, employers get the right people for the job, costs are reduced and

productivity is boosted over the long term. If the remuneration is unattractive and

uncompetitive, it is hard to retain highly competent workers and the less capable the

workforce, the greater the reliance on external controls to achieve desired levels of

performance. When properly implemented, pay-for-performance and other related

plans serve as control systems. It is used in more individualistic countries like

Australia, UK and USA. Fringe benefits also affect the organisation’s ability to recruit

and retain a qualified workforce. Since fringe benefits are expensive, organisations

are encouraging choice of benefits catering to diverse needs.

EMPLOYEE DISCIPLINE SYSTEMS – absenteeism, tardiness, and sloppy work can lead

to extremes like falsifying records, sexual harassment, and embezzlement. Discipline

is the act of influencing behaviour through reprimands. Progressive discipline ties

reprimands to the severity and frequency of the employee’s infractions. The

progressive discipline guidelines of an university can state “the level of disciplinary

action shall increase with the level of severity of behaviour engaged in and based on

whether conduct is of a repetitive nature’. The goal is to achieve compliance with

least extreme reprimand as possible but this can lead to adverse manager-worker

relationships, poor attitudes from people who can’t seem to change and increase in

severity of problem if managers wait too long before action.

INFORMATION AND FINANCIAL CONTROLS – at minimum, managers should be able

to understand and assess financial information for control purposes. Liquidity is the

ability to generate cash to pay bills, leverage is the ability to earn more cash than

cost of debt, asset management is the ability to use resources efficiently and operate

at minimum cost and profitability is the ability to earn revenues greater than costs.

Large companies like Luxottica need to be able to control cash flows to be able to

open businesses in 38 markets. Budgets are also widely used in planning and control.

They are single-use pans that commit resources to activities, projects or programs.

OPERATIONS MANAGEMENT AND CONTROL

PURCHASING CONTROL – the cost of materials in production are increasing

drastically. To leverage buying power, more organisations are centralising purchasing

to allow buying in volume. They are committing to a small number of suppliers with

whom they can negotiate special contracts, gain quality assurances and get preferred

service. Nowadays, parts suppliers keep their warehouses in customer facilities. The

customer provides the spave and the supplier does the rest. This helps in lowering

purchasing costs and ensures more sales volume.

INVENTORY CONTROL – the goal is to make sure that inventory is is just the right size

to meet performance needs, thus minimising costs. Economic order quantity (EOQ)

involves ordering a fixed number of items every time the inventory falls below a

certain point. Just-in-time (JIT) systems try to reduce costs and improve work-flow by

scheduling materials to arrive at a workstation or facility just in time to be used. This

minimises carrying costs as almost no inventory is maintained.

QUALITY CONTROL – this responsibility applies to all aspects of operations, from the

selection of raw materials and supplies to the last task performed to deliver the

finished good or service. This means to take samples of work and measure their

quality. Unacceptable results will require investigation and corrective action will be

taken to bring operations back to standard. General Electric’s quality performance

tolerates no more than 3.4 defects per million.

PROJECT MANAGEMENT AND CONTROL – project management is the responsibility

for overall planning, supervision and control of projects.

GANTT CHARTS – developed by Henry Gantt, an industrial engineer, it provides a

visual overview of what needs to be done on a project. This facilitates control by

allowing progress checks to be made at different time intervals. One of the biggest

problems of projects, delay in early activities creating problems for later ones, is

avoided using Gantt charts by sometimes planning contingencies. Products use

complex charts due to their complexity. Refer page 200 if you want to draw.

CPM/PERT TECHNIQUES - project planning based on CPM/PERT uses a network

chart. The charts are developed by breaking a project into small sub-activities that

each have clear beginning and end points. These points become nodes in the charts

and arrows between the nodes will indicate the order in which things will be

completed. The full diagram shows all the interrelationships that must be

coordinated during the entire project. The pathway with the longest completion time

from start to finish is called the critical path and represents the shortest possible

time in which the entire project can be completed. This technique helps managers to

track and control activities, making sure the right sequences happen on time,

assuming everything goes according to plan. Refer page 200 if you want to draw.

BALANCE SCORECARD – it tallies organisational performance in financial, customer

service, internal process and innovation and learning areas. If an organisation has a

clear vision and mission, the following question can help develop the scorecard.

a) Financial performance – How we should appear to the shareholders to improve

financially? Sample goals include survive, succeed and prosper and can be

measured by cash flow, sales growth and operating income.

b) Customer satisfaction – How should we appear to the customers, to achieve our

vision? Sample goals include new products and responsive supply and can be

measured by percentage sale from new products, percentage on-time deliveries.

c) Internal process improvement – what internal processes must we improve to

satisfy the customers and shareholders? Sample goals include design productivity

and manufacturing excellence and it can be measured by cycle times and

engineering efficiency.

d) Innovation and learning – how can we sustain our ability to change and improve

to satisfy our vision? Sample goals include technology leadership and time to

market and can be measured by time to develop new technologies and time to

introduce new product versus competitors.

MBO - MANAGEMENT BY OBJECTIVES – it is a process of joint objective setting

between a manager and a staff member. Many of Australasia’s large and medium-

sized organisations use some form of MBO systems.

ADVANTAGES OF MBO – it can focus workers on most important tasks and

objectives, focus managers on areas of support by truly helping employees attain the

agreed – upon objectives, helps in relationship building, encourages self-

management by providing opportunity for participation in decision making. They are

beginning to reflect a more team or group perspective especially towards

accountability and decision making.

DISADVANTAGES OF MBO – common mistakes to avoid include giving too much

attention to easy objectives, requiring excessive paperwork, and having managers

simply tell the employees the objectives. It also focuses on a most individualistic

approach which is not acceptable in most Asian countries and even in indigenous

organisations in Australia.

ORGANISING

ORGANISING – it is the process of assigning tasks, allocating resources and arranging

activities to implement plans.

ORGANISATION STRUCTURE – it is a system of tasks, workflows, reporting

relationships and communication links. Any structure should provide task

assignments through division of labour and coordination for performance results.

Structure must be dealt with in a contingency fashion. As environments and

situations change, the structure should be able to change too. Chaotic systems, such

as revolutions and resistance, create new configurations of decision making and

power.

a) FORMAL STRUCTURE - it represents the way an organisation is intended to

function. An organisation chart describes the arrangement of work positions

within an organisation.

b) INFORMAL STRUCTURE – it is a set of unofficial relationships among an

organisation’s members. The lines of informal structure would cut across levels

and move from side of side

ADVANTAGES

1) Employees gain access to interpersonal networks of emotional support and

friendship that satisfy important social needs.

2) They benefit task performance by being in personal contact with others who can

help them get things done when necessary.

DISADVANTAGES

1) They can lead to increase in rumours being spread.

2) Inaccurate messages might be carried around the organisation

3) The employees might breed resistance to change and can also divert work efforts

from important objectives.

4) People who are out of informal groups might feel less part of group activities and

might lead to decrease in satisfaction.

5) Staff might consciously or unconsciously exclude new workers from the informal

structure

DIFFERENT ORGANISATIONAL STRUCTURES

The different structures are divided on the basis of a concept called

departmentalisation which is the process of grouping together people and jobs into

work units.

1) FUNCTIONAL STRUCTURES – they group together people with similar skills to

perform similar tasks. Example: a senior management team might have functions

of marketing, finance, production and human resources. Under the functional

structure, manufacturing problems will be dealt by the production director and

employee problems will be dealt with by human resources director and so on.

ADVANTAGES

a) Economies of scale due to the efficient use of resources.

b) Task assignments consistent with expertise and training

c) High-quality technical problem solving

d) In-depth training and skill development within functions

e) Clear career paths within functions

DISADVANTAGES

a) Difficult in pinpointing responsibilities for problems like timeliness, innovation,

cost containment etc.

b) The functional chimney problem which refers to lack of communication,

coordination and problem solving across functions. A sense of cooperation and

common purpose vanishes.

c) When problems take place in another unit, they are referred up to higher levels

of management without being solved in the same level.

Example: the former chairman of Jaguar blamed many of the quality problems on

excessive compartmentalisation as the different departments were not

communicating effectively.

2) DIVISIONAL STRUCTURES – it groups together people working on the same

product, in the same area with similar customers or involved with the same

processes. They are common in complex organisations selling multiple

differentiated products, pursue diversified strategies and/or operate in various

and different competitive environments.

ADVANTAGES

a) More flexibility in dealing with environmental changes

b) Improved coordination across functional departments

c) Clear points of responsibility for product or service delivery

d) Expertise focused on specific customers, products and regions

e) Greater ease in changing size by adding or deleting divisions.

DISADVANATGES

a) It reduces economies of scale and increases costs due to duplication of

resources and efforts across divisions

b) They create unhealthy rivalries as divisions compete for resources and

attention

c) The emphasis on division needs and goals take attention away from the

organisation’s goals as a whole.

PRODUCT STRUCTURES – they group together jobs and people working on a single

product or service. They clearly identify costs, profits, problems and successes in a

market area with a central point of accountability. Example: In recent years

companies like Apple and Intel have moved away from these structures.

GEOGRAPHICAL STRUCTURES – they group together people and jobs performed in

the same location. They are typically used when entire products and services need to

be differentiated across different regions. Example: French-based global resort and

tourism operator, Club Med, puts its operations into five major areas ranging in the

different continents of the world. The development of internet based

communications has further promoted this type of structure.

CUSTOMER STRUCTURES – they group people and jobs that serve the same

customers or clients. The appeal is to serve different customers with special needs.

Example: BHP Billiton is designed around customer sector groups that focus on

customers rather than operations.

PROCESS STRUCTURES – they group jobs and activities that are part of the same

processes. Example: when a customer orders a product from a catalogue, the

process of order fulfilment takes the order from point of initiation by the customer

to the point of fulfilment by a delivered order.

3) MATRIX STRUCTURES – it combines functional and divisional approaches to

emphasise project or program teams. It is achieved by using permanent cross-

functional teams to integrate functional expertise, in support of a clear divisional

focus on a product, project or program. It is used in diverse settings like the

manufacturing and service industries, professional fields and even not-for-profit

industries.

ADVANATGES

a) Better interfunctional cooperation in operations and problem solving.

b) Increased flexibility in making alterations to operations to meet changing

demands

c) Better customer service as there is always a program, product or project

manager capable to answer questions.

d) Better performance accountability for all managers.

e) Improved decision making as problem solving takes place at team level where

all the information is available

f) Improved strategic management as top managers are freed from unnecessary

problem solving.

DISADAVANTAGES

a) There is a chance for power struggles as functional supervisors and team

leaders will coincide will exercising authority

b) It can create task confusion and conflicts in work priorities.

c) It can also become time consuming due of increased participation

d) Strong team loyalty can lead to lost focus on larger organisational goals.

ORGANISATIONAL DESIGN – it is the process of creating structures that best serve a

company’s mission and objectives. The main purpose is to create alignment between

supporting structures and situational challenges. It is a problem solving activity and

must be approached in a contingency fashion.

1) BUREACRATIC DESIGN – a bureaucracy is defined as a form of organisation based

on logic, order and the legitimate use of formal authority. It focuses more on a

mechanistic approach used when the environment is stable.

FEATURES – clear division of labour, strict hierarchy of authority, formal rules and

procedures and promotion based on competency.

EXAMPLE - A local KFC restaurant is a relatively small operation, and it operates like

the other franchise chains according to the rules formed by corporate management.

Service personnel work in systematic and disciplined ways but problems quickly arise

when the customers’ orders something that is not on the menu or get bored of the

menu.

2) ADAPTIVE DESIGNS – they are designs using the least amount of bureaucratic

features and encourage worker empowerment and teamwork. They are built on

trusting that people will do the right things with their own initiatives. They free

capable people from unnecessary control and restrictions. They encourage

employees setting up their own control techniques to improve customer service

and performance.

LEARNING ORGANISATION – An organisation that is continuously changing and

improving by learning from experience.

ORGANIC DESIGNS - they are decentralised with fewer rules and procedures,

open divisions of labour, wide spans of control and more personal

coordination.

3) VIRTUAL DESIGNS – virtual organisations that use virtual designs are shifting

networks of strategic alliances linked by technology with very little physical

infrastructure that is used when needed.

FEATURES

a) Lack of physical structure compared with conventional organisations means that

there are fewer tangible assets.

b) Electronic communication technologies link people, assets, knowledge and ideas

forming the basis of a virtual organisation

c) Communication networks rather than buildings become the employees’ work

places.

d) They are not constrained by what a traditional company or corporation is and

how they are legally defined.

e) They are capable of restructuring and redeploying assets to meet changing

requirements.

f) They are hybrid in nature comprising of a loose framework of human resources,

assets and knowledge involving organisational units, a consortia/group of

companies and autonomous members brought together for a particular period to

achieve a mutual objective.

CONTIGENCIES IN ORGANISATIONAL DESIGN

1) ENVIRONMENT – the organisation’s external environment and the degree of

uncertainty if offers are important to the organisational design. In a certain

environment, composed of stable and predictable elements, bureaucratic

organisations and mechanistic designs are appropriate and in an uncertain

environment with more dynamic and less predictive elements, adaptive

organisations with organic designs are better. Eg. A manufacturer of detergent faces

a relatively stable environment while a manufacturer of electronics will face a more

dynamic environment.

2) STRATEGY – the nature of organisational strategies affects the choice of structure.

When the strategies are more stability oriented, the organisational design can work

under the premise that there will be little change in the external environment and

plans can be implemented. When the strategies are more growth oriented, the

situation as a whole becomes more complex, fluid and uncertain. The operational

objectives are likely to need innovation and flexible responses to changing

competition in the environment. Eg. When McDonalds wanted to open shop in India,

it had to be more flexible in its strategy and change the menu to meet the tastes of

the Indian population.

3) TECHNOLOGY – it is the combination of knowledge, skills, equipment, computers and

work methods used to transform resource inputs into organisational outputs. Joan

classified core manufacturing technology in three categories.

Small‐batch production is used to manufacture a variety of custom, made‐to‐order goods for each customer's specifications. A print shop is an example of a business that uses small‐batch production.

Mass production is used to create a large number of uniform goods in an

assembly‐line system. Workers are highly dependent on one another, as the product passes from stage to stage until completion. Equipment may be sophisticated, and workers often follow detailed instructions while performing simplified jobs. A company that bottles soda pop is an example of an organization that utilizes mass production.

Organizations using continuous‐process production create goods by

continuously feeding raw materials, such as liquid, solids, and gases, through a highly automated system. Such systems are equipment intensive, but can often be operated by a relatively small labour force. Classic examples are automated chemical plants and oil refineries. The best small-batch and continuous-process production companies had flexible organic structures while mass production had rigid mechanistic structures.

4) SIZE AND LIFE CYCLE – in the organisational life cycle, an organisation passes through different stages from birth to maturity. There are four stages in the organisational life cycle.

Birth stage: when the organisation is founded by an entrepreneur. The founder usually runs the organisation. The size is relatively small and the structure is quite simple.

Youth stage: when the organisation starts to grow rapidly. Management responsibilities extend to more people and the structure exhibits stresses of change.

Midlife stage: when the organisation has grown large with success. There are more levels in the chain of command and the founder may have trouble remaining in control. It has a larger and more formal organisational structure.

Maturity stage: when the organisation stabilises at a large size. It often opts for a more mechanistic structure. This stage runs the risk of organisations becoming more complacent and slow in competitive markets. The large size of the company might start to become disadvantageous and companies start downsizing with the aim reducing costs quickly and increasing productivity.

Simultaneous systems: they are organisations that use both mechanistic and organic designs to meet the need for product efficiency and continued innovation.

5) HUMAN RESOURCES: Any design should allow the expertise and talents of

organisational members to be relised to the full. The focus of high involvement organic designs is on empowerment. Eg. When IBM purchased Lotus, the aim was to turn it into a building block for the organisation’s networking business. But since Lotus was small and IBM was big, they had to adapt a design that fit the people to ensure that the talented workforce was not lost. The organisational structure must bring talented people together to collaborate on innovation so that employees might not feel that they own their good ideas and restrict organisational access to it. DEVELOPMENTS IN ORGANISATIONAL STRUCTURES – today organisations are moving towards more horizontal structures that drive performance by decreasing hierarchy, increasing empowerment and mobilising employees for better use of their talents. GUIDELINES FOR EFFECTIVE HORIZONTAL STRUCTURES – pg 286 notepad 11.3 1) TEAM STRUCTURES – organisations are being restructured for greater internal

integration. Team structure involves teams of different types working together to solve problems and explore opportunities as required. Cross-functional teams bring together members from different functional departments. They break down functional chimneys r barriers and create effective lateral relations to solve problems and increase work performance. Project teams are convened for a particular task or project and disbanded once it is completed. The intention is to quickly focus the efforts of the team to solve a problem or to take advantage of a specific problem.

ADVANTAGES They break down barriers between operating departments

Boosts morale of people when they get to know people from different parts of the organisation.

They increase speed and quality of decision making because of shared knowledge and expertise on specific problems.

Greater involvement leading to increasing enthusiasm for the job. Within teams and under the guidance of formal and informal leaders, individuals are expected to work together with cooperation and shared commitment to a common purpose. Multidisciplinary teams of doctors, nurses, technicians, social workers and allied health professionals is an example of how patient care teams provide effective service for patients with complex health problems.

2) NETWORK STRUCTURES – it links networks of outside suppliers and service contractors to a company’s core functions. They aim to simplify and streamline organisational structures by engaging in a variety of strategic alliances and business contracts that sustain operations.

ADVANTAGES a) They can operate with fewer full-time employees and less complex

internal systems. Eg. mail-order company b) It has potential to reduce costs by cutting overheads and increasing

operating efficiency. c) Enables the use of outsourcing strategies and to contract out

specialised business functions. A bank can contract with local firms to provide mailroom, café and legal services.

DISADVANTAGES a) The more complex the business, the harder it is to control and

coordinate between the network of contracts.

b) If one part of the network breaks down, the entire system suffers the

consequences.

c) Organisations that have transitioned to a network structure tend to

eliminate the headquarters function.

d) Loss of control over functions contracted out and lack of loyalty for

contractors used infrequently.

SUBSYSTEMS – they are smaller components of a larger system.

SUBSYSTEM DIFFERENCES

1) Differences in time orientation - planning and action horizons vary from short-

term to long term. A manufacturing subsystem may have a shorter-term outlook

than research and development.

2) Differences in objectives – cost-conscious production managers and volume-

conscious marketing managers might have trouble finding solutions to their

common problems.

3) Differences in interpersonal orientation – the patterns of communication,

decision making and social interactions may vary across different subsystems

making it harder to work together

4) Differences in formal structure – a person used to flexible problem solving in an

organic setting may find it frustrating to work with a mechanistic setting.

HOW TO ACHIEVE INTEGRATION – it refers to level of coordination achieved among

an organisation’s internal components.

1) Rules and procedures – clearly specify required activities

2) Hierarchical referral – refer problems upward to a common superior.

3) Planning – set targets that keep everyone headed in the same direction.

4) Direct contact – have ‘submit’ managers coordinate directly.

5) Liaison roles – assign formal coordinators to link subunits together

6) Task forces – form temporary task forces to coordinate activities and solve

problems on a timetable.

7) Teams – form permanent teams with the authority to coordinate and solve

problems over time.

8) Matrix organisations – create a matrix structure to improve coordination on

specific programs.

ORGANISING TRENDS

1) Upside-down pyramid – it puts customers on top served by workers whose

managers support them. It is more of a concept that an actual structure, though it

is shaping new directions of how a modern workplace should be.

2) Shorter chains of command – it links all people with successively higher levels of

authority. In the classical model, following the scalar principle, the chain of

command is barely ever broken. However as organisations grow, the levels of

management continuously increase increasing costs and time of decision making.

Currently organisations are being streamlined by cutting unnecessary levels with

more flatter and horizontal structures being viewed as a competitive advantage.

3) Less unity of command – it states that each person in an organisation must

report to one and only one supervisor. It is intended to avoid confusion that

might arise if a worker gets directions from more than one source. The ‘two-boss’

system of the matrix structure violates this principle but it attempt to improve

lateral relations and teamwork. The matrix structure facilitates rapid and

innovative responses to new situations without constant upward referrals.

4) Wider spans of control – it refers to the number of subordinates directly

reporting to a manager. The principle states that there is a limit to the number of

people a manager can effectively manage. However this leads to tall structures

that are less efficient and less flexible. Many organisations are shifting to flatter

structures and providing subordinates with less direct supervision leading to

empowerment.

5) More delegation and empowerment – delegation is the process of distributing

and entrusting work to other persons. There are three steps in delegation. (a) The

manager assigns responsibility by carefully explaining the work someone else is

expected to do. (b) The manager grants authority to act and take the necessary

decisions for completing the task. (c) The manager creates accountability by

requiring the subordinate to answer to the supervisor about performance results.

Delegation leads to empowerment, better job performance and freedom to

contribute ideas and work in the best possible way.

6) Decentralisation - it is the dispersion of authority to make decisions throughout

all levels of the organisation and centralisation – it is the concentration of

authority for most decisions at the top level of an organisation. Developments in

IT have facilitated decentralisation. Managers at higher levels can easily stay

informed about a wide range of day-to-day performance and if something goes

wrong can quickly take corrective action.

MOTIVATION AND REWARDS

Motivation – it accounts for the level, direction and persistence of effort expended

at work.

Rewards – work outcome of positive value to an individual.

Extrinsic rewards – they are provided by someone else typically a supervisor or a

higher level manager. Examples include pay bonuses, promotions, awards, special

assignments and verbal praise

Intrinsic rewards – they occur naturally during job performance. They are internal

and do not depend on the actions of another person. They are very important for

knowledge workers who use their minds on a daily basis rather than performing

repetitive work. Examples include a feeling of competency, personal development

and self-control.

Rewards and performance – there must be a link in every organisation between

rewards and performance. Managers must respect diversity and individual

differences in organisations. Michael Vavakis, vice-president of HP, suggests that

rewards need to be customised rather than the idea that one size fits all. He provides

employees an option between an array of rewards including cash, gifts and other

services.

DIFFERENT THEORIES OF MOTIVATION

NEEDS – they are unfulfilled physiological and psychological desires.

1) CONTENT THEORIES OF MOTIVATION – they help understand human needs

and how people with different needs may respond to different work situations.

The basic idea is people have needs and they engage in behaviour to obtain

extrinsic and intrinsic rewards to satisfy these needs.

a) HIERARCHY OF NEEDS THEORY – the theory was developed by Abraham

Maslow. Lower order needs – they are physiological, safety and social needs.

Higher order needs – they are esteem and self-actualisation needs. He offers

two principles. (1) The deficit principle states that a satisfied need is not a

motivator for behaviour. People are expected to act in ways to satisfy only

deprived needs. (2) The progression principle states that the needs of one level

do not activate until all the needs below it are satisfied. The self-actualisation

needs are satisfied entirely with intrinsic rewards, esteem needs by both

extrinsic and intrinsic rewards and physiological, safety and social needs are

satisfied entirely by extrinsic rewards. Example: A university student that

needs to pay rent will accept any job that gives a good salary irrespective of

other factors because he needs to satisfy his physiological need. After he has

paid rent, he will check if his workplace is safe for him, whether he feels

accepted in his group and has made friends, whether he has enough respect

and lastly if he has scope for improvement or if this job can help him achieve

his personal goals.

b) ERG THEORY – This theory by Clayton Alderfer collapses Maslow’s five need

categories into three.

1) Existence needs – they are needs for physiological and material

wellbeing.

2) Relatedness needs – they are needs for satisfying interpersonal

relationships.

3) Growth needs – they are desires for continuous psychological

growth and development.

DIFFERENCES BETWEEN MASLOW AND ALDERFER

1) Alderfer assumes that any of these three can influence behaviour at any point of

time.

2) He also doesn’t assume that satisfied needs lose their influencing power.

3) The ERG theory came up with a unique frustration-regression principle that states

that an already satisfied lower level need can be reactivated when a higher level

need cannot be satisfied.

c) TWO-FACTOR THEORY – this theory by Fredrick Herzberg explains two factors

that ‘turns employees on’ and ‘turns them off’

a) Satisfier factors – they are found in job content, such as a sense of

achievement, recognition, responsibility, advancement and personal

growth. These factors ‘turn them on’. They refer to things that

employees actually do and to make improvements in what they are

expected to do.

b) Hygiene factors – they are found in job context such as working

conditions, interpersonal relations, organisational policies and salary or

other sources of dissatisfaction. These factors ‘turn them off’.

Improving these conditions are important and can make people less

dissatisfied but not increase satisfaction.

It is not a very successful theory and has received much criticism for being difficult to

replicate. However it is effective in cautioning managers who improve hygiene

factors and expect it to motivate employees. They should instead focus on the nature

of the job itself and direct attention towards things as responsibility and opportunity

for personal growth and development.

d) ACQUIRED NEEDS THEORY – this theory by David McClelland began

experimenting with the Thematic Apperception Test (TAT) as a way of

examining human needs. There are three needs central to motivation. He

suggests that people acquire or develop these needs over time as a result of

individual life experiences. He also states that success in top management is

not based on concern for individual achievement alone.

1) Need for achievement (nAch) – it is the desire to do something better or

more efficiently to solve problems, to basically master complex tasks.

2) Need for power (nPower) – it is the desire to control other people,

influence their behaviour or be responsible for them.

3) Need for affiliation (nAff) – it is the desire to establish and maintain

friendly and warm relations with other people.

He also distinguishes between two types of needs. Need for personal power which is

exploitative and involves manipulation for the pure sake of personal gratification.

This power is not successful in management. Need for social power is the positive

face of power and directs use of power in a socially responsible way towards

organisational objectives.

DIFFERENCES BETWEEN THE FOUR THEORIES

1) Only Maslow supports the hierarchical form of needs while the rest accept that

needs are formed in no particular order.

2) Herzberg and McClelland don’t support the inclusion of physiological needs of

food, clothing and shelter as they are prerequisite needs.

3) The concept of success is emphasised excessively in McClelland’s theory and he

believes that the needs are acquired as you move through life.

2) PROCESS THEORIES OF MOTIVATION – they offer additional insights into how

people give meaning to rewards and then respond with various work-related

behaviours.

a) EQUITY THEORY – set up by J. Stacy Adams. He believes that if people think

they are treated unfairly in comparison to others, they will be motivated to

act in a way to reduce the perceived inequity. Employees could put in less

effort into their jobs, ask for better treatment, change comparison points to

make them feel better or do the extreme thing of leaving the job. It is often

people’s perception of the reward in social terms that determine

motivational outcomes. There could arise a problem of gender equity where

men are paid more than women for the same work, comparable worth

where individuals with the same education, training and skills receive

different salaries. Also when the CEO of a company is overpaid.

b) EXPECTANCY THEORY – Victor Vroom asks what determines the willingness

of an individual to work hard at tasks important to the organisation.

1) Expectancy – belief that working hard will result in a desired level of task

performance being achieved.

2) Instrumentality – belief that successful performance will be followed by

rewards and other potential outcomes

3) Valence – the value a person assigns to the possible rewards and other

work-related outcomes.

He has come up with the formula or Motivation = Expectancy x instrumentality x

valence. It implies that if one of these on the right hand side is zero then there will be

no motivation. If a person believes he cannot achieve the required level of task

performance (E) or lacks confidence in the high level of task performance that will

lead to being promoted (I) or does not place value with the promotion (V), then

motivation will suffer.

c) GOAL-SETTING THEORY – the theory by Edwin Locke focuses on the

motivational properties of task goals. He says that goals can be highly

motivating if they are properly set and well defined. They clarify work

expectations, establish a frame of reference for task feedback, provide a

foundation for behavioural self-management and also improves employee

satisfaction if associated with participation. The MBO is an illustration of the

above theory as the process helps unlock and apply the motivational power

of goal-setting theory.

d) SELF-EFFICACY THEORY – this theory by Albert Bandura explains that when

people themselves to be capable, they will be motivated to work hard at a

task. Self-efficacy is a belief in one’s self that they are able to perform a task.

There are four ways in which self-efficacy can be enhanced.

1) Enactive mastery – when a person gains confidence by positive

experience gained by working more

2) Vicarious learning – it refers to learning by observing what others are

doing.

3) Verbal persuasion – when someone encourages you to perform the task

with praise.

4) Emotional arousal – when we are highly energised or stimulated to

perform well in a situation.

POSITIVE PYSCHOLOGICAL CAPITAL – A concept developed by Fred Luthans as a

positive psychological state of development. The costs of training for development

this capital is supported by return on investment of up to 270%.

1) High personal confidence and self-efficacy in performing a task.

2) Optimism about present and future success

3) Hope and perseverance in pursuing goals and adjusting them when needed

4) Resiliency in responding to setbacks and problems.

DIFFERENCES BETWEEN THE PROCESS THEORIES

1) Both Vroom and Locke believe that self-efficacy is linked to boosting employees’

motivation to work.

3) REINFORCEMENT THEORY OF MOTIVATION – it focuses attention on the

environment as a major source of rewards and influence on human behaviour.

Developed by E. L. Thorndike.

Law of effect – states that behaviour followed by pleasant consequences is

likely to be repeated but behaviour followed by unpleasant consequences is not.

Operant conditioning – it is the control of behaviour by manipulating its

consequences.

Organisational behaviour modification - it is the application of operant

conditioning to influence human behaviour at work.

FOUR STRATEGIES OF OPERANT CONDITIONING

Positive reinforcement – it strengthens a behaviour by making a desirable

consequence contingent on its occurrence. There are two laws in positive

reinforcement. The law of contingent reinforcement states that for a reward to

have maximum reinforcing value, it must be delivered only if desired behaviour

is exhibited. The law of immediate reinforcement states that the more

immediate the delivery of a reward after the occurrence of a desirable

behaviour, the greater the reinforcing value of the reward. A continuous

reinforcement schedule administers a reward each time a desired behaviour

occurs and is more effective and permanent than an intermittent reinforcement

schedule that rewards behaviour periodically. Amway provides recognition pins

for distributors as they reach new levels of success. Nutrimetics and Tupperware

provides company cars to their best performers.

Negative reinforcement – strengthens a behaviour by making an avoidance of

an undesirable consequence contingent on its occurrence

Punishment – discourages a behaviour by making an unpleasant consequence

contingent on its occurrence. Guidelines on page 379.

Extinction – discourages a behaviour by making removal of a desirable

consequence contingent on its occurrence.

Example: to improve quality under total quality management, if the employee

meets the product goals without any defects and you give him praise it is

positive reinforcement and if you stop complaining, it is negative reinforcement.

If the employee meets product goals with many defects and you withhold praise

and rewards, it is extinction and if you reprimand the employee it is

punishment.

MOTIVATION AND REMUNERATION

PAY FOR PERFORMANCE – merit pay is a remuneration system that awards pay

increases in proportion to performance contributions. Managers are attempting to

recognise and positively reinforce high performers and encourage them to work hard

for similar accomplishments in the future. It also attempts to remind performers of

their lack of achievement and send a signal that they must do better in the future.

INCENTIVE REMUNERATION SYSTEMS – these are successful only if they are

implemented correctly. A Taiwanese insurance company rewarded 2000 of its best

agents with a 3 day trip to Australia.

1) Pay for knowledge – Skills-based pay is a system of paying workers

according to the number of job-relevant skills they can master. The

government of Australian Capital Territory uses this method.

2) Bonus pay – Bonus pay plans provide one-off or lump sum payments to

employees based on the accomplishment of specific performance targets

or some other extraordinary contribution such as an idea for work

improvement. Usually used in the executive level.

3) Profit sharing – profit sharing plans distribute to some or all of its

employees a proportion of profits earned by the organisation during a

stated performance period. Used in professions like accounting and law

and the level of profits depend on each person’s level of remuneration

and/or length of service.

4) Gain sharing – Gain sharing plans extend the profit sharing concept by

allowing groups of employees to share in any savings or gains realised

through their efforts to reduce costs and increase productivity. The

Scanlon plan usually results in 75% of the gains being distributed among

workers and 25% kept by the company.

5) Employee share ownership – these plans involve employees in ownership

through purchase of shares in the company that employ them. Formal

ESOPs are often used as financing schemes to save jobs and prevent

business closures, performance incentives ( the employees will be

motivated to work hard to build the price of the shares). The employees

usually get to buy shares at a discount and benefit from financial gains

except when the firm is suffering, then it loses its effect as a motivator.

LEADING AND MANAGING CHANGE

Changing nature of business

1) Companies that do it all from designing their own products to then

delivering it to the customers themselves will soon no longer exist.

2) Companies now have the ability to strip down to its essence and focus on

where the greatest value creation and profit lies.

3) Extraneous functions can be eliminated through partnerships and

outsourcing.

4) Instead of one big monolithic entity, companies are starting to look like

clusters of distributed capabilities.

The global financial crisis and subsequent economic downturn along with many other

factors have further challenged the traditional forms, practices and systems of the

past and are being replaced by new developments driven by forces of information

technology and pressures of global competitiveness.

LEARNING ORGANISATION – they continuously change and improve using lessons of

experience. The characteristics of learning organisations are

1) A requirement of provision of learning spaces

2) A willingness to experiment

3) Acceptance that mistakes are an opportunity to learn and hence no blaming.

4) A celebration of diversity

5) A truly shared vision

6) Rewarding learning

STRATEGIC LEADERSHIP – it enthuses people to continuously change, refine and

improve strategies and their implementation. The components of this are

1) Determine the organisation’s purpose or vision

2) Exploit and maintain the organisation’s core competencies.

3) Develop the organisation’s human capital

4) Sustain an effective organisational culture

5) Emphasise and display ethical practices

6) Establish balanced organisational controls.

CONTINUOUS INNOVATIONS – Innovation is an effort to create purposeful,

focused change in the enterprise’s economic or social potential. It is divided into

two namely Process innovations which involve new or improved ways of

manufacturing the product or service and Product innovations which involve the

use of new or improved design principles or technologies for incorporation in

products or services. The management of both requires active encouragement

and support for invention and application.

Hamel’s wheel of innovation – involves five steps for leading the innovation

process in the innovation process

1) Imagining – thinking about new possibilities, making discoveries by ingenuity

or communication with others.

2) Designing – testing ideas, discussing them with peers, customers, clients or

technical experts and testing models, prototypes or samples

3) Experimenting – examining practicality and financial value through

experiments and feasibility studies

4) Assessing – identifying strengths and weaknesses, potential costs and

benefits, potential markets or applications and making constructive changes.

5) Scaling – gearing up and implementing new processes; putting to work what

has been learned; commercialising new products or services.

COMMERCIALISING INNOVATION – the process of turning new ideas into

products or processes that can make an economic difference through higher sales

or reduced costs. LG and Sony generate substantial proportion of their revenue

from new products embodying new technologies. Most decisions related to idea

generation and development is done by middle-level managers and people below

them on the organisational chart. Senior management shapes the organisational

culture, giving direction, championing new technologies, allocating resources and

creating a balance between current and future demands. Fujio Cho, current

chairman of Toyota was personally involved in developing the Prius.

BENEFITS OF ORGANISATIONAL LEADERS INVOLVED IN INNOVATION PROCESS

1) It sends a powerful signal to employees that innovation matters

2) It provides senior management with opportunity to publicise strategic

direction of the firm and boundaries in which innovation should be pursued.

3) It gives senior management direct input into the design of products and

services that will define the company in the future.

4) It educates leaders on technical and market issues and prepares them to act

as recognisers and patrons of good ideas.

CHARACTERISTICS OF INNOVATIVE ORGANISATIONS

1) It mobilises talent and intellectual capital to support creativity and

entrepreneurship.

2) Managers from all levels are the ones who lead the innovation process

3) Innovation is expected, failure is accepted and the organisation is willing to

take risks as high deregulated industries are the most innovative

4) They have a more organic structure with lateral communication and cross-

functional teams and task forces.

INNOVATIONAL ROLES

1) Idea generators – people who create new insights from internal discovery or

external awareness or both

2) Information gatekeepers – people who serve as links between people and

groups within the organisation and external sources

3) Product champions – people who push for change and innovation in general

and for adoption of a specific idea.

4) Project managers – people who perform the technical functions needed to

keep a new project on track with the necessary resource support.

5) Innovation leaders – people who encourage, sponsor and coach others to

keep the innovation values and goals in place and channel energies in the

right direction.

INDUSTRY CLUSTERS – they are groups of enterprises with common or

complementary business interests, including the public and private entities on which

they depend. Far North Queensland has industry clusters in tourism, biotechnology,

tropical and exotic fruit production, tertiary education and marine engineering.