MGT 5371

1
MGT 5371 Session 2 The world we live
in Globalization, Change and Options for
Organizations
Barry A. Macy Professor, Organizational
Design Texas Center for Productivity and Quality
of Work Life College of Business
Administration Texas Tech University Lubbock,
Texas
5371 Spring 2007 Week 2 The world we live in -
Web
2
Globalization . . . . . . . . . . . . . . . . .
(Only last ten years)
Change . . . . . . . . . . . . . . .
(Economic, Political, Societal, Organizational
and Individual)
Organizational Options . . . . . . . . .
(Choices)
3
Competitors, unborn and unknown, will render
your present Business Models obsolete!
____________ Source Barry A. Macy, Successful
Strategic Change, Berrett-Koehler Publishers, San
Francisco, CA (forthcoming)
4
GLOBAL
COMPETITIVE
ENVIRONMENT
____________ Source Barry A. Macy, Successful
Strategic Change, Berrett-Koehler Publishers, San
Francisco, CA (forthcoming)
5
Whats Changing?
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FACT OF LIFE
7

• Increased Complexity
• Increased Competition
• Accelerated Pace/Exponential Rate
• Difficult Product Differentiation

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ONE EXAMPLE OF WORLD CHANGE
FORTUNE 500 Dec 79
Dec 89
51.9 Change (Merger/Acquisitions/ Bankruptcy/ Les
s Market Share)
500 Companies
FORTUNE 500 Dec 89
Dec 99
500 Companies 62 Change
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The Changing Business Environment

• HISTORICAL
• Growing Markets
• Excess Resources
• Slow Change
• Domestic Competition

• TODAY
• Stable/Shrinking Markets
• Scarce Resources
• Rapid Change
• Global Competition

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The United States Changing Business Environment -
1
     
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The United States Changing Business Environment -
2
CHARACTERISTICS/ DIMENSIONS
Before 1980 Describe this Condition
NOW Describe this Condition

• 8. - Per Capita Income 8 times Japan
  x 2 time Europe Roughly equal
• - U.S. vs. Japan
• - U.S. vs. Europe
• 9. Competition
  Low
  High fast paced
• 10. White-collar jobs
  Lay-offs were in blue-collar Lay-offs are
  frequent 3,000 per day (25
  downsize last 3 years
• 11. Unionization
  22
  13
• 12. Organization Structure
  Tall/multi-tiered
  Getting Flatter-leaner/less staff
• 13. Average C.E.O. Pay (No. of 12
  times higher than average 70 160 times
  higher than a times average U.S. worker)
  worker
  average worker
• 14. Decision Making
  Made at the top
  Made at top, middle, and bottom

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The United States Changing Business Environment -
3
CHARACTERISTICS/ DIMENSIONS
Before 1980 Describe this Condition
NOW Describe this Condition
15. Product/Service Quality Poor to
average Average 16.
Technology Slow
to moderate change Step-wise
change 17. Change
Linear
Accelerated place Non


linear (Step-wise) 18. Workforce
Little to moderate change
More More Moremuch


more 19. Empowerment
Not in the Management One of the
keys to High
dictionary
Performance 20. No. of
worksites with 100 work places
500 work places
Self-directed Work Teams (SDWT) 21.
Fortune 500 with Multi-
Non-existent 21 of
Fortune 500 functional Customer
Account Teams
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The United States Changing Business Environment -
4
CHARACTERISTICS/ DIMENSIONS
Before 1980 Describe this Condition
NOW Describe this Condition
22. Communication
Vertical
Vertical and Horizontal


(Business teams, individual) 23.
Training/Development/ Less than 40
hours per Benchmark 160
hours Coaching
employee
per employee 24. Suppliers
Many/No certification
Few/great deal of


certification 25. Customers
Little demands
Great demands 26.
Economies of Scale This was
KING! Lost a lot of
its power/

force
(Flexibility is the Key!) 27. Average No. of
Direct 5
20 -
Manufacturing Reports per Manager/
Team Leader 28. High School Education Scores
1st
16th (lowest of any industrialized


country)
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The 21st Century Organization Shapers
Power shifts to buyers (customers - away from the
firm) they know they have power --- they have
learned how to use it. Result Organizations are
being designed around customers and/ or market
segments
1. Buyer Power
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The 21st Century Organization Shapers
Greater products/service/ variety/flexibility
and customization Result More issues/ much
finer Market segments more people brought into
decision making lower levels decentralization
2. Product/ Service Variety
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The 21st Century Organization Shapers
People and Management must be able to
re-learn and re-decide combin- ation of
product/service variety customization causes
more decisions (faster expand people capabilities
(de-central- ization) - Breakthrough change
NOT incremental
3. Constant Change
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The 21st Century Organization Shapers
4. Speed to the Marketplace

• Variety leads to wanting
• products/services faster!
• Result additional
• efficiencies -
• short lead times / cycle
• times /less inventory/
• more inventory turns.
• Decentralization
• More demands on IS/IT
• Electronic Information
• Systems

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Your Customers Are Looking For 1

• Fewer Suppliers Global Customers, Global
  Pricing, Global Sourcing
• Lower Costs by Emphasizing Value Chain
• (Product Supply and Demand Side Management)
• Globalization/Global Agreements/Global
  Product Supply
• Partnerships/Strategic Alliances
• ?Work Intimately Together to Increase
  Business
• Increased Organization Capabilities
  (Organizational, Teams and Employees)

____________ Source Barry A. Macy, Successful
Strategic Change, Berrett-Koehler Publishers, San
Francisco, CA (forthcoming)
19
Your Customers Are Looking For 2

• Long Term Commitment
• ?Multi Year Agreements
• ?Stable Price
• ?Forecasting Capability
• Responsiveness to Competitive Environment
  ?Price/Service/Delivery /Intimacy/Custom
  ization
• Management Visibility/Intimacy
• Accessible/Strong/Empowered Sales
  Teams/Enterprise Teams

____________ Source Barry A. Macy, Successful
Strategic Change, Berrett-Koehler Publishers, San
Francisco, CA (forthcoming)
20
Technological Innovation Examples
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Computing Power doubles/ triples every 18 months
MooresLaw
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New Kind of Computer LIQUID (No hard wired
semi-conductors)
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Your Customers are looking for...1

• Fewer Suppliers
• Lower Costs by emphasizing Product Supply
  Management
• Globalization/Global Agreements/Global Product
  Supply
• Global Product Supply Capability
• ?Production and Distribution Network
• Partnerships/Strategic Alliances
• ?Work intimately together to increase business

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Your Customers are looking for...2

• Long Term Commitment
• ?Multi year Agreements
• ?Stable Price
• ?Forecasting Capability
• Responsiveness to Competitive environment
• ?Price/Service/Delivery/Intimacy
• /Customization
• Management Visibility
• Accessible/Strong/Empowered Sales Teams

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GLOBALIZATION OUTCOMES
CHALLENGES Linear Model Must Be Replaced by
Organic (Interconnected, Interdependent,
Complex) Optimizing Against Diminishing
Returns Competitiveness Leveraging Capabilities
Talent to the Fullest Choosing the Right Pathways
for Increasing Returns

• CATALYSTS FOR GROWTH
• Advancing Technology Which Resembles Life
• More People, More Demand
  plus
• More Access, More Opportunity (Revenue
  Market Share)
• More Knowledge and Innovation
• Demand for Uniqueness and Value-Added
  Precision/Accuracy

POTENTIAL DISTRACTIONS

• Competitive Practices of Others
• Rich-Poor Gap De-Stabilizes Governments or
  Markets
• Political Conflict Disrupts the Global Economy
  Daisy Chain

• Substitution Threat
• Conflicts Within Firms
• Outdated Work Systems Practices
• Not World Class - price, quality, service
• and delivery

POTENTIAL LEVERS FOR SUCCESS

• Customer Intimacy
• Flexible/Adaptive Company Work Force
• Continuous Pursuit of Innovation
• Breakthrough Improvement

• Increased Precision Accuracy
• Integration of the Value Chain
• High Performance Organization (H.P.O.)
• Increased Organization Capabilities
• (Organizational, Teams and Employees)

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Where to Look for Options
Make Change the Opportunity (Not the Problem)

• Demographic Changes
• Technological Changes
• Political Changes
• Competitive Changes
• Value/Taste Changes
• Cultural Changes
• Work Design Changes

____________________________ Source B.A. Macy,
Successful Strategic Change, Berrett-Koehler
Publishers, San Francisco, CA (forthcoming)
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THE ROLE BOX IN GLOBALIZATION
Aspirations Self-Imposed Limits
The Design of Work Traditional Contemporary F
uturistic

• Benchmarks in Comparison to
• Performance - Based Competitions
• Others Anywhere Seeking Capital

YOU

• Expectations of Stakeholders
• You Your Family
• Customers
• Shareowners
• Co-Workers Up/Down The Hierarchy And Across
  The Heterarchy

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• HOW to Compete on a Global Basis?

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In the new economy, human and the 4 other types
of capital (customer, supplier, structural and
value chain) perhaps more than any other asset,
is your organizations greatest competitive
advantage!
B.A. Macy, Successful Strategic Change,
Berrett-Koehler Publishers, San Francisco, CA
(forthcoming)
30
Market Opportunities for Growth
Customer Demands
HPO
Process Technology other Technologies
____________ Source Barry A. Macy, Successful
Strategic Change, Berrett-Koehler Publishers, San
Francisco, CA (forthcoming)
(High Performance Organization)
Culture, Values, Philosophies, High Expectations,
and Ethics
Future Societal Workforce Trends
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How does it fit together?
Vision Direction and Strategies
Vision Direction
Strategies
Business Imperatives
Year 2012 Goals (Internal)
Globalization (External)
Capabilities
High Performing Organizations (Internal)
Strategic Alliances (External)
Future Trends
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21st Century Organizational Model
Employees (increased capabilities of peoples
intellectual capital)
Electronic Technologies across the Value Chain
Customers
Shareholder Value
Globalization
____________________________ Source B.A. Macy,
Successful Strategic Change, Berrett-Koehler
Publishers, San Francisco, CA (forthcoming)
33
Current Reality
The Future aint like it used to be.
____________ Source Barry A. Macy, Successful
Strategic Change, Berrett-Koehler Publishers, San
Francisco, CA (forthcoming)