This Document Contains Chapters 16 to 18 Chapter 16 Managerial Control DISCUSSION QUESTIONS 1. What controls can you identify in the management of your school or at a company where you now work (or recently worked)? If you can, interview a manager or employee of the organization to learn more about the controls in use there. How might the organization’s performance change if those controls were not in place? Students will have a wide range of answers to this question, but be sure they consider all three types of control mechanisms — bureaucratic, market, and clan control. Types of control mechanisms can include policies and procedures, performance reviews, quality control standards, budgets, balance sheets, and a host of others. For example, Symantec CEO John Thompson uses five critic metrics to run his company: • customer satisfaction • market share • revenue growth • expenses • earnings Control mechanisms help to steer an organization. If they are not in place, the company is likely to falter. 2. How are leadership and control different? How are planning and control different? How are structure and control different? Leadership, as defined earlier, is the process of influencing others to behave in a preferred way to achieve organizational objectives. Control, on the other hand, is the process of measuring the progress towards these organizational objectives and, where necessary, applying corrective measurement. So, in a sense, one involves motivating people to move ahead, and the other is measuring where the organization stands relative to its goals. Planning is the process of defining organizational objectives and then developing the strategies, tactics, and operations necessary to achieve those objectives. So, once again, it is primarily concerned with the overall direction while control measures the progress of these strategies and tactics. Structure is the way in which the elements of the organization are configured so as to achieve the goals and objectives of the organization. Control does not directly measure the effectiveness of the structure, but the control process measures the process of the organization towards its goals. When the organization is falling short, revisions and adjustments are typically made in the organizational structure and/or planning. 3. Imagine you are the sales manager of a company that sells medical supplies to hospitals nationwide. You have 10 salespeople reporting to you. You are responsible for your department achieving a certain level of sales each year. In general terms, how might you go about taking each step in the control cycle? As indicated in the text, the four steps are: 1. Setting performance standards. 2. Measuring performance. 3. Comparing performance with the standard. 4. Taking corrective action. Thus, a sales manager might set goals for each of the salespeople in the organization, measure the amount each person sold, compare the amount sold against the goal, and if necessary, provide additional training or reprimands for people who were not meeting their goals. 4. In the situation described in Question 3, what actions would you need to take if sales fell far below the budgeted level? What, if any, actions would you need to take if sales far exceeded the sales budget? If sales are right on target, does effective controlling require any response from you? (Would your answer differ if the department were on target overall, but some salespeople fell short, and others exceeded their target?) Whether sales fall far below the budgeted level or exceed it, the first question that must be asked is why? Sales that are below the proper level can be due to any number of things — lack of sales training, poor products, a bad economy, or lack of salesperson motivation (possibly because their pay is too low.) When sales are below the goal, a manager must take responsibility, be proactive, and develop a new strategy regarding training and possibly replacing some salespersons. Similarly, high sales may be due to internal or external factors. The trick is to find out what is happening and then address that particular issue. When sales are on target for the group as a whole, you may want to ask if sales could be higher, but you will also want to watch who is meeting their goals and who isn’t. One of the best approaches to increasing sales is to examine the practices of the best salespersons in your industry. Once you gain this knowledge, you can train each of your salespersons to utilize the same techniques and create a successful sales system. 5. Besides sales and expenses, identify five other important control measures for a business. Include at least one nonfinancial measure. There are many, but they can include budgets, performance reviews, employee satisfaction, customer satisfaction, debt-equity ratio, profit and loss statements, return on investments, etc. 6. What are the pros and cons of bureaucratic controls such as rules, procedures, and close supervision? The pros of rules, procedures, and supervision cause an organization's personnel to focus on those behaviors that management requires or desires. They provide employees with a set of day-to-day guidelines with which they can function. By observing the rules and procedures, people do what the system requires. The cons are that they can also result in rigid and inflexible behavior. Employees become accustomed to obeying the rules and doing nothing more. They often make the organization slow to react ... and stifle creativity and innovation. 7. Suppose a company at which executives were rewarded for meeting targets based only on profits and stock price switches to a balanced scorecard that adds measures for customer satisfaction, employee engagement, employee diversity, and ethical conduct. How would you expect executives’ behavior and performance to change in response to the new control system? How would you expect the company’s performance to change? Peter Drucker says that “what gets measured gets done” and you could expect the same to hold true in this instance. However, in order to change executive behavior, the company’s board of directors will have to set standards in each of the four areas of the balanced scorecard, and hold managers accountable for meeting those standards. As long as there is a “trickle down” effect from the executives, the company’s performance should increase in each of the areas being monitored. The only drawback to these systems may occur if achieving goals in one area prevents the achievement of goals in another area. 8. Google has begun offering Google Apps, such as Gmail, Google Calendar, and Docs & Spreadsheets, as collaboration tools for employees. Describe how the company could use controls to determine whether Google employees will use these software programs or competing software (e.g., Word and Excel). Google could use the number of documents prepared in each application as a form of market control at the individual level. At the corporate level, Google could compare their stock price and profitability with the stock price and profitability of Microsoft. 9. How effective is clan control as a control mechanism? What are its strengths and limitations? When should a manager rely primarily on clan control? The effect of clan control as a control mechanism depends, to a large degree, on the strengths of the culture. If it is a very strong culture and a very cohesive organization, the impact will be substantial. People will not normally act in a manner contrary to accepted behavior patterns. At the other end of the spectrum, a weak culture in a relatively non-cohesive organization will have little or no impact on individual behavior. The strengths of clan control as a control mechanism are that it is self-enforcing (people modify their actions in a manner consistent with the culture) and that it can be relatively resistant to change. A clan culture, once firmly established, will continue for a substantial period of time even if the causal factors are removed. Its weakness as a control mechanism is that there is no ongoing measurement of performance against the standard. As a result, an individual can act in a manner totally contrary to the corporate culture for a substantial period of time without being discovered. A manager can rely on clan control when the members of the group: • Share the same values. • Enjoy a high degree of trust in each other. • Share the same goals and objectives. Under these conditions, there is less need for formal controls 10. Does empowerment imply the loss of control? Why or why not? Empowerment (or the sharing of power with employees) does not necessarily imply a loss of control since it involves personnel in the management and processes of their business unit, not the assignment of total responsibility for the business. Management is still responsible for the control aspects of the management process. The main difference is that following empowerment; a wider group of individuals (from all levels in the organization) has responsibility for controlling the operation and has access to the available information. Top management still needs to review the information and when it sees the need for change, communicate effectively with the appropriate individuals. 11. Some people use the concept of personal control to describe the application of business control principles to individual careers. Thinking about your school performance and career plans, which steps of the control process (Exhibit 16.3) have you been applying effectively? How do you keep track of your performance in meeting your career and life goals? How do you measure your success? Does clan control help you meet your personal and professional goals? Answers to these questions will vary widely. But a typical student might use bureaucratic control to see if papers are turned in on time and if he or she is getting desired grades, market control to see if he or she is getting more job interviews than other students are, and clan control to manage work done in a group for a particular class. EXPERIENTIAL EXERCISES EXPERIENTIAL EXERCISE 16.1 - SAFETY PROGRAM Objectives 1. To understand some of the specific activities that fall under the management functions planning organizing, controlling and staffing, and directing. Suggested Responses The steps in instituting a safety program would be the creation of a safety committee. The charge of this committee would be to create a corporate safety policy procedures and rules. There must be planning of how the safety program will be instituted, organized as to the people involved, direction in terms of inspiration, motivation, and safety must come first, and how this safety program will be controlled to permit plans and safety objectives to be achieved. Teaching Tips 1. Have students do this exercise twice — once before coming to class, and once after you have completed your lecture/discussion on control. Then get students to meet in small groups and compare how their answers changed with the additional information they got from the chapter. 2. Divide the class into groups of five, and have each student focus on one of the five activities such as the planning or organizing. Have a group spokesperson present the results followed by a class discussion. 3. Assign students the roles of the production manager, the supervisors, the machine operators, and the union steward and have them discuss how each of these individuals will view the issue of safety at Vamp. EXERCISE 16.2 - FEEDFORWARD, CONCURRENT, AND FEEDBACK CONTROL Objectives 1. To demonstrate the need for control procedures. 2. To gain experience in determining when to use preliminary, concurrent, and feedback controls. Suggested Responses HRM and general administration – to do a better job in the future of recruiting personnel. Concurrent controls would be to retrain and reinforce a better understanding of the contract so it will not be violated concurrently with new employees. Feedback control is making a decision that is in direct violation of the contract. Operations – Preliminary controls would be the implementation of improved planning of the purchase of inventory before a stock out. Concurrent controls would be inserted of the moment inventory is spotted to be defective, this would be returned to the vendor or supplier. Feedback controls would be the insertion of improved profits from the result of reports of poor substandard mass production. Engineering – Preliminary controls could be implemented to improve inventory control of obsolete inventory. Concurrent controls would be the result of defective detection when substandard inventory is observed. Engineering changes are made concurrently when obsolete inventory is detected. Feedback controls of engineering are the result of worker unrest and the possible formulation of a union. Feedback controls are recognized by the discrimination charges, and poor worker morale is observed. Marketing – Preliminary controls could be instituted for sales and marketing policy procedures and rules to create greater consistency of customers throughout the world. Concurrent controls would be the creation or the elimination of any unnecessary expenses in relation to sales and marketing activities. Feedback controls could be instituted through the creation of sales contracts with resellers. This would create more uniform policies and procedures. Finance – Preliminary controls could be the offering of cash discounts for prompt payment from customers. Concurrent controls can be observed immediately when long-term debt is coming due at the same time as other financial problems for the firm. Cash flow problems can be observed through feedback controls and can be recognized through the analysis of financial statements. Suggested Responses to Discussion Questions 1. For which control(s) was it easier to determine application? For which was it harder? Feedback controls are easiest to determine after the fact problems in finance, marketing, engineering, HRM and general administration, and operations. Preventative controls are the most difficult because it requires experience, forecasting, and foresight on the part of management in each of these problem areas. 2. Would this exercise be better assigned to groups or to individuals? This exercise would be better assigned to a group who collectively can analyze these problems in each of the five functional areas. Teaching Tip 1. Some students, especially those with little work experience, may need some coaching with respect to the responsibilities of various functional groups. 2. Students should be reminded that the solution for a given problem might require different controls in different functional areas. CONCLUDING CASE The Grizzly Bear Lodge Case Summary: Diane and Rudy Conrad own a small lodge outside Yellowstone National Park. The lodge can accommodate up to 40 guests in 15 rooms, and is open April through Thanksgiving, with the busy season from May to September. They employ one cook and two waitpersons on the weekends, and several housekeeping staff members, a groundskeeper, and a front-desk employee. The employees are empowered to do whatever guests need, and the Conrads attribute the efficiency of their operation to clan control. Now the Conrads are thinking about expanding the business. The property next door is available, and it would give them space for 20 more rooms. Currently, their annual sales total $300,000, with all expenses (mortgage, payroll, maintenance, etc.) running at $230,000, leaving an annual income of $70,000 per year. They want to make several other improvements as well, working with local businesses to offer guided rafting, fishing, hiking, and horseback riding trips, and expanding their restaurant. Eventually, they would like to be open year round. Chapter Topics Related to the Case: • Discuss the concept of control • Identify the control cycle • Discuss the purpose of budgetary and financial controls such as those needed by Diane and Rudy’s operations • Describe how managers such as Diane and Rudy can implement effective control systems within organizations • Discuss the concept of market controls Case Discussion Questions: 1. Discuss how Rudy and Diane can use feedforward, concurrent, and feedback controls both now and in the future at the Grizzly Bear Lodge to ensure their guests’ satisfaction. Suggested Response: Rudy and Diane will want to use feedforward controls to anticipate problems before they arise. For example, they will need to create a budget and stick to it in purchasing the new lodge and staffing it. In addition, they may want some of their current employees to help them create procedures that can be shared with new employees. Empowerment will continue to be important, but training is equally important. Rudy and Diane are already using concurrent control systems by supervising the work of their employees and allowing the employees to do whatever it takes to satisfy a guest. As the lodge expands, they may need to do a little feedforward control to think about concurrent control (e.g. , they may need an additional manager as the lodge expands.) Obviously, financial controls are critical concurrent control systems — Rudy and Diane will need to keep a watchful eye on expenses, rates, and profit as they move forward. Finally, the most important feedback control for Rudy and Diane will be customer satisfaction, which can be measured either through surveys or, more importantly, through return visits. 2. What might be some of the fundamental budgetary considerations the Conrads would have as they plan the expansion of their lodge? Suggested Response: Rudy and Diane will want to estimate their sales and expenses in any budget they create. In addition, they may want to budget their labor, both in terms of costs and hours. Costs might be split into fixed (e.g., mortgage) and variable (e.g., electricity, labor.) Rudy and Diane may also find it useful to do activity-based costing so that they can estimate their costs across different parts of the business (restaurant, hotel rooms, activities, etc.) 3. Describe how the Conrads could use market controls to plan and implement their expansion. Suggested Response: Market controls can be used at the level of the organization, the individual business unit or department level, or at the individual level. At the corporate level, business units are evaluated against one another based on profitability. Within business units, transfer pricing may be used to approximate market mechanisms to control transactions among departments. At the individual level, market mechanisms control the wage rate of employees and can be used to evaluate the performance of individual managers. Chapter 17 Managing Technology and Innovation DISCUSSION QUESTIONS 1. According to Francis Bacon, “A wise man will make more opportunities than he finds.” What does this have to do with technology and innovation? What does it have to do with competitive advantage? The implication for technology and innovation is that new ideas are rarely just lying around waiting for somebody to make use of them. Innovation is a complex process. At the individual level, innovation requires a large measure of persistence, creativity, and determination to succeed with an idea. At the organizational level, it involves a culture that encourages innovation and recognizes the importance of failure. 2. What examples of technological innovation can you identify? What forces led to the commercialization of the science behind these technologies? Did the capability exist before the market demand or was the demand there before the technology was available? Students should be able to generate a long list of technological innovations, the forces behind commercialization, and whether or not the demand was there before the technology was available. Two American inventions – the mechanical washing machine (Hamilton E. Smith in 1858) and the vacuum cleaner (W. MeGaffey in 1969)—merely replaced existing household activities. The commercialization owed much to the growth of a middle-class that could not afford to employ servants and thus represented a ready market for appliances that made life easier. By contrast, X-rays (Wilhelm Roentgen in 1895) and lasers (Gordon Gould in 1957) represented scientific discoveries for which, at the time, there was no immediate use. However, it was soon realized that both technologies could provide valuable assistance to the medical profession and they were rapidly commercialized. 3. Thomas Edison once said that most innovations are 10 percent inspiration and 90 percent perspiration. How does this match with what you know about technology life cycles? Technology life cycles begin with the recognition of a need and a perception of a means by which the need can be satisfied. This is the inspirational part of the process. Translating the idea into a viable product often requires overcoming numerous problems which is the perspiration part of the process. Once the product or idea is introduced, the technology life cycle may have many years to run, and a tremendous amount of effort will go into numerous variations until a dominant design emerges. Beyond this point, years of further work may be devoted to improving the product until it reaches a point of demise or replacement. 4. Why would a company choose to follow rather than lead technological innovations? Is the potential advantage of technological leadership greater when innovations are occurring rapidly, or is it better in this case to follow? While technological leadership has the potential for high profits and represents an opportunity to establish a significant competitive advantage, it can also be a high risk/high-cost strategy involving educating consumers, building an infrastructure to support the technology, etc. Even so, there is no guarantee that the product will be a success. For example, Sony introduced the Beta format, which eventually lost out to the VHS format (also developed by Sony). The leader can often discover that it has committed its resources to a losing technology (such as the Stanley Steamer automobile). Many firms either do not have the resources to assume the risks associated with the leadership role or prefer, as a strategy, for the technology to be firmly established, the marketplace to have been developed, and the cost of entry relatively easy to determine. The question of whether or not it is better to be a leader or a follower when innovations are occurring rapidly should produce an interesting discussion. Some students will argue that it is better to be a follower since unless the firm has "deep pockets" and is willing to take considerable risks. Otherwise, a company is likely to find itself on the wrong technological path. Others will suggest the opposite. If innovations are occurring rapidly, then the followers will always be entering the marketplace with technology that is about to be replaced. The only way to survive in such a market is to be a leader. For example, the personal computer market in the mid-90s has seen one innovation after another with many firms going out of business because they were unable to keep up. 5. If you were in the grocery business, whom would you benchmark for technological innovations? What could you possibly learn from companies outside the industry? As the text points out, benchmarking is the process of comparing your organization's practices and technologies with those of other companies. Which companies you would choose to benchmark against would depend, very largely, on the nature of your grocery business. A small "Mom and Pop" store would probably want to look at similar operations to see how they functioned, and might also look at some of the local supermarkets to see what, if anything, they could learn from them. By contrast, a large supermarket chain would want to benchmark against other similar chains to compare operations, and against leading mass merchandisers to see what they were doing which might be beneficial. In addition, they might want to look at some of the hypermarkets in Europe that combine large volume grocery operations with the merchandising of a variety of other products. Benchmarking outside of the industry may provide be useful for parts of the operation not specifically grocery related. Specifically concerning IT, these items may include IT cost per revenue, order process time, system uptie, and security measures. 6. Think about the key roles in technology management. Which ones appeal to you most, and how can you learn the necessary skills? Student answers will vary but should consider the following points in justifying their positions. The chief technology officer is most likely to be the person to recognize the potential value of a new technology or innovation and he or she is then likely to try to sell the concept to either the executive or the product manager. Ideally, one of these individuals then picks up on the idea. If it is the executive, the development process is likely to gather immediate momentum resulting from that individual's status, authority, and financial resources. If, however, the development process first gains support at the product manager level, he or she and the technology officer will need to persuade one of the executives to take up the idea. Ideally, these three individuals work together. Quite frequently, the founder of a company will be a technically oriented individual who will continue to be chief technology officer and will champion the potential for the product, thus effectively playing all three roles. If the chief technology officer is a member of the firm's executive or management team, he or she may also be able to act in all three roles although, given the typical interest of these individuals, it is less likely to happen. The product champion is the least likely to play all three roles since he or she will probably have neither the status to be the executive champion nor the technological background to be the chief technology officer. 7. Among those same roles, how and why might conflicts arise? And how would you deal with them? Student may take a number of approaches some focusing on differences in power, status, experience, and objectives. While students may offer any of the conflict-handling approaches, collaboration should be presented as typically the best method to resolve differences. 8. Think about an employer you are familiar with, or your school. How would you describe it using the concepts in this chapter? Where and how could it become more effective? Student answers will vary but may revolve about technology leadership and followership as a drive of all aspects of technology application. My school emphasizes collaboration and inclusivity, fostering a sense of belonging among students and staff. Using the chapter's concepts, it aligns with shared values and a collective mission but could enhance effectiveness by promoting more diverse perspectives in decision-making. Encouraging open communication and feedback loops would empower all members to contribute ideas. Implementing flexible strategies for accommodating different learning and working styles could drive innovation. These changes would support both individual and organizational growth. EXPERIENTIAL EXERCISES EXERCISE 17.1 – TECHNOLOGY LIFE CYCLE Objectives To explore the different stages of the Technology Life Cycle. Instructions Refer back to the Technology Life Cycle in Exhibit 17.2. Review each product or technology listed below and indicate whether it is in 1st, 2nd, or 3rd stage of the cycle. Stages - Stage 1: A new technology is created to address a need. Competitors experiment with operational designs and product characteristics. Progress is slow. The rate of product innovation is high. - Stage 2: As initial problems are resolved, and a dominant design emerges, technology is refined through process innovations. Efficiencies and cost competitiveness are pursued. - Stage 3: The technology reaches the limit of its performance capabilities and usage. In this mature stage, development slows, and production becomes increasingly costly. Technology Life Cycle Worksheet EXERCISE 17.2 - INNOVATION FOR THE FUTURE Objectives 1. To look ahead into the future. Suggested Responses to Discussion Questions The innovative product may be a flying automobile. 1. What trends lead you to believe that his product or service will be successful? Because of the increased technology that will be made available to institute this new product. 2. What current technologies, services, or products will be replaced by your idea? This flying automobile will not operate on the consumption of gasoline. Therefore gas stations will become obsolete. Road construction and repair will be eliminated. Teaching Tip 1. Prior to beginning the exercise, have the students brainstorm ideas as to the various trends that are likely to influence society over the next 25 or 30 years. 2. Narrow the field of focus to one specific area, such as education, communications, etc. CONCLUDING CASE Worldwide Games Case Summary: Worldwide Games develops and markets game consoles, portable devices, and software for video game enthusiasts. The company provides subscriptions for millions of users who play one another online, in real time. The system came under attack by hackers who obtained the credit card numbers of the network members. Worldwide had to shut down the network for nearly a month and cost hundreds of millions in lost sales and upgrades to the system. They immediately informed all customers of the breach and have now hired an executive to focus on network security. Chapter Topics Related to the Case: • Identify the concepts of technology and innovation • Discuss the impacts technology and innovation have on organizations Discuss how to effectively manage technology by monitoring network security in a company like Worldwide Games. • Discuss methodologies to grow and develop an organization that is high in innovation • Identify and discuss key characteristics of successful development projects like security fix at Worldwide Case Discussion Questions: 1. Is Worldwide Games a technology leader or a technology follower? What are the risks and benefits of staking out this position? Suggested Response: Suggested responses may point out the fact that Worldwide was not proactive in monitoring its security systems or making this a priority as a protection for its customers. This makes them a technology follower. Through the successful implementation and usage of security technology, Worldwide could have facilitated better control of their entire operation. The immediate risk is to this position, is that the company will likely be in “firefighting” mode every time there is a shift in the technology industry or whenever new hacking programs are unleashed. The benefit of this position is that Worldwide is not spending money on research and development to protect itself against threats that never occur. However, the risk of losing customers, in the long run, is much greater than the cost of developing stronger security systems to protect the customer’s personal information and the online gaming network. 2. What opportunities might Worldwide be missing by not having its chief information officer report directly to the CEO? Suggested Response: First, Worldwide will make changes and respond to critical issues more slowly as a result of the distance between the CEO and the person in charge of keeping the system secure. Second, the CEO will be at a loss since he or she will be receiving third-party information regarding technology matters. The ideal approach would be to have the chief information officer (CIO) reporting directly to the CEO so that both individuals will be more knowledgeable and together they can collaborate on the best methods to use as they discuss and consider the big picture for the future of the company. 3. What makes innovation important for Worldwide? Following the hacking incident, how might bureaucracy be expected to interfere with innovation? How should Worldwide engage in “bureaucracy busting?” Suggested Response: As a leader in online gaming, Worldwide needs to protect its reputation and the privacy of its customers. By demonstrating a commitment to innovation in security, Worldwide might garner a significant share of the online gaming market. Following a crisis situation, most organizations create a lot of new policies and rules to protect themselves. However, many times these new policies can be so restrictive that they slow progress to a near halt. Worldwide should be diligent to always maintain the highest levels of security and protection of the personal information for its customers as well as maintain the integrity and stability of their online gaming systems. Chapter 18 Creating and Leading Change DISCUSSION QUESTIONS 1. Why do some people resist the goal of becoming world class? How can this resistance be overcome? The reasons for resistance are many. Some people don't see their organization as competing in the global marketplace or as having the need to do so ("we're doing all right as it is"), while others feel that forces (such as the local workforce, the lack of money or staff, or top management's lack of foresight) holds them back, and yet others believe that the competition has benefits that they don't share ("it's not a level playing field"). Behind these "excuses" are a number of general reasons for this resistance: Inertia — people prefer to stick with the status quo. Timing — people would be more receptive to chance, but it is proposed at the wrong time. Surprise — people don't like being surprised and thus have an almost reflexive resistance to the change. Peer pressure — although people favor the change, they are influenced to resist it by the attitudes and perspectives of their peers. There are also a number of change-specific reasons for resistance: Self-interest — people are more concerned about their personal well-being than that of the organization as a whole and will resist chance if they think they are going to lose something of value. Misunderstanding — people don't fully understand the potential benefits of the proposed change. Different assessments — people may have varying amounts of information and thus may reach very different conclusions about the value of the proposed change. This resistance can be overcome by: Education and communication — to make sure that employees understand the nature of the change. Participation and involvement — resistance can be overcome by involving the employees in the development of the program. Facilitation and support — helping people to adjust to the change. Negotiation and agreement — resistance can be overcome by negotiating an agreement acceptable to all parties. Manipulation and cooptation — people can be manipulated through the use of individual rewards and benefits. Explicit and implicit coercion — people can be forced to accept the change. Point out to students that each of these approaches has advantages and disadvantages. 2. Generate specific examples of world-class business that you have seen as a customer. Also, generate examples of poor business practice. Why and how do some companies inspire world-class service, while others do not? As the text points out, there are seven elements of world-class service: Provide basic service — emphasize fundamentals over fanciness. Be reliable perform promised services on time ... and work to eliminate mistakes. Listen to customers — let them identify your strengths and weaknesses. Listen to employees — these are the people who see how the set-vice system works on a daily basis. Solve problems — solve them, don't make them worse. Surprise customers — exceed customer expectations. Be fair — ask yourself, “Is it fair to the customer?” Ask students to think back to jobs they have held and decide how they would rate their former company on each of these elements. Most companies have accepted the fact that quality customer service is important to them. They recognize that good service keeps customers while poor service drives customers away. Companies should know that retaining an existing customer is far less expensive than obtaining a new one. So why don't all companies aspire to world-class service? Students may suggest some of the following reasons: Although top management appreciates the importance of world-class service, it has never communicated this fact to those involved in providing the service or has done so only infrequently. The reward system does not support the concept of world-class service. It doesn't "put its money where its mouth is." The company doesn't have an effective system for gathering customer opinions. Management doesn't have a very high opinion of its service personnel and thus doesn't listen to what they have to say. The "bottom line" takes priority over "what is fair to the customer." While the company's service personnel want to be fair, they are under pressure from top management to maximize profitability. 3. How might blogging and other social forms of communication via social media affect the process of managing change? What are the professional and career implications of blogging for you? Blogging increases the speed of change since it provides a format to disseminate instantaneous information about change and the business environment. Blogging can also be useful in the change process when it supports change — for example when people share ways to make change happen effectively or their success stories about change. Blogging has a downside in that it can give untrue rumors a much greater forum than they might have had previously, which can hinder change. Blogs can both help and hinder one’s professional career. When a blog is related to one’s work (for example Dr. Jeff Master’s blog at http://www.weatherunderground.com), blogging provides a forum for ideas and inexpensive publicity for good work. However, personal blogs that mention work can be professionally disastrous. Employees at Microsoft, Starbucks, Delta Airlines and Wells Fargo have all been fired for blogging. People who get fired are typically the ones who disclose proprietary information or spend excessive amounts of company time on the Internet. 4. Generate and discuss examples of problems and opportunities that have inspired change, both in business and in you personally. Students should have no trouble identifying numerous business examples of problems and opportunities that have inspired change. The changes in the U.S. automobile industry in recent years resulted, in large part, from a serious problem: its inability to compete with Japanese manufacturers. And the growth of the personal computer has caused dramatic changes in the software industry. At a personal level, students may find it more difficult to identify problems or opportunities that resulted in a permanent change (as implied by the question) as opposed to merely acting differently. So, it may be useful to suggest examples: I couldn't afford to buy a car, so I started running, or cycling and now complete regularly in local events. Or, I had the opportunity to study abroad for a semester and now am planning to specialize in languages and international business. 5. Review the methods for dealing with resistance to change. Generate specific examples of each that you have seen and analyze why they worked or failed to work. General reasons for resistance: Inertia – the old ways of doing things are comfortable and easy, so people don’t want to try something new. Timing – managers should introduce change when people are receptive. Otherwise, the timing is poor. Surprise – if the change is sudden, unexpected, or extreme, resistance may be the initial reaction. Peer pressure – if a group is highly cohesive and has anti-management norms, peer pressure will cause individual so to resist even reasonable changes. Change specific reasons for resistance: Self-interest – people, will resist change if they think it will cause them to lose something of value. Misunderstanding – people may resist change due to a lack of understanding or inaccurate rumors. Different assessments – employees receive different and usually less information than management receives. Specific approaches to enlist cooperation: Education and communication Participation and involvement Facilitation and support Negotiation and rewards Manipulation and cooptation Coercion 6. Choose some specific types of changes you would like to see happen in groups or organizations with which you are familiar. Imagine that you were trying to bring about these changes. What sources of resistance should you anticipate? How would you manage the resistance? One way of approaching this question would be to have students each make a list of the organizations to which they belong ... and then identify those with which they experience the most frustration. The lists probably will include fraternities/sororities and professional clubs to sporting teams and religious groups. Desired changes will probably range from being, more active (meeting more frequently or being more socially aware) to functioning in a different manner (increasing the involvement of all members and reducing the role of one individual or operating in a number of small sub-groups rather than in one large group). As an example, you would like to see your organization become more socially responsible by sponsoring the cleanup of a particular section of highway. If it costs money to provide bags, equipment, etc., resistance may come from the person responsible for the group's financial picture. If it takes one day a month, resistance may come from those who do not have the time available or do not want to devote the time in this manner. The former objection could be overcome by having a fund-raiser for this specific purpose, and the latter could be resolved by having members work only once a quarter or by turning, the clean-up into a social event. 7. Develop a specific plan for being a continuous learner. Some students may indicate that, when they have completed the current degree, they will take an advanced degree followed by another and so on. While this meets the criteria of continuous learning, it is learning (at least to some degree) for the purpose of learning rather than to achieve a specific objective. Picking up on the point made in Question #1 above, it may be more useful for the students to make a commitment to evaluating their lives and careers on a regular basis and identifying those areas in which they need or wish to learn more. So, over their lifetimes they will have been learning continuously – albeit in a number of different areas. 8. In your own words, what does the idea of creating the future mean to you? How can you put this concept to good use? Again, generate some specific ideas that you can really use? The text suggests that "creating the future" means "getting ahead of the pack." This may be translated as "putting yourself outside the current envelope" or "thinking outside the current boundaries." In a business environment, this probably means looking at one's industry and going beyond the current products, structure, and ways of doing business, and looking for the next quantum leap. Will there be a discontinuity between today's technology and that of ten years from now? Is it possible that the nature of the business will change? As an example, the instructor might look at the chances in the computer industry. Over the past few years, a number of new firms have emerged. Some started by selling hardware and others by selling software. Today, the superstores sell both. What dramatic chance could occur in this industry? Software could easily be transferred by modem directly from the manufacturer to the customer. Consumers don't really need the stores for software. So how do you get ahead of the pack in the software industry? Attacking the question from a personal perspective may lead in a somewhat different direction. Students may see it as meaning that they are responsible for their futures ... and that it is up to them to create their own opportunities. How are they planning to differentiate themselves from their peers? Example: Accounting students might take a dramatic step forward in terms of "creating their own future" by learning Russian or Chinese. The combination of the skills may well put them far ahead of the pack. 9. In what ways do you think the manager’s job will be different in 20 years from what it is today? How can you prepare for that future? Managers of the future will be faced with a number of changes to their jobs. They will continue to have to do more with less and to supervise large and larger numbers of people as organizations become flatter and spans of control increase. They will need to be skilled in multiple disciplines, not just one - accounting managers will need to assume HR functions like performance reviews and training, while HR managers will need to be able to speak to financial and strategy issues. As companies become both more global and more virtual, managers will have to find new ways of working with people who are not only not in the office with them, but who are probably in a different country, and possibly speaking a different language than they do. As the focus on the environment continues to increase, managers will be responsible for ensuring that their operations are “green,” and that they and their employees are following ecologically sound practices and principles. Technology is ever-changing, and good managers must keep up with the trends. It is no longer enough to be good at creating Excel spreadsheets — now managers will need to be familiar with wikis, blogs, podcasts, and all the other new forms of information delivery. The bottom line is that anyone who wants to be a manager 20 years from today is going to have to immerse themselves in training on a regular basis and develop a large network of resources with whom to work. EXPERIENTIAL EXERCISES EXERCISE 18.1 – OVERCOMING RESISTANCE TO CHANGE Objectives To learn how to overcome resistance to change. Instructions Refer back to Exhibit 18.6 on page ______ and the different ways to manage resistance to change. Next, think about the last time you tried to introduce a new idea or way of doing things at work, school, or some other organization. Describe the new idea and which approach(es) you used to overcome others’ resistance to trying out the new idea. Resistance to Change Worksheet Describe a new idea you tried to introduce at work, school, or some other organization: ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ Which (if any) of the following approach(es) to overcoming resistance to change did you use? (Please check all that apply) What was the outcome? To what degree were you successful in overcoming the resistance to change? Explain. ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ If you could go back in time, would you use a different approach to overcome the resistance to your new idea? Why or why not? _____________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ EXERCISE 18.2 - NETWORKING SCENARIOS Purpose: To allow participants to apply networking strategies for various situations. Time: 30-40 min. Resources/Set-up: Scenarios worksheet and questions (in the chapter). Activity Instructions: Follow the instructions in the chapter. You can assign Step 1 as homework. Discussion/Debrief: See questions in the text; facilitate discussion with these, plus: •You might also discuss different groups' approaches to similar situations. There is no best way to network, while some approaches suit certain situations and individuals' work styles better than others. Discuss this. Note: This exercise works well as an opener to the topic of networking. CONCLUDING CASE Eatwell Technologies Case Summary: Eatwell Technologies is an example of social entrepreneurship: a business the founders created as a way to drive social change for the better. The two entrepreneurs, Cristina Muñoz and Pete Prakash, applied their knowledge of bioengineering to develop a drought-tolerant, high-vitamin strain of rice. They wrote a business plan calling for them to sell first in Africa, targeting Nigeria as the first market. The start-up has been successful enough for the two to hire an office manager and attract a third partner with a business background. However, the new partner, Bill Jensen, is a force for change: he has been encouraging the founders to think more practically about the bottom line and improve earnings by selling high-nutrition products to middle-class consumers, rather than serving the poor. In this case, the initial resistance to change comes from the top—from the company’s founders. Chapter Topics Related to the Case: •Discuss the concept of change •Identify methodologies to successfully implement changes in an organization such as Eatwell Technologies •Describe ways Eatwell Technologies can evaluate changes and shape its future •Evaluate ways of overcoming resistance to change •Generate ideas for EatWell Technologies to plan for sustaining future success Case Discussion Questions: 1. Review the first section of the chapter, about becoming world class. How can EatWell Technologies fulfill its social mission and be profitable? Suggested Response: It can identify problems that its technology can solve profitably, with skillful management and the proper resources. It can establish core values that it maintains consistently, even as conditions change. While trying bold ideas, it is restrained about straying from the values. Its leaders would provide a clear vision and direction but would allow employees to experiment with ideas that are consistent with the vision. It would motivate people with stretch goals while also measuring each step forward. It would empower employees to make decisions, as long as they are in line with the company’s values. The owners would monitor and reward both short-term results and progress toward a long-range vision because their thinking combines visionary ideas with concern for day-to-day execution. 2. In this case, where do you see resistance to change? How can leaders overcome the resistance? How should they? Suggested Response: The two founders of Eatwell Technologies are open to growth, but they resist Bill Jensen’s idea to reformulate their basic vision of the company’s purpose. For Pete and Cristina, the purpose is about better feeding the hungry as much as about earning a profit. Bill is stressing ways to improve profits by offering products to middle-class buyers. Bill might overcome the resistance with a strategy of education: explaining that his ideas are not intended to do away with the original mission but to generate more cash to enable growth in that mission. However, Pete and Cristina might find this argument implausible, so Bill might find more support if he adopts a strategy of participation with the two founders in defining profit goals (profits being needed to expand how much good the company can do) and determining how they can meet the goals. Bill is not in a position of great enough strength to use the other possible methods for managing resistance to change. Answers may vary on what Bill should do about the resistance. To the extent that he is proposing a change in the organization’s original values, the advice in this chapter would be to proceed conservatively on changes to organizational values. Students may offer additional arguments on ethical or practical grounds. 3. Suppose you are coaching Pete and Cristina. What advice would you give them about shaping their future? Suggested Response: Answers will vary. Encourage students to apply the general advice in the last part of the chapter to this specific situation. A coach using that information would encourage Pete and Cristina to continue thinking about the future and taking an active role in shaping what they will do. As owners of a business, they can help to make the world better by improving nutrition. Where are they able to have the most impact, and where will the improvements do the most good? How can technology for the business (not just biotechnology for the product) help EatWell Technologies operate more efficiently and effectively? The coach also could guide the two entrepreneurs in making decisions about themselves individually. The coach can offer skills assessments, helping the two founders identify their strengths, interests, and areas needing further development. A coach could urge the two to continue learning, both about the continuing developments in their field of biotechnology and about other relevant subjects such as marketing, business management, and the political and social climates of the areas they might want to serve. PART V SUPPORTING CASE Technology Helps Dollar General Remain Competitive Case Overview: In a tight economy, more consumers are determined to save money, and they often end up shopping at deep-discount stores such as Dollar General, Family Dollar, or Dollar Tree. In an effort to compete with Walmart, Kathleen Guion turned to technology to increase the efficiency of store operations. The company introduced scanners which are connected to an inventory management system which allows employees to quickly and accurately see which items need to be replenished. In addition, computers were installed in all stores which are linked to headquarters to expedite ordering of good and supplies. The company also introduced computer-based training programs for employees and screening software to assist in identifying the best candidates for hire. Managers are given computers with software that monitors performance and flags areas which do not meet standards. District managers use BlackBerry devices to keep in touch with their employees. More efficient systems have supported the company’s strategy of rapid growth and expansion (they now have more than 12,000 stores in 43 states). Teaching Objectives •Review the importance of identifying problem areas in operations •Challenge students to consider ways that technology can solve operational issues •Provide an example of how one manager effectively led change •Engage students in a discussion on managing toward the future and implementing continuous improvement Purpose and Relationship to the Part One of the few “constants” in our world is change. As managers in today’s global economy, it is critical to learn how to motivate people to change, to identify effective solutions and technologies that will produce change, to reduce worker stress and redundant worker actions, and to provide resources that simplify the management process. It is no longer sufficient to be an effective manager with a day-to-day or week-to-week mindset. In order to be competitive, today’s manager must be constantly thinking about the future and seeking solutions that will shape the future and become tomorrow’s reality. Competitive managers are people who are continually learning and who guide their workers to face challenges with a confident attitude and solution-oriented approaches that make operations more efficient and more effective. Case Discussion Questions 1. What types of control are important at Dollar General? Why are these important? Suggested Response Controls at Dollar General focus on efficiency. Feedforward controls include security cameras to prevent theft, job design to increase efficiency, and employee selection software to standardize decisions aimed at selecting the best employees. Concurrent controls include the inventory management system. Feedback controls include the performance management system installed on district managers’ PCs. A company with a low-cost strategy would rely heavily on budgetary and financial controls. All of these are important because a low-cost retailer has no room in today’s competitive environment to waste any money that could be saved in order to minimize prices. Student responses may also include control over costs, control of work activities, control of inventory, etc. These areas of control are important because they directly impact profit margins and operational efficiency and sustainability. 2. What technological innovations did Kathleen Guion introduce at Dollar General? How did these innovations support the company’s strategy? Suggested Response The technological innovations were “rolltainers” (important to note that not all technology is computer technology), inventory management system with scanners, screening software for job candidates, computers for online communication, computer-based training, personal computers and Blackberries’ for district managers, and performance management software. All of these contribute to more efficient operations, and improved efficiency is at the heart of a low-cost strategy such as Dollar General’s. Also, several types of technology were introduced to Dollar General by Guion which include the use of scanners, an inventory management system, computer systems for ordering goods, computer-based training candidate screening software, performance software for managers, and BlackBerry devices for district managers. All of these were used to expedite operations and increase the effectiveness and efficiency of workers. 3. What challenged would you have expected Guion to face in introducing these changes? What principles of managing change would you have suggested she apply? Suggested Response Specific recommendations will vary, but resistance to change is the norm. Not all employees/managers will be enthusiastic about learning and using new technology and work procedures. Reasons include inertia, timing, surprise, and peer pressure. Guion can address some of these by avoiding many changes at the busiest times for the stores and by providing advance information to avoid surprises. Self-interest can be another reason for resistance; Guion can address this by pointing out the ways in which the changes she wants to make will make work easier or get better results. Misunderstandings and different assessments of the situation can breed resistance; Guion can minimize these with good communication. Guion also should use tactics that minimize resistance, such as making realistic promises and providing sufficient resources. Other principles of managing change that could apply to this situation include communicating the reasons for the change in a way that does not arouse defensiveness (e.g., by blaming problems on the employees) and that communicates hope rather than fear. Guion could describe the performance gap (say, between Dollar General’s old, limited use of technology and the capabilities other stores already have), and she could describe her goals in terms of exciting opportunities in which employees’ changes will enable them to make a positive impact on their customers and their company. Finally, Guion should communicate a vision of where the changes will take Dollar General, and she should refreeze the changes with control systems and rewards. Together, these ideas can be summed up in terms of the actions listed in Table 18.2: education and communication, participation and involvement, facilitation and support, and negotiation and rewards. The last two categories (manipulation and cooptation, explicit and implicit coercion) do not seem to be suited to Dollar General’s situation as described in the case. Students should also try to put themselves in the place of an employee at Dollar General. What fears or kinds of resistance do they think they might have experienced? What if they were the manager? Think about the thoughts and fears that people experience when they are first introduced to new technologies. Robot Repercussion Victor Principal, vice president of industrial relations for General Manufacturing, Inc., sat in his office reviewing the list of benefits the company expected to realize from increasing its use of industrial robots. prior to meeting with Ralph McIntosh, president of the labor union. McIntosh’s position could be summed up as “We in the union believe the company is giving our jobs to robots to reduce the labor force.” Their meeting ended amicably, but Principal and McIntosh each knew that much hard bargaining lay ahead. As Principal returned to his office, the two opposing positions were obvious. On his yellow tablet, Principal listed the requirements as he saw them: (1) A clearly stated overall policy was needed to guide negotiation decisions and actions; (2) it was critical to decide on a company position regarding each of the union’s announced demands and concerns; and (3) a plan had to be developed. As Principal considered these challenges, he idly contemplated a robot possessing artificial intelligence and vision capability that could help him in his work. Immediately a danger alarm sounded in his mind. A robot so constructed might be more than helpful and might take over this and other important aspects of his job. Slightly chagrined, Principal returned to his task. He needed help—but not from any smart robot. Implementing Strategic Change James Fulmer, chief executive officer of Allied Industries, had just reviewed three notes he had exchanged with Frank Curtis, director of fiscal affairs, now president of a company owned by Allied. Problems had recently surfaced at Lee Medical Supplies a recent acquisition of Allied now run by Curtis. The plan was, like all acquisitions by Allied was to send in a turnaround expert to increase performance. In a relatively short period Curtis had increased sales and profits to meet Allied’s standards, but in the past 18 months, three of your nine vice presidents have resigned, and four others have been terminated. An opinion survey conducted by the consultants indicates that a low state of morale exists and that your managerial appointees are regarded by their subordinates as hard-nosed perfectionists obsessed with quotas and profits. Curtis had, as he believed he was instructed to do, implemented immediate strategic changes in five areas: the organization’s structure, employee rewards and incentives, management information systems, allocation of resources, and managerial leadership style. As a result, sales areas were reorganized into divisions, regions, and districts. Managers Curtis felt were incompetent and/or lacking in commitment to the new methods were replaced. Authority for staffing and compensation decisions was decentralized. A new department was established and charged with reviewing the performance of those units. Improved accounting and control systems were implemented. Performance appraisals are now required for all employees. To encourage more aggressive action, bonuses and incentives are offered to managers of units showing increased profits. A commission plan based on measurable sales and profit performances has replaced straight salaries. Resources were allocated to units based on their performance. Fulmer is undecided about how to communicate to Curtis the changes at Lee Medical and how they were implemented. Solution Manual for Management: Leading and Collaborating in a Competitive World Thomas S. Bateman, Scott A. Snell, Robert Konopaske 9781259927645, 9781259546945
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