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Strategy #9

Strategy #9. Loose Hierarchies. Characterized by greater delegation Information flows up Executives make decisions that govern subordinates If you are in a hierarchical organization, you implicitly agree to abide by your superiors’ decisions Rewards are based on pleasing superiors.

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Strategy #9

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  1. Strategy #9

  2. Loose Hierarchies • Characterized by greater delegation • Information flows up • Executives make decisions that govern subordinates • If you are in a hierarchical organization, you implicitly agree to abide by your superiors’ decisions • Rewards are based on pleasing superiors

  3. Loose Hierarchy Examples • Linux • Wikipedia • AES Corporation

  4. Loose Hierarchy Lessons Strengths • Minimal communication for coordinating large-scale projects • Conflict of interest resolution Weaknesses • Information overload as you go up • Narrow perspective • Decisions can be vetoed at any level • Lack of autonomy, motivation, and what goes with them

  5. Democracies • Networked information sharing • Decisions are made by voting – simple majority, consensus, other voting regimes • You must abide by decisions made by the group you belong to • Vote for you interests or your group’s interests

  6. Democracy Examples • WL Gore • Corporate Culture • “Our founder, Bill Gore created a flat lattice organization. There are no chains of command nor pre-determined channels of communication. Instead, we communicate directly with each other and are accountable to fellow members of our multi-disciplined teams.” • Guiding Principles • Fairness to each other and everyone with whom we come in contact • Freedom to encourage, help, and allow other associates to grow in knowledge, skill, and scope of responsibility • The ability to make one's own commitments and keep them • Consultation with other associates before undertaking actions that could impact the reputation of the company

  7. Democracy Examples Mondragon Cooperative • "Nothing differentiates people as much as their respective attitudes to the circumstances in which they live. Those who opt to make history and change the course of events themselves have an advantage over those who decide to wait passively for the results of the change". • Father Don José María ArizmendiarrietaConceptual Creator of the Mondragon Cooperative System • http://www.sfworlds.com/linkworld/mondragon.html

  8. Democracy Lessons Strengths • Individuals are insured participation • Group decisions force people to do things for overall good Weaknesses • High communication overhead to insure knowledgeable decision making • Everyone’s opinions count equally even when some are more qualified

  9. Markets • Networked communication • Decisions made via mutual agreement between parties involved in an environment of competitive alternatives • Incentives come from profit maximization

  10. Market Examples • eLancing • Guilds • Quasi Markets for ad hoc projects • Idea futures

  11. Market Lessons Strengths • Markets are efficient • Markets are flexible • Markets are motivating Weaknesses • High communication overhead • For some situations, overall good may not be achieved because agreement is not in a key party’s self interest

  12. Trust • Willingness to be vulnerable (Dynamic-RT) • Dependability – to have faith or confidence • Static versus dynamic understanding of trust – a state of trusting in contrast to the process of developing of trust or evolving trust

  13. Trust Model Ability Benevolence Trust RTRs Integrity

  14. Trust Model • Three trust components • Ability: a group of skills, competencies, and characteristics. • Benevolence: the extent to which a trustee is believed to want to do good to the trustor. • Integrity: the trustor’s perception that the trustee adheres to a set of principles that the trustor finds acceptable. • Risk taking dynamic (Risk taking in relationship)

  15. Decision-making Structure Comparison

  16. Problem – Efficient Decisions • Loose Hierarchies – Managers force decisions on occasion • Democracies – Voting for some decisions, election of managers for others • Market – People participate only when there is mutual agreement, everyone follows the rules

  17. Problem – Quality and Catastrophic Loss • Loose Hierarchies – Managers control of people and results (e.g. via standards), but not actions directly • Democracies – May employ standards, voting, elected managers • Market – Reputation systems, insurance, performance bonds

  18. Problem – Economies of Scale • Loose Hierarchies – Managers may force people to take advantage of economies of scale • Democracies – Voting and managers may force people to take advantage of economies of scale • Market – Rules encourage buyers and sellers to take advantage of sconomies of scale

  19. Problem – Knowledge Sharing • Loose Hierarchies – Managers provide channels and incentives • Democracies – Same as loose hierarchies. Incentives may be set by voting • Market – Rules provide means for protecting, pricing, and selling knowledge

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