Framing Organizations

Aug 26

Having just finished the course for Organizational Dynamics, I wanted to summarize my main take away from the course. The material covered leadership, strength assessment and four frames through which organizations can be viewed. By far the most valuable insight for me came from exploring the four frames, which are: Structural Political Symbolic Human Resources Structural The structural frame focuses on the hierarchical structure of an organization. Who reports to who, titles, roles, responsibilities. The primary argument from this frame’s perspective is that organizational issues can be solve by changing the structure of the organization. Cases in which this can work include organizations which have well defined roles based on commodity skills, where workers with those skills are widely available. Some examples might include retail or manufacturing. Political The political frame views organizations as power structures where influence is gained by forming coalitions and leverage. The primary argument from this frame’s perspective is that success in an organization depends on one’s ability to navigate the complexity of political relationships and gain power and influence to drive key decisions. Organizations in which this can work include industries where there may be multiple successful solutions to a given problem or where the value of an outcome depends on human evaluation. Some examples might include a law practice or an advertising agency. Symbolic The symbolic frame views an organization from the perspective of symbols that emotionally drive and motivate the workforce. These can come in the form of stories, myths and other objects of significance that carry special meaning. Motivation and alignment with company objectives can be powerful and effective, often compensating for deficiencies in structure. This can be especially effective in organizations that have an emotional component, such as non-profits. Human Resources The human resources frame focuses on the human needs of the workers within the organization. These may include family, entertainment, acceptance and achievement. From the perspective of this frame, an organization is most likely to be successful when the needs of its workers are met. Conversely, workers whose needs are met are more fully available to address the needs of the organization. Some examples of this type of focus include companies that provide meals, transportation and access to gym...

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Throw Away the APA

Jul 27

Communication is a major emphasis of many MBA programs, at least as a matter of rhetoric. Business leaders should be skillful, effective communicators. It’s not a hard case to make, and I agree that a leader who can’t communicate his vision will not be very effective. What I can’t understand is the almost singular focus many universities have on “writing styles”, such as APA, MLA, etc. Benefit of Standardized Communication Standardized communication approaches can bring benefit. For example, when reviewing hundreds of papers to see if they may contain details related to some research, it’s helpful to have abstracts. In the process of diving deeper into published research it’s helpful to know that sources are located in the bibliography. It’s even helpful to have the same font, spacing and formatting so that transitioning from one paper to another is easier on the eyes. From a grading perspective, I can also see how a standardized format can make life easier for a professor. But that’s not really the point of a graduate degree, at least not as I see it. Leadership is about Creation Leadership should be about creation, not emulation. When my university sends me out into the world as a newly minted, card carrying business leader, capable of tackling any problem, what will the world expect of me? I’m pretty sure when I present a solution to a pressing business problem, no one will complain that it’s not in APA format. In fact, I’ve found professionally that when I publish solutions in a standard format, such as IEEE for electrical engineering, it actually works against me. I’ve observed that my peers were turned off by the format, since it reminded them of school and being forced to dig through hundreds of papers full of dry commentary on research all to often void of novelty. What worked then? I have found that creating a website for internal or group communication among peers is more accessible, shared more frequently, more easily found by my team and benefits more people outside my immediate organization as search engines direct traffic there. Google and Bing are the New Standard Above I mentioned some of the perceived benefits of standardized communication. Before search and...

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Net Present Value & the Go, No-Go Decision

Jul 15

When and how should the decision be made to pursue a new project in your business? I think far too often the “Go”, “No-Go” decision is made without consulting the data. Two discussion points that came up over and over in Corporate Finance include the cost of capital and net present value. The cost of capital is the rate of return you might expect if you invested the same capital in another opportunity with similar risk. This is useful because it puts you in the frame of mind of an external investor that has the option of passing on your company with his investment dollars. Using the cost of capital properly can help you make objective decisions. Present value is a calculation that takes the cost of capital into account when calculating the expected return for an investment when considering all cash flows, and their timing. The net present value (NPV)takes in to account all cash investments as well. If the NPV of a project is positive, then it should be pursued. If two projects have a positive NPV, either both or the project with the higher NPV should be pursued. Go, No-Go The point is that far too many entrepreneurs fail to determine the cost of capital that should drive their decision making or to calculate the NPV for a given project. If an NPV is negative, the project should be dropped. You might ask: Should we just do nothing then? Not at all. If you drop one project because it doesn’t produce a positive NPV, look for other projects, or invest your capital where it is likely to get the same return. My point is this: Don’t be afraid to drop a project because it has a negative NPV. The point of business is to make money, and if you can’t show ahead of time that you’ll make money, there’s little point in investing in the project. In a slightly less sophisticated way, Ed Dale, an Apple loving internet marketer by trade, is saying the same thing this...

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Innovation in Business

Jul 15

In 1837, Ralph Waldo Emerson delivered a talk to the Phi Beta Kappa Society, at Cambridge in which he espoused his vision for the ascendancy of education in our budding republic. He draws on some rich analogy in his arguments, and even admonishes that American universities must “aim not to drill, but to create”, lest they begin to “recede in their public importance, whilst they grow richer every year.” While books are one of the primary resources he cites to facilitate education, he gave the following caution: Books are the best of things, well used; abused, among the worst. What is the right use? What is the one end, which all means go to effect? They are for nothing but to inspire. I had better never see a book, than to be warped by its attraction clean out of my own orbit, and made a satellite instead of a system. I think often about the books I read and question my relationship to them. I have observed that when a book becomes popular (e.g. a best seller), its gravity increases. I have also found that when a book provides me with a very clear and and relevant answer to a problem I have, the remaining contents of the book tend to increase in gravity. A book’s popularity and apparent relevance are good cues, but they can also interfere with the development of our own systems, making us satellites to the ideas they present. Creation is the Goal Businesses need men and women, leaders and managers, who create. When considering what qualifies as innovation in business, it’s important to acknowledge that books, while essential, do not in themselves qualify as innovation. They should instead server to inspire us to create something new, novel and meaningful. In addition to books, there are numerous programs, seminars, certifications, etc. which, if adopted whole hog (so to speak), may put businesses at risk of becoming satellites rather than systems. Some examples might include: Six Sigma Scrum Off shoring Restructuring I’m not suggesting that there’s no benefit in adding off shore resources to increase capacity or implementing Scrum for software development. Those can be very successful approaches and can enable businesses in very creative and...

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Merchant Issues Related to UCC

Jun 15

The last lecture in my Management Law course was lively and interesting. It centered on the UCC and gave particular emphasis on the merchant to merchant dealings. There was particular emphasis on Sale and Lease sections and some discussion around the original vs. the revised, which addresses contemporary issues related to e-commerce and electronic communication. What was interesting is that the formality and rigidity which is characteristic of law in so many other contexts cedes to predictability and flexibility. In other words, the UCC wants to make business easy and remove as many inhibitors. As a result, many of the questions that arise in merchant to merchant cases center around past dealings and industry averages. This may result in cases where there was no contract, but there can still be a definitive ruling. Another aspect of the UCC for merchants is that it favors resolution outside of court. With the less rigid structure of the guidelines governing merchants, it’s not as easy to clearly identify breach. If breach isn’t absolutely clear, the cost of litigation is a risky bet. So it seems there is opportunity for broad interpretation of the UCC when it comes to merchants. Bottom line? Take the time to choose vendors, suppliers, contractors and other partners that you trust and establish a good track record. If you keep the lines of communication open and have well established policies, you may not even need to review the UCC....

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Principals and Agents

Jun 07

The law surrounding relationships in business has its heart in Principals and Agents. There are various ways that these relationships are formed. The most common are Employer, employee Independent contractor The most common formation involves Express Agency. That means that both parties agree on the terms of the principal agent particulars. This may include exclusive agency, where the relationship is limited to the original parties for the purposes set forth in the contract. There are other types of agency, including implied agency, agency by ratification and power of attorney. While the implied and ratification formation mechanisms are less specific in terms and timing, power of attorney is a deliberate transfer of (often specific) rights to legally act on behalf of the principal. Agents duties include to perform as agreed, notify the principal of relevant information related to that performance and account for expenses and other pertinent information related to his activities. Principal’s duties It is expected that the principal, as well as the agent, has specific duties and responsibilities after the formation of an agency relationship. These include duties to reimburse, indemnify and cooperate. The professor shrugged a bit on this topic explaining that in her professional course as a practicing lawyer the overwhelming majority of agency related cases had to do with the agent, not the principal. Termination There are many circumstances that can bring about the termination of a principal-agent relationship. These may include Act of the parties Unusual change in circumstances Impossibility of performance Operation of law There are also times when wrongful termination occurs. In these cases, the agency relationship is terminated, but remedies may be available in court, such as damages to cover benefits that were anticipated under the principal-agent relationship as specified in a...

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