The document discusses how technology impacts organizational structure. It presents three frameworks for classifying technology: Woodward's organizational technology framework classifies production processes based on degree of automation; Thomson's framework looks at inter-unit interdependencies based on production linkages; and Perrow's framework categorizes technologies based on task analyzability and variability. The frameworks are then used to examine how different technologies require different structural designs and coordination mechanisms within organizations. Advances in manufacturing technology like customization and flexibility are also discussed in terms of their impact on redesigning organizational structures and processes.

1. MANAGING ORGANIZATIONS
Session 3: Impact of Technology on Structure
Sourav Mukherji
PGP 2012-14 Section C & E
Associate Professor of Organization & Strategy
Term 1:June-September 2012 Indian Institute of Management Bangalore, India

2. RECAPITULATION: ORGANIZATION DESIGN GETS 2
IMPACTED BY VARIOUS CONTINGENCY FACTORS
STRATEGY
DEPENDENCY IMPACT OF
ON TECHNOLOGY
ENVIRONMENT STRUCTURE &
PROCESSES
1. Centralization
2. Formalization
3. Specialization
CULTURE 4. Coordination SIZE
POWER 5. Control systems AND
POLITICS 6. Learning GROWTH
7. Decision Making
© S Mukherji

3. WE WILL LOOK AT THE IMPACT OF TECHNOLOGY ON 3
ORGANIZATION DESIGN
STRATEGY
DEPENDENCY IMPACT OF
ON TECHNOLOGY
ENVIRONMENT STRUCTURE &
PROCESSES
1. Centralization
2. Formalization
3. Specialization
CULTURE 4. Coordination SIZE
POWER 5. Control systems AND
POLITICS 6. Learning GROWTH
7. Decision Making
Caveat: In reality, all these factors are interrelated
© S Mukherji

4. 4
TECHNOLOGY IS AN ORGANIZATION’S PRODUTION PROCESS
Three aspects of technology
1
Equipment and tools used in production
2
Design and process of production
3
Knowledge / know-how needed for production
Input Transformation process Output
Material, information, Products, services,
ideas Process variability, standardization,
interdependence
© S Mukherji

5. WE WILL LOOK AT THREE TYPES OF 6
TECHNOLOGY CLASSIFICATION
Organizational
Technology
(Woodward)
Inter – unit
Interdependencies
(Thomson)
Unit technology
(Perrow)
© S Mukherji

6. 7
WOODWARD’S CONTINGENCY THEORY OF TECHNOLOGY
Typology of production processes Technology classification
1. Production of single pieces to customers Low
Group I
2. Production of technically complex units
Small batch &
one at a time
3. Fabrication of large equipment in stages
unit production
4. Production of pieces in small batches
5. Production of components in large batches
& subsequently assembled diversely
6. Production of large batches in assembly line Group II Degree of
7. Mass production Large batch & automation
8. Continuous process production combined mass production
with preparation of product by large batch
or mass production
9. Continuous process production of chemicals
in batches
10. Continuous flow production of liquids, gases Group III
and solid shapes Continuous
process production
High
© S Mukherji

7. 8
TECHNOLOGY IMPACTS STRUCTURAL DIMENSIONS
Structural dimensions Unit Mass Continuous
production production process
Levels of management 3 4 6
Span of control 23 48 15
Formalization low high low
Centralization low high low
Verbal communication high low high
Skill level of workers high low high
Overall structure organic mechanistic organic
Noted a high degree of similarity in structural features between
unit production and continuous process
• Woodward mainly studied small and medium sized organizations
• Relationships were less significant for large organizations
• Woodward studied only manufacturing industries and ignored services
© S Mukherji

8. 9
CLASSIFICATION OF SERVICE TECHNOLOGIES
SERVICE
Unique Selective Restricted Generic PACKAGES
Expert Consulting Increasing
Service scale of
operations
Service
Higher Education
Shop
Service
Package
Factory Delivery
SERVICE
PROCESSES Increasing customization
Source: D E Kelllog & W Nie (1995) A Framework for Strategic Service Management
Journal of Operations Management, Vol 13: 323 - 337 © S Mukherji

9. 10
PERROW IDENTIFIED TWO DIMENSIONS OF TECHNOLOGY…
TASK VARIABILITY TASK ANALYZABILITY
Number of exceptions to Extent to which task can be broken
standard procedures down into sequential steps and
encountered in application participants can follow objective
of given technology procedure to do the task
Characteristics of task with Characteristic of task with
low variability high analyzability
• Most of the tasks are same from day • Known ways exist to do the major type
to day of work encountered most frequently
• Work be described as routine • Understandable sequence of steps that
• Most people in the unit do the same can be followed in doing the work
job the same way most of the time • Established processes and procedures
• Unit members perform repetitive can be relied upon to a large extent
activities in doing their jobs • Problem solution involves using
• Low frequency of encountering instruction manuals, handbooks
novel or unexpected events (explicit sources)
© S Mukherji

10. 11
…TO PROVIDE FOUR UNIT LEVEL TECHNOLOGY
CRAFT NON-ROUTINE
UNANALYZABLE
• small amount of tacit information • large amount of tacit information
• personal observation • frequent face-to-face & group
• occasional face-to-face & group meetings, unscheduled discussions
meetings • high technology and high touch
• intuition & experience – high touch • high MIS , DSS support
• low MIS , DSS support • R & D , prototyping labs
• construction work, piano manufactr. aerospace engineering
ROUTINE ENGINEERING
• small amount of explicit • large amount of explicit
ANALYZABLE
quantitative information quantitative information
• reports, procedures, schedules • standardized exception handling
• some MIS , DSS support • high technology
• long linked mass production • high MIS , DSS support
• Clerical work, credit verification • executive assistant, architectural
engineering
LOW TASK VARIETY HIGH TASK VARIETY
© S Mukherji

11. LINKING UNIT TECHNOLOGY TO STRUCTURAL CHARACTERISTICS12
CRAFT NON-ROUTINE
• Mostly organic • Organic
• Moderate formalization • Low formalization
• Moderate centralization • Low centralization
• Work experience • Professional training &
• Moderate to wide span work experience
• Horizontal verbal • Moderate to narrow span
Organic / Mechanistic • Horizontal communications,
communication Formalization meetings
Centralization
Staff qualifications
• Mechanistic Span of control • Mostly mechanistic
• High formalization • Moderate formalization
Communication
• High centralization • Moderate centralization
• Little training or • Professional training
experience • Moderate span
• Wide span • Written and verbal
• Vertical, written communication
communication
ROUTINE ENGINEERING
© S Mukherji

12. WE WILL LOOK AT THREE TYPES OF 13
TECHNOLOGY CLASSIFICATION
Organizational
Technology
(Woodward)
Inter – unit
Interdependencies
(Thomson)
Unit technology
(Perrow)
© S Mukherji

13. 14
THOMSON’S CLASSIFICATION OF TECHNOLOGY
1 Long linked technology
Automobile assembly line
linear transformation
Continuous process – steel plants
2
Mediated technology Banks, brokerage and
bring clients and customers insurance firms
together in exchange or transaction
3 Intensive technology Research laboratories
coordinate specialized abilities of
Hospital emergency rooms
multiple experts
Different technologies lead to different kind of
interdependencies among members of organizations
© S Mukherji

14. TASK INTERDEPENDENCIES 15
Transformation processes
Transformation Inputs A’s B’s C’s Outputs
processes
tasks tasks tasks
A’s
Client 1 Client 2 Sequential interdependence
tasks
e.g., assembly line operations
B’s
Client 3 Client 4
tasks Transformation processes
C’s A’s
Client 5 Client 6
tasks Inputs tasks Outputs
C’s B’s
tasks tasks
Outputs
Pooled interdependence Reciprocal interdependence
e.g., Banks, franchisee e.g., product development teams
restaurants, universities hospital emergency room
© S Mukherji

15. 16
MATCHING TECHNOLOGY WITH COOORDINATION MECHANISMS
Technology Task Coordination
interdependence mechanisms
Mediated Pooled Rules & standards
procedures
Long Linked Sequential Rules & standards
procedures Planning & scheduling
Intensive Reciprocal Rules & standards
procedures Planning & scheduling
Mutual adjustments
While designing organizations, it is necessary to first group people together
who have reciprocal interdependence, followed by those with sequential
interdependence and finally those having pooled interdependence
© S Mukherji

16. 17
ADVANCES IN MANUFACTURING TECHNOLOGY…
off-diagonal
Customized
Small Mass
batch customization
Extensive use
of information
Flexible technology
Flexibility
Mass manufacturing
production • CAD
Trade-off • CAM
Standardized
diagonal of • ERP
traditional Continuous
• DSS
manufacturing process
Small Batch size Unlimited
© S Mukherji

17. 18
…BRINGING ABOUT REDESIGN IN STRUCTURES & PROCESSES
Characteristics Mass Production Mass Customization
Structure
Span of control Wide Narrow
Hierarchical levels Many Few
Tasks Routine, repetitive Adaptive, craft like
Specialization High Low
Centralization High Low
Overall Bureaucratic, mechanistic Self regulating, organic
HR
Interaction Stand alone Teamwork
Training Narrow, one time Broad, frequent
Expertise Manual, technical Problem solving, cognitive
Inter-organizational
Customer demand Stable Changing
Suppliers Many, arm’s length Few, close relationship
• Opportunity for intellectual mastery and enhanced cognitive skills for workers
• Greater responsibility for results
• Greater interdependence leading to social interaction and
development of team work
© S Mukherji