Question

The new companies that are established these days are getting in to news by their innovative technologies; one of innovation that we can see these days is that layers of management in the organizations are becoming lesser and the levels that make decisions are coming down. Instead of mangers they are using user friendly software that will make 4

decisions and performs the jobs in an easy way. For example, flip kart’s yellow shift is an application for storing corporate data, analyzing the data, and presenting the results in the form of dashboards that anyone in the firm can use. In the past such data were difficult to get, needed more experienced managers to organize and interpret, or could not be analyzed without expensive business intelligence systems costing millions of dollars. Today even small companies can afford to store and manipulate nearly limitless pools of data in near real time. For example, Kappa a rapidly growing clothing start-up targeting college students and staff, doesn’t have a CEO. They follow a decentralized structure with four co-CEO’s who manage their own department. This organization structure is implemented throughout the company. All Kappa employees have access to the same data as its top level managers. According to Vasanth, one of the Kappa co-CEOs, when you don’t have a traditional CEO and final decision maker, you have to trust people to make the right decisions based on the information they see. The company can progress quickly once this trust is established. Vasanth points out that in the past, an associate specializing in events for clients might report to a manager in the marketing department. Now, the event planner can take decision about planning future events based on the likes and posts on Facebook about a current event. This information is also displayed on the dashboards. These tools help him to take accurate decision with least involvement from the manager.

Answer the following questions:

3a. Critically analyze Simons framework and compare the organization structure discussed in the above case study. Which structure do you think makes the decision making process easier?

3b. Illustrate any two examples from your experience where the companies are replacing people with technology

Answer 1

Ans 3a)

Simon's framework of four levels of control provide how Manager's can use innovative data based control systems to make strategic decisions in the company. Flipkart's yellow shift and Kappa's decentralized decision making are using these innovative control systems to make decision making faster and more effective.These 4 levels of control are:

1. Beliefs system: This control is about the value system and core values of the company. These core values are repeatedly exhibited in the actions, communications and decision of the management. They are articulated via the mission and the vision statements of the company. They are the guiding principles based on which the management is supposed to make decisions. Kappa's belief system is clearly that final decision should be made by the person having the most expertise about the relevant area irrespective of his hierarchy. This leads to faster and more effective decision making.

2. Boundary Systems: These are associated with the codes of conduct for employees including risks to be avoided and operational guidelines. Flipkart has made its key operational data visible to all employees to ensure that employees can take corrective action in their relevant area themselves without being told to do so.

3. Diagnostic Control systems: These are associated with the monitoring of the key performance indicators of each departments and activities. Managers use these to take corrective action by making modifications in the system if the KPI is falling below a particular level. Both Flipkart's and Kappa's management has made the Key Performance Indicator's available to all employees to ensure that decisions can be taken real time basis by the relevant person or department.

4. Interactive Control Systems. These are about flow of ideas from the lower level to upper level management through various interactive systems and insights drawn from the data analysis done by the lower level employees. All Kappa employees have access to the same data that management have, this creates transparency and flow of ideas from the data analysis done by the respective departments' who are keen to improve performance.

I believe that organizations using the Simon's level of control systems are more prone to faster and better decision making,

Ans 3b)

Two personal examples where I have witnessed people being replaced by technology are:

i) In the stock trading company I currently work many risk management features have been automated and controlled by the system. For example the magnitude of the exposure per trade is now controlled by the system and this was manually controlled earlier.

ii) In a supply chain consultancy  i worked earlier the supply network planning was earlier done manually but now is being by the Llamasoft software that the company deploys and enter's the client data in it.