Legacy Factors: Organizational Growth

1. Longitudinal thinking and Legacy Factors: Organizational Growth Facilitator and Course Coordinator: Vinayshil Gautam PhD, FRAS(London) (Founder Director IIM K; Leader Consulting Team IIM S) A Al_Sager Chair Professor and First Head, Management Department, IIT D Chairman, DKIF

2. Organizational Growth • The future of any organization depends on how well it is able to relate itself to its givens and use that knowledge to project growth. • Also, calls for longitudinal thinking • The longitudinal thinking can effect different components of the organization differently, because, the givens can vary in each component (Burton et al., 2002; Eisenhardt et al., 1990b).

3. Eg:Organizational Structure • There is no ideal organizational structure • Structures can be placed along the continuum from mechanistic to organic • Entrepreneurial choices about organizational structures and processes are driven by founders’ prior experiences in specific companies • As the organization grows, it evolves into a more organic structure. Past affiliations are an important and understudied component of founders. Beckman (2006)

4. Factors that influence the choice of structure

5. Longitudinal Thinking • The present state is a result of the past state and the future state would be the result of the present state--- nothing begins ab initio. • Tool to analyse organizational structure • Account for the constraints and facilitations provided by the environment

6. Longitudinal Thinking (cont.) • Can help to establish a useful pattern or trend between a dependent and an independent factor over time. • Can reveal the impact of other surrounding or circumstantial or peripheral factors • There are 2 underlying sub processes • Longitudinal study(mapping the givens) • Longitudinal analysis (structure, aggregate, classify)

7. Variables in Longitudinal Thinking- Used to factor variables into issues of technological choice and development

8. Legacy Variables • The trajectory of organizational growth can be plotted as • c is the legacy variable • Represents the appropriate definition of the situation • Longitudinal Thinking can reveal ‘c’ i.e. the factors that impact the dynamics of the relation between y and x y = mx + c

9. Legacy Variables (cont.) • c emerged as a result of • Molding influences during the early stages of growth • Contextual factors • Personality variables • Process variables • Has to be factorized/scientifically decomposed and selectively built upon • Done by longitudinal thinking

10. Legacy Variables (cont) • Any choice the organization makes invariably reflects • Its past experience • Its learning from its mistakes • Present state of affairs • Its vision for the future

12. Organizational Legacy • When an individual leaves an organization to pursue an entrepreneurial venture, the new firm’s initial endowment will be the knowledge that is embedded in the parent organization. • Certain decisions central to the capabilities of a new firm, are part of that knowledge • The design of the organization • The degree of hierarchy and span of control • The institutional routines • Organizational culture Agarwal et. al (2004)

13. A substantial percentage of the founders in the successful Inc.500 gathered ideas for their new company while working for their prior employer in the same industry1. • The survival rate of new firms is greater when the founders have prior work experience in incumbent firms2. Bhide (2000) Klepper and Sleeper (2005)

14. Longitudinal Analysis • Detailed examination of data and evidence to reveal trends over time • Reveals patterns in target population’s achievements, behavior etc over time • Comparison with trend analysis • Switch from trend to longitudinal is simple; focus on the individual’s event • Gives a ‘before’ and ‘after’ picture

15. Comparison with cross-sectional analysis • People making up the population change according to who fits the criterion each year • Longitudinal analysis looks at the same people over time based on whether they fit the criterion at the selected time

16. Comparison of Studies

17. Longitudinal Study • Correlation research study that involves repeated observations of the same items over long periods of time. • Observational in nature • Repeated observations at an individual level • Enable to distinguish between short-term and long-term phenomena

18. Types of Longitudinal Studies

19. Cohort Analysis • Cohort • Group of people who share a common characteristics or experience within a defined period • Set of individuals entering a system at the same time • It seeks to explain an outcome through exploitation of differences between cohort

20. Variations of Cohort Study

21. Longitudinal Thinking & Organizational Effectiveness in Learning Process • Organizational learning is the sum total of the individual learning occurring in the workplace1 • There is a marked shift to group learning • Cowan (1995) made use of the Native American Medicine Wheel to describe this model of organizational learning2 • Circular, longitudinal & integrative Argyris & Schon, 1996; Levitt & March, 1988; Normann, 1985; Weick & Westley, 1996) Rhythms of Learning: Patterns That Bridge Individuals and Organizations : David Cowan, 1995

22. North American Medicine Wheel Model

24. Longitudinal Thinking and Organizational Planning • High-level planning activities • Establish the high-level goal • Scan the environment • Analyze the high-level goal • Develop strategies and tactics • Develop schedules and assign responsibilities We need a plan before planning

25. Longitudinal Assessment for Grading System in Performance Appraisal • Based on the performance during the performance appraisal term • Each individual compared to their own beginning level • Assessment by means of • Process, effort, and participation as tools of learning. • Practice in generating and developing ideas. • Thinking skills, problems solving skills, and dexterity skills. • Grades on basis of ‘learning to think’.

26. CASE A pharmaceutical company and the evolution of its organisation structure

27. Organizational Legacy and Entrepreneurial Firm Performance • Study done on Swedish and Danish biotechnology start-ups • Founders’ immediate prior experience affects the performance of their new venture. • Differentiation between financial performance and product development

28. Legacy Variable: Founders’ Professional Backgrounds

30. Control Variables • Human Capital variable • Work experience of the founders • Number of publications • Number of citations • Social Capital variable • Founding alliances: Early stage strategic alliances • Later alliances

31. Performance Measures • Innovative performance • Early stage inventive performance: No. of patents granted to the firm • Number of active clinical trials in the firm’s portfolio (market potential) • Financial performance • PMV (Post Money Value) • Market capitalization, calculated as the average daily closing price in each year for a given firm, multiplied by the number of stocks committed • Non-listed firms • Calculated per each round of capital inflow as the total number of shares committed, multiplied by share values paid by new investors

32. Results: Effect of Organizational Legacies

33. Thank you!