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Flexibility Audit

Flexibility Audit. Functional Chaos or Flexible Truth?. P.R. Boers (Erasmus) Drs. N.A. Giling (AMS/QB) G. Joppe (Erasmus) Ing. J.J. Kooiman (AMS/QB) Dr. H.W. Volberda (Erasmus). Department of Strategic Management & Business Environment Rotterdam School of Management

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Flexibility Audit

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  1. Flexibility Audit Functional Chaos or Flexible Truth? P.R. Boers (Erasmus) Drs. N.A. Giling (AMS/QB) G. Joppe (Erasmus) Ing. J.J. Kooiman (AMS/QB) Dr. H.W. Volberda (Erasmus) Department of Strategic Management & Business Environment Rotterdam School of Management Erasmus University Augustus 31, 1995

  2. Agenda • Flexibility audit KLM CARGO • Environmental turbulence profile • Flexibility profile • Actual organizational potential • Discussion and conclusions

  3. Conceptual model Stable/Turbulent Environ- ment Management task Metaflexibility } • Operational • Structural • Strategic Flexibility Mix Limited/broad Low/high potential Organization design task Technology Structure Culture Organizational conditions

  4. Environmental Turbulence Profile

  5. Environmental Turbulence Profile (2) • Summary • Turbulence • Complex, dynamic environment • Highly controllable

  6. Environmental Turbulence Profile (3) • Complexity • Suppliers • Increase of internal dependencies • Technology • Increase of new technologies for process control • PMC’s • Grey area’s (who owns the customer?) • Customers • Increasing number of client demands due to intended shift to direct accounts

  7. Environmental Turbulence Profile (4) • Dynamism • Workload • “Making your capabilities visible” • Technology • Many developments in technology, impact on organisation • Financial Resources • Variations in allocation of financial resources • “Financial resources are not limiting Cargo’s actions at the moment”

  8. Environmental Turbulence Profile (5) • Unpredictability • Inside-out: • Predictable markets, despite lack of market information • Suppliers • Internally highly dependent, yet relations seem unclear

  9. Flexibilityscan KLM Cargo

  10. Flexibilityscan KLM Cargo (2) • High overall flexibility • Highlights: • High flexibility score regarding suppliers of capacity (rubber planes) • High flexibility score regarding PMCs (anticipating market needs) • Less internal flexibility, focus on cost and efficiency • Less flexibility regarding internal clients (compared to external clients)

  11. Technology characteristic

  12. Technology characteristic (2) • Summary • Large deviation: much variety in flexibility potential of technology within division • Flexibility potential can be inproved by increasing the applicability of infosystems and widening the operational production repertoire • Design variables lay out & mode of production are hardly changeable • >The above determines the potential for operational flex. of the current organisation

  13. Technology characteristic (3) • Mode of production • batch leaning towards mass production • Large range of services (mass customised) • Lay-out • functional-group • much dependences between operations

  14. Technology characteristic (4) • Means of transformation • Average flexibility, not applicable for other services • Info systems support functional departments instead of processes • Operational production repertoire • Quality control based on informal spot-checks and self-control • Routinization of actions, little customization

  15. Structure characteristic

  16. Structure characteristic (2) • Summary • Flexibility potential restricted by functional organisation, control systems and large dependencies between subparts • Organisational form • Functional • Specialised to function & product • Integral management

  17. Structure characteristic (3) • Control systems • Top down & bottom up planning • Process regulation • Specialisation systematically, but not formalised • Much participation, yet limited autonomy of the departments • Large sequential dependencies in processes

  18. Culture Characteristic

  19. Culture Characteristic (2) • Identity • Strong collective “pride” • “everything is possible here” • Many sub-cultures • Leadership • Consultive leadership style of division management • Lack of leadership by lower management • Freedom within guide-lines • Priority rules

  20. Culture Characteristic (3) • Unwritten rules • Strong conformation to Cargo mentality • Discipline dominance: “work hard, don’t argue” • Rules are violated by definition (everybody is vice president) • Willingness to change (except for middle management) • “Practise what you preach”

  21. Culture Characteristic (4) • External orientation: • long term • Fairly open, yet renewal is mainly means orientated and technology-driven • Anticipation of changes is purely driven by self-interest

  22. Decision support matrix(flexibility deficit)

  23. Decision support matrix(flexibility surplus)

  24. Overall analysis Flexible organisation High kc ? Bureaucratic organisation Controllability Rigid organisation Chaotic organisation Low Operational flexibility Structural flexibility Strategical flexibility Flexibility mix

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