Creative and Innovative Approach to Organizational Problems Report (Assessment)

Abstract

The main objective of this study is to synthesize organizational theories in order to analyze and solve organizational problem in a creative and innovative way. The organizational problem in this case is Rollers over ambitious and risky strategies to maintain its position as a premium provider of design and marketing services. The study explores different theories and their relevance in solving organizational problems.

Major decisions of the company are only made by the five founding directors or their representatives and this means that there subordinates have limited powers. The business must take a lot of caution in its strategies aimed at maintaining their position in the industry. The company should also delegate duties to its staff to ensure balance of power, continuous learning and sustainability.

Introduction

Roller is an innovative studio found in Surry Hills, Sydney. The company was established in the year 2009 by five directors with diverse experience and skills in marketing and design. The diverse experiences and specialties of these directors matched the company’s philosophy of creating more comprehensive solutions for its clients.

While most agencies make massive profit from marking –up external suppliers, the company brings an alternative model to the sector, by charging value-based fees and not marking-up external service providers. This has ensured that the company upholds its status as the leading provider of design and marketing services (Roller studio 2011, p. 3).

The overall objective of the company is to expand its operations beyond its current status. The other objectives of the company include: increasing its turnover to over $350000 in the current financial year, employing two positions in support of client management and design, obtaining two major clients accounting for $100000 in the present financial year, and to secure a major project in excess of $100000 (Roller studio 2011, p. 3).

With the intention to provide services to the clients who share similar philosophy as the company, the company intends to attract like minded clients through a person-to person referral system. Presently, the company serves to major clients in the property development sector.

However, the company has also extended its services to other realms including: the hotel industry, airline industry and manufacturing industry. The company continues to pay a lot of attention to these areas because they offer high value brands. This harmonizes the company’s products and services positioning which is strongly linked to brand management (Roller studio 2011, p. 4).

Roller provides a wide range of services which includes photographic services, communication and design. Rollers business covers numerous activities ranging from consumer segmentation to photo shoots to graphic communication and event activation.

The company aims at providing clients with services which constantly exceed their expectations. In this case, the company aims to lead, inform and shape the direction of the industry by pushing the bounds to the brief, challenging the market and being the first (Roller studio 2011, p. 5).

The main objective of this study is to synthesize organizational theories in order to analyze and solve organizational problem in a creative and innovative way. The organizational problem in this case is Rollers over ambitious and risky strategies to maintain its position as a premium provider of design and marketing services.

Major decisions of the company are made by the five founding directors or their representatives and this means that their subordinates have little powers in the business if any. Therefore, as much as Roller is an ambitious company, caution must be taken against the strategies used to transform the business into a leader in the industry (Roller studio 2011, p.5).

External Analysis

PEST stands for political, economic, social and technological factors that have significant impacts in an organization. This analysis assesses the impacts of the above factors on the business. The results of this analysis can be used in taking advantage of the new opportunities and preparing contingency plans for threats in the industry (Porter 1980 P.3).

The operations and functions of Rollers are less affected by political and legal externalities, unlike manufacturing or financial businesses where political and legal changes affect the way they make their decisions and also determine their future. Its operations do not rely much on legal representations or requirements.

However, in the case of the local government deciding to invest in promoting and growing the local design and creative industry, it will provide a wealth of opportunities for Roller (Roller studio 2011, p. 5; Porter 2008, p.78).

Since Roller provides professional services in design marketing, technology will be an external factor that will most affect its operations. If technology is cheaper to obtain or technology is more advanced, it will provide Roller cost advantages or efficiency, or both.

Roller would then be able to exploit its core competencies more effectively, providing its services to clients at a more effective rate (Roller studio 2011, p. 5; Porter 2008, p. p. 4).

There are about 1,500 design agencies in Sydney and 150 in Surry Hills alone. Of these 150, about a dozen are direct competitors to Roller which provides similar professional services, such as Frost. The market is in perfect competition, without many barriers to entry and no specific leader.

There are no big fluctuations of competitions leaving or entering the market, since the professional creative services industry is relatively stable and established. However, the market does indirectly segment itself into 3 tiers: low, medium, and high.

Lower segments provide budget and cost effective solutions to clients at a fixed rate, whereas higher segments provides unique and individual solutions to each specific client. From design and marketing research, each stage will be individually audited and collaboratively designed with clients (Roller studio 2011, p. 6; Porters 1998, p.5).

The profile range of clients varies accordingly with the 3 tiers (segments) of the competitive market. Generally, clients who are willing to pay a premium for premium service belong to the higher segment.

Roller is establishing itself to be in the higher segment of the market, and has no intentions of penetrating into the lower or middle segments. Roller currently caters for property industrial related clients, but they look forward to cater for a more diverse profile range of clients (Roller 2011, p.6; Senge et al. 2008, p.10).

The most substantial threat to Roller would be in the situation where clients might restrict spending and cut back on marketing budgets. Economic downturns will affect many clients, in particular Roller’s clients who are in the property industry.

Without consistent sustainable revenue and cash flow, Roller will eventually feel constricted in its operations. Apart from economic downturns, Roller might face a situation where they are not able to get enough clients to fund current operations as a whole, hence not meeting expectations of both Roller and current clients (Roller studio 2011, p. 5; Porter 2008, p.78).

Internal environment Analysis

Since Roller was founded based on individuals with diverse experience and skills in marketing and design, its main competitive advantage is in its human capital. The unique talent of these people puts the business into a very unique position.

This business is not its founder’s main business but they do it out of passion for design and creative works. The passion for deign and creative works give Rollers a competitive advantage over their rivals. This is because their rivals are in the business to earn income while they do it for passion (Roller studio 2011, p. 6; Porter 1998, p.7).

Roller has developed huge networks and relationships and, therefore, does not spend a lot of money on conventional marketing such as media advertising. The founder’s passion for this type of business has also attracted a huge following.

Roller believes that relationships are the main focus of their customer policy because relationships are built on trust. In the professional services industry, trust is a very important factor as familiar mutual understanding will give both parties a win-win situation (Roller studio 2011, p. 7; Porter 2008, p.78).

The location of the business offers it with a unique space for hire as well as an opportunity space for establishing new networks. Roller accepts clients and charges based on the values they provide. Although Roller charges at a higher quote, they are confident about delivering above expectations. Financially, Roller is very cost effective compared to its competitors.

Roller employs only 2 full-time workers: one to coordinate clients’ needs with Roller’s, another to keep track of finances (Roller studio 2011, p. 7; Porter 2008, p.78).

Positive Organizational Scholarship

This is an extensive framework which attempts to explain behaviors in and of an organization. It emphasizes on the positive states and processes that result from, and lead to, organizational transformations, optimal operation, and improvements or organizational strengths.

Positive organizational scholarship focuses on the following aspects: flourishing, development of strengths or capabilities, and generative, life-giving dynamics (Cameron 2005, p. 8; Holmberg & Robèrt 2000, p. 299).

Even though Rolls has less number of employees, the business has created a network of talented designers, creators and marketers, who are readily available whenever they are required. The business naturally engages in numerous projects which require new skills and unique talents and therefore benefits from this network.

The business should focus on the positive organizational scholarship with little attention to the negative aspects. This will be boosted by the business’s core founder’s passion for design and creative works (Dutton & Glynn 2008, p. 698; Rolls 2011, p. 3).

Positive organizational scholarship is largely concerned with conditions that facilitate flourishing at the personal level to the organizational level. At a personal level, flourishing is exhibited by dynamism, growth or success. At the organizational level, flourishing is indicated by creativeness, level of innovation, growth or optimal functioning.

Organizational development and expression of strength is illustrated by organizational virtuousness as a combined accomplishments, collective wisdom and collective courage. Lastly, life-giving dynamics is explained by flourishing and nurturing of strength in all aspect of the organization (Dutton & Glynn 2008, p. 698).

In the case of Rollers, individual strength lies on the passion of the founders and their skills and experience in the field of design and work arts. Their unique backgrounds and large experience enable them to offer more comprehensive solutions to their clients than the competitors could offer. The business offers a wide range of services and enjoys massive revenue.

At an individual level, Rollers has employed very few members of staff who are highly competent and subservient. Collectively, the business has set its goals high and applied effective strategies to maintain its status in the industry (Helfat, Finkelstein & Mitchell 2007, p. 6; Kay 2010, p. 1210).

However, Positive Organizational Scholarships rest on a number of assumptions, which include:

Contextual strength, which posits that the status and condition of an organization significantly impacts on the personal and joint processes of potency and capacity building; positivity and negativity in relationship, that can be complementary and unbalanced; endogeneity and dynamism of resources, that provide the basis for success and growth of organizations; lastly, normative basis, that favors positive or good things.

Even though Positive Organizational Scholarship theory is promising, it still has a number of limitations. Some of its limitations include: its usefulness, ability to generalize and moral implications.

Additionally, there are challenges in accounting for what is good or optimal according to different cultures but POS perspectives do not take this into account (Helfat, Finkelstein & Mitchell 2007, p. 6; Dutton & Glynn 2008, p.698; Katkalo 2010, p. 1175).

Cultural cognitive structure provides the inner basis of institutional forms. They provide the infrastructure on which the organizational norms, beliefs and policies rest. The regulatory aspect of cultural cognitive framework has received a lot of attention from experts and scholars all over the world.

This is because they are more visible, more superficial and less far-reaching than normative and cultural facets (Dutton & Glynn 2008, p.700; Kay 2010, p. 1210).

Strategic management and organizational dynamism

Change is a widespread feature in life of organizations and the capability to handle such changes is the core competence of success in an organization (Senge et al., 2004, p. 4).

The main drivers of organizational changes over the last two decades have been globalization, advancement in technology and fluctuation in global economy. This has led to distressed exploration of mechanisms for achieving competitive advantage through increased radical forms of change (Stacey 2003, p. 8, Katkalo 2010, p. 1180).

Recently, scholars and professionals have come to scrutinize organizations through complexity theory. Complexity theory has had significant impact on the organizational structure and transformation.

This theory serves as serves as an umbrella for other numerous theories, ideologies and investigative programs derived from various disciplines in natural science. Complexity theory is concerned with the systems which are continuously changing and where the cause and effect laws are not applicable (Burnes 2004, p. 310).

According to complex adaptive system theory, the dynamic and non-linear systems, the dynamic and non-linear nature of systems are attributed to chaos and order. Chaos explains a complex, random and orderly disorder in which patterns of behaviors spread out in unpredictable but similar manner. Stacy (2003) identified three categories of order-disorder.

These are stable equilibrium, volatile instability, and bounded instability. The bounded instability is the only type with the ability to change itself in a sustainable manner. She argued that if the system became extremely stable, they become fixed and die. On the other hand, if the system becomes too unstable, it may get out of control and destroy itself. (Stacey 2003, p. 8; Burnes 2004, p. 313).

However, under the state of bound instability systems are perched between the order and chaos. The most common term used to describe this circumstance is the “edge of chaos” (Stacey 2003, p. 8).

Senge et al. (2008) argue that creativity and growth reaches their highest state when the complex systems operate at the rim of chaos. This argument is in the opinion that the presence of suitable order-generating rules, which allows self-organization to occur, permits some systems to remain at the rim of chaos, at the same time as others fall over the edge (Senge et al. 2008, p.15).

Organization which operates at the edge of chaos should responds constantly to changes in their surrounding through a process of spontaneous self-regulating transformation to achieve sustainability. However, in the natural circumstance, the process is usually driven by order-generating rules which are subjected to changes in certain situation. Naturally it is also an automatic process which is not the case in most organizations.

As a result, self-organization may not take place even when proper order-generating rules are there. Senge et al. (2008) argue that to promote change through self organization, organizations are required to operate the principle of democracy, which is freedom of members to self-organization (Burnes 2004, p. 311; Senge et. 2008, p. 6).

If Roller was to adopt complexity approach it must have a balanced allocation of power, strong consumer focus, steady learning and inclination towards corporate social responsibility.

Senge et al. (2004) argues that since small actions in an organization can have serious and unpredictable repercussions, individual activities are very significant. Consequently, for organization to function well, authority should only be delegated to persons who have access to the wider channels of information on the subject concerned (Senge et al. 2004, p. 8)

Complex system theory also states that human beings must learn to coexist productively within the limits of the existing global system. If this was the case now, then the exterior expression of organized human activities would not be the same with operational models in use now.

Regenerative leadership structure provides insight to how leaders in an organization and society at large should change to achieve the natural equilibrium.

Therefore, the problem and challenge of sustainability lies on the outcome of individual actions. It is only through a comprehensive integration of all the individual components that the expertise and understanding to attain the natural equilibrium can be achieved (Holmberg & Robèrt 2000, p. 292).

Cortese (2003) recommended that organizational strategies must take the form of a continuous learning, in which at the limit, preparation and execution becomes impossible to tell apart. He proposes that organizations should generate, develop and maintain excellent business designs capable of taking advantage of its strategic landscape and business environment beyond the lifetime series of changes in an organization.

This can only be achieved through self-organizing process of the individual employees. He acknowledges the role of strategic planning and the formation of networks since individual errors may have severe impact in the organization as a whole (Cortese 2003, p. 16-17; Holmberg & Robèrt 2000, p. 292).

Senge et al (2008) explains how individuals and organizations work jointly to create a sustainable planet. He developed new ideologies related to leadership using an organized approach. The systematic approach views the entire organization as a complex system with interconnected parts. The constituents of an organization include the management, general employees and the stakeholders.

He describes sustainable thinkers as innovators who work relentlessly to create regenerative economy in the future and are capable of viewing and understanding the system in which they live and work. There vision is beyond the events and organizational boundaries thus make critical choices which take into consideration the natural and societal edge so as to create sustainable cycles of innovation (Senge et al., 2008, p.4).

Transactional Cost Economics

Transactional Cost Economics is a result of the two most recent and corresponding studies. These are: New Institutional Economics and New Economics of Organizations. These two theories have transformed organizational theories from the technological perspective to governance perspective.

Transaction cost economics agree with other experts in social science that adaptation is the major challenge of any organization. Economic problems arise from both internal and external changes in the business environment. Therefore, to achieve sustainability business entities must learn how to adapt to such changes. Adaptations can be classified into autonomous adaptations and cooperative adaptation.

Autonomous adaptation refers to mechanisms through which individual parties respond to market prospects as indicated by changes in prices. Administrative adaptations are achieved through business administration (Williamson 1998, p. 25).

Adaptive cost economics recognizes that a high performing system requires adaptive capacities mentioned above. Alternative forms of governance are express in terms of their unique competence in delivering the two types of adaptations.

Most organizational theories that rely on administration to achieve cooperative adaptation are mainly concerned with the management. In other words, transaction cost economics is very much sequential, adaptive, and a managerial exercise (Dosi, Nelson & Winter, 2000 p.16; William 1998, p. 27).

Many theories of economic organization tend to be fundamentally retrogressive, in that they provide a historical explanation of what has happened. Even though such kinds explanations are vey educative, they must go beyond retrospective explanations and recommend predictions.

This is well covered in transaction cost economics. Transaction cost economics is very flexible and is linked to a large number of phenomena (William 1998, p. 28).

Acknowledging the transaction as a fundamental unit of analysis transforms economics from a science of choice to a science of contract. However, transaction becomes significant in an operation only when the elements that differentiate transactions from one another are recognized.

Out of the numerous factors that describe transaction, transaction cost economics applies three dimensions that have been particularly informative to the study of business transaction. These include: frequency of transaction, transaction uncertainties, and the state of asset specificity.

The latter dimension leads to an increase in a state of mutual dependency, immediately after which a huge number of supply conditions at the onset are changed into a diminutive number of exchange afterwards.

Asset specification takes different forms in which entities of governance structure develops it response. Therefore, it is a driving force to which transaction cost economics owed its extrapolative content (Mingers 2000, p. 219; William 1998, p. 30).

Conclusion

Complex adaptive system theory attributes the non-linear and dynamic nature of systems to chaos and order. Chaos explains a complex, random and orderly disorder in which patterns of behaviors spread out in unpredictable but similar manner.

The bound instability is the only type with the ability to change itself in a sustainable manner. In the organizational perspective, approaches used must balance power, consumer focus, continuous learning and community service.

The organization must also put check and balance (order-generating rules) to ensure organizational strategies towards change and innovation do not go overboard to impact the organization severely. This is because small changes in a system can lead to large, or even radical transformational changes in an organization.

Therefore, as much as Roller is an ambitious company, caution must be taken against the strategies used to transform the business into a leader in the industry. The company should set up clear guidelines that would help both the directors and the staff in making critical decisions.

Complex adaptive system theory explains how decisions made by individuals can have a major impact in an organization. The company should also delegate duties to its staff to ensure balance of power, continuous learning and sense of belonging.

Transaction cost economics agree with other experts in social science that adaptation is the major challenge of any organization. Economic problems arise from both internal and external changes in the business environment. Therefore, to achieve sustainability business entities must learn how to adapt to such changes. Adaptations can be classified into autonomous adaptations and cooperative adaptation.

Autonomous adaptation refers to mechanisms through which individual parties respond to market prospects as indicated by changes in prices. Administrative adaptations are achieved through business administration.

Rolls should adopt the two types of adaptations to ensure sustainability of business. Even though Rolls offers high quality services and products, their prices tend to be very high. The business also delegates less power to its employees.

As a matter of fact, Rolls has only two employees employed on permanent basis, this restricts the growth of the business to other parts of the country. The business should embrace cooperate adaptation as to counter such challenges. Rolls should also emphasize on the positive states and processes that result from, and lead to, business transformations, optimal operation, and improvements or organizational strengths.

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