MGT1FOM Foundations of management
Case study 1 for assessment 1 Creating an innovation culture Shutterstock, 25th on the most innovative companies list in 2014, is certainly not one of those companies that can be accused of becoming slower innovators after going public. The company achieved a 40% growth in revenue and has been consistently releasing new programs. In addition to integrating with Dropbox, Shutterstock’s images are freely available to Facebook advertisers who formerly littered the site’s ad space with cheap but poor-quality photos. Shutterstock’s founder and CEO, John Oringer, explained to Fast Company that the Facebook advertising deal is a win-win: advertisers are happy as their ads have high-quality photos for no cost; Facebook gets more advertisers and better looking ads and Shutterstock sells more images. Oringer said that Facebook pays Shutterstock a fee per image, with the photograph contributor receiving approximately 30% of that fee. That all of Shutterstock’s images are ready to be used commercially also helps advertisers avoid the threat of litigation that they would be exposed to had they simply copied and pasted an image from the internet. The company has brought in the concept of collaborative experimentation, which can help companies to not only boost their products but instil a progressive innovative mentally into the company culture. Shutterstock’s Vice President of Product, Wyatt Jenkins, argues that through the continuous testing of ideas, a culture of experimentation can begin to manifest in the organisation. Jenkins says that the benefits of an experimental culture include the death of ‘HiPPOs’, which he describes as the ‘highest paid person’s opinion’. ‘A/B testing is a sure way to get to the bottom of a decision without relying on anyone’s gut instinct. At Shutterstock, if a senior executive has an idea in a meeting, the response is simply, “Let’s test it”.” This process spills over into teams, which results in better engagement since their ideas are values and will be testes. Even if the result is failure, many positive spin-offs are achieved such as improved self-esteem and employee growth, especially the growth of critical ideas. Jenkins is an advocate of keeping the testing teams small, for example, a business analyst, an engineer and a designer/front-end developer (in the case of Shutterstock). The idea is to get a mix of different business functions but related to what is being tested. The concept of the ‘20% time’ phenomena of the tech world is relevant here. In essence, it allows employees to use some of their work time to work on any company-related product they want. They experiment with ideas that would not normally see the light of day. This kind of experimentation has led to Gmail, Adsense and many other Google initiatives. Question 1 Shutterstock is empowering its employees by investing in a culture of experimentation. What are the benefits and limitation of allowing lower level employees to have a say in the strategic direction of the business? Question 2 : What risks to the organisation do you identify in the initiative Shutterstock executives have taken and what actions can they take to minimise such risks? (maximum 2 risks) Case study 2 for assessment 1 COLES The first Coles grocery store was started in 1914 by George Coles in Collingwood, with the philosophy of lowering the costs of living for Australian families. He used a small inheritance to start the small grocery store, and it was immediately successful. The location was good, and George had given careful consideration to the needs of balancing family and work life, maintaining a contended staff and creating a store environment that others would respect. Following the Second World War (WWII) the organisation went through rapid expansion shifting from full service stores where staff would help pick products for customers, to what we consider normal today with self-service stores. The expansion in store meant that the organisation had to give more focus to activities other than food retailing, with logistics, warehousing and distribution systems becoming increasingly central to business operations. Coles has continued to grow and adapt with technological innovations a hallmark of the company’s approach to business. In 1993, the internet provided a new opportunity for the business to explore value creation, and the flybuys program attracted 3.5 million members within its first year of operation. Coles was also early to market in trialling online shopping, with trials in Melbourne starting in 1999. Further market innovation came with the diversification to petrol stations, with Coles Express service stations forming parts of Coles market offering in 2004. Coles has continued to expand and break new ground under its new ownership. Acquired by Wesfarmers in 2007, Coles has focused on a mix of customer experience and sustainability initiatives. Question 1 Based on the information available in the case, identify and describe the organisational structure that would best describe Coles structure after the rapid growth following WWII (but before 1993). In your explanation provide a reasoning as to why that structure was selected. Question 2: Based on the information available in the case, identify and describe the organisational structure that would best describe Coles structure following the adoption of modern technologies (such as the internet) and diversified products (such as service stations). In your explanation provide a reasoning as to why that structure was selected.
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