R.Daft Understanding Management

Understanding Management,

Eighth Edition

Richard L. Daft and Dorothy Marcic

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How do you define turbulence? Flying into gusty winds at 30,000 feet? A recent breakup? This month’s cell phone bill?

For Sony Corp., turbulence is the recent data heist of more than 100 million PlayStation Network (PSN) user accounts, including stolen passwords, purchase histories, and possibly even credit card data.

The shocking news broke on April 26, 2011, when Sony’s senior director of corporate communications issued a blog post saying that the online video game network suffered a massive security break-in. The attack occurred one week earlier, as cybercriminals successfully breached Sony’s computer system, snatching private profiles and sensitive transaction information.

To prevent additional damage, Sony shut down its PlayStation and PC-based networks for nearly a month—a move that risked sending customers to Microsoft Xbox and Nintendo Wii. The crisis also prompted statements from Kazuo Hirai, Sony’s PlayStation chief, who, with other top-level managers, offered a traditional heads-bowed Japanese apology. “We deeply apologize for the inconvenience we have caused,” Hirai was quoted as saying.

Given the danger that lurks in the murky underworld of cybercrime, where hackers can breach even the firewalls of security fortresses like the Pentagon and Sony, today’s multimedia managers must possess the ability to stay calm, be visible, and tell the truth—especially when facing worst-case scenarios.

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New Manager

Self-Test

Manager Achievement Test

Rate each item below based on your orientation toward personal achievement. Read each item and check either Mostly True or Mostly False as you feel right now.

1.I enjoy the feeling I get from mastering a new skill.

2.Working alone is typically better than working in a group.

3.I like the feeling I get from winning.

4.I like to develop my skills to a high level.

6. I am frequently the most valuable contributor to a team.

7. I like competitive situations.

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8. To get ahead, it is important to be viewed as a winner.

Scoring and Interpretation: Give yourself 1 point for each Mostly True answer. In this case, a low score is better. A high score means a focus on personal achievement separate from others, which is ideal for a specialist or individual contributor. However, a manager is a generalist who gets things done through others. A desire to be a winner may cause you to compete with your people rather than develop their skills. As a manager, you will not succeed as a lone achiever who does not facilitate and coordinate others. If you checked three or fewer statements as Mostly True, your basic orientation is good. If you scored 6 or higher, your focus is on being an individual winner. You will want to shift your perspective to become an excellent manager.

make them better. Facebook’s management team encourages a culture of fearlessness, helping the company win the top spot on Fast Company’s 2010 list of the world’s 50 most innovative companies. Even during grim economic times, Facebook was increasing its engineering team, investing in new ideas, and pushing people to take risks for the future.2 Why does innovative management matter? Innovations in products, services, management systems, production processes, corporate values, and other aspects of the organization are what keep companies growing, changing, and thriving. Without innovation, no company can survive over the long run. In today’s world, industries, technologies, economies, governments, and societies are in constant flux, and managers are responsible for helping their organizations navigate through the unpredictable with flexibility and innovation. The meltdown of the housing and finance industries in the United States and the resulting global financial crisis, volatile oil prices and a devastating oil spill on the Gulf Coast, sweeping government changes, natural disasters such as major

The

Grateful

Dead

earthquakes in Haiti and Chile, continuing threats of terrorism, massive problems for automakers from General Motors to Toyota, global health scares such as the H1N1 flu virus, and other recent events have confirmed for managers the folly of managing for stability. The growing clout and expertise of companies in developing countries, particularly China and India, also have many Western managers worried. In such a turbulent and hypercompetitive global environment, managers must help their companies innovate more—and more quickly—than ever.

People can learn to manage innovatively. Interestingly, some hard-nosed business executives have turned to a study of the Grateful Dead rock band for a lesson or two.

Who said that, “[in an information economy] the best way to raise demand for your product is to give it away”? Perhaps Jeff Bezos, founder of Amazon.com? Maybe Sergey Brin or Larry Page, cofounders of Google?

Actually, those words were written by Grateful Dead lyricist John Perry Barlow in a 1994 issue of Wired magazine, long before most people were even thinking about “Internet business models.” The Dead were famous for allowing fans to tape their shows, giving up a major source of revenue in potential record sales but dramatically widening their fan base in the process—and those fans spent plenty of money on concert tickets, merchandise, and so forth, as well as records.

Far from being lackadaisical about their jobs, Dead members always treated the band as a business, incorporating early on and establishing a board of directors that included people from all levels of the organization. They pioneered numerous ideas and practices that were later embraced by corporations. One example was their decision to focus intensely on their most loyal fan base and find ways to create and deliver superior customer value. Even more interesting is how, in a pre-Facebook world, the band found ways to foster a “community of interest” that defied distance. Decades before the Internet and social networking sites, intense bonds of friendship and loyalty often developed among Deadheads living thousands of miles apart.

Barry Barnes, a business professor who lectures to business leaders about the Grateful Dead, says the band’s ability to constantly think and behave innovatively is a lesson for today’s managers. The band thrived for decades, through bad times as well as good. “If you’re going to survive this economic downturn,” Barnes says, “you better be able to turn on a dime. The Dead were exemplars.”3

Innovation has become the new imperative, despite the need for companies to control costs in today’s economy. In a January 2009 survey of corporate executives in Asia, North America, Europe, and Latin America, 76 percent agreed that “innovation is more important than cost reduction for long-term success.”4 Throughout this text, we will spotlight various companies that reflect managers’ ability to think and act innovatively. In addition,

Chapter 8 discusses innovation and change in detail. First, let’s begin our exploration of the world of management by learning some basics about what it means to be a manager.

The Definition of Management

Every day, managers solve difficult problems, turn organizations around, and achieve astonishing performances. To be successful, every organization needs good managers.

What do managers actually do? The late famed management theorist Peter Drucker, often credited with creating the modern study of management, summed up the job of the manager by specifying five tasks.5 In essence, managers set goals, organize activities, motivate and communicate, measure performance, and develop people. These five manager activities apply not only to top executives such as Mark Zuckerberg at Facebook, Steve Odland at Office Depot, or Ursula Burns at Xerox, but also to the manager of a restaurant

in your hometown, the leader of an airport security team, a supervisor at a Web hosting service, or the director of sales and marketing for a local business.

Manager’s activities fall into four core management functions: planning (setting goals and deciding activities), organizing (organizing activities and people), leading (motivating, communicating with, and developing people), and controlling (establishing targets and measuring performance). Depending on their job situation, managers perform numerous and varied tasks, but they all can be categorized under these four primary functions. Thus, our definition of management is as follows:

Management is the attainment of organizational goals in an effective and efficient manner through planning, organizing, leading, and controlling organizational resources. This definition holds two important ideas: (1) the four functions of planning, organizing, leading, and controlling, and (2) the attainment of organizational goals in an effective and efficient manner. Let’s first take a look at the four primary management functions. Later in the chapter, we’ll discuss organizational effectiveness and efficiency, as well as the multitude of skills managers use to successfully perform their jobs.

Exhibit 1.1 illustrates the process of how managers use resources to attain organizational goals through the functions of planning, organizing, leading, and controlling. Chapters of this book are devoted to the multiple activities and skills associated with each function, as well as to the environment, global competitiveness, and ethics that influence how managers perform these functions.

EXHIBIT

The Process of Management

1.1

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•Managers get things done by coordinating and motivating other people.

•Management often is a different experience from what people expect.

•Innovative management is critical in today’s turbulent world.

•Facebook’s success can be attributed to the effectiveness of its innovative managers.

•Management is defined as the attainment of organizational goals in an effective and efficient manner through planning, organizing, leading, and controlling organizational resources.